Money and Banking (part – II)

Shaktikanta Das, former Secretary, Department of Revenue and Department of Economic Affairs, Ministry of Finance, Government of India assumed charge as the 25th Governor of the Reserve Bank of India w.e.f. 12 December, 2018. Before him, Dr. Urjit Patel was the Governor of the RBI from 4 September, 2016 to 11 December, 2018 and Dr. Raghuram Rajan was Governor of the RBI from 4 September, 2013 to 4 September, 2016.

A Committee on Financial Sector Assessment (CFSA) was constituted by the Government of India in 2006, in consultation with the Reserve Bank with the objective of under- taking a self-assessment of financial sector stability and development. The Chairman of the Committee was Dr. Rakesh Mohan (the then Deputy Governor, RBI). The Committee was co-chaired by Ashok Jha (the then Finance Secretary; September 13, 2006-July 15, 2007), Dr. D. Subbarao (the then Finance Secretary; July 16, 2007-September 5, 2008) and Ashok Chawla (the then Secretary, Dept. of Economic Affairs, Ministry of Finance; from September 6, 2008). The Committee submitted its report in March, 2009.

As per the question period, the accounting year of the Reserve Bank of India was July-June. Earlier it was January-December, which was changed into July-June on 11 March, 1940. At present, accounting year of the RBI is aligned with the fiscal year of the Government (i.e. April-March). The year 2020-21 was significant for the change in the accounting year of the RBI to April-March (from earlier July-June). Due to this transition, the accounting year 2020-21 was of nine months only, i.e., July 2020- March 2021. From fiscal year 2021-22 onwards, RBI's accounting year starts on April 1.

As per the question period, the accounting year of the Reserve Bank of India was July-June. Earlier it was January-December, which was changed into July-June on 11 March, 1940. At present, accounting year of the RBI is aligned with the fiscal year of the Government (i.e. April-March). The year 2020-21 was significant for the change in the accounting year of the RBI to April-March (from earlier July-June). Due to this transition, the accounting year 2020-21 was of nine months only, i.e., July 2020- March 2021. From fiscal year 2021-22 onwards, RBI's accounting year starts on April 1.

The Negotiable Instruments Act (NIA, 1881) was passed in December, 1881 but came into effect on 1 March, 1882. Recently, the Negotiable Instrument (Amendment) Act, 2018 is enacted. On 2 August, 2018, the President gave his assent to this Act. By way of this amendment, section 143A and section 148 have been inserted in the NI Act, to ensure that the payee of a dishonoured cheque is offered a greater protection and to discourage frivolous and unnecessary litigation, saving the time and money of the litigating parties as well as of the courts.

All of the given institutions are different from others on one or another basis. UTI is a mutual fund company while other three are financial institutions. Canbank Financial Services Ltd. is a subsidiary of Canara Bank whereas other three are autonomous institutions. State Bank of India is a commercial bank and it is different from others in this way, and U.P. State Financial Corporation is a public enterprise of State Government, while other three are public enterprises of Central Government.

According to Companies Act 2013, a company that is limited by shares refers to a company that has the liability of the members (shareholders) limited by such an amount that is unpaid on their respectively held shares. The company can enact this liability while the company is in existence or as it is ending. When incorporating a company limited by shares, the total share capital consists of all of the shares held by each member at incorporation. Those shares can either be: fully paid; partly paid; or unpaid. Partly paid or unpaid shares are shares where a member is due to pay the company. In contrast, fully paid shares are where the full value of the shares have been paid to the company. In companies limited by shares, the liability of members is limited to any unpaid amount of shares that they hold. If a member has fully paid for their shares, they should have no further liabilities as a member.

Limited Liability Partnership (LLP) is an alternative corporate business form that gives the benefits of limited liability of a company and the flexibility of partnership. In LLPs partnership and management need not be separate and internal governance may be decided by mutual agreement among partners. It is a corporate body with perpetual succession. A minimum of two partners will be required for formation of an LLP. There is not any limit to the maximum number of partners. Hence, option (a) is the correct answer.

The International Financial Services Centres Authority (IFSCA) has been established on April 27, 2020 under the International Financial Services Centres Authority Act, 2019. It is headquartered at GIFT City, Gandhinagar in Gujarat. The IFSCA is a unified authority for the development and regulation of financial products, financial services and financial institutions in the International Financial Services Centre (IFSC) in India. At present, the GIFT IFSC is the maiden international financial services centre in India. Prior to the establishment of IFSCA, the domestic financial regulators, namely, RBI, SEBI, PFRDA and IRDAI regulated the business in IFSC.

IFCI Ltd. (IFCI) was set up as a Statutory Corporation ('The Industrial Finance Corporation of India') in 1 July, 1948 for providing medium and long term finance to industry. IFCI was the first development financial institution of India set up to propel economic growth through development of infrastructure and industry. Since then IFCI has contributed significantly to the economy through its continuous support to projects in all the three spheres of growth and development manufacturing, infrastructure & services and agriculture allied sectors. In 1993, after repeal of the IFC Act, IFCI became a Public Limited Company (effected from October 1999), registered under the Companies Act, 1956. Currently, IFCI is a Government Company with Government of India holding 70.32% (as on 31 March, 2024) of paid-up capital of IFCI. IFCI is also registered with the Reserve Bank of India (RBI) as a Systemically Important Non-Deposit taking Non-Banking Finance Company (NBFC-ND-SI) and is also a notified Public Financial Institution under Section 2 (72) of the Companies Act, 2013.