RBI SCRAPS LOUs & LETTER OF COMFORT :-
The Reserve Bank of India has scrapped letters of undertaking (LoUs) and letters of comfort (LoCs), instruments that were regarded as bank guarantees but became central to the ₹13,000-crore fraud at Punjab National Bank.
- The move reflects the regulator’s bid to prevent the re-occurrence of such wrongdoing and improve banks’ due diligence when it comes to trade credit, bankers said.
- Banks can continue to issue guarantees and letters of credit (LCs) for trade purposes, in line with international norms. These instruments have features that more firmly ensure the issuer’s liability.
LCs (Letter of Credit) :-
- A letter of credit is more secure because it has the details of the purchase by the importer, date of issue, expiry date, the material purchase and other transaction details.
- Receiving banks conduct their own credit appraisal of companies when it comes to bank guarantees and LCs, reducing the risk of default and fraud, said bankers.
Impact of Scrapping LoUs & LoCs :-
- It will likely raise the cost of funding for companies.
- It will also make the system less vulnerable to fraud.
- It will also improve banks due diligence when it comes to trade credit.
Mains Level :- Steps to make Banking System less vulnerable to Frauds & Default.
SC SHUTS THE DOOR ON FOREIGN LAW FIRMS :-
Keeping India’s legal market exclusively for Indians, the Supreme Court on Tuesday ruled that foreign law firms or foreign lawyers cannot practise law in the country either on the litigation or non-litigation side.
What does it Means :-
- Overseas lawyers or firms cannot open offices in the country.
- They can not appear in courts or before any authority.
- Neither they can render other legal services such as giving opinions or drafting documents.
Further Judgement :-
- The Bench said adding that any dispute in this issue regarding “fly in & fly out which does not amount to practice” would be decided by the Bar Council of India.
- The court also ruled that foreign law firms and lawyers did not have an “absolute right” to conduct arbitration proceedings and disputes arising out of contracts relating to international commercial arbitration.
- Though they might not be debarred from conducting arbitration in India arising out of international commercial arbitration, they would be governed by the code of conduct applicable to the legal profession in India.
- The court said Business Process Outsourcing (BPO) companies providing a range of services to customers like word processing, secretarial support, transcription and proof reading services, travel desk support services and others would not come under the Advocates Act.
Mains Level :- Steps to ensure India’s Legal Market remain for Indians
Though they might not be an important from exam point of view but still this issue was long standing argument on whether foreign firms or attorneys should be allowed to enter the Indian legal market. because similarly Indian advocates are not allowed to practise in the U.K., the U.S., Australia and other nations, except on fulfilling onerous restrictions like qualifying tests, experience and work permit.
CENTRE TO CURB CHILD PORN WITH “PhotoDNA” :-
Home ministry will procure “PhotoDNA hash tool” technology and has sought US help to set up a Virtual Private Network (VPN) for secure connection between the MHA and the National Centre for Missing and Exploited Children (NCMEC) of the US to curb child porn and rape videos on the internet.
What is PhotoDNA Technology ?
PhotoDNA technology computes hash value of images, videos and audio clips to identify similar images and is primarily used in prevention of child pornography by computing unique hash that represents the image.
Additional solicitor general Maninder Singh submitted a detailed plan of action framed by the MHA to curb child pornography which included development of a portal.
Development of a Portal :-
- It will have a facility to accept anonymous complaints of child pornography and videos with rape and gang rape content.
- It would link all police stations in India to take actions against anonymous complaints.
Prelims Level :- PhotoDNA Technology
Mains Level :- Steps to prevent rape victims & abused children from exploitation on internet or child pornography