Insights Daily Current Events, 13 June 2016
Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
SEBI to relax REIT, portfolio manager norms to woo investors
To deepen Indian capital markets, regulator Sebi has lined up wide-ranging relaxations to its norms for REITs.
Highlights:
- Among the changes, which would be considered by Sebi, the regulator is looking to make Real Estate Investment Trusts (REITs) more attractive to investors by allowing them to invest a large portion of funds in under-construction assets.
- Besides, REITs would be allowed to have a larger number of sponsors, while regulations regarding the minimum public offer size and related party transactions could also be eased.
- Sebi is also planning to remove curbs on the SPV to invest in other SPVs holding the assets, which in turn would allow REITs to invest in a holding company owning stake in SPVs.
What are REITs?
REITs are similar to mutual funds. While mutual funds provide for an opportunity to invest in equity stocks, REITs allow one to invest in income-generating real estate assets.
How does an REIT work?
REITs raise funds from a large number of investors and directly invest that sum in income-generating real estate properties (which could be offices, residential apartments, shopping centres, hotels and warehouses). The trusts are listed in stock exchanges so that investors can buy units in the trust. REITs are structured as trusts. Thus, the assets of an REIT are held by an independent trustee on behalf of unit holders.
Tax and other issues:
Short-term capital gain tax is applicable for unit holders at the rate of 15%. While interest is tax-exempt for REITs, it is taxable for unit holders. The registration charges for every purchase and sale of property is still applicable.
Sources: The hindu.
Paper 2 Topic: Bilateral, regional and global groupings and agreements involving India and/or affecting India’s interests.
Shanghai meet crucial for NSG nod
Prime Minister Narendra Modi is expected to meet with Russian President Vladimir Putin, Chinese President Xi Jinping as well as Central Asian leaders, including Kazakh President Nazarbayev in Tashkent on the sidelines of the Shanghai Cooperation Organization (SCO) summit, to make a final attempt to push through India’s NSG membership. India is slated to join the SCO after its membership was approved last year.
About the Shanghai Cooperation Organisation (SCO):
It is a Eurasian political, economic and military organisation which was founded in 2001 in Shanghai by the leaders of China, Kazakhstan, Kyrgyzstan, Russia, Tajikistan, and Uzbekistan. These countries, except for Uzbekistan, had been members of the Shanghai Five, founded in 1996; after the inclusion of Uzbekistan in 2001, the members renamed the organisation.
- The SCO is seen as a counter to the North Atlantic Treaty Organisation (NATO).
- With observer states included, its affiliates account for about half of the world’s population.
- The SCO has established relations with the United Nations, where it is an observer in the General Assembly, the European Union, Association of Southeast Asian Nations (ASEAN), the Commonwealth of Independent States and the Organisation of Islamic Cooperation.
- India and Pakistan were accepted as full members of the organization in July 2015.
- Afghanistan, Belarus, Iran and Mongolia enjoy observer status.
Sources: the hindu.
Paper 3 Topic: Science and Technology- developments and their applications and effects in everyday life Achievements of Indians in science & technology; indigenization of technology and developing new technology.
Space technology to safeguard thatched roofs
The scientists of the Vikram Sarabhai Space Centre (VSSC) are planning to use the technology that protects rocket launch vehicles from high-temperature fire to protect the thatched roofs and even prevent water seepage in concrete buildings.
Details:
The technology uses the ceramic-polymer hybrid (CASPOL). CASPOL is water-based ready-to-coat product. It was originally developed to protect the rockets from high temperature and fire to which they are exposed during the initial moments of launch. Caspol can withstand up to 800 degree Celsius. The centre has described the product as one which is eco-friendly as it is free of toxic materials.
Benefits:
- This could protect public transport systems and poor men residing in thatched homes from fire accidents. Seats in automobiles, public transport system and seat cushions of railway coaches can be made fireproof when Caspol is applied.
- Besides its ability to protect against fire and high temperature, Caspol can also make surfaces waterproof. When applied over the concrete surface of buildings, fill up the micro cracks and holes on concrete to prevent water from seeping in.
- Also, when applied over concrete surface of buildings, the high emissivity of the product reduces the temperature inside the building by at least 5 to 6 degree Celsius.
Sources: the hindu.
Paper 3 Topic: Indian Economy and issues relating to planning, mobilization of resources, growth, development and employment.
Sebi Issues Stricter KYC, Disclosure Regime 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.
Background:
The new norms follows approval from the regulator’s board to amend its regulations for Offshore Derivative Instruments (ODIs)– popularly known as P-Notes — after taking into account suggestions from the Special Investigation Team (SIT) on Black Money to ensure this route is not used for money laundering.
Details:
- Under the new norms, all the users of ODIs 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.
What are P-notes?
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.
Sources: the hindu.
Facts for Prelims:
- Unprecedented new details of medieval cities hidden under jungle in Cambodia near Angkor Wat have been revealed using lasers shedding new light on the civilisation behind the world’s largest religious complex. Angkor Wat, a UNESCO World Heritage site seen as among the most important in south-east Asia, is considered one of the ancient wonders of the world. It was constructed from the early to mid 1100s by King Suryavarman II at the height of the Khmer Empire’s political and military power and was among the largest pre-industrial cities in the world. While the Khmer Empire was initially Hindu, it increasingly adopted Buddhism and both religions can be seen on display at the complex.
- Public sector banks have increased their presence across the country in the last four years—in terms of ATMs and points of sale devices—far faster than private sector banks have recent data released by the Reserve Bank of India shows. There are 27 public sector banks and 19 private sector banks in operation currently. One common view is that this increase in the number of ATMs by PSBs is due to the government-mandated rural financial inclusion programme. Also, PSBs have a higher share of ATMs than private banks in metro, urban, and semi-urban areas as well. However, the issuance of credit cards and the share in credit card transactions are two areas where the private sector outshines the public sector.
- With the country set to celebrate the second International Yoga Day (IYD) on June 21, the government has proposed instituting ‘Yoga medals’ for Central paramilitary troops for displaying exceptional skills in the ancient discipline for physical, mental and spiritual well being. It has also planned to re-employ retiring personnel of the Central Armed Police Forces as Master Yoga Trainers in order to create a constant resource pool of teachers for about 9 lakh personnel of the CRPF, the CISF, the ITBP, the SSB and the BSF.
- China has successfully launched its 23rd BeiDou Navigation Satellite to support its global navigation and positioning network. BeiDoU is being developed as an alternative to GPS of US. It has a total of 35 satellites.
- The World Day Against Child Labour was observed across world on 12 June to bring awareness against child labour. The observance seeks to bring together governments, employers and workers organizations, civil society, as well as millions of people from around the world to highlight the plight of child labourers and what can be done to help them. 2016 Theme: ‘End child labour in supply chains – It’s everyone’s business.’
