Current Affairs for IAS Exams - 18 September 2013

Tighter norms for NBFCs offering gold loans

• The Reserve Bank of India (RBI) has tightened gold loan norms for non-banking finance companies (NBFCs).
• It has asked NBFCs accepting gold jewellery as collateral to value them at the average of the closing price of 22-carat gold for the preceding 30 days as quoted by The Bombay Bullion Association (BBA).
• If the gold is of purity less than 22 carats, “the NBFCs should translate the collateral into 22 carat, and state the exact grams of the collateral and value the gold proportionately
• The loan-to-value (LTV) ratio for loans against jewellery would continue to be at 60 per cent,
• In case the gold jewellery pledged by a borrower at any one time or cumulatively on loan outstanding is more than 20 gram, NBFCs must keep a record of the verification of the ownership of the jewellery.
• “The method of establishing ownership should be laid down as a board approved policy.”
• It also stipulated that auction should be conducted in the same town or taluka in which the branch that has extended the loan is located.
• “The reserve price for the pledged ornaments should not be less than 85 per cent of the previous 30-day average closing price of 22-carat gold as declared by the BBA and value of the jewellery of lower purity in terms of carats should be proportionately reduced,”
• It would be mandatory on the part of the NBFCs to provide full details of the value fetched in the auction, and the outstanding dues adjusted. Any amount over and above the loan outstanding should be payable to the borrower.

Ratify ILO convention

• The entry into force of the landmark global convention that legally recognises domestic work as economically productive activity makes it even harder to countenance the long official neglect of this sector in India.

• This new standard adopted by the International Labour Organisation (ILO) mandates states to promote the freedom of association and the right to collective bargaining between domestic workers and their employers, and the effective abolition of child labour in this sector.

• But the task of mobilising domestic workers to assert their rights to fair terms of employment is most formidable.
• The workplace is an extremely amorphous term in this particular context, as it typically connotes more than one household.
• The isolated and unprotected nature of the activity exposes workers, more than 80 per cent of whom are women, to greater vulnerability.
• A high rate of attrition is also a factor, as migrant groups constitute the mainstay of domestic labour.
• Not surprisingly, barely 10 per cent of domestic workers around the world are covered by general labour legislation in comparison with those in other sectors.
• A 2013 ILO report shows that the Asia-Pacific region has the maximum prevalence of domestic labour, about 41 per cent.

• But it is the weakest in terms of legal protection — only three per cent of workers are entitled to a weekly day off as compared to the global average of 50 per cent. Just one per cent of the Asia-Pacific domestic workforce is entitled to stipulated maximum hours of work a week.

• Rights to minimum wages and maternity benefits that are norms in Latin America are a far-cry in Asia.
• In India, which has eight per cent of the world’s domestic workers, attempts to extend legal protection to this sector date back to a private member’s bill in Parliament in the 1950s.
• But the closest any legislature has moved to realise the objective is the recent inclusion of this category in the Tamil Nadu Manual Workers Act, besides legally guaranteed minimum wages in Kerala and Karnataka.
• Entitlements to a weekly day off, paid leave and other long term benefits are no less legitimate demands and are important steps to augment their social status as workers.
• The demand for domestic workers is said to be on the increase given the changing profile of the Indian family, the ageing process and urbanisation.
• The ratification of the ILO convention will be an important step in improving the lot of the millions employed in this sector.
• But it will also need enabling domestic legislation. As a first, Parliament should consider acting expeditiously on the 2008 draft bill proposed by the National Commission for Women that seeks to regulate working conditions for domestic workers.

Sources: Various News Paper