RBI Grade B 2019 Preparation

Covid-19 pandemic has restricted the ability of the public and public institution to physically assemble and debate matters of national importance. Almost all of the government machinery and public & private institutions have been brought to halt due to lockdown and social distancing norms.Working remotely is the new normal and in this scenario, information empowerment becomes fundamental to a successful democracy. The advent of Information and Communication Technology (ICT) has nurtured the swift emergence of a global Information Society that is changing the way people live, learn, work and communicate.Therefore, to sustain the institution of democracy, the government should redefine its Information and Communication Technology (ICT) policy and make it more innovative with the active participation of development organisations.In the present scenario, the role of technology becomes more significant in good governance and public service delivery.

Striving for E-Legislature§ The role of Parliament and many state legislatures, as an institution of debate, deliberation and law-making have been disrupted due to Covid-19.§ These legislative bodies are an institution of public trust and need to continue its role of scrutiny of government’s actions, especially in times of crisis.§ It is here that technology-centric solutions can ensure work continuity in law-making institutions even when meetings can’t be held physically. For example:o These online meetings of legislative bodies will help in the furtherance of debate and deliberation on important issues.o The establishment of e-legislature will help in reducing the frequent use of ordinances.§ Following this, Virtual parliament has been set up in the democracies like the UK, New Zealand, etc.

Strengthening Parliamentary Committees§ It is the stoppage in the work of parliamentary committees which needs immediate attention.§ These committees are smaller sub-groups of MPs which meet outside the House to deliberate on issues of public importance. The committees play a critical role as they are tasked with the in-depth examination of government bills.§ Thus, the use of ICT platforms will enable proper functioning of parliamentary committees.§ Also, the added advantage could be that the committee could get to hear a wide range of stakeholders who might otherwise find it difficult to appear in person before the committees.

Virtual Judiciary§ It is obvious that normalcy in the judicial process will not resume in a short time, even in an early period post lockdown phase.§ Therefore, it is an opportunity of the judiciary to adopt Information and communication technology, so that justice can reach everyone without any delay.§ Also, by adopting initiatives like e-courts judiciary may reduce the backlog of cases.

Promoting Participative Democracy§ There is an unprecedented opportunity for community collective choice, whereby citizens who are affected by a set of governing rules can help to select and frame policy, rank spending priorities, and can, in partnership with their local government representatives,§ Such Mechanism may help in strengthening Social audit. For example, citizens can directly give suggestions to the government on myGOV platform.

Implementing Good Governance§ Information Technology has ensured that a policy decision taken by the government can be quickly executed and implemented at multiple locations, across the length and breadth of the country.§ It also ensures transparency, accountability—while assuring quick and effective responsiveness of government to citizens’ problems and suggestions.

Achieving Sustainable Development Goals§ Government has taken much of the e-governance initiatives for effective public service delivery. Also, when combined with emerging technologies, it can help in achieving sustainable development goals.

This disruption caused by the pandemic has provided an opportunity for the public institutions to leverage technological ability and steps up to fulfil the constitutional duty. This will require the setting up of principles for ensuring participation, security and robust technology.In order to bring in innovations and new paradigms in the administration of justice, there is a need to focus on 6Cs of IT i.e. Computer density, Communication, Connectivity, Cyber laws, Cost and Commonsense to emerge as an effective and well-governed country in the twenty-first century.

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  IMPORTANT TOPIC FOR FINANCE & MANAGEMENT

A forward is similar to a futures contract in that it specifies the future delivery of an underlying asset at an agreed price. However, forwards differ from futures in several ways:

1. Purpose: Forward contracts are almost always held until expiration and physically settled because the counterparties are interested in exchanging the underlying asset for cash. Physically settled future contracts might be held until expiration for traders who want to buy or sell the underlying. But most futures traders are speculating on the price of the underlying, hoping to make a profit from favorable price movements without taking or making delivery.
2. Source of contract: A forward contract is a customized contract, privately traded directly between two identified counterparties. This is called over-the-counter trading and doesn’t involve a futures exchange. In contrast, futures contracts are only available on futures exchanges. You must set up a futures brokerage account to buy and sell these contracts. A futures trader does not directly transact with a counterparty; instead, a futures clearing house mediates all transactions – it acts as the buyer to sellers and the seller to buyers.
3. Contract terms: A forward contract is completely customized according to the wishes of the buyer and seller. In addition, forward contracts have no built-in default protection, though a custom default-protection scheme can be negotiated and included. Futures contracts are highly standardized and guaranteed against default. Their expiration date, delivery date, delivery point, amount of underlying asset and settlement terms cannot be negotiated – the only decisions open to a trader are how much to bid or ask, when to close out the position and to select financial or physical settlement, the contract expiration month and the number of contracts.
4. Settlement procedures: Forwards are settled at expiration and perhaps more frequently if both participants agree – there is no automatic daily cash settlement. Futures are cash-settled every trading day.
5. Margin requirements: Forward contracts typically have few margin requirements, if any. Futures exchanges require traders to deposit into their brokerage accounts a minimum amount of cash per contract, as margin. The deposit is used to guarantee the daily mark to market payment. If the account balance falls below the minimum requirement, then the trader’s broker will issue a margin call – a directive to the trader to replenish the account. Failure to do so promptly will lead to a forced offset – the broker closes out the trader’s contracts and adds the cash proceeds to the brokerage account.

The main differences between futures and option contracts include:

1. Upfront cost: Buyers must pay a premium to purchase an option, and option sellers collect his premium. There are no upfront costs for futures trades, just margin requirements.
2. Margin requirements: Option buyers do not have to post margin, but option sellers do, unless their options are “covered” by other assets. For example, if an option trader sells a call stock option while owning 100 shares of the underlying stock, the call is covered, and margin isn’t required. All futures trades require margin.
3. Flexibility: The owner of an options contract does not have to execute it – that is, force the trade of the underlying asset for the strike price even if such a trade would be profitable. For physical delivery futures, buyers must take delivery of the underlying asset, and sellers must deliver the asset.
4. Risk: Option buyers can lose no more than the premium they pay. Option sellers and futures traders have unlimited risk on their contracts.
5. Mark to market: Most options, with a few exceptions, are not marked to market every day. An options trader can collect a gain by exercising a profitable option, closing out a profitable option position via offset or collecting profit at expiration. Futures contracts are always marked to market daily, which is the only way to experience gains and losses.
6. Size: Options are generally less expensive than futures, and control a smaller amount of the underlying asset. This means that futures are riskier than options. Of course, option traders can increase their risks by trading multiple options.
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