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Insights Daily Current Events, 13 December 2014

Insights Daily Current Events, 13 December 2014

Measures to reduce pendency of cases in consumer courts

The Minister of State for Consumer Affairs, Food and Public Distribution has said that the government has taken a number of measures to reduce pendency of cases in the consumer courts.

The measures include:

  • State Governments have been requested from time to time to take action well in advance for filling up of vacancies of President and Members and to maintain a panel of candidates for filling up of future vacancies also to avoid delay in appointments.
  • Circuit Benches from National Commission have been frequently visiting States.
  • Some State Commissions have constituted Additional Benches mainly to dispose off backlog of pending cases.
  • The National Commission and some of the State Commissions as well as District Fora are adopting the process of holding Lok Adalats for speedy disposal of the cases.
  • Financial assistance is provided by the Central Government to the States/UTs for strengthening of infrastructure of Consumer Fora including computerization and networking.

Sources: PIB.

Legislation for online shopping

At present there is no single set of law/regulations to govern E-commerce industry.

Then, how are they governed?

  • E-commerce activities including online shopping come under the purview of different laws like Information Technology Act, 2000, Contract Law and Indian Penal Code. E-commerce industry is also required to comply with other business laws like Company law, Labour law, Income Tax laws, Sales Tax law, etc.

Regulatory framework:

  • Presently there is no proposal for a separate regulatory framework for e-commerce under consideration. Directorate of Enforcement conducts investigations under Foreign Exchange Management Act, 1999 (FEMA) and Prevention of Money Laundering Act, 2002 (PMLA). Such investigations are carried out as and when any credible information, including those relating to frauds committed by e-commerce companies, is received.
  • Action under PMLA can be initiated in appropriate cases where a case of fraud by an e-commerce company is registered by some other Law Enforcement Agency.
  • Keeping in view the increased number of online fraud/cheating cases, the Government has also initiated steps for incorporating sufficient provisions for protection of consumers of online shopping/e-commerce under Consumer protection Act, 1986.

Sources: PIB.

Banking Reforms for Housing Sector

‘Affordable Housing for All’ has been a stated national policy of the Government of India. Many of the programmes of the Government are designed to provide affordable housing to lower-income households through the subsidy-cum-loan schemes.

Addressing the problem of housing shortage in the country requires other multiple interventions besides financial intervention. In order to further expand the market to the lower-income segment of the populace, the availability of mortgage guarantee products like Credit Risk Guarantee Fund for Low Income Housing has been launched by the Central Government.

Measures taken by the Government:

  • The corpus of Rural Housing Fund and Urban housing Fund have been augmented to Rs. 8000 crore and Rs. 4000 crore respectively to refinance banks, Housing Finance Companies (HFCs) and other Financial Institutions.
  • To encourage development of Smart Cities, which will also provide habitation for the neo-middle class, requirement of the built up area and capital conditions for FDI has been reduced from 50,000 square metres to 20,000 square metres and from USD 10 million to USD 5 million respectively with a three year post completion lock-in.
  • To further encourage this, projects which commit at least 30 per cent of the total project cost for low cost affordable housing have exempted from minimum built up area and capitalization requirements, with the condition of three year lock-in.
  • In order to encourage affordable housing, the Reserve Bank of India (RBI) has permitted Bank to raise long-term bonds to lend to housing segment.
  • In terms of extant RBI instructions, banks have been advised to allow finance to facilitate the growth of house sector through finance provided to individuals or groups of individuals including cooperative societies.
  • Finance provided for construction of residential houses to be constructed by public housing agencies like HUDCO, Housing Boards, local bodies, individuals, co-operative societies, employers, priority being accorded for financing construction of houses meant for economically weaker sections, low income group and middle income group.
  • Finance for construction meant for improving the conditions in slum areas for which credit may be extended directly to the slum-dwellers on the guarantee of the Government, or indirectly to them through the State Governments.
  • RBI has carved out a separate sub sector out of ‘Commercial Real Estate (CRE)’ as ‘Commercial Real Estate Residential Housing (CRE-RH) with the intention of providing regulatory support to lending towards residential housing projects by allowing lower provisioning and risk-weights.

Sources: PIB.

Shadow Banking Implementation Group (SBIG)

Reserve Bank of India (RBI) has constituted Shadow Banking Implementation Group (SBIG).

Why?

  • To undertake micro mapping of shadow banks to assess the risks posed by such entities to the formal financial sector.

Composition:

  • SBIG is chaired by RBI and constitutes of members from Ministry of Finance, Stock Exchange Board of India, Ministry of Agriculture and Cooperation, National Housing Bank, National Bank for Agriculture & Rural Development, Insurance Regulatory Development Authority, Ministry of Corporate Affairs, Registrar of Agriculture and Cooperatives.

Terms of Reference of SBIG are as follows:

  • As a first step, the Group will undertake an assessment of the position of compliance of the regulatory framework in the country vis-à-vis the Financial Stability Board policy guidelines;
  • The Group will then carry out gap, analysis to identify the reform measures that can be implemented and those where implementation may not be desirable given the specific domestic conditions;
  • Where it may not be desirable to initiate the reform measures, the Group will document the same setting out the reasons within an overall ‘comply of explain’ framework;
  • The Group will set out a roadmap indicating the timelines for implementation of the reform area concerned together with the regulatory/agency which will implement the reforms and the framework for monitoring;
  • The Group will also recommend whether publishing of a formal approach to implementation of reform measures, as being done by several jurisdictions for some of the reform areas, would be appropriate in the Indian context; and
  • Setting up a data repository for the shadow banking sector.

Shadow banking:

The shadow banking system is a term for the collection of non-bank financial intermediaries that provide services similar to traditional commercial banks.

  • In the context of developing economies, shadow banks play a gainful role in credit delivery and financial inclusion as they can facilitate credit availability to certain sectors that might otherwise have difficulty in access to credit.

Regulation:

Shadow banking operates outside the regular banking system and financial intermediation activities are undertaken with less transparency and regulation than the conventional banking.

Risks posed by them:

  • As shadow banks do not take deposits, they are subject to less regulation than traditional banks. They can therefore increase the rewards they get from investments by leveraging up much more than their mainstream counterparts, and this can lead to risks mounting in the financial system.
  • Unregulated shadow institutions can be used to circumvent the strictly regulated mainstream banking system and therefore avoid rules designed to prevent financial crises.
  • Shadow banks can also cause a buildup of systemic risk indirectly because they are interrelated with the traditional banking system via credit intermediation chains, meaning that problems in this unregulated system can easily spread to the traditional banking system.
  • As shadow banks use a lot of short-term deposit-like funding but do not have deposit insurance like mainstream banks, a loss of confidence can lead to “runs” on these unregulated institutions.
  • Shadow banks’ collateralised funding is also considered a risk because it can lead to high levels of financial leverage.

Sources: PIB, RBI, Wiki.

IIP shrinks by 4.2 %

The factory output, as measured by the Index of Industrial Production (IIP), contracted by 4.2 per cent in October.

Why?

  • On account of de-growth in the manufacturing sector and poor demand for consumer goods.

The factory output had declined by 1.2 per cent in October last year.

IIP:

  • The Index of Industrial Production (IIP) is an index for India which details out the growth of various sectors in an economy such as mining, electricity and manufacturing.
  • The all India IIP is a composite indicator that measures the short-term changes in the volume of production of a basket of industrial products during a given period with respect to that in a chosen base period.
  • It is compiled and published monthly by the Central Statistical Organisation (CSO) six weeks after the reference month ends.
  • The base year is 2004-2005.
  • Recent revision of IIP released by CSO with 2004-05 as the base year comprises 682 items.

Sources: The Hindu, Wiki.

Two teachers booked under POCSO Act

Two teachers and a worker from the Morarji Desai Residential School at Santpur in Aurad have been booked under the provisions of Protection of Children from Sexual Offences (POCSO) Act on the charge of forcing some girl students to dance, after threatening them that they would fail them in the exams if they did not do their bidding.

POSCO Act:

The POCSO Act was formulated in order to effectively address the heinous crimes of sexual abuse and sexual exploitation of children.

Details:

  • The Act defines a child as any person below eighteen years of age, and regards the best interests and well being of the child as being of paramount importance at every stage, to ensure the healthy physical, emotional, intellectual and social development of the child.
  • It defines different forms of sexual abuse, including penetrative and non-penetrative assault, as well as sexual harassment and pornography, and deems a sexual assault to be “aggravated” under certain circumstances, such as when the abused child is mentally ill or when the abuse is committed by a person in a position of trust or authority vis-a-vis the child, like a family member, police officer, teacher, or doctor.
  • People who traffic children for sexual purposes are also punishable under the provisions relating to abetment in the Act.
  • In keeping with the best international child protection standards, the Act also provides for mandatory reporting of sexual offences. The Act also prescribes punishment for a person, if he provides false information with the intention to defame any person, including the child.
  • The Act casts the police in the role of child protectors during the investigative process. Thus, the police personnel receiving a report of sexual abuse of a child are given the responsibility of making urgent arrangements for the care and protection of the child, such as obtaining emergency medical treatment for the child and placing the child in a shelter home, should the need arise. The police are also required to bring the matter to the attention of the Child Welfare Committee (CWC) within 24 hours of receiving the report, so the CWC may then proceed where required to make further arrangements for the safety and security of the child.
  • The Act makes provisions for the medical examination of the child designed to cause as little distress as possible.
  • The Act makes provisions for avoiding the re-victimisation of the child at the hands of the judicial system.
  • It provides for the Special Court to determine the amount of compensation to be paid to a child who has been sexually abused, so that this money can then be used for the child’s medical treatment and rehabilitation.

For Further reference: http://pib.nic.in/newsite/efeatures.aspx?relid=86150.

Sources: The Hindu, PIB.