Current Affairs: Mains

 

• Accession Day
• Relevance: Mains: G.S paper II: Polity

Why in news?

• From 2020, people in the Union Territory of Jammu and Kashmir will have a public holiday on October 26 for the first time.
• The day, which will be observed as Accession Day, marks the signing of the Instrument of Accession by the last Dogra ruler of Jammu and Kashmir, Maharaja Hari Singh, with the then Governor-General of India, Lord Mountbatten.
• Like the UT of Ladakh, Jammu and Kashmir has also dropped Martyr’s Day — which the erstwhile state observed on July 13 to mark the deaths of the 22 people who lost their lives when the Maharaja’s forces opened fire on them — and December 5, which marks the birth anniversary of Sheikh Abdullah, former prime minister and chief minister of Jammu and Kashmir.
• From the new year, the new UT of Jammu and Kashmir will have 27 public holidays instead of the earlier 28, according to a list of public holidays issued by UT’s General Administration Department on Friday.

Background:

• As per the Indian Independence Act, 1947, British India was divided into India and Pakistan and the roughly 580 princely states that had signed subsidiary alliances with the British had their sovereignty restored to them. In essence, these princely states were given the option to remain independent or to join the Dominion of India or Pakistan.
• According to Section 6(a) of the Act, before joining India or Pakistan, these states had to sign an Instrument of Accession, in which
  they would specify the terms on which they were becoming part of the new dominions. This is what the Maharaja signed on October 26, 1947 — essentially, a treaty between the state of Jammu and Kashmir and India. Mountbatten accepted it on October 27, 1947.
• Initially, the Maharaja had decided to remain independent and sign standstill instruments with India and Pakistan, but after tribesmen and army men from Pakistan invaded, he sought India’s help, which sought the accession of the state to the Dominion of India.

What does the Instrument of Accession say?

• The Schedule appended to the Instrument of Accession gave Parliament the power to legislate in respect of Jammu and Kashmir only on Defence, External Affairs and Communications.
• In Kashmir’s Instrument of Accession in Clause 5, the Maharaja explicitly mentioned that the terms of “my Instrument of Accession cannot be varied by any amendment of the Act or of Indian Independence Act unless such amendment is accepted by me by an Instrument supplementary to this Instrument”.
• Clause 7 said, “nothing in this Instrument shall be deemed to commit me in any way to acceptance of any future constitution of India or to fetter my discretion to enter into arrangements with the Government of India under any such future constitution”.
• Furthermore, Clause 6 of the instrument states, “Nothing in this Instrument shall empower the Dominion Legislature to make any law for this State authorising the compulsory acquisition of land for any purpose…”.

 

• Steps for enhancing towards digital transactions

Relevance: Mains: G.S paper III: Economy

Context:

• Union Finance Minister Smt. Nirmala Sitharaman here today discussed banking issues with chiefs of Public Sector Banks (PSBs), chief executive of Indian Banks’ Association and representatives of leading private sector banks.
  • Finance Secretary, Revenue Secretary, Economic Affairs Secretary, Electronics and Information Technology Secretary, CBI Director, RBI representative and the chief executive officer of NPCI were also present.

Steps for enhancing digital transactions:

• In order to strengthen the digital payment eco-system and move towards less-cash economy, Hon’ble FM in her budget speech of 2019-20 had, inter alia, announced that business establishments with annual turnover of more than Rs. 50 crore shall offer low cost digital modes of payment ( such as BHIM UPI, UPI QR Code, Aadhaar Pay, Debit Cards, NEFT, RTGS etc.) to their customers, and no charge or Merchant discount rates (MDR) shall be imposed on customers as well as merchants.
  • To facilitate implementation of this announcement, it was decided as under:
  • Department of Revenue (DoR) will notify RuPay and UPI as the prescribed mode of payment for undertaking digital transactions without any MDR.
  • Accordingly, all companies with a turnover of Rs. 50 crore or more shall be mandated by DoR to provide the facility of payment through RuPay Debit card and UPI QR code to their customers.
  • All banks will also start a campaign to popularise RuPay Debit card and UPI.

Banks restored to health for lending:

• Extensive reforms carried out by the Government have restored banks to health, with the gross NPAs of PSBs declining from Rs. 8.96 lakh crore in March 2018 to Rs. 7.27 lakh crore in September 2019, their provision coverage ratio rising to their highest level in seven years, and banks returning to profitability, with as many as 13 banks reporting profits in H1FY20.
  • With the Essar resolution decision, banks have recovered Rs. 38,896 crore, in addition to Rs. 4.53 lakh crore recovered in the last 4½ years.
  • PSBs have attached assets worth over Rs. 2.3 lakh crore over the last three financial years and to enable online auction by banks of attached assets transparently and cleanly for improved realisation of value, eBक्रय, a common e-auction platform was launched today by the Finance Minister.
  • The platform is equipped with property search features and navigational links to all PSB e-auction sites, provides single-window access to information on properties up for e-auction as well as facility for comparison of similar properties, and also contains photographs and videos of uploaded properties.
  • As on 27.12.2019, a total of 35,000 properties had been uploaded on the platform by PSBs.
  • To strengthen banks, in addition to the recent infusion of Rs. 60,314 crore, additional infusion of Rs. 8,855 crore (Rs 4360 crore to Indian Overseas Bank, Rs 2153 crore to Allahabad Bank, Rs 2142 crore to UCO Bank and Rs 200 crore to Andhra Bank) has been approved and would be released shortly.
  • Having improved asset quality and internal resource generation, PSBs are now fully poised to support prudential credit growth towards a $ 5 trillion economy by 2025.

Robust banks to lend without undue apprehensions:

• Bankers were assured that prudent commercial decision-making would be protected.
  • To allay any apprehensions in this regard and to take feedback, Director, CBI also attended the meeting. It was decided that—
  • CBI would develop a mechanism as recently introduced for income tax notices, so that CBI notices carry a registration number to avoid any scope for unauthorised communication and consequent harassment.
  • While pursuing criminal action against those responsible, the agency shall be sensitive to the distinction between genuine commercial failures and culpability. It was also noted that there is need for preserving the value of the business enterprise by treating it on a separate footing from culpability of individuals, if any.
  • PSBs may report instances of fraud through e-filing of FIRs on a designated email address of CBI so as to avoid scope of any arbitrage due to information asymmetry.
  • CBI would create a dedicated phone number on which any person could give information regarding any undue harassment by the investigative machinery.
  • Banks were also advised to ensure rigor and adherence to objective standards in selection of forensic auditors and devising objective SOPs for carrying out of forensic audit. To this end, the Indian Banks’ Association was requested to—
  • To strengthen the forensic auditor empanelment process;
  • To put in place robust arrangements for assessing adherence to standards by forensic auditors; and
  • Tie up with CBI for training forensic auditors.

Credit outreach by banks:

• PSBs have sanctioned over 11.68 lakh Repo-linked loans to retail borrowers for home/vehicle/education/personal loans and to micro and small enterprises, amounting to Rs. 1.32 lakh crore post Finance Minister’s announcements on 23.8.2019 on measures to boost the economy.
  • All PSBs have introduced checkbox-based OTS and have sanctioned settlements under OTS in over 5.26 lakh accounts amounting to Rs. 16,716 crore, post Finance Minister’s announcements on 23.8.2019.
  • In order to address the working capital needs of MSMEs on account of stress arising from delayed payments, PSBs are offering up to 25% enhancement in working capital limits for standard MSME accounts as a Standby Line of Credit and have launched a MSME Outreach Initiative for restructuring of stressed standard assets as needed on priority and in a timely manner, besides providing new term loans, payment solutions for delayed receivables, bill discounting and trade finance.
  • A total of 5,38,440 MSME loan accounts have been restructured in terms of RBI’s circular dated 1.1.2019, out of which 1,65,104 accounts have been restructured since October, 2019.

Support to NBFCs and HFCs by PSBs:

• The Cabinet has approved the recently launched Partial Credit Guarantee Scheme (PCGS) that would now cover NBFCs/HFCs which may have slipped into SMA-0 (up to 30 days overdue) category during the one-year period prior to 1.8.2018, and asset pools rated BBB+ or higher. Under PCGS, Government has already approved issuance of guarantee for buy-outs of NBFC asset pools worth Rs. 4,294 crore from 10 NBFCs/HFCs covering a wide spectrum of entities.
  • Post ILandFS default, aided significantly by Government support, assets of NBFCs have grown by 12.83% from Rs 28.31 lakh crore to Rs 31.94 lakh crore, and assets of the 211 larger NBFCs with 81% of market share have grown at an even higher rate of 19.69%. Bank exposure to NBFCs has grown at a much higher rate of 17.46% as compared to market financing.
  • Similarly, 76 out of 101 HFCs with 82% of market share have shown a positive asset growth of 18% post ILandFS default from Rs 8.45 lakh crore to Rs 10 lakh crore. Exposure of banks and NHB to the 76 performing HFCs has grown by 38% post ILandFS default, as compared to 14% growth in market financing to these HFCs.

Conclusion:

• Thus, the NBFC/HFC sector post IL&FS default, is now stabilizing and good NBFCs/HFCs are able to raise funds from market even at times at rates less than the pre-ILandFS rates.
  • The market is, however, distinguishing between good and not-so-good entities which is reflected in the better entities being able to obtain higher financing from both banks and the market.

 

• Constitutional framework about forming detention center
• Relevance: Mains: G.S paper II: Polity

Context:

• On December 24, the Union Cabinet approved an outlay of over ₹3,941.35 crore for updating the National Population Register (NPR) across the country, barring Assam.
  • A mandatory exercise, the NPR is to be conducted between April-September 2020.

Key highlights:

• The NPR, first collated in 2010, already has a database of 119 crore residents. The fresh exercise will collect data on additional parameters such as “place of birth of father and mother, last place of residence” along with details like Aadhaar (optional), voter ID, mobile phone and driving licence numbers.
  • As in the Citizenship (Registration of Citizens and Issue of National Identity Cards) Rules, 2003, and subsequent response furnished by the Ministry of Home Affairs (MHA) in Parliament from 2012 onwards, the NPR was the first step towards compiling the National Register of Indian Citizens (NRIC) or National Register of Citizens (NRC).
  • According to the Rules, a person’s citizenship status will be decided by local officials. No new law or rules are needed to conduct this exercise across the country. The Assam NRC, conducted under the supervision of Supreme Court, excluded at least 19 lakh out of 3.29 crore residents.
  • There are apprehensions that people will have to dig out old documents to prove their residency in India on the lines of the exercise done in Assam.
  • After the Citizenship (Amendment) Act, 2019 was passed on December 11, there are fears that those excluded from NPR-NRC will be sent to detention centres. The government has denied that the NPR and the NRC are linked.

What are detention centres?

• The Centre has the power to deport foreign nationals staying illegally in the country under Section 3(2)(c) of The Foreigners Act, 1946. State governments have also been entrusted under Article 258(1) of the Constitution to take similar steps.
  • In 1998, the MHA under the then Atal Bihari Vajpayee government wrote a letter to all States and Union Territories asking them to restrict the movement of convicted foreign nationals who had completed their jail sentence.
  • The letter said that they be confined to one of the detention centres/camps, pending confirmation of their nationality from the country concerned and to ensure their physical availability at all times for expeditious repatriation/deportation as soon as the travel documents are ready.
  • The centres are also used to hold foreigners who have been caught overstaying their visa term.
  • In 2009, the instructions were sent again to States, “conveying the detailed procedure to be adopted for deportation of illegal immigrants from Bangladesh”.
  • States were asked by the MHA to set up sufficient number of detention centres where the “suspected illegal immigrants would be detained pending their deportation”. Similar letters were sent in 2012, 2014 and 2018. On January 9, 2019, a detailed manual on “model detention centres” was circulated to make a distinction between “jails and detention centres”.
  • The manual was prepared after a petition filed by activist Harsh Mander on September 20, 2018 in the Supreme Court of India to highlight the plight of families languishing in six detention centres in Assam where members of the families who were declared foreigners were put in camps separated from each other.

Which are the States that already have detention centres?

• Delhi has one detention centre at Lampur on the outskirts. It is under the operational control of the Foreigners Regional Registration Office (FRRO) and is maintained by the Delhi government.
  • The ward holding Pakistanis is under the watch of the Special Branch of Delhi Police and other nationalities are under the FRRO. Both FRRO and the Delhi Police report to the MHA.
  • A detention centre was set up at Mapusa in Goa on February 7. Rajasthan has a detention centre located inside Central Jail in Alwar.
  • As of now there is no separate detention centre in Punjab and foreigner detenues are kept in a segregated place at Central Jail in Amritsar.
  • A separate detention centre is going to come up in a new jail being constructed in Goindwal Sahib in Tarn Taran district that is expected to be completed by May 2020. A detention centre on the outskirts of Karnataka’s capital Bengaluru is all set to get operational from January 1, 2020 onwards.
  • Maharashtra identified land to build a detention centre at Nerul in Navi Mumbai. But Maharashtra Chief Minister Uddhav Thackeray assured a delegation that it was not connected to NRC. There is a report that the plan has been scrapped.

What about West Bengal and Kerala?

• West Bengal had identified two locations, at New Town in Kolkata and Bongaon in North 24 Parganas district to construct the detention centres.
  • But Chief Minister Mamata Banerjee said she will not allow any such centre in the State. Kerala, which was in the process of identifying a location to build a centre, has put it on hold.

What is happening in Assam?

• The final NRC to segregate Indian citizens living in Assam from those who had illegally entered the State from Bangladesh after March 25, 1971 was published on August 31, 2019. Nearly 19 lakh people were excluded from the final list.
  • Those who have been excluded may move Foreigners Tribunals (FTs) and can also appeal to courts if the FTs give a verdict against them. This process has not started. The Assam government wants the NRC to be repeated.
  • From 1985 till October this year, the FTs declared 1,29,009 people as “foreigners.” through ex parte (one sided) proceedings.
  • A total of 4,68,905 matters were referred to the FTs during this period. Most declared foreigners ended up in the six detention camps. To handle the influx of applications following Assam’s NRC, the MHA sanctioned 1,000 additional tribunals. Presently, there are 100 FTs in Assam of which 64 were established in 2014.
  • According to a MHA reply in Rajya Sabha on November 27, as on November 22, 2019, 988 foreigners were lodged in six detention centres in Assam.
  • From the year 2016 up to October 13, 28 detenues died either in the detention centres or in hospitals where they were referred to.
  • Former Chief Minister of Assam Tarun Gogoi said in a tweet that detention centres were first built in Assam under High Court’s orders in 2009 for detaining declared foreigners.
  • Subsequently, the BJP Government allotted funds of ₹46.41 crore in 2018 and supported the construction of a big centre in Goalpara for housing around 3,000 inmates.

Way forward:

• On May 30, the MHA amended the Foreigners (Tribunals) Order, 1964 which empowers district magistrates in all States and Union Territories to set up tribunals.
  • Earlier such powers to constitute tribunals vested with the Central government only.
  • The MHA later issued a clarification on June 11 that “since the FTs have been established only in Assam, and in no other State of the country, this amendment is going to be relevant only to Assam at present”.

 

• Prepaid Payment Instrument

Relevance: Mains G.S paper III: Economy

Why in news?

• The Reserve Bank of India has given Indian consumers a new option to make their daily payments at local shops and retail outlets for the purchase of daily household goods and services.
• In a bid to give increased impetus to small ticket digital payments RBI has introduced a new Prepaid Payment Instrument (PPI) which will come with a monthly rechargeable limit of Rs 10000 and can be used only for making retail payments.

Objectives:

• To give impetus to small value digital payments and for enhanced user experience, it has been decided to introduce a new type of semi-closed PPI.
• These PPIs shall be used only for purchase of goods and services and not for funds transfer.

Key highlights:

• The newly introduced payment instrument can be issued by banks and existing non bank PPI players.
• These companies would be able to verify credentials of customers seeking to open their PPI accounts using an OTP sent to user’s verified mobile number and a digital identification document recognized by the Department of Revenue.
• The minimum details shall necessarily include a mobile number verified with One Time Pin (OTP) and a self-declaration of name and unique identity/ identification number of any ‘mandatory document’ or ‘officially valid document’ (OVD) listed in the ‘Master Direction – Know Your Customer (KYC) Direction.
• This will come as a boost especially for wallet companies such as Paytm and Phonepe that have reeled due to high costs of KYC compliance since the Supreme Court denied them permission to access Aadhar database to complete full KYC authentication.
• The PPI can be used for a monthly limit of Rs. 10000 and the amount can only be uploaded only from bank account linked with customer’s verified mobile number.
• Furthermore, RBI has also fixed an annual limit of Rs 1.2 lakh that can be recharged on these accounts.
• The governor had emphasised on the need for a seamless, easy to issue payment instrument to increase the use of digital payments at small merchant locations where typically the failure rate of transactions are known to be high.