19 APRIL CURRENT AFFAIRS (MCQ)

Q1. Consider the following statements

1. Electoral Bond is a financial instrument for making donations to political parties.
2. The bonds are issued in multiples of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh and Rs. 1 crore without any maximum limit.

Which of the above statement/s is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer: c)

Electoral Bond

● Electoral Bond is a financial instrument for making donations to political parties.

● The bonds are issued in multiples of Rs. 1,000, Rs. 10,000, Rs. 1 lakh, Rs. 10 lakh and Rs. 1 crore without any maximum limit.

● State Bank of India is authorised to issue and encash these bonds, which are valid for fifteen days from the date of issuance.

● These bonds are redeemable in the designated account of a registered political party.

● The bonds are available for purchase by any person (who is a citizen of India or incorporated or established in India) for a period of ten days each in the months of January, April, July and October as may be specified by the Central Government.

○ A person being an individual can buy bonds, either singly or jointly with other individuals.

○ Donor‟s name is not mentioned on the bond.

Q2. Which of the following are steps taken to combat the menace of terror financing and fake Indian currency?

1. Unlawful Activities (Prevention) Act, 1967
2. Terror Funding and Fake Currency (TFFC) Cell
3. FICN Coordination Group (FCORD)

Code:

1. 1 and 2 only
2. 2 and 3 only
3. 1 and 3 only
4. All the above

Answer: d)

Steps taken to combat the menace of terror financing and fake Indian currency

● Strengthening the provisions in the Unlawful Activities (Prevention) Act, 1967 –

○ by criminalizing the production or smuggling or circulation of high-quality counterfeit Indian currency as a terrorist act,

○ and enlarging the scope of proceeds of terrorism to include any property intended to be used for terrorism.

● A Terror Funding and Fake Currency (TFFC) Cell has been constituted in National Investigation Agency (NIA) to conduct focused investigation of terror funding and fake currency cases.

● FICN Coordination Group (FCORD): Fake Indian Currency Notes (FICN) network is one of the channels of terror financing in India.

○ FICN Coordination Group (FCORD) has been formed by the Ministry of Home Affairs to share intelligence/information among the security agencies of the states/centre to counter the problem of circulation of fake currency notes.

● Memorandum of Understanding (MoU) has been signed between India and Bangladesh to prevent and counter smuggling and circulation of fake currency notes.

○ Also, security at the international borders has been strengthened by using new surveillance technology, deploying additional manpower for round the clock surveillance, establishing observation posts along the international border, erection of border fencing and intensive patrolling.

Q3. Consider the following statements

1. Foreign portfolio investment (FPI) consists of securities and other financial assets passively held by foreign investors.
2. The BOP measures the amount of money flowing from one country to other countries over two monetary year.

Which of the above statement/s is/are correct?

1. 21 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer: a)

Foreign Portfolio Investment

● Foreign portfolio investment (FPI) consists of securities and other financial assets passively held by foreign investors.

● It does not provide the investor with direct ownership of financial assets and is relatively liquid depending

on the volatility of the market.

● FPI is part of a country‟s capital account and is shown on its Balance of Payments (BOP).

○ The BOP measures the amount of money flowing from one country to other countries over one monetary year.

● The investor does not actively manage the investments through FPIs, he does not have control over the securities or the business.

● The investor‟s goal is to create a quick return on his money.

● FPI is often referred to as “hot money” because of its tendency to flee at the first signs of trouble in an economy.

● FPI is more liquid and less risky than Foreign Direct Investment (FDI).

○ A Foreign Direct Investment (FDI) is an investment made by a firm or individual in one country into business interests located in another country.

○ FDI lets an investor purchase a direct business interest in a foreign country.

● FPI and FDI are both important sources of funding for most economies.

● Foreign capital can be used to develop infrastructure, set up manufacturing facilities and service hubs, and invest in other productive assets such as machinery and equipment, which contributes to economic growth and stimulates employment.

● Securities and Exchange Board of India (SEBI) brought new FPI Regulations, 2019, replacing the erstwhile FPI Regulations of 2014.

Q4. Consider the following statements

1. The Reserve Bank of India introduced KYC guidelines for banks in 2002.
2. The objective of KYC guidelines is to prevent businesses from being used by criminal elements for money laundering.

Which of the above statement/s is/are correct?

1. 1 only
2. 2 only
3. Both 1 and 2
4. Neither 1 nor 2

Answer: c)

Know your customer

● The Reserve Bank of India introduced KYC guidelines for banks in 2002.

● The know your customer or know your client (KYC) guidelines in financial services require that professionals make an effort to verify the identity, suitability, and risks involved with maintaining a business relationship.

● The procedures fit within the broader scope of a bank’s Anti-Money Laundering (AML) policy.

● KYC processes are also employed by companies of all sizes for the purpose of ensuring their proposed customers, agents, consultants, or distributors are anti-bribery compliant, and are actually who they claim to be.

● Banks, insurers, export creditors and other financial institutions are increasingly demanding that customers provide detailed due diligence information.

● Initially, these regulations were imposed only on the financial institutions but now the non-financial industry, fintech, virtual assets dealers, and even non-profit organizations are liable to oblige.

Objectives

● The objective of KYC guidelines is to prevent businesses from being used by criminal elements for money laundering.

● Related procedures also enable businesses to better understand their customers and their financial dealings.

● This helps them manage their risks in a well-judged manner.

● Today, KYC principles apply to banks as well as different online businesses.

● They usually frame their KYC policies incorporating the following four key elements:

○ Customer acceptance policy;

○ Customer identification procedures;

○ Monitoring of transactions; and

○ Risk management.

Q5. Nongkhyllem Wildlife Sanctuary, often mentioned in news, is located in:

1. Meghalaya
2. Assam
3. Himachal Pradesh
4. Sikkim

Answer: a)

Meghalaya has yielded India’s first bamboo-dwelling bat with sticky discs, taking the species count of the flying mammal in the country to 130.

• The disc-footed bat (Eudiscopus denticulus) was recorded in the north-eastern State’s Lailad area near the Nongkhyllem Wildlife Sanctuary, about 1,000 km west of its nearest known habitat in Myanmar.
• There are a couple of other bamboo-dwelling bats in India. But the extent of adaptation for bamboo habitat in this species is not seen in the others.
• The flattened skull and sticky pads enabled the bats to roost inside cramped spaces, clinging to smooth surfaces such as bamboo internodes. The disc-footed bat was also found to be genetically very different from all other known bats bearing disc-like pads.
• Scientists analysed the very high frequency echolocation calls of the disc-footed bat, which was suitable for orientation in a cluttered environment such as inside bamboo groves.
• The disc-footed bat has raised Meghalaya’s bat count to 66, the most for any State in India. It has also helped add a genus and species to the bat fauna of India.
• Hence, option (a) is the correct answer.