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21-January-2025-Daily-Current-Affairs

January 21 @ 7:00 am - 11:30 pm

RBI UPDATES GUIDELINES FOR ASSET RECONSTRUCTION COMPANIES (ARCS)

TOPIC: (GS3) ECONOMY: THE HINDU

The Reserve Bank of India (RBI) has revised guidelines for Asset Reconstruction Companies (ARCs) to ensure settlements with borrowers occur only after all recovery options are exhausted. This aims to enhance accountability and streamline recovery processes.

Key Highlights of the Revised Guidelines

Mandatory Board-Approved Policy:

  • ARCs must create a board-approved policy for settling borrower dues.

The policy should include:

  • Eligibility criteria for one-time settlements (OTS).
  • Guidelines on permissible sacrifices for different exposure categories.
  • A method to calculate the realisable value of security.

Settlement Conditions:

  • Settlements should prioritize lump sum payments.
  • For instalment-based payments: Proposals must include a viable business plan. Cash flow and projected earnings of the borrower should support the plan.

Guidelines for Large and Small Accounts:

  • Accounts with an aggregate exposure above ₹1 crore or less must adhere to specific procedures for settlement.
  • Settlements must ensure the net present value (NPV) of the settlement amount is generally not lower than the realisable value of securities.

Focus on Due Diligence:

  • Settlements with borrowers are permissible only after all recovery options are thoroughly explored.
  • This ensures transparency and fairness in recovery mechanisms.

Updates to Master Directions:

  • The ‘Master Direction – Reserve Bank of India (Asset Reconstruction Companies) Directions, 2024’ has been updated to reflect these new measures.

Objectives of the Guidelines

  • Fair and Transparent Recovery: Encourages ARCs to exhaust all options before opting for settlements. Prevents arbitrary or rushed agreements with borrowers.
  • Efficient Financial Management: Ensures settlements are backed by realistic assessments of security values and borrower cash flows.
  • Enhanced Oversight: Strengthens the role of boards in overseeing ARC policies and decisions.

Conclusion

The revised guidelines emphasize meticulous planning and accountability in borrower settlements, promoting sustainable recovery practices. By ensuring settlements align with financial realities, the RBI seeks to enhance the effectiveness of ARCs in managing stressed assets.

Practice Question:

  1. Consider the following statements regarding the Insolvency and Bankruptcy Board of India (IBBI) and Bad Bank:
  1. The Insolvency and Bankruptcy Board of India (IBBI) is responsible for implementing the Insolvency and Bankruptcy Code, which aims to resolve insolvency cases in a time-bound manner.
  2. A Bad Bank is a financial institution that takes over non-performing assets (NPAs) from commercial banks to help them clean up their balance sheets.

Which of the statements given above is/are correct?

  1. 1 only
  2. 2 only
  3. Both 1 and 2
  4. Neither 1 nor 2

Answer: C

Explanation:
The IBBI was established to oversee and regulate the implementation of the Insolvency and Bankruptcy Code, 2016, ensuring timely resolution of insolvency cases and promoting ease of doing business.

A Bad Bank is an entity created to acquire and manage non-performing assets (NPAs) from commercial banks, thereby helping them focus on regular banking operations and improving their financial health. For example, the National Asset Reconstruction Company Limited (NARCL) is India’s bad bank initiative.

SUPREME COURT’S RULING ON PMLA BAIL EXCEPTION FOR WOMEN

TOPIC: (GS2) INDIAN POLITY: THE HINDU

The Supreme Court criticized the Enforcement Directorate (ED) for opposing bail to Shashi Bala, a woman accused in a money laundering case, despite the statutory exception for women under Section 45 of the Prevention of Money Laundering Act (PMLA). This judgment reinforces the importance of consistent application of legal safeguards for women.

Bail Provisions Under PMLA

Stringent Bail Conditions

  • Section 45 of the PMLA requires the accused to prove that no prima facie case exists against them.
  • This makes securing bail difficult in money laundering cases.

Exception for Vulnerable Groups

  • Women, minors, and the sick or infirm are granted a special exception, allowing the Special Court discretion in granting bail.
  • This provision aligns with similar exceptions under the Indian Penal Code (IPC).

Legal Precedents on Women’s Bail Exception

  • Delhi High Court (2023): In the Preeti Chandra case, the court emphasized that socio-economic status or education should not limit the exception for women.
  • K Kavitha Case (2024): Initially denied bail based on societal position and education, the Supreme Court overturned the trial court’s decision, reinforcing the broad application of the exception.

Case Analysis: Shashi Bala

  • Details of the Case: Accused of aiding Shine City Group in laundering ₹36 lakh. The Allahabad High Court denied bail, claiming she was not a “vulnerable” woman under PMLA.
  • Supreme Court’s Judgment: Rejected ED’s argument and stressed that the exception does not discriminate based on socio-economic factors. Highlighted the need to apply statutory provisions uniformly.

Judicial Observations

  • Criticism of ED’s Misinterpretation: Justice Oka condemned ED’s approach, asserting that actions contrary to statutory provisions would not be tolerated.
  • Emphasis on Rule of Law: The Supreme Court reiterated that statutory exceptions must be applied uniformly, ensuring equal justice for all.

About PMLA

  • Enactment: Introduced in 2002 under Article 253 of the Constitution to curb money laundering. Came into effect in 2005, with amendments in 2009 and 2012.
  • Purpose:  Prevents money laundering and enables confiscation of proceeds from criminal activities, such as corruption, terrorism, and drug trafficking.
  • Authority: Powers under the Act are vested with the Director of FIU-IND and the Director of Enforcement.

Conclusion

The Supreme Court’s decision in the Shashi Bala case highlights the importance of consistently applying statutory safeguards for women. It reinforces the principle of equality before the law and ensures justice for vulnerable groups.

Practice Question:

  1. Consider the following statements with regard to the Prevention of Money Laundering Act (PMLA), 2002:
  1. PMLA was enacted to prevent money laundering and provides for the confiscation of property derived from or involved in money laundering.
  2. Under PMLA, only the Enforcement Directorate (ED) is authorized to conduct investigations related to money laundering offenses.
  3. The offense of money laundering under PMLA is cognizable and non-bailable, and punishment may include imprisonment up to 7 years.
  4. The PMLA provides for the establishment of an Appellate Tribunal to hear appeals against orders passed by the authorities under the Act.

Which of the statements given above are correct?

  1. 1, 2, and 4 only
  2. 1, 3, and 4 only
  3. 2, 3, and 4 only
  4. 1, 2, 3, and 4

Answer: B

Explanation:

  • PMLA was enacted to combat money laundering and allows for the confiscation of assets derived from or used in money laundering.
  • While the Enforcement Directorate (ED) plays a central role, the investigation under PMLA can also be conducted by other designated agencies like the Central Bureau of Investigation (CBI) in specific cases.
  • Money laundering is a cognizable offense, and offenders can face imprisonment for up to 7 years, making it a serious criminal act under the law.
  • The PMLA provides for the establishment of an Appellate Tribunal where appeals against decisions of authorities, such as the adjudicating authority or the Appellate Tribunal, can be filed.

WORLD ECONOMIC FORUM (WEF) ANNUAL MEETING 2025

TOPIC: (GS2) INDIAN POLITY: THE HINDU

The World Economic Forum (WEF) is hosting its Annual Meeting from January 20–24, 2025, in Davos, Switzerland. This global event brings together leaders from various sectors to address pressing global and regional socio-economic challenges.

About World Economic Forum

  • Founding: Established in 1971 by Klaus Schwab, initially named the European Management Forum. Promoted the idea of “stakeholder capitalism,” where companies consider the interests of all stakeholders, not just shareholders.
  • Objectives: Address global challenges through collaboration among business, political, and civil society leaders. Promote sustainable economic growth and inclusive development.

Key Features of the Annual Meeting

  • Participation: Includes over 3,000 participants, such as business leaders, political figures, economists, journalists, and celebrities. Focuses on discussions in more than 500 sessions covering critical global issues.
  • Themes: Past themes have included climate change, artificial intelligence, geopolitical tensions, and global economic challenges.
  • This year, discussions will focus on inclusive growth, infrastructure investments, and technological democratization.
  • Diplomatic Role: Serves as a platform for international diplomacy, including historic meetings like the North and South Korean ministerial-level talks and discussions on German reunification.

Funding and Venue

  • Funding: Supported by global corporations with an annual turnover exceeding $5 billion.
  • Davos as a Venue: Known for its tranquil environment, ideal for fostering thoughtful discussions on global issues. Also highlighted in literature, like Thomas Mann’s novel The Magic Mountain.

Significance of WEF

  • Global Impact: Facilitates discussions on critical socio-economic issues affecting both developed and developing nations. Encourages partnerships and innovative solutions to global challenges.
  • Publications: Produces global indices, such as the Global Competitiveness Report and the Global Gender Gap Report, influencing policy worldwide.

Conclusion

The WEF Annual Meeting in Davos plays a pivotal role in fostering dialogue and collaboration among global stakeholders to address challenges and promote equitable growth.

Practice Question:

  1. Which of the following reports are published by the World Economic Forum (WEF)?
  1. Global Competitiveness Report
  2. Global Gender Gap Report
  3. Human Development Index Report
  4. Global Risks Report

Select the correct answer using the code given below:

  1. 1, 2, and 4 only
  2. 1, 3, and 4 only
  3. 2, 3, and 4 only
  4. 1, 2, 3, and 4

Answer: A

Explanation:

  • Global Competitiveness Report – Published by the WEF, this report assesses the competitiveness landscape of countries.
  • Global Gender Gap Report – Also published by WEF, this report tracks the gender gap in various aspects such as economic participation, education, and health.
  • Human Development Index Report – This is published by the United Nations Development Programme (UNDP), not the WEF.
  • Global Risks Report – A report by WEF that examines global risks and challenges in the areas of economics, geopolitics, and environmental concerns.

PARTIAL LIFTING OF SUGAR EXPORT BAN

TOPIC: (GS2) INTERNATIONAL RELATIONS: THE HINDU

The Union government has allowed the export of one million tonnes of sugar for the 2024-25 season. This decision aims to balance domestic sugar prices, benefit farmers, and boost the financial health of sugar mills.

Key Benefits of Partial Sugar Export

Stabilization of Domestic Sugar Prices

  • Controlled exports will prevent an oversupply of sugar in the domestic market.
  • It ensures prices do not drop drastically due to surplus stock.

Support for Farmers

  • Enhanced liquidity for sugar mills through exports will help in timely payments to sugarcane farmers.
    • Approximately five crore farmer families will benefit directly.

Boost to Sugar Mills

  • Clearing surplus sugar stock improves cash flow for sugar mills.
  • Strengthens the financial health of the industry, aiding long-term sustainability.

Employment Opportunities

  • The decision benefits about five lakh workers in the sugar sector.
  • Ensures job security and contributes to rural employment.

Strengthening the Sugar Sector

  • Enhances market stability and fosters growth in the Indian sugar industry.
  • Positions India as a competitive player in the global sugar market.

Challenges of Sugar Export

  • Risk of Domestic Shortages: Excessive exports could lead to domestic sugar shortages, causing price hikes.
  • Global Market Uncertainty: Volatile international sugar prices and fluctuating global demand may reduce export profitability.
  • Logistical and Operational Issues: Export processes involve coordinating quotas and complying with regulations, which may create challenges.

Conclusion

The partial lifting of the sugar export ban is a well-thought-out decision to support the sugar industry and farmers. However, it requires meticulous monitoring to avoid domestic shortages and price instability. Balancing exports and domestic needs is crucial for the sustainable growth of the sector.

UGC’S DRAFT REGULATION ON VICE-CHANCELLORS

TOPIC: (GS2) INDIAN POLITY: THE HINDU

The University Grants Commission (UGC) has proposed a draft regulation for the selection and appointment of vice-chancellors. This move has faced criticism, especially from non-BJP-ruled States, over concerns of federal violations and constitutional challenges.

Key Provisions of the Draft Regulation

Expanded Eligibility Criteria

  • Professionals with over 10 years of experience in industry, public administration, or public policy will be eligible.
  • Earlier, eligibility was restricted to academicians with at least 10 years of professorial experience.

Objective of the Amendment

  • Aims to broaden the pool of candidates for vice-chancellorship.
  • Attempts to include expertise from diverse sectors.

Legal and Constitutional Issues

Mandate of the UGC Act, 1956

  • The Act focuses on maintaining standards in teaching, examinations, and research in universities.
  • It empowers the UGC to regulate teaching qualifications but not the selection process for vice-chancellors.
  • Regulations exceeding the Act’s scope may be deemed ultra vires (beyond legal authority).

State Legislature’s Role

  • State legislatures establish universities and determine vice-chancellors’ qualifications and appointment procedures.
  • UGC’s intervention in this area may infringe on the powers of State governments.

Judicial Observations

  • The Bombay High Court (2011) ruled that vice-chancellors’ qualifications do not directly impact education standards, limiting UGC’s authority.
  • The Supreme Court later held that UGC regulations are binding on universities but not mandatory for State universities under local laws.

Federal Concerns

  • The Constitution’s Article 254 addresses conflicts between State and Central laws, but UGC regulations do not qualify as “laws” under this Article.
  • Only laws passed by Parliament and assented to by the President can override State legislation.
  • Critics argue the regulation undermines the autonomy of State governments in higher education.

Conclusion

The draft regulation seeks to expand the scope of vice-chancellor appointments but raises significant legal and constitutional concerns. Resolving these issues requires balancing UGC’s role in maintaining education standards with the autonomy of States in managing their universities

PRIORITIZING IMEC: AMERICA’S STRATEGIC INTEREST

TOPIC: (GS2) INTERNATIONAL RELATIONS: THE HINDU

The India-Middle East-Europe Economic Corridor (IMEC) is a proposed initiative aimed at strengthening economic and strategic ties between India, the U.S., Europe, and the Middle East. This project holds immense potential to boost connectivity, trade, and clean energy collaboration.

Significance of the U.S.-India Relationship

  • Strategic Evolution: Began in the 1990s during the Clinton administration and has since deepened. Driven by shared goals of economic growth, security, and democratic values.
  • IMEC’s Importance: Presents an opportunity for the U.S. to reinforce ties with India and other key nations. Promotes multilateral cooperation for trade and energy security.

Features of IMEC

  • Integrated Infrastructure: Aims to connect regions via railways, maritime routes, and pipelines. Includes digital networks and green energy infrastructure.
  • Goals: Reduce transportation costs and diversify supply chains. Enhance economic integration across participating nations, including India, the U.S., Saudi Arabia, UAE, and European countries.

Challenges in Implementation

  • Complex Investments: Requires significant infrastructure funding and collaboration. Competes with other national priorities.
  • Private Sector Engagement: Success depends on ensuring profitable returns for investors.
  • Geopolitical Dynamics: Risk of uneven benefits leading to tensions among nations.

Strategic Benefits for India

  • Economic Opportunities: Reduces trade costs and boosts foreign investment. Provides an alternative to China’s Belt and Road Initiative (BRI).
  • Environmental Impact: Supports India’s leadership in green hydrogen technology. Helps decarbonize energy and create green technology jobs.

Role of the U.S.

  • Diplomatic Leadership: U.S. efforts like the Abraham Accords have enabled IMEC’s foundation. Active engagement can bolster its legacy and strategic goals.
  • Future Prospects: Collaboration between leaders, such as Trump and Modi, is crucial for success.

Conclusion

IMEC is a transformative initiative that can redefine regional cooperation, trade connectivity, and clean energy collaboration. The U.S. and India must lead its implementation for mutual economic and environmental benefits.

INTERNAL CODE OF CONDUCT FOR LEGISLATORS

TOPIC: (GS2) INDIAN POLITY: THE HINDU

During the 85th All India Presiding Officers Conference, Lok Sabha Speaker Om Birla emphasized the need for an internal code of conduct for legislators to uphold parliamentary decorum and strengthen democratic practices. This initiative aims to ensure professionalism and constructive discussions in legislative proceedings.

Need for an Internal Code of Conduct

  • Preserving Decorum: Ensures smooth functioning of the legislature and maintains a respectful atmosphere. Prevents disruptions and promotes professionalism in parliamentary work.
  • Enhancing Quality of Debates: Encourages meaningful discussions on policy and governance. Reduces unnecessary interruptions and improves the standard of debates.
  • Strengthening Democracy: Reinforces respect for constitutional principles and parliamentary traditions. Upholds the dignity of elected representatives and institutions.

Benefits of an Internal Code

  • Improved Dialogue: Promotes constructive and focused discussions during legislative sessions.
  • Prevention of Disruptions: Reduces unruly behaviour and limits frequent adjournments.
  • Increased Efficiency: Keeps the House focused on legislative business, improving productivity.
  • Accountability: Encourages lawmakers to fulfil their responsibilities responsibly.
  • Cross-Party Collaboration: Fosters cooperation and reduces conflicts among political parties.

Challenges in Implementation

  • Political Differences: Varied ideologies and agendas may hinder consensus on a common code.
  • Resistance to Restrictions: Legislators might view the code as an infringement on their freedom of expression.
  • Enforcement Difficulties: Ensuring compliance across diverse members from different states can be challenging.
  • Partisan Behaviour: Overcoming entrenched party loyalties may slow the adoption of reforms.

Way Forward

  • Consensus Building: Political parties should collaborate to frame a code aligned with democratic values.
  • Empowering Presiding Officers: Provide authority to enforce the code and ensure accountability.
  • Awareness Programs: Train legislators on the significance of maintaining decorum and respecting parliamentary norms.

Conclusion

An internal code of conduct is essential for promoting discipline, improving legislative functioning, and strengthening democracy. Collaborative efforts are necessary to overcome challenges and ensure its effective implementation.

NATIONAL CONFERENCE OF DMS ON PM JANMAN

TOPIC: (GS1) CULTURE: PIB

The Ministry of Tribal Affairs hosted a National Conference on January 21, 2025, at Bharat Mandapam, New Delhi, to review the progress of PM JANMAN. This program focuses on empowering Particularly Vulnerable Tribal Groups (PVTGs) through targeted interventions.

About PM JANMAN

  • Objective: Empower PVTGs by addressing disparities and creating opportunities for dignified living. Promote sustainable livelihoods and inclusive development.
  • Focus Areas: Housing, clean water, sanitation, education, healthcare, and skill development. Financial inclusion and self-reliance for tribal communities.
  • Scope: Covers 75 PVTG communities across India. Involves collaboration among 9 Ministries for holistic development.
  • Budget: Allocated ₹24,104 crore for implementing various initiatives.

Key Features

  • Multi-Sectoral Approach: Active involvement of government agencies, NGOs, and community members. Focus on integrated development through 11 key interventions.
  • Targeted Interventions: Construction of roads, housing, Anganwadis, school hostels, and health infrastructure. Ensuring access to quality education and skill training programs.

Significance

  • Social Justice: Aims to uplift marginalized tribal communities and reduce inequalities.
  • Sustainable Development: Encourages self-reliance and better quality of life for PVTGs.

Conclusion

PM JANMAN is a transformative initiative to bridge developmental gaps and ensure inclusive growth for PVTGs, reflecting the government’s commitment to social equity.

Details

Date:
January 21
Time:
7:00 am - 11:30 pm
Event Category:
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