Current Affairs for IAS Exams - 17 February 2018

Current Affairs for IAS Exams - 17 February 2018

::National::

SC on cauvery water dispute

  • It only refers to the 2007 tribunal award which had vaguely dealt with the issue by saying that the allocated shares of water would be “proportionately reduced” among Kerala, Karnataka, Tamil Nadu and Puducherry.
  • The court gave the Centre six weeks’ time to frame a Cauvery water-sharing scheme under Section 6A of the ISWD Act of 1956. The scheme has to be in consonance with the CWDT’s award and the changes introduced by the Supreme Court though this judgment.
  • The Supreme Court gifted Karnataka 14.75 tmc (thousand million cubic feet) of Cauvery water from Tamil Nadu’s share, reasoning that Karnataka has historically suffered “limited access to and use” of the river water.
  • A three-judge Bench, led by Chief Justice of India Dipak Misra, said there is “confirmatory empirical data” that Tamil Nadu has 20 tmc groundwater available with it.
  • The court asked Tamil Nadu to draw out at least 10 tmc groundwater instead of banking on Cauvery water from Karnataka. In fact, the judgment even cites Karnataka’s submission that groundwater, if not extracted regularly, would run waste.
  • The remaining 4.75 tmc of the 14.75 tmc would be diverted to the people of Bengaluru for their domestic and drinking purposes.
  • The judgment said the drinking water needs of Karnataka, especially the burgeoning and global Bengaluru city, was somehow “ignored” in the water-sharing agreement reached by the Cauvery Water Disputes Tribunal (CWDT) in 2007.
  • Compared to Tamil Nadu, the court found that Karnataka, despite being the upper riparian State on the Cauvery basin, has 28 districts still reeling under drought.
  • The 14.75 tmc for Karnataka would be taken from the 192 tmc Cauvery water supplied by Karnataka from its Biligundlu site to Mettur dam in Tamil Nadu. This means that Karnataka would now supply 177.25 tmc.
  • So, out of a total of 740 tmc available in the 802-km long Cauvery, the Supreme Court determined that Karnataka would now get 284.75 (270 + 14.75) tmc, Tamil Nadu’s share has been reduced from 419 tmc to 404.25, while Kerala and Puducherry would continue to be allocated 30 tmc and seven tmc, respectively.
  • he court allowed Puducherry’s request to grow a second crop. However, cultivation should be limited to 43,000 acres. The judgment rejected Kerala’s request for a diversion of the Cauvery water for its hydro-power projects.
  • The apex court also maintained the 10 tmc allocated for environmental protection and spared another four tmc for “inevitable escapages” of Cauvery water into the sea.
  • The judgment however does not provide for distress years when water in Cauvery basin depletes from the 740 tmc available during a normal year.

CVC summoned top officials over PNB fraud

  • The Central Vigilance Commission (CVC has summoned senior officials of the Reserve Bank of India and the Finance Ministry, along with the Chief Vigilance Officer of PNB, early next week to assess how the Rs. 11,500 crore fraud.
  • An official aware of the development said the CVC would like to ascertain if there is a systemic issue that needs to be corrected, as it isn’t convinced by the bank’s claims that junior employees colluded with the fugitive diamond merchant Nirav Modi and other banks were to blame for not carrying out due diligence on the LoUs.
  • “Banks are audited at three levels — apart from an internal audit, there is an external auditor and a statutory audit undertaken by the RBI.
  • The CVC is keen to understand how none of these audits picked up a red flag on the letters of undertaking that seem to have been issued bypassing the system,” said the official.
  • The CBI and the Enforcement Directorate conducted searches on Mr. Modi’s firms and his associates across the country. The External Affairs Ministry suspended his passports along with that of his relative Mehul Choksi.
  • The Ministry said it would revoke their passports if they failed to respond to the notice of suspension within one week.

PM interacted with students on examination

  • Prime Minister Narendra Modi said that he focussed on his work for 125 crore Indians and believed that election results were only by-products of it. And he believed the blessings of 125 crore Indians were with him for his next examination.
  • He was sharing his views on how to handle examinations with school students here and used the simile in reply to a question by a Class 11 student, who reminded him that they were both going to face “examinations” one year later.
  • Telling the student that such a question suggested he should be a journalist, Mr. Modi said, “Focus on your studies and work. Make it the dharma of your life. Exams and results should be by-products of that.
  • I do the same in politics. For 125 crore Indians, I devote my time, energy and capability. Polls will come and go: they are just by-products,” the Prime Minister told a gathering.

PM Modi praises Solar Alliance

  • The biggest development on tackling climate change since the Paris Accord of 2015 has been the International Solar Alliance, said Prime Minister Narendra Modi at the inaugural session of the World Sustainable Development Summit. “India and France initiated the International Solar Alliance.
  • It already has 121 members [countries] and is perhaps the single most important global achievement since the Paris Agreement of 2015,” he told a crowd of students, Ministers and delegates from 40 countries.
  • “While the world was discussing Inconvenient Truth [a reference to the 2006 documentary on global warming] we translated it into Convenient Action,” he added.
  • The International Solar Alliance (ISA) that aims at increasing solar energy deployment in member countries, came into legal, independent existence in December and is the first treaty-based international intergovernmental organisation to be based out of India.
  • The ISA aims to mobilise more than $1,000 billion in investments by 2030 for “massive deployment” of solar energy, pave the way for future technologies adapted to the needs of moving to a fossil-free future and keep global temperatures from rising above 2°C by the end of the century.
  • India has committed itself to having 175,000 MW of renewed energy in the grid by 2022.
  • As part of the agreement, India will contribute $27 million (Rs. 175.5 crore approximately) to the ISA for creating corpus, building infrastructure and recurring expenditure over five years from 2016-17 to 2020-21.
  • The ISA was launched on November 30, 2015 in Paris, on the sidelines of COP-21, the UN climate conference.

Asset worth ore than 500 crore seized by ED

  • The Enforcement Directorate on Friday seized assets worth Rs. 549 crore in the Punjab National Bank’s fraudulent transactions case, taking the total amount of seizure to Rs. 5,649 crore. A money laundering case was also registered against diamond merchant Nirav Modi’s uncle Mehul Choksi.
  • The agency searched 35 locations across 11 States. “The searches were conducted in Goa, Ahmedabad, Chandigarh, Jalandhar, Kolkata, Delhi, Patna, Lucknow, Bengaluru, Mumbai and Chennai,” said a senior official.
  • The Central Board of Direct Taxes has shared details of 29 properties linked to Mr. Modi in different parts of the country. Besides, six more properties have been identified for further legal action.
  • The Directorate, through Indian offices of Mr. Modi, has got messages sent to the overseas outlets of the businessman in New York, London, Macao and Beijing, instructing them to stop all trade forthwith.
  • “They have instructed that no article should be sold from those outlets,” said the official.The agency plans to issue summonses to Mr. Modi and his relatives.
  • Investigations have revealed that the bank had not only failed to detect the fraudulent transactions, which were made without any entry into the Core Banking Software, it was also unaware of the delayed repayments that were being received on account of the Letters of Undertaking (LoU) issued in favour of the companies involved.
  • Investigating agencies suspect that some officials of the overseas branches of other India-based banks were also involved in concealing the alleged fraud.

Court made it mandatory to declare income before contesting elections

  • The court made it mandatory for candidates contesting elections and their associates to declare their assets and source of income at the time of nomination.
  • The obligation of a candidate to disclose both his assets and the source of income is a part of the fundamental right of citizen to know, under Article 19 (1) (a) of the Constitution. The court said enforcement of a citizen’s fundamental right needs no statutory sanction from the government or the Parliament.
  • “A candidate’s constitutional right to contest an election to the legislature should be subservient to the voter’s fundamental right to know the relevant information regarding the candidate,” the court held.
  • It held that “undue accretion of assets” is an independent ground for disqualifying an MP or an MLA. Amassing wealth is a “culpable offence” by itself and a law maker can be prosecuted even without charging him for offences under the Prevention of Corruption Act.
  • The court said the amassment of unaccounted wealth by lawmakers is the mark of a failing democracy. “If left unattended it would inevitably lead to the destruction of democracy and pave the way for the rule of mafia.”
  • The court said India as a “socialist republic” believes in the distribution of material resources and not in the concentration of wealth.
  • If the assets of a legislator increase without bearing any relationship to their known sources of income, the only logical inference that can be drawn is that there is some abuse. The court pointed out about how legislators use their position to secure loans from nationalised banks which turn into NPAs.

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::INTERNATIONAL::

South Africa appoints a new President

  • South Africa’s newly-appointed President, Cyril Ramaphosa, on Friday hailed “a new dawn” for the country in his first policy speech after Jacob Zuma’s bruising nine-year term came to an end.
  • “We should put all the negativity that has dogged our country behind us because a new dawn is upon us and a wonderful dawn has arrived,” Mr. Ramaphosa told Parliament in the annual State of the Nation address.
  • He vowed to revive South Africa’s stagnant economy, tackle the country’s dire unemployment rate and control spiralling government debt.
  • “Tough decisions have to be made to close our fiscal gap, stabilise our debt and restore our state-owned enterprises to health,” he said.

::Business and Economy::

PNB fraud raised problems for SBI as well

  • State Bank of India (SBI) has an exposure of $212 million linked to the fraud at Punjab National Bank (PNB), SBI Chairman Rajnish Kumar said, adding that the exposure was mainly to PNB and that he did not see any liabilities accruing to SBI as a consequence of the fraud.
  • “We do not have exposure to (Nirav) Modi. My exposure is to PNB,” Mr. Kumar told mediapersons before inaugurating the Global NRI Center at Kochi.
  • “We are not worried... the regulator is there, judicial system is there... there is also a categorical statement by the MD of PNB, that all bonafide transactions, they will honour. This is something which will get sorted out between the banks.”
  • PNB, India’s second-largest bank, was defrauded of Rs. 11,500 crore through letters of undertaking (LoUs) in a scam whose dimensions are still unfolding.
  • Speaking after the press meet, Mr. Kumar said of the SBI group’s $212 million exposure — relating to the LoU transactions initiated on behalf of firms controlled by Nirav Modi — $90 million was made through SBI’s Mauritius subsidiary.
  • “There has been absolutely no slip up or lapse from our side. We have followed standard operating procedure.” He added that the bank was “100% confident” of recovering the amount.
  • Mr. Kumar separately said SBI had “a small exposure to Gitanjali Gems,” without giving any details on the nature or extent of that exposure.
  • The SBI chief observed that risk management in banks was a continuous process. “We have to keep updating it. Operational risk is unknown, while credit risk is a calculated risk. In operational risk, what hits and when, is unpredictable. The question is what to do when every level of security is breached.
  • Asked about the impact of recent RBI norms to accelerate the recognition of bad loans and initiation of insolvency proceedings, he said, “Guidelines have made it easier... there are two key elements to the new norms: whatever the bank feels is sustainable debt needs a rating; two, unless you get back 20% in payment, you can’t upgrade the asset.”
  • Recognition of stressed loans at SBI was ‘almost over’, he said adding, “From next year onwards, 2018-19, we will enter into what I call the normal position. Normal for me is 2% or below on gross fresh slippages.”
  • SBI would also look to monetise some of its non-banking assets by FY20. “ FY20, we will go for IPO [of some assets], because we believe we can add lot more value before going for IPO. Three companies are prime candidates... SBI MF, SBI General, SBI Card.”
  • The Global NRI Center will help SBI centralise NRI operations across the country. The centre will be a single-point of contact for all NRI banking services. To enhance the experience for its 33 lakh NRI customers, SBI introduced services including wealth management, SBI Intelligent Assist and a remittance facility for U.S.-based customers.

Know your employee back in focus after PNB fraud

  • The Rs. 11,500-crore fraud in the state-run Punjab National Bank (PNB) has brought back into focus the importance of Know Your Employee (KYE) norms for banks, according to some experts.
  • As early as 2005, when the banking sector was in the initial stages of adopting technology, Reserve Bank of India (RBI) had highlighted the importance of banks enforcing KYE norms which would act as a firewall against frauds committed in connivance with employees.
  • The latest scam at PNB involves issuing unauthorised Letters of Undertaking (LoUs) in favour of companies for availing buyers’ credit, allegedly in connivance with a former employee and a present employee.
  • In September 2005, the central bank had cited the recent cases of technological mishaps, resulting in mainly employees or ex-employees of banks-induced financial losses which had also damaged the lenders’ reputation.
  • G Padmanabhan, the then chief general manager of RBI, had urged the banking community to enforce KYE norms not only prior to staff recruitment but even more vigorously thereafter.
  • There has been a rise in number of private sector banks and NBFCs that are not only conducting background screening but are also doing regular credit checks on their employees who at the end of the day handle large amounts of clients’ money,” Mr. Belwalkar said.
  • Not only the banking regulator but the central vigilance commission (CVC) has also talked about the importance of KYE recently.
  • According to a vigilance manual released last year, CVC said that several frauds were insider jobs or perpetrated with the help of insiders.
  • It had asked banks to take extra care and have continuous vigil on their staff while highlighting the need for KYE and Know Your Partner norms.

RBI says PNB fraud is an internal failure

  • The Reserve Bank of India (RBI) said the failure of internal controls was the main reason for the Rs. 11,500 crore fraud that occurred in Punjab National Bank (PNB).
  • The banking regulator, in its first reaction since the issue came to light on Wednesday, described the fraud as a case of operational risk arising out of delinquent behaviour by the bank’s employees.
  • “The fraud in PNB is a case of operational risk arising on account of delinquent behaviour by one or more employees of the bank and failure of internal controls,” the central bank said.
  • RBI said it was assessing the situation and would take appropriate supervisory action.
  • “RBI has already undertaken a supervisory assessment of control systems in PNB and will take appropriate supervisory action,” it said. RBI denied directing PNB to pay other banks.

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