WriCraft

■ AT-1 BOND :--  Recently, the Reserve Bank of India  has made a proposal to write-down Additional Tier-1 (AT-1) bonds as part of the SBI-LED restructuring package for Yes Bank . ●  AT-1 bonds are a type of  unsecured, perpetual bonds  that banks issue to shore up their core capital base to meet the  Basel-III norms. ●  They are a type of unsecured, perpetual bonds. • No maturity date. ● Higher rate of interest than other secured bonds and fixed deposits. ● The issuing bank has the option to call back the bonds or repay the principal after a specified period of time. ● They are listed and traded on the exchanges. ■ RISK ASSOCIATED WITH AT-1 BONDS? The issuing bank has the discretion to skip interest payment.  The bank has to maintain a Common equity tier I ratio of 5.5%, failing which the bonds can get written down. ■  WHO ARE MOST AFFECTED? • Mainly the investors are the Institutional investors such as Mutual funds. •But...

  • IMF SPECIAL DRAWING RIGHT AND QUOTA :- - A member country's  quota  determines its maximum financial commitment to the  IMF , its voting power, and has a bearing on its access to IMF financing.  when a nation joins  the IMF, it is assigned an initial quota in the same range as the quotas of existing members of broadly comparable economic size and characteristics. •The IMF uses a quota formula to help assess a member’s relative position. • CURRENT QUOTA FORMULA:-- A weighted average of GDP(weight of 50%), Openness (30%), Economic variability (15%), and International reserves (5%). ● Quotas are denominated in Special Drawing Rights (SDRs). ●Recently held G-20 meeting, proposal  to create and distribute an additional 500 billion worth of SDRs was mooted.But it did not take off because it was vetoed by at least two countries: the United States and India. ■ SPECIAL DRAWING RIGHTS (SDRS):-- It is the IMF’s unit of account and not...

■ Sovereign Gold Bonds scheme:---- - The Government of India (GoI), in consultation with the Reserve Bank of India (RBI), has decided to issue Sovereign Gold Bonds (SGBs) in six installments, from April 2020 to September 2020. • This series of government-run gold bonds the Sovereign Gold Bond 2020-21 scheme comes at a time when the rapid spread of the deadly coronavirus (Covid-19) has disturbed the financial markets around the globe, but increased the appeal of the yellow metal (gold) as a safe-haven. * Sovereign gold bonds scheme: • Issued by the RBI on behalf of the government.  • Government securities denominated in grams of gold. • Substitutes for holding physical gold. • Launched in November 2015. • Objective- reduce the demand for physical gold and shift a part of the domestic savings (used for the purchase of gold) into financial savings.. • Buy and Sale: Investors have to pay the issue price in cash and the bonds will be redeemed (bought back by the issuer)...

■ Helicopter Money :  •  HELICOPTER MONEY : It is an unconventional monetary policy tool. To inject cash into the economy.  Through printing large sums of money.  Distributing it among the general public to stimulate the economic growth. ■ how it works :  •Direct transfers to peoples account. •Cutting down taxes. •Government Spending. ● THE TERM ‘HELICOPTER MONEY’?   Well known economist, Milton Freidman introduced the concept of helicopter money in his paper.The Optimum Quantity of Money in 1960. The basic principle behind this is that the central banks want to increase inflation and output. Therefore, this assumption implied that the influx of money in the economy will be used to purchase goods and services. ■ NEGATIVE CONSEQUENCES •May lead to hyper inflation.    •Rapid Depreciation of Rupee.                 •People may keep this money in their savings accounts. ...

Prime minister citizen assistance and relief in emergency situation (P.M.C.A.R.E)   ✓ Money doneted to P.M.National relief fund can't be used for the purpose other than mentioned by doner.ie. money donated for flood affected area should only be used for it... so there was need of alternative fund to help in covid-19

"Impacts of covid -19 on the India and world economies":