YOJANA-Monthly Summary-JANUARY-2018



Insolvency and Bankruptcy Board of India issues Guidelines for Technical Standards for Core Services

Based on recommendations of the Technical Committee, the Insolvency and Bankruptcy Board of India (IBBI) has laid down the Technical Standards for the performance of Core Services for the following matters under Regulation 13 of the IBBI (Information Utilities) Regulations, 2017:

(i) standard terms of service,
(ii) registration of users;
(iii)  unique identifier for each record and each user;
(iv)  submission of information;
(v)  identification and verification of persons;
(vi)  authentication of information;
(vii)  verification of information;
(viii)  data integrity;
(ix)  consent framework for providing access to information to third parties;
(x)  security of the system;
(xi) security of information;
(xii) risk management framework;
(xiii) preservation of information; and
(xiv)  purging of information.

An information utility shall comply with the applicable Technical Standards, while providing services.

Foreign Exchange Management

  • For a long time, foreign exchange in India was treated as a controlled commodity because of its limited availability. The early stages of foreign exchange management in the country focused on control of foreign exchange by regulating the demand due to its limited supply.
  • Exchange control was introduced in India under the Defence of India Rules on September 3, 1939 on a temporary basis.
  • The statutory power for exchange control was provided by the Foreign Exchange Regulation Act (FERA) of 1947, which was subsequently replaced by a more comprehensive Foreign Exchange Regulation Act, 1973.
  • This Act empowered the Reserve Bank, and in certain cases the Central Government, to control and regulate dealings in foreign exchange payments outside India, export and import of currency notes and bullion, transfer of securities between residents and non-residents, acquisition of foreign securities, and acquisition of immovable property in and outside India, among other transactions.
  • Extensive relaxations in the rules governing foreign exchange were initiated, prompted by the liberalization measures introduced since 1991 and the Act was amended as a new Foreign Exchange Regulation (Amendment ) Act 1993.
  • Keeping in view the changed environment after significant developments in the external sector, such as, substantial increase in foreign exchange reserves, growth in foreign trade rationalization of tariffs, current account convertibility and liberalization of India investments abroad, the Foreign Exchange Management Act (FEMA) was enacted in 1999 to replace FERA.
  • FEMA became effective from June 1, 2000. FEMA aims at facilitating external trade and payments and for promoting the orderly development and maintenance of foreign exchange markets in India.
  • Emphasizing the shift in focus, the Reserve Bank in due course also amended (since January 31, 2004) the name of its department dealing with the foreign exchange transactions to Foreign Exchange Department from Exchange Control Department.

Cabinet approves India’s Membership for European Bank for Reconstruction & Development

The Union Cabinet chaired by the Prime Minister has approved India’s Membership for European Bank for Reconstruction & Development (EBRD). Membership of EBRD would enhance India’s international profile and promote its economic interests, give access to EBRD’s Countries of Operation and sector knowledge.

  • India’s investment opportunities would get a boost
  •  It would increase the scope of cooperation between India and EBRD through co-financing opportunities in manufacturing, services, information technology, and energy.
  • EBRD’s core operations pertain to private sector development in their countries of operation.  The membership would help India leverage the technical assistance and sectoral knowledge of the bank for the benefit of development of private sector.
  • This would contribute to an improved investment climate in the country.
  • The membership of EBRD would enhance the competitive strength of the Indian firms, and provide an enhanced access to international markets in terms of business opportunities, procurement activities, consultancy assignments etc.
  • This would open up new vistas for Indian professionals on the one hand, and give a fillip to Indian exports on the other.
  • Increased economic activities would benefit the employment generating potential.
  • It would also enable Indian nationals to get employment opportunity in the Bank.

The Insolvency and Bankruptcy Board of India (IBBI) notifies Regulations for handling of Grievances and Complaints.

  • The Insolvency and Bankruptcy Board of India (IBBI) notified the IBBI (Grievance and Complaint Handling Procedure)  Regulations, 2017 in the Gazette of India on 7th December, 2017.
  • The Regulations enable a Stakeholder, namely, debtor, creditor, claimant, service provider, resolution applicant or any other person having an interest in an insolvency resolution, liquidation, voluntary liquidation or bankruptcy transaction under the Insolvency and Bankruptcy Code, 2016 Code), to file a grievance or a complaint against a Service provider, namely, insolvency professional agency, insolvency professional, insolvency professional entity or information utility.
  • The Regulations provide for an objective and transparent procedure for disposal of grievances and complaints by the IBBI, that does not spare a mischievous service provider, but does not also harass an innocent service provider.
  • A Stakeholder may file a grievance that shall state the details of the conduct of the service provider that has caused the suffering to the aggrieved; details of suffering, whether pecuniary or otherwise, the aggrieved has undergone; how the conduct of the service provider has caused the suffering of the aggrieved; details of his efforts to get the grievance redressed from the service provider; and how the grievance may be redressed.
  • A stakeholder may file a complaint in the Specified Form along with a fee of Rupees Two Thousand and Five Hundred (2,500).  A complaint needs to state the details of the alleged contravention of any provision of the Code, or rules, regulations, or guidelines made there under or circulars or directions issued by the IBBI by a Service provider or its associated persons, along with date and place of such conduct or activity, which contravenes the provision of the law; and details of evidence in support of alleged contravention.  If the complaint is not frivolous or malicious, the fee will be refunded.
  • The Regulations have been effective from 7th December, 2017 .

What Are Haircuts in the Banking Systems?

A haircut is the difference between the loan amount and the actual value of he asset used as collateral. The haircut reflects the lender’s perception of the risk of fall in the value of assets. In the context of loan recoveries, it is the difference between the actual dues from a borrower and the amount he settles with the bank. Haircuts are used as a last resort when there is absolutely no hope of a recovery and the loan is written off for a one time settlement.


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