Important Developments in the Economy & Financial Sector

1. Monetary Policy Committee Reconstitution

The Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI) was reconstituted by the Central Government on October 1, 2024, under Section 45ZB of the RBI Act, 1934.

Composition of the Reconstituted MPC:

  1. Ex-Officio Members:
    • Governor of the Reserve Bank of India: Chairperson.
    • Deputy Governor of the Reserve Bank of India, in charge of Monetary Policy: Member.
    • One officer of the Reserve Bank of India, nominated by the Central Board: Member.
  2. External Members Appointed by the Central Government:
    • Prof. Ram Singh: Director, Delhi School of Economics, University of Delhi.
    • Shri Saugata Bhattacharya: Economist.
    • Dr. Nagesh Kumar: Director and Chief Executive, Institute for Studies in Industrial Development, New Delhi.
    • Tenure: 4 years or until further notice.

2. NPS Vatsalya (Pension for Minors)

The NPS Vatsalya Scheme is a contributory pension plan introduced by the Indian government, regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It allows parents or guardians to open a National Pension System (NPS) account for their minor children, fostering early financial planning and retirement savings.

Key Features:

  • Eligibility: Indian citizens below 18 years, including Non-Resident Indians (NRIs) and Overseas Citizens of India (OCI).
  • Contributions: Minimum annual contribution of ₹1,000; no maximum limit. The initial enrollment requires a contribution of ₹1,000.
  • Withdrawals:
    • Partial Withdrawals: Permitted before the child turns 18, up to 25% of contributions, under specific conditions.
    • Exit Options at 18:
      • Withdraw 20% of the corpus as a lump sum; the remaining 80% is reinvested into an annuity plan.
      • If the corpus is less than ₹2.5 lakh, the entire amount can be withdrawn as a lump sum.
  • Tax Benefits: The government has not specified the tax aspects of the NPS Vatsalya Scheme.

Benefits:

  • Encourages early savings and financial literacy among children.
  • Provides a substantial retirement corpus due to long-term investment and compounding.
  • Offers flexibility and portability, allowing continued contributions and management into adulthood.

How to Apply:

  • Online: Through the eNPS platform, selecting the ‘NPS Vatsalya (Minors)’ registration option.
  • Offline: Via authorized Points of Presence (PoPs) such as banks and financial institutions.

  • Launched by Finance Minister in 2024.
  • Features:
    • Accounts can be opened for minors by parents/guardians.
    • Min. annual contribution: ₹1,000.
    • Converts to a regular NPS on adulthood.
  • Aim: Foster early savings, contribute to Viksit Bharat@2047.

3. Securities Listing in GIFT IFSC

Securities Listing in The Gujarat International Finance Tec-City International Financial Services Centre (GIFT IFSC) allows Indian and foreign companies to raise funds by listing their securities in Gujarat’s GIFT City (an international financial hub).

Key points:

  • Indian companies can directly list shares on international exchanges in GIFT IFSC.
  • Regulations make it easy to issue and trade bonds, shares, and depository receipts.
  • Benefits include global investor access, tax advantages, and faster approval processes.
  • GIFT IFSC is growing as a global financial hub for capital-raising.
  • 10% minimum public offer for companies listing only in IFSC.
  • Supports startups and tech firms in accessing global capital.

4. Tax Updates (New Tax Regime)

  • Revised Slabs:
    • ₹0–3 lakh: Nil
    • ₹3–7 lakh: 5%
    • ₹7–10 lakh: 10%
    • ₹10–12 lakh: 15%
    • ₹12–15 lakh: 20%
    • Above ₹15 lakh: 30%
  • Additional Benefits:
    • Standard deduction for salaried raised to ₹75,000.
    • Family pension deduction increased to ₹25,000.

5. Beta T+0 Rolling Settlement Cycle

  • Introduced for equity cash markets (25 stocks).
  • Benefits: Faster settlement, cost efficiency, improved transparency.

6. Domestic Systemically Important Insurers (D-SIIs)

  • Notified Insurers:
    • Life Insurance Corporation (LIC)
    • General Insurance Corporation (GIC)
    • New India Assurance

7. NPS Security

  • Aadhaar-based two-factor authentication for NPS transactions.

8. Insolvency and Bankruptcy Updates

  • Amendments to streamline:
    • Liquidation processes.
    • Personal guarantor resolutions.
    • Real estate projects in insolvency.

9. Circulars for Improved Financial Processes

  • Transparent liquidation reports and stakeholder engagement.
  • Cross-border payment efficiencies via SWIFT GPI. SWIFT GPI (Global Payments Innovation) is a system developed by SWIFT to make cross-border payments faster, more transparent, and easier to track.
  • Key Features:
    • Faster Payments: Cross-border payments settle within the same day or a maximum of 24 hours.
    • Tracking: Payments can be tracked end-to-end using a unique reference number.
    • Transparency: Banks and customers can see fees, exchange rates, and payment statuses.
    • Global Reach: Used by over 4,500 banks worldwide, making it the leading standard for cross-border transactions.

10. Ease of Doing Business

  • Remote Trading Participants allowed in IFSC stock exchanges.

Awareness About Indian Economy

Awareness About RBI Guidelines, RBI Monetary Policy, Regulatory Initiatives