Current Affairs for BANK, IBPS Exams - 3 January 2018

::National::

Govt says FRDI bill has all the checks and balances

• In yet another clarification about the FRDI Bill, the government has said depositors will be given preferential treatment in the event of liquidation of a bank, and the controversial bail-in clause will be used only with the prior consent of depositors.
• The clarification also said the bail-in clause would not be applied to public sector banks, and it would be a tool of last resort — when a merger or acquisition is not viable — in the case of private sector banks. The government reiterated its implicit guarantee for the solvency of public sector banks.
• “The uninsured depositors, that is, beyond Rs. 1 lakh, of a banking company are treated on a par with unsecured creditors under the present law and paid after preferential dues, including government dues, in the event of its liquidation,” the Ministry of Finance said in a statement.
• “As per the provisions of the FRDI Bill, the claims of uninsured depositors in the case of liquidation of a bank will be higher than those of the unsecured creditors and government dues.”
• Under current laws, deposits with banks are insured up to Rs. 1 lakh. Under the FRDI law, the Resolution Corporation is empowered to increase this deposit insurance amount.
• The FRDI Bill was introduced in Parliament in August 2017 and is under the consideration of a Joint Committee of Parliament.
• According to the government, there is no risk of public sector banks being required to avail themselves of the bail-in clause because the government “always stands ready to take care of the capital needs of the public sector banks.”

Govt. outlines basic contours of electoral bonds

• Union Finance Minister Arun Jaitley outlined the basic contours of the electoral bonds scheme announced during the 2017 Budget, including their denominations, validity, and eligibility of the purchasers.
• “Electoral bonds would be a bearer instrument in the nature of a promissory note and an interest-free banking instrument,” the Minister said in the Lok Sabha. “A citizen of India or a body incorporated in India will be eligible to purchase the bond.”
• Electoral bonds can be purchased for any value in multiples of Rs. 1,000, Rs. 10,000, Rs. 10 lakh, and Rs. 1 crore from any of the specified branches of the State Bank of India.
• “The purchaser will be allowed to buy electoral bonds only on due fulfilment of all the extant KYC norms and by making payment from a bank account,” Mr. Jaitley said. “It will not carry the name of the payee.”
• The bonds, aimed at increasing transparency in political funding, will have a life of 15 days during which they can be used to make donations to registered political parties that have secured not less than 1% of the votes polled in the last election to the Lok Sabha or Assembly.
• The bonds shall be available for purchase for a period of 10 days each in the months of January, April, July and October, with an additional 30 days to be specified by the Central government in the year of a general election.
• The political funding mechanism developed over the last 70 years has faced widespread criticism as people do not get clear details about how much money comes, from where it comes and where it is spent.

Govt. rejected opposition’s demand of sending triple talaq bill to select committee

• The government has rejected the Opposition’s demand to send the controversial triple talaq legislation criminalising instant triple talaq, or talaq-e-biddat, to a select committee.
• The Muslim Women (Protection of Rights on Marriage) Bill, cleared by the Lok Sabha on December 28, will be tabled in the Rajya Sabha. Four hours have been allotted for a debate. The Opposition, however, has the requisite numbers to refer the Bill to a select committee.
• The Business Advisory Committee, which has members from all parties and allocates time to debate various pieces of legislation in Parliament.
• The party has vocally opposed the “criminalisation” clause in the Bill. It is, however, treading cautiously to avoid taking a position against what is seen as a Bill that favours Muslim women.
• It is learnt that when the government discussed the time allocation for the debate on the talaq legislation, Mr. Azad vociferously protested, saying the Bill must be sent to a select committee instead of discussing the duration of the debate.
• Members of the Trinamool Congress, who have been ambivalent on the legislation, backed the demand for referring the Bill to a committee as it needed fine-tuning. Derek O’ Brien, MP, represented the party. The Trinamool had not participated in the debate in the Lok Sabha.

Insolvency and Bankruptcy Code (Amendment) Bill, 2017 passed by Rajya sabha

• The Rajya Sabha passed the Insolvency and Bankruptcy Code (Amendment) Bill, 2017, which bars unscrupulous persons from misusing the provisions of the code. The Bill, which replaces an ordinance promulgated last November, was cleared by the Lok Sabha.
• Concurring with Congress leader Jairam Ramesh, Finance Minister Arun Jaitley said it was only in recent years that the government had charted into the bankruptcy and insolvency area.
• “Therefore, for all of us, it is a learning experience. We encounter situations that we had not anticipated earlier, and as we move further, we will certainly require evolution as far as our laws and procedures are concerned,” he said.
• Addressing another issue flagged by Opposition members, including Mr. Ramesh, about the code’s application vis-à-vis Micro, Small, and Medium Enterprises (MSME), Mr. Jaitley said the Insolvency Legal Committee was examining if separate regulations were required for the sector.
• Another major concern was the huge “haircut [loss on account of auction of assets of defaulting companies],” to the extent of 75%, being taken by public sector creditors. To this, Mr. Jaitley said it was for the creditors to decide how much haircut they wanted to settle for.
• Initiating the debate, former Finance Minister P. Chidambaram said there were flaws in several clauses.
• “One should have kept exclusion to a very, very small number which definitely must be excluded. By making clauses so broad, so over-inclusive, practically everybody in the financial world is likely to be excluded.”

Defence Ministry gave the final approvals for the procurement of 131 Barak missiles

• The Defence Ministry gave the final approvals for the procurement of 131 Barak missiles for the Navy and 240 precision-guided munitions (PGM) for the Indian Air Force (IAF), together estimated at Rs. 1,714 crore.
• The proposals were cleared by Defence Minister Nirmala Sitharaman, the Ministry said in a statement.
• “This PGM is a variant of the KAB PGMs the IAF has in service and employed by Su-30 fighter jets. It is a regular procurement through the revenue expenditure. Due to the value of the contract, the approval of Defence Ministry was required,” a defence official said.
• The 240 KAB-1500 PGMs will be procured from Rosoboronexport of Russia at a cost of Rs. 1,254 crore.
• The second proposal was the final contract for 131 Barak surface-to-air missiles (SAM), which are installed on all frontline warships of the Navy.
• Last April, the Defence Acquisition Council (DAC), under the then Defence Minister Arun Jaitley, had cleared the procurement under “Buy Global” category of procurement procedure from Rafael Advance Defence Systems Ltd. of Israel at a cost of Rs. 460 crore.

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::International::

Iran protests against Trump’s comment

• Iran’s Foreign Ministry responded to U.S. President Donald Trump’s latest Twitter attack, saying he should focus on “homeless and hungry people” in his own country rather than insulting Iranians.
• “Instead of wasting his time sending useless and insulting tweets regarding other countries, he would be better off seeing to the domestic issues of his own country such as daily killings of dozens of people... and the existence of millions of homeless and hungry people,” said Ministry spokesman Bahram Ghasemi.
• Mr. Ghasemi said Mr. Trump had no support from Iranians after labelling them a “terrorist nation” and “using a false name for the Persian Gulf”. He was referring to the U.S.’s travel ban against Iranians imposed last year, and Mr. Trump’s use of the term “Arabian Gulf”.

::Business and Economy::

Manufacturing activity quickened to fastest pace in five years

• Manufacturing activity quickened to the fastest pace in five years in December, bolstered by a sharp rise in output and new orders, according to a private sector survey.
• The Nikkei India Puchasing Managers’ Index registered a value of 54.7 in December, compared with 52.6 in November. A value over 50 indicates an expansion while one below 50 denotes a contraction.
• “The Indian manufacturing sector ended the year on a strong note, with operating conditions improving at the strongest rate in five years,” IHS Markit said in the report. “The overall upturn was supported by the sharpest increase in output and new orders since December 2012 and October 2016 respectively.”
• In response to the improved inflows of new business, job creation quickened to the strongest since August 2012, according to the report.
• “This was consistent with the strongest improvement in the health of the sector since December 2012. Notably, the PMI reading was slightly stronger than the average (54.0) recorded since the inception of the survey in March 2005.”
• At the broad market group level, growth was seen across all three monitored categories (consumer, intermediate and investment). Higher order book volumes and improved underlying demand conditions reportedly contributed to greater production, IHS Markit said.
• Challenges remain as the economy adjusts to recent shocks, but the overall upturn was robust compared to the trend observed for the survey history.
• This outlook was shared by the manufacturing community as sentiment picked up to the strongest in three months amid expected improvements in market conditions over the next 12 months.

New interconnectivity regulations issued by TRAI

• The Telecom Regulatory Authority of India (TRAI) has issued new interconnectivity regulations mandating service providers to enter into an interconnection agreement “on non-discriminatory basis” within 30 days of receiving a request from another operator.
• The ‘Telecom Interconnection Regulations 2018’, which will come into effect from February 1, 2018, also provide for a daily penalty of up to Rs. 1 lakh per service area for operators violating the new norms.
• The regulations follow a prolonged battle between Jio and its older counterparts – Airtel, Vodafone and Idea, on the issue.
• While Reliance Jio had alleged that its subscribers were unable to make calls to other networks as other operators were not providing adequate interconnection points, the older operators blamed free calls offered by Reliance Jio for a “tsunami” of network traffic.
• The regulator had also recommended a hefty penalty of Rs. 3,050 crore on top three telcos – Airtel, Vodafone and Idea — for denial of interconnection to Reliance Jio.
• The new regulations cover important aspects of interconnection such as interconnection agreement, provisioning of initial interconnection and augmentation of points of interconnections, disconnection of ports, and financial disincentive on interconnection issues.
• The regulations will apply to all service providers offering telecom services in India, TRAI said.

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