Week II June 2016 UPSC Notes | EduRev

UPSC : Week II June 2016 UPSC Notes | EduRev

 Page 1


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, June 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
Page 2


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, June 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
 
SEBI(Security Exchange Board Of India)  Issues Stricter norms For P-Notes 
?  Markets regulator SEBI has put in place a stricter KYC and disclosure regime for Participatory Notes to make it 
tougher to use these offshore instruments without disclosing the money-trail and details of their users. 
?  These norms are formed after taking into account suggestions from the Special Investigation Team (SIT) on 
Black Money to ensure this route is not used for money laundering. 
?   Under the new norms, all the users of ODIs(Offshore Derivative Instruments) would have to follow Indian KYC 
and AML (Anti Money Laundering) Regulations, irrespective of their jurisdictions, while the ODI issuers will be 
required to file suspicious transaction reports, if any, with the Indian Financial Intelligence Unit, in relation to 
the ODIs issued by them. 
?  Presently, the details of ODI holders need to be mandatorily reported to SEBI on a monthly basis. SEBI has 
now decided that in the monthly reports on ODIs all the intermediate transfers during the month would also 
be required to be reported. 
?  Besides, ODI issuers will have to carry out reconfirmation of the ODI positions on a semi-annual basis. In case 
of any divergence from reported monthly data, the same should be informed to SEBI in a prescribed format. 
?  In order to bring about an uniformity in KYC/AML norms, it has been decided that Indian norms will now be 
applicable to all ODI issuers. These norms will be the same as that applicable for all other domestic investors. 
?  Also, ODI Issuers will be required to identify and verify the beneficial owners in the subscriber entities, who 
hold in excess of the applicable threshold – 25% in case of a company and 15% in case of partnership firms, 
trusts or unincorporated bodies. In such cases, the ODI issuers will need to identify and verify the persons 
who control operations of these entities. 
About P-notes or Offshore Derivative Instruments (ODIs) :- 
?  P-Notes are derivative products issued by FPIs in foreign markets which give their holders the right to have a 
share of the profit and loss from underlying Indian stocks but at the same time help maintain anonymity 
about the actual owners of those notes. P notes are also called by the name of Offshore Derivative 
Instruments (ODIs) 
?  So, P-notes, or off-shore derivatives instruments (ODIs), allow foreign investors to take exposure to Indian 
stocks without registering with Sebi. 
?  Currently, around 10 per cent of foreign flows are through the P-note route. 
Key Elements of the KYC 
?  Customer Acceptance and Customer Severance Policy 
?  Customer Identification Procedures; 
?  Monitoring of Transactions; 
?  Risk Management 
Analysis: 
? The measure was issued after taking into account suggestions from Special Investigation Team (SIT) on black 
money to ensure this route is not used for money laundering. In recent times ODIs have often been in 
Page 3


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, June 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
 
SEBI(Security Exchange Board Of India)  Issues Stricter norms For P-Notes 
?  Markets regulator SEBI has put in place a stricter KYC and disclosure regime for Participatory Notes to make it 
tougher to use these offshore instruments without disclosing the money-trail and details of their users. 
?  These norms are formed after taking into account suggestions from the Special Investigation Team (SIT) on 
Black Money to ensure this route is not used for money laundering. 
?   Under the new norms, all the users of ODIs(Offshore Derivative Instruments) would have to follow Indian KYC 
and AML (Anti Money Laundering) Regulations, irrespective of their jurisdictions, while the ODI issuers will be 
required to file suspicious transaction reports, if any, with the Indian Financial Intelligence Unit, in relation to 
the ODIs issued by them. 
?  Presently, the details of ODI holders need to be mandatorily reported to SEBI on a monthly basis. SEBI has 
now decided that in the monthly reports on ODIs all the intermediate transfers during the month would also 
be required to be reported. 
?  Besides, ODI issuers will have to carry out reconfirmation of the ODI positions on a semi-annual basis. In case 
of any divergence from reported monthly data, the same should be informed to SEBI in a prescribed format. 
?  In order to bring about an uniformity in KYC/AML norms, it has been decided that Indian norms will now be 
applicable to all ODI issuers. These norms will be the same as that applicable for all other domestic investors. 
?  Also, ODI Issuers will be required to identify and verify the beneficial owners in the subscriber entities, who 
hold in excess of the applicable threshold – 25% in case of a company and 15% in case of partnership firms, 
trusts or unincorporated bodies. In such cases, the ODI issuers will need to identify and verify the persons 
who control operations of these entities. 
About P-notes or Offshore Derivative Instruments (ODIs) :- 
?  P-Notes are derivative products issued by FPIs in foreign markets which give their holders the right to have a 
share of the profit and loss from underlying Indian stocks but at the same time help maintain anonymity 
about the actual owners of those notes. P notes are also called by the name of Offshore Derivative 
Instruments (ODIs) 
?  So, P-notes, or off-shore derivatives instruments (ODIs), allow foreign investors to take exposure to Indian 
stocks without registering with Sebi. 
?  Currently, around 10 per cent of foreign flows are through the P-note route. 
Key Elements of the KYC 
?  Customer Acceptance and Customer Severance Policy 
?  Customer Identification Procedures; 
?  Monitoring of Transactions; 
?  Risk Management 
Analysis: 
? The measure was issued after taking into account suggestions from Special Investigation Team (SIT) on black 
money to ensure this route is not used for money laundering. In recent times ODIs have often been in 
 
 
controversy in India for alleged misuse for round-tripping of funds 
?  This will help SEBI to keep a penetrating eye on the investors and check the flow of black money and 
unwanted money from unknown persons in the Indian stock markets 
?  Though this stringent rule may have short-term effect on the capital market, but it would be a boon for 
honest investors and FIIs and market as a whole in the long run. 
?  The SEBI move is a balanced act since rather than imposing restrictions on the P-note issuance, which 
otherwise would have brought a lot of negativity in the market, it has concentrated more on strengthening 
the overall KYC checks and rightfully putting in more obligations on the issuer FPIs in the entire P-note 
issuance process 
RBI revises debt recast norms: Scheme for Sustainable Structuring of 
Stressed Assets' (S4A) 
The Reserve Bank of India (RBI) has revised the norms for banks to undertake debt restructuring if they feel the 
project is viable in the long run. 
The main aim of this  is to “strengthen the lenders’ ability to deal with stressed assets and to put real assets back 
on track by providing an avenue for reworking financial structure of entities facing genuine difficulties.”  
Highlights of scheme/norms: 
The Reserve Bank will facilitate the resolution of large accounts which meets certain criteria. Those accounts 
facing severe financial difficulties might be put for restructuring or some write-down or larger provisions can be 
allowed. The paper describes resolution plans that can be implemented to service the debt. An Overseeing 
Committee (OC) will be formed by the Indian Banks’ Association (IBA) in consultation with the Reserve Bank for 
overseeing the stressed assets cases.   
Eligible Accounts    
?  The paper mentions certain guidelines to choose accounts that will fall under this. Accounts that have 
commenced commercial operations. Projects in which institutional lenders have exposure of more than Rs 
500 crore.  
Sustainable Debt   
?  This scheme defines sustainable debt as that where the Joint Lenders Forum or consortium of financial 
institutions believes that the existing loan can be serviced or can be retained at the existing level.  
?  But, for this scheme, the sustainable debt cannot be less than 50 percent of current funded liabilities. 
?  RBI also states that resolution may involve the current promoter to continue holding her stake in the 
company or some new promoter can be brought via the structural debt restricting (SDR) or non-SDR route. 
However, sustainable structuring is not permissible where promoters’ malpractices or wrongdoings have 
been revealed under audit.  
?  Under the new scheme, banks will have to divide the borrower's debt into two parts - Part A and Part B. Part 
A will be the debt amount that can be serviced including any new funding that may be required within six 
months and non-funded credit facilities whereas the debt that cannot be serviced will be classified under Part 
B. Promoters will have to provide personal guarantee for sustainable part of the loan. 
Resolution Plan  
?  No moratorium will be granted to unsustainable debt as well as no extension will be given for repayment of 
principal or interest amount.  
?  Part A of the loan will need to have the same amount of security cover as was prior to resolution.   
?  Part B debt, on the other hand, can be converted into redeemable cumulative or convertible preference 
shares. Banks will also have the option to convert the debt into optionally convertible debentures. For Part B, 
the report mentions guidelines for fair valuations.  
?  In case of equity, the share in the bank’s portfolio will be marked to market on daily or weekly basis. 
?  In case the shares are not listed on stock exchanges, they should be valued at the lowest using methods like 
discounted cash flow and break-up value. 
Page 4


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, June 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
 
SEBI(Security Exchange Board Of India)  Issues Stricter norms For P-Notes 
?  Markets regulator SEBI has put in place a stricter KYC and disclosure regime for Participatory Notes to make it 
tougher to use these offshore instruments without disclosing the money-trail and details of their users. 
?  These norms are formed after taking into account suggestions from the Special Investigation Team (SIT) on 
Black Money to ensure this route is not used for money laundering. 
?   Under the new norms, all the users of ODIs(Offshore Derivative Instruments) would have to follow Indian KYC 
and AML (Anti Money Laundering) Regulations, irrespective of their jurisdictions, while the ODI issuers will be 
required to file suspicious transaction reports, if any, with the Indian Financial Intelligence Unit, in relation to 
the ODIs issued by them. 
?  Presently, the details of ODI holders need to be mandatorily reported to SEBI on a monthly basis. SEBI has 
now decided that in the monthly reports on ODIs all the intermediate transfers during the month would also 
be required to be reported. 
?  Besides, ODI issuers will have to carry out reconfirmation of the ODI positions on a semi-annual basis. In case 
of any divergence from reported monthly data, the same should be informed to SEBI in a prescribed format. 
?  In order to bring about an uniformity in KYC/AML norms, it has been decided that Indian norms will now be 
applicable to all ODI issuers. These norms will be the same as that applicable for all other domestic investors. 
?  Also, ODI Issuers will be required to identify and verify the beneficial owners in the subscriber entities, who 
hold in excess of the applicable threshold – 25% in case of a company and 15% in case of partnership firms, 
trusts or unincorporated bodies. In such cases, the ODI issuers will need to identify and verify the persons 
who control operations of these entities. 
About P-notes or Offshore Derivative Instruments (ODIs) :- 
?  P-Notes are derivative products issued by FPIs in foreign markets which give their holders the right to have a 
share of the profit and loss from underlying Indian stocks but at the same time help maintain anonymity 
about the actual owners of those notes. P notes are also called by the name of Offshore Derivative 
Instruments (ODIs) 
?  So, P-notes, or off-shore derivatives instruments (ODIs), allow foreign investors to take exposure to Indian 
stocks without registering with Sebi. 
?  Currently, around 10 per cent of foreign flows are through the P-note route. 
Key Elements of the KYC 
?  Customer Acceptance and Customer Severance Policy 
?  Customer Identification Procedures; 
?  Monitoring of Transactions; 
?  Risk Management 
Analysis: 
? The measure was issued after taking into account suggestions from Special Investigation Team (SIT) on black 
money to ensure this route is not used for money laundering. In recent times ODIs have often been in 
 
 
controversy in India for alleged misuse for round-tripping of funds 
?  This will help SEBI to keep a penetrating eye on the investors and check the flow of black money and 
unwanted money from unknown persons in the Indian stock markets 
?  Though this stringent rule may have short-term effect on the capital market, but it would be a boon for 
honest investors and FIIs and market as a whole in the long run. 
?  The SEBI move is a balanced act since rather than imposing restrictions on the P-note issuance, which 
otherwise would have brought a lot of negativity in the market, it has concentrated more on strengthening 
the overall KYC checks and rightfully putting in more obligations on the issuer FPIs in the entire P-note 
issuance process 
RBI revises debt recast norms: Scheme for Sustainable Structuring of 
Stressed Assets' (S4A) 
The Reserve Bank of India (RBI) has revised the norms for banks to undertake debt restructuring if they feel the 
project is viable in the long run. 
The main aim of this  is to “strengthen the lenders’ ability to deal with stressed assets and to put real assets back 
on track by providing an avenue for reworking financial structure of entities facing genuine difficulties.”  
Highlights of scheme/norms: 
The Reserve Bank will facilitate the resolution of large accounts which meets certain criteria. Those accounts 
facing severe financial difficulties might be put for restructuring or some write-down or larger provisions can be 
allowed. The paper describes resolution plans that can be implemented to service the debt. An Overseeing 
Committee (OC) will be formed by the Indian Banks’ Association (IBA) in consultation with the Reserve Bank for 
overseeing the stressed assets cases.   
Eligible Accounts    
?  The paper mentions certain guidelines to choose accounts that will fall under this. Accounts that have 
commenced commercial operations. Projects in which institutional lenders have exposure of more than Rs 
500 crore.  
Sustainable Debt   
?  This scheme defines sustainable debt as that where the Joint Lenders Forum or consortium of financial 
institutions believes that the existing loan can be serviced or can be retained at the existing level.  
?  But, for this scheme, the sustainable debt cannot be less than 50 percent of current funded liabilities. 
?  RBI also states that resolution may involve the current promoter to continue holding her stake in the 
company or some new promoter can be brought via the structural debt restricting (SDR) or non-SDR route. 
However, sustainable structuring is not permissible where promoters’ malpractices or wrongdoings have 
been revealed under audit.  
?  Under the new scheme, banks will have to divide the borrower's debt into two parts - Part A and Part B. Part 
A will be the debt amount that can be serviced including any new funding that may be required within six 
months and non-funded credit facilities whereas the debt that cannot be serviced will be classified under Part 
B. Promoters will have to provide personal guarantee for sustainable part of the loan. 
Resolution Plan  
?  No moratorium will be granted to unsustainable debt as well as no extension will be given for repayment of 
principal or interest amount.  
?  Part A of the loan will need to have the same amount of security cover as was prior to resolution.   
?  Part B debt, on the other hand, can be converted into redeemable cumulative or convertible preference 
shares. Banks will also have the option to convert the debt into optionally convertible debentures. For Part B, 
the report mentions guidelines for fair valuations.  
?  In case of equity, the share in the bank’s portfolio will be marked to market on daily or weekly basis. 
?  In case the shares are not listed on stock exchanges, they should be valued at the lowest using methods like 
discounted cash flow and break-up value. 
 
 
 
?  The bankers can obtain promoters’ personal guarantee for the sustainable part of the loan. In a situation 
where the resolution does not involve a change in promoter, the principle of proportionate loss sharing by 
promoters will stand.  
?  In such a case, existing shareholders will have to dilute their holdings.  
?  For the resolution plan to be passed, consent from 75 percent lenders by value and 50 percent lenders by 
numbers in JLF or consortium will be needed.  
?  Once the resolution plan is decided, it will go to the OC. Once the resolution plan is approved by OC, it will be 
binding on all lenders. However, lenders will have the option to exit JLF and correction action plan.  
Analysis: 
? Reserve Bank's new debt recast norms are credit positive for banks and will help in reducing the gross non-
performing asset levels by 30-100 basis points after one year. 
?  This move is expected to give an impetus, especially for projects that are viable in the long term but strapped 
for cash and/or good management. 
?  This rule will benefit companies which are under severe stress and are highly leveraged. 
?  This scheme will attract those corporate who are not able to service their debt due to weak cash flow or are 
unable to raise fresh equity due to poor valuations. Under this scheme, corporate will have to pay interest 
only on the sustainable part, which will reduce their interest liability. 
?  The move is intended to help restore the flow of credit to crucial sectors such as infrastructure and iron and 
steel, among others, reduce the stress on corporate borrowers and stanch bad loans across banks. 
?  Banks will be allowed to rework stressed loans under the oversight of an external agency, thereby ensuring 
transparency while also protecting bankers from undue scrutiny by investigative agencies. 
?  Overall, this scheme will likely help only those banks which have good provisioning cover and adequate 
capital in the first place. For state-owned banks which suffer on both these counts, this might not be an 
option. So, the scheme might not be enough to free up capital and kick-start lending. 
Regional Comprehensive Economic Partnership (RCEP)  
?  India is already in process to join  ASEAN+6 Regional Comprehensive Economic Partnership (RCEP). 
?  But this move is likely to harm the pharma sector of India and other developing countries. 
?  There are some concerns over the proposals made by Japan and South Korea that go beyond the World Trade 
Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights. 
?  Two of the most worrying are the demands for ‘Data Exclusivity’ and ‘Patent Term Extensions’. Data 
exclusivity is a form of legal monopoly protection for a drug, over and above the patent protections. This is 
given expressly to compensate for the investment made during clinical trials. It implies that regulators cannot 
approve a similar drug with similar data for the next five years, delaying the entry of generic, affordable 
versions. 
?  Patent term extensions are given to compensate the company for delays in processing patent applications. A 
company gets a 20-year patent monopoly on a drug from the date that the application is filed. Sometimes 
processing these applications takes time and the companies get only 13 years instead of 20. A patent term 
extension will give another five-year monopoly to the innovator company, again delaying the entry of generic 
drugs in the market. 
?  So, Civil society organisations are pushing for the removal of harmful intellectual property provisions that 
could potentially increase drug costs by creating new monopolies and delaying the entry of affordable 
generics in the market. 
About Regional Comprehensive Economic Partnership: 
Page 5


 
 
Abhimanu 
Weekly current affairs Series 
 
 
 
 
 
Week: II, June 2016 
 
 
 
 
 
Abhimanu’s IAS Study Group 
Chandigarh 
 
 
 
 
NATIONAL ECONOMIC AFFAIRS 
 
SEBI(Security Exchange Board Of India)  Issues Stricter norms For P-Notes 
?  Markets regulator SEBI has put in place a stricter KYC and disclosure regime for Participatory Notes to make it 
tougher to use these offshore instruments without disclosing the money-trail and details of their users. 
?  These norms are formed after taking into account suggestions from the Special Investigation Team (SIT) on 
Black Money to ensure this route is not used for money laundering. 
?   Under the new norms, all the users of ODIs(Offshore Derivative Instruments) would have to follow Indian KYC 
and AML (Anti Money Laundering) Regulations, irrespective of their jurisdictions, while the ODI issuers will be 
required to file suspicious transaction reports, if any, with the Indian Financial Intelligence Unit, in relation to 
the ODIs issued by them. 
?  Presently, the details of ODI holders need to be mandatorily reported to SEBI on a monthly basis. SEBI has 
now decided that in the monthly reports on ODIs all the intermediate transfers during the month would also 
be required to be reported. 
?  Besides, ODI issuers will have to carry out reconfirmation of the ODI positions on a semi-annual basis. In case 
of any divergence from reported monthly data, the same should be informed to SEBI in a prescribed format. 
?  In order to bring about an uniformity in KYC/AML norms, it has been decided that Indian norms will now be 
applicable to all ODI issuers. These norms will be the same as that applicable for all other domestic investors. 
?  Also, ODI Issuers will be required to identify and verify the beneficial owners in the subscriber entities, who 
hold in excess of the applicable threshold – 25% in case of a company and 15% in case of partnership firms, 
trusts or unincorporated bodies. In such cases, the ODI issuers will need to identify and verify the persons 
who control operations of these entities. 
About P-notes or Offshore Derivative Instruments (ODIs) :- 
?  P-Notes are derivative products issued by FPIs in foreign markets which give their holders the right to have a 
share of the profit and loss from underlying Indian stocks but at the same time help maintain anonymity 
about the actual owners of those notes. P notes are also called by the name of Offshore Derivative 
Instruments (ODIs) 
?  So, P-notes, or off-shore derivatives instruments (ODIs), allow foreign investors to take exposure to Indian 
stocks without registering with Sebi. 
?  Currently, around 10 per cent of foreign flows are through the P-note route. 
Key Elements of the KYC 
?  Customer Acceptance and Customer Severance Policy 
?  Customer Identification Procedures; 
?  Monitoring of Transactions; 
?  Risk Management 
Analysis: 
? The measure was issued after taking into account suggestions from Special Investigation Team (SIT) on black 
money to ensure this route is not used for money laundering. In recent times ODIs have often been in 
 
 
controversy in India for alleged misuse for round-tripping of funds 
?  This will help SEBI to keep a penetrating eye on the investors and check the flow of black money and 
unwanted money from unknown persons in the Indian stock markets 
?  Though this stringent rule may have short-term effect on the capital market, but it would be a boon for 
honest investors and FIIs and market as a whole in the long run. 
?  The SEBI move is a balanced act since rather than imposing restrictions on the P-note issuance, which 
otherwise would have brought a lot of negativity in the market, it has concentrated more on strengthening 
the overall KYC checks and rightfully putting in more obligations on the issuer FPIs in the entire P-note 
issuance process 
RBI revises debt recast norms: Scheme for Sustainable Structuring of 
Stressed Assets' (S4A) 
The Reserve Bank of India (RBI) has revised the norms for banks to undertake debt restructuring if they feel the 
project is viable in the long run. 
The main aim of this  is to “strengthen the lenders’ ability to deal with stressed assets and to put real assets back 
on track by providing an avenue for reworking financial structure of entities facing genuine difficulties.”  
Highlights of scheme/norms: 
The Reserve Bank will facilitate the resolution of large accounts which meets certain criteria. Those accounts 
facing severe financial difficulties might be put for restructuring or some write-down or larger provisions can be 
allowed. The paper describes resolution plans that can be implemented to service the debt. An Overseeing 
Committee (OC) will be formed by the Indian Banks’ Association (IBA) in consultation with the Reserve Bank for 
overseeing the stressed assets cases.   
Eligible Accounts    
?  The paper mentions certain guidelines to choose accounts that will fall under this. Accounts that have 
commenced commercial operations. Projects in which institutional lenders have exposure of more than Rs 
500 crore.  
Sustainable Debt   
?  This scheme defines sustainable debt as that where the Joint Lenders Forum or consortium of financial 
institutions believes that the existing loan can be serviced or can be retained at the existing level.  
?  But, for this scheme, the sustainable debt cannot be less than 50 percent of current funded liabilities. 
?  RBI also states that resolution may involve the current promoter to continue holding her stake in the 
company or some new promoter can be brought via the structural debt restricting (SDR) or non-SDR route. 
However, sustainable structuring is not permissible where promoters’ malpractices or wrongdoings have 
been revealed under audit.  
?  Under the new scheme, banks will have to divide the borrower's debt into two parts - Part A and Part B. Part 
A will be the debt amount that can be serviced including any new funding that may be required within six 
months and non-funded credit facilities whereas the debt that cannot be serviced will be classified under Part 
B. Promoters will have to provide personal guarantee for sustainable part of the loan. 
Resolution Plan  
?  No moratorium will be granted to unsustainable debt as well as no extension will be given for repayment of 
principal or interest amount.  
?  Part A of the loan will need to have the same amount of security cover as was prior to resolution.   
?  Part B debt, on the other hand, can be converted into redeemable cumulative or convertible preference 
shares. Banks will also have the option to convert the debt into optionally convertible debentures. For Part B, 
the report mentions guidelines for fair valuations.  
?  In case of equity, the share in the bank’s portfolio will be marked to market on daily or weekly basis. 
?  In case the shares are not listed on stock exchanges, they should be valued at the lowest using methods like 
discounted cash flow and break-up value. 
 
 
 
?  The bankers can obtain promoters’ personal guarantee for the sustainable part of the loan. In a situation 
where the resolution does not involve a change in promoter, the principle of proportionate loss sharing by 
promoters will stand.  
?  In such a case, existing shareholders will have to dilute their holdings.  
?  For the resolution plan to be passed, consent from 75 percent lenders by value and 50 percent lenders by 
numbers in JLF or consortium will be needed.  
?  Once the resolution plan is decided, it will go to the OC. Once the resolution plan is approved by OC, it will be 
binding on all lenders. However, lenders will have the option to exit JLF and correction action plan.  
Analysis: 
? Reserve Bank's new debt recast norms are credit positive for banks and will help in reducing the gross non-
performing asset levels by 30-100 basis points after one year. 
?  This move is expected to give an impetus, especially for projects that are viable in the long term but strapped 
for cash and/or good management. 
?  This rule will benefit companies which are under severe stress and are highly leveraged. 
?  This scheme will attract those corporate who are not able to service their debt due to weak cash flow or are 
unable to raise fresh equity due to poor valuations. Under this scheme, corporate will have to pay interest 
only on the sustainable part, which will reduce their interest liability. 
?  The move is intended to help restore the flow of credit to crucial sectors such as infrastructure and iron and 
steel, among others, reduce the stress on corporate borrowers and stanch bad loans across banks. 
?  Banks will be allowed to rework stressed loans under the oversight of an external agency, thereby ensuring 
transparency while also protecting bankers from undue scrutiny by investigative agencies. 
?  Overall, this scheme will likely help only those banks which have good provisioning cover and adequate 
capital in the first place. For state-owned banks which suffer on both these counts, this might not be an 
option. So, the scheme might not be enough to free up capital and kick-start lending. 
Regional Comprehensive Economic Partnership (RCEP)  
?  India is already in process to join  ASEAN+6 Regional Comprehensive Economic Partnership (RCEP). 
?  But this move is likely to harm the pharma sector of India and other developing countries. 
?  There are some concerns over the proposals made by Japan and South Korea that go beyond the World Trade 
Organization’s Agreement on Trade-Related Aspects of Intellectual Property Rights. 
?  Two of the most worrying are the demands for ‘Data Exclusivity’ and ‘Patent Term Extensions’. Data 
exclusivity is a form of legal monopoly protection for a drug, over and above the patent protections. This is 
given expressly to compensate for the investment made during clinical trials. It implies that regulators cannot 
approve a similar drug with similar data for the next five years, delaying the entry of generic, affordable 
versions. 
?  Patent term extensions are given to compensate the company for delays in processing patent applications. A 
company gets a 20-year patent monopoly on a drug from the date that the application is filed. Sometimes 
processing these applications takes time and the companies get only 13 years instead of 20. A patent term 
extension will give another five-year monopoly to the innovator company, again delaying the entry of generic 
drugs in the market. 
?  So, Civil society organisations are pushing for the removal of harmful intellectual property provisions that 
could potentially increase drug costs by creating new monopolies and delaying the entry of affordable 
generics in the market. 
About Regional Comprehensive Economic Partnership: 
 
 
?  The Regional Comprehensive Economic Partnership (RCEP) negotiations were launched by Leaders from 
ASEAN and ASEAN's free trade agreement (FTA) partners in the margins of the East Asia Summit in Phnom 
Penh, Cambodia on 20 November 2012. 
?  The RCEP is among the proposed three mega FTAs in the world so far – the other two being the TPP (Trans 
Pacific Partnership, led by the US) and the TTIP (Trans -atlantic Trade and Investment Partnership between 
the US and the EU). 
?  The agreement is proposed between the ten member states of the Association of Southeast Asian Nations 
(ASEAN) (Brunei, Burma (Myanmar), Cambodia, Indonesia, Laos, Malaysia, the Philippines, Singapore, 
Thailand, Vietnam) and the six states with which ASEAN has existing FTAs (Australia, China, India, Japan, 
South Korea and New Zealand). 
Analysis: 
? This will help in furthering the aims and objectives of India’s own Look-East Policy. RCEP will have huge trade 
potential. In real practice, RCEP once formalized, is supposed to emerge as the most effective and largest 
free-trade bloc in the world. 
?  It will also help achieve its goal of greater economic integration with countries East and south East of India 
through better access to a vast regional market ranging from Japan to Australia. 
?  The challenge before India is about balancing its negotiations with RCEP partners, and utilising both 
promotional and conditional offers in a number of sectors. India can showcase to its regional partners, and 
indeed the world, that some of its domestic producers are ready for greater competition — especially those 
that have a comparative or competitive advantage and can connect with global value chains. This should 
include linking India’s high-quality information technology sector with manufacturing and commodity 
processing in regional value chains. 
?  At the same time, due to greater flexibility in the RCEP, India can continue to support its domestic industry to 
give certain sectors the time to prepare for greater foreign competition. This should be done through a 
sensitive list approach, product-specific rules of origin criteria and offer extended phases for tariff reductions. 
?  Ever-evolving trade-related standards — from packaging requirements to sanitary rules for exporting melons 
— are sharply affecting India’s trade in many products. While differential treatment on standards will not be 
possible, long phase-in periods are one way to promote greater competition and also address various 
domestic anti-competitive market distortions. This can be done while supporting domestic industries, giving 
them time to adapt. India’s government and industry will have to work together. 
? Conditional offers will also be needed to build industry’s capacity to deal with potentially stringent rules, such 
as Intellectual Property (IP) rights, which will affect India’s vital pharmaceutical industry. Affordable generic 
drugs are critical for India and other developing countries struggling with large low-income populations in 
need of better healthcare. 
PMJDY(Pradhan Mantri Jan Dhan Yojana) and Business Correspondens 
PMJDY is launched with the ambition to ensure universal coverage of all households by financial institutions. 
About PMJDY: 
?  The primary aim of this scheme is to provide poor people access to bank accounts. 
?  This scheme was launched by the Prime Minister Narendra Modi on 28 August 2014. 
?  This scheme is run by Department of Financial Services, Ministry of Finance 
?  Account holders will be provided zero-balance bank account with RuPay debit card, in addition to accidental 
insurance cover of 1 lakh  rupees  (to be given by 'HDFC Ergo',). 
?  Those who open accounts by 26 January 2015 over and above the  1 lakh rupees  accident claim will also be 
given life insurance cover of 30,000   rupees  (to be given by LIC). 
?  After Six months of opening of the bank account, holders can avail 5,000 overdraft from the bank 
?  With the introduction of new technology introduced by National Payments Corporation of India (NPCI), a 
person can transfer funds, check balance through a normal phone which was earlier limited only to smart 
phones so far. 
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