CENTRE MAY BRING FUGITIVE ECONOMIC OFFENDERS BILL SOON :-
- The Union government may soon bring in the Fugitive Economic Offenders Bill to confiscate assets of those who flee the country and refuse to return after committing frauds in excess of Rs. 100 crore.
- The draft Bill followed an announcement in the Union Budget for 2017-18 that the government planned to introduce a legal measure to confiscate assets of the economic offenders who flee to foreign jurisdictions to escape the clutches of law.
- The Bill was cleared last year in Sept, 2017 by the Union Law Ministry with certain recommendations on reconciliation of provisions with the existing laws.
Why do we need a law like this ?
As major bank frauds have come to light in quick succession of late. For example :-
- Nirav Modi, a diamond merchant accused in the Rs. 11,400-crore Punjab National Bank case, and his family members are currently abroad.
- In another case involving Rs. 389 crore of the Oriental Bank of Commerce, a Delhi-based jewellery exporter and his business partners fled the country in 2014. Under the existing laws, the bank has failed to recover the dues in the past three years.
- Vijay Mallya, who owed more than Rs. 9,000 crore to the public sector banks, flew out of the country and refused to come back & fighting a legal battle with government for his extradition from the U.K.
Features of the bill :-
- The draft Bill defines a fugitive economic offender as any individual against whom an arrest warrant has been issued and who has either left the country or refuses to come back to face prosecution.
- As proposed, the Enforcement Directorate will be empowered under the Prevention of Money Laundering Act (PMLA) to initiate the proceedings.
- It has a provision enabling repayment of dues to creditors by disposing of confiscated assets, in case the accused offender continues to evade prosecution.
- As listed in the draft Bill’s schedule, it will be applicable to various financial and allied offences as defined under the Indian Penal Code, the Prevention of Corruption Act, the Securities and Exchange Board of India Act, Customs Act and so on.
LITHIUM ION BATTERIES CHARGES UP RURAL HOUSES :-
Shift towards Lithium Ion Batteries :-
- The shift towards lithium ion batteries from the older technology of lead acid batteries has allowed firms like Kaho India Private Limited to help the Centre achieve its rural electrification target even in areas beyond the reach of the grid.
Kaho India Private Limited, started in 2012, seeks to provide last-mile energy access through compact solar modules to areas that are so far not connected to the grid.
Features of Lithium Ion batteries :-
- A very much lighter than lead acid batteries.
- Charging time have been reduced.
- In lead acid batteries, the typical calculation is that you have to put 8 VAh per peak watt of solar panel. In lithium ion, you need to do 4.8 VAh per peak watt.
- Low/No maintenance cost.
- Eco Friendly Nature
CAN BANKING RECOVER :-
Effects on the Indian Banking System
- The Indian banking system is under the pressure of growing NPAs which will touch nearly Rs. 10 lakh crore by March this year & it does not include the Rs. 6 lakh crore already written-off.
- There is also a slowdown in disbursal of bank credit, in turn affecting productive investment.
These failures has occurred at many levels :-
- Recently revealed scams are fundamentally and overwhelmingly a failure of regulation.
- At the level of the bank, it is impossible that only a handful of employees have been implicated.
- Senior management and auditors did not track these problematic transactions for years.
- The RBI did not monitor banks properly and created opacity with new financial instruments.
- The Finance Ministry failed in its oversight and regulation.
- Successive Central governments, including the present one, did and have not done anything to address the obvious problems that were festering, and made them even worse.
What are the letter of undertaking (LoU)?
- This is a bank guarantee that enables a bank’s customer to raise short-term credit from another Indian bank’s foreign branch
- It has to be another Indian bank, because the LoU as a form of underwriting other borrowing does not exist in other countries and is not even recognised by foreign banks
- It was created by the RBI as an additional incentive to importers who could then avail of cheaper credit abroad, even though import credits already exist
Is Privatisation of banks a solution?
- No, the key issue is one of Poor regulation & not ownership
- Poorly regulated private banks are even more prone to scams and failure as the financial sector is rife with information asymmetries and market imperfections
- Private profit orientation generates incentives for managements to exploit loopholes in the rules and engage in risky behaviour
- The U.S. and European bank behaviour leading to the great financial crisis of 2008-09 show
- In India, in the decade before the nationalisation of banks in 1969, there was an average of more than 35 private bank failures every year.
- Private banks such as Axis and ICICI also face large NPAs, often with the same companies that are defaulting on public banks.
- Kotak Mahindra Bank and several others have been found guilty of providing unsecured loans and ever-greening, practices that the PNB is now accused of
Why has banking regulation in India failed to this extent?
- This government like the previous one has created incentives for all banks to privilege large high-profile corporate borrowers and be relatively lax on their repayment in the mistaken belief that this would encourage sustained income growth.
WHY COAL MINING HAS BEEN OPENED UP ?
What is the significance of the move?
- With the latest decision, the Centre said, the sector will move from an era of monopoly to that of competition.
- After the state-owned Coal India Limited (CIL) was set up in 1975 with an aim to boost coal production. Ever since, it has monopolised the sector, and is now the world’s largest coal-producer.
What led to this move?
- The coal ministry had, from 1993 to 2011, allocated 218 coal blocks to eligible Public Sector Undertakings and private firms for specified end-use projects, that is power, steel and cement, as well as for commercial mining by PSUs.
- However, these allocations were challenged before the Supreme Court, which in August 2014 cancelled the allocation of 204 blocks after finding that the allocations were arbitrary and illegal.
- To manage and reallocate the cancelled blocks, the Coal Mines (Special Provisions) Act, 2015 was enacted.
- In March 2017, the coal ministry brought out a discussion paper on auction of coal mines for commercial mining.
How will the February 20 decision be implemented?
- The approved methodology for auction of coal mines / blocks for sale will prioritise on transparency and ease of doing business.
- There will be an ‘ascending forward auction’ – a two-stage online auction comprising
(i) technical bid
(ii) financial bid with initial and final price offers.
There will be no curbs on the sale or use of coal from the mine.
What are the benefits ?
- It is expected to bring in greater efficiency, technology, higher investment and more employment.
- It would also lead to more revenue that can be used for development of the area and inhabitants around the mine by the State.
- Jharkhand, Odisha, Chhattisgarh, West Bengal, Madhya Pradesh, Telangana and Maharashtra would benefit the most.
- Angel Broking said the move could be the first step towards the full privatisation of the mining sector.