📰 SBI to offer home loan linked to repo rate
Scheme will be introduced on July 1
•Home loan shoppers will have a new product to opt for come July 1. The State Bank of India will introduce a product where the interest rate is linked to the repo rate of the Reserve Bank of India.
•Repo rates are benchmark rates set by the RBI and those opting for the SBI’s new home loan product will see interest rates moving instantly in sync with the repo rate. Now, the SBI’s home loan rates are linked to its marginal cost of funds based lending rate (MCLR) due to which transmission of rate cuts are slower. All banks link their retail lending rates to their MCLR rates. The SBI has also cut by 25 basis points (bps) its rates on cash credit and overdraft accounts of over ₹1 lakh linked to the repo rate.
•Also, Bank of Maharashtra reduced its lending rate by 10 bps to 8.6%. The interest rate will come down for all loans having a residual maturity of more than six months, the lender said.
The order restrained students from changing their original option/preference for seats for the academic year 2019-2020
•An application was filed in the Supreme Court on Friday for a modification of its June 4 order restraining students from changing their original option/preference for seats in the postgraduate medical and dental courses in Maharashtra for the academic year 2019-2020.
•The application sought that the court allow students to seek a fresh choice of seats, including seats reverted from the Economically Weaker Sections (EWS) category to general category.
•The application said seats should be allotted to already registered and qualified medical students during manual (physical) counselling, in accordance with merit, without insisting upon previous choice/options exercised by the applicants.
•The application filed by Sagar Damodar Sarda said the original exercise of options by the applicants and other qualified students “cannot be termed a valid exercise in facts of the given case when the said exercise was itself restricted by operation of EWS quota, which is now not applicable for the current academic year.”
•It said the “provisional seat position of postgraduate courses in government/ government-aided/ BMC and central government medical colleges, published by the Government of Maharashtra, State Common Entrance Cell would further reveal that there were several seats, discipline wise – college wise which were earmarked for EWS students (only); before the said reservation scheme (for EWS) was directed not to be applicable for this academic year 2019-2020” by the apex court on May 30.
•The application alleged that the authorities, even after the issuance of directions by the court, did not call for fresh choice-filing, to enable students in order of merit to participate afresh in the recounseling process.
•“The inaction has seriously prejudiced rights of the applicants and is arbitrary and malfide exercise of powers; antithesis to the concept of rule of law,” the application submitted.
•On June 4, the court directed the Maharashtra government to hold the last round of physical counselling for postgraduate medical and dental seats by June 14.
•The June 4 order followed an interim direction in May to the State to not implement the 10% economic quota for the admissions for the 2019-20 academic year. The government had issued two notifications in February and March 2019 to implement the 10% reservation for the economically-deprived classes. They were stayed by the court in a recent order.
•The court had slammed the government for “creating a mess” and troubling candidates who aspire to become postgraduates.
📰 Dissenting view not part of final order, says EC
•The Election Commission has issued a formal directive, ruling that dissenting opinion in the Model Code of Conduct violation cases will not be included in the final order. Only the majority or unanimous decision will be communicated to the parties.
•The written order dated June 4 follows the EC’s decision on May 21, rejecting Election Commissioner Ashok Lavasa’s demand that minority view be reflected in the final order.
Lavasa’s plea
•The issue had come up before the full bench after Mr. Lavasa objected to his dissenting opinion not being included in the orders.
•Mr. Lavasa had given dissenting views in at least five matters pertaining to speeches by Prime Minister Narendra Modi and BJP president Amit Shah during the campaigning for the Lok Sabha election.
📰 Draft National Education Policy moots all-India entrance tests for UG courses in public colleges
The system seems to have some similarities to the SAT, a standardised aptitude test widely used for admissions to colleges and universities in the United States. The SAT, however, is used as a criterion alongside school grades.
•Admission to undergraduate courses in all government-funded universities and colleges will soon be through all-India entrance tests, if the draft National Education Policy is approved. Private institutes will also be strongly encouraged to make use of the common admission tests, which will be available from 2020. Both aptitude and subject knowledge-based tests will be offered.
•The system seems to have some similarities to the SAT, a standardised aptitude test widely used for admissions to colleges and universities in the United States. The SAT, however, is used as a criterion alongside school grades.
•In India, the common entrance test has largely been the domain of aspirants to professional or post-graduate courses, but that is already changing. The new National Testing Agency (NTA) has already conducted premier professional entrance tests — JEE, NEET, and CMAT — this year. Later this month, the NTA will also conduct admission tests for applicants to more than 170 Delhi University (DU) courses, including 12 undergraduate programmes.
•These DU students could well be the pioneers of a new era in undergraduate admission if the draft Policy is implemented.
•“Admission to all undergraduate programmes of public HEIs [or Higher Education Institutions] will be through a process of assessment through the NTA,” says the draft Policy. This seems to indicate that the NTA assessment will replace Class 12 marks as the criteria for admission to these government funded institutions. “This will help to eliminate the intensity, stressfulness, and wasted time of the Grade 12 examination season faced by students every year as well as by so many higher educational institutions and employers,” it adds.
•The NTA testing system will offer flexibility. “[From] 2020 onwards, [the NTA] will administer aptitude tests and tests in specific subjects that can be taken on multiple occasions during the year in order to reduce the intense and unnecessary pressures of the university entrance examinations system,” adds the draft Policy. “The NTA tests will aim to assess essential concepts, knowledge, and higher order skills from the national common curriculum as per the NCF in each subject, for the purpose of aiding colleges and universities in their admissions decisions.”
•Private institutions can set their own criteria, but “most educational institutions and many employers will be encouraged to use these NTA tests”, according to the draft Policy.
•The draft projects that the NTA will establish test centres across the country, offering tests in multiple languages. The preferred mode of testing will be computer-based, though it is unclear if this means multiple choice tests only. Ultimately, NTA tests should be credible for admission not only to universities and colleges across India, but other countries as well. The NTA’s vast assessment database could also be used for research and policy making, adds the draft Policy.
📰 RBI revises stressed asset resolution norms
Introduces ‘review period’ of 30 days to recognise default
•After the Supreme Court struck down the controversial February 12, 2018 circular of Reserve Bank of India (RBI) on stressed asset resolution, the banking regulator on Friday released revised set of norms which are substantially less stringent from the previous one.
•In particular, neither there is a mandate to start resolution which results in higher provisioning if there is a single day default nor a mandate for initiating insolvency proceeding if resolution plan is not implemented for large accounts within a time frame. However, the RBI has sought to nudge banks towards the insolvency courts by introducing a disincentive in the form of additional provisions for delayed resolution.
•At the same time, the central bank said it would issue directions to banks for initiation of insolvency proceedings against borrowers for specific defaults ‘so that the momentum towards effective resolution remains uncompromised.’
•The new circular asked lenders to undertake a prima facie review of the borrower account within 30 days from a default, which is termed as “review period.”
•During this review period, lenders may decide on the resolution strategy, including the nature of the resolution plan (RP), the approach for implementation of the RP etc.
Legal proceedings
•“The lenders may also choose to initiate legal proceedings for insolvency or recovery,” the circular, which comes into effect immediately, said.
•If the RP is to be implemented, lenders have been asked to enter into an inter-creditor agreement (ICA), within the review period, to provide for ground rules for finalisation and implementation of the RP.
•“The ICA shall provide that any decision agreed by lenders representing 75% by value of total outstanding credit facilities (fund-based as well as non-fund based) and 60% of lenders by number shall be binding upon all the lenders,” the circular said. The RP will have to implemented within 180 days from the end of review period, RBI said.
•The review period shall commence not later than the date of the this circular for loans above Rs. 2000 crore; January 1 ,2020 for loans above Rs. 1,500 crore to Rs. 2,000 crore.
•For loans less than Rs. 1,500 crore, the reference date would be announced later.
•There is a disincentive for banks if they delay implementing a viable resolution plan. In case the plan is not implemented within 180 days from the end of review period, banks have to make additional provision of 20% and another 15% if the plan is not implemented within 365 days from the start of the review period.
•The additional provisions would be reversed if resolution is pursued under Insolvency and Bankruptcy Code (IBC).
•Half of the additional provisions could be reversed on filing of insolvency application and the remaining additional provisions may be reversed once case is admitted for insolvency proceedings.
•“Incentives to reverse 50% of these provisions upon reference under IBC will incentivise lenders to refer such stressed cases to IBC for faster resolution,” says Karthik Srinivasan, group head, financial sector ratings ICRA, who thinks the overall framework is positive and will continue to incentivise banks for accelerated resolution of stressed assets.
•Debt recast tools like corporate debt restructuring scheme and strategic debt restructuring scheme are withdrawn. Apart from banks, these new norms are also applicable for non-banking financial companies, small finance banks and other financial institutions.
📰 SEBI, MCA sign pact for more data scrutiny
MoU to enable seamless sharing of data to carry out investigation, prosecution
•The Securities and Exchange Board of India (SEBI) and the Ministry of Corporate Affairs (MCA) signed a memorandum of understanding (MoU) to facilitate seamless sharing of data and information for carrying out scrutiny, inspection, investigation and prosecution.
•This assumes significance as the MCA has the database of all registered firms while SEBI only regulates listed entities that may have unlisted subsidiaries, with the MCA having access to all the data of such unlisted entities.
‘Backdrop of frauds’
•“The MoU comes in the wake of increasing need for surveillance in the context of corporate frauds affecting important sectors of the economy. As the private sector plays an increasingly vital role in economic growth, the need for a robust corporate governance mechanism becomes the need of the hour,” said a statement issued by the SEBI on Friday.
•Incidentally, there is already a protocol of sharing of data between the capital markets regulator Ministry and, in many cases, the regulator has also sent its orders against various entities to the MCA for further action.
•According to the SEBI statement, the MoU will facilitate the sharing of data and information between the regulator and the MCA on an automatic and regular basis, while enabling sharing of specific information such as details of suspended companies, delisted firms, shareholding pattern from the SEBI and financial statements filed with the Registrar by corporates, returns of allotment of shares and audit reports relating to corporates.
•The MoU will ensure that both the MCA and the SEBI have seamless linkage for regulatory purposes and in addition to regular exchange of data, the two will also exchange with each other, on request, any available information for scrutiny, inspection, investigation and prosecution.
•A Data Exchange Steering Group will meet periodically to review the data exchange status.
📰 NPP first from N-E to get national party status
Becomes the 8th national party
•The Election Commission of India on Friday declared the National People’s Party led by Meghalaya Chief Minister Conrad K. Sangma as a national party.
•This made the NPP, formed by his father and former Lok Sabha Speaker Purno A. Sangma in 2013, the first from the north-eastern region to earn the tag.
Four States
•In its order, the ECI said that the NPP was given the national party status for fulfilling conditions such as polling more than 6% of the total votes in the last general election and being recognised as a State party in at least four States.
•The NPP is recognised as a State party in Arunachal Pradesh, Manipur, Meghalaya and Nagaland.
•“Glad to announce to our party supporters, well-wishers and members of NPP that #ElectionCommissionOfIndia has accorded ‘National Party’ status to National People’s Party,” the Meghalaya Chief Minister said in a Twitter message. “It is a very nostalgic moment for all of us,” he said in Meghalaya capital Shillong. The NPP is the single largest political family in Meghalaya with 21 MLAs in the 60-member House. Mr Sangma heads the coalition government there.
•The party has five MLAs in Arunachal Pradesh and four in Manipur. It had two MLAs in Nagaland until they merged with the ruling Nationalist Democratic Progressive Party earlier this year.
•Before NPP’s elevation, India had seven national parties. Trinamool Congress, led by West Bengal Chief Minister Mamata Banerjee, became the seventh in September 2016.
📰 Monsoon likely to be ‘below normal’
Deficit rains are likely to spill into July, says Skymet report
•The monsoon this year is expected to be ‘below normal’, which is 93% of the long period average of 887 mm of rainfall between June and September, according to the Kharif Estimate 2019, released by Skymet on Friday.
•The report also indicated that soyabean and cotton production is likely to go up, as paddy cultivation is expected to go down this kharif season. “In terms of geographical risk, we expect east India along with a major portion of central India to be at a higher risk of being rain deficient, especially during the first half of the season,” the report said.
•Skymet Weather Services, a leading weather and agriculture risk monitoring company, said that the Pacific Ocean had become strongly warmer than average. “The model projections call for 80% chance of El Nino during March-May, dropping to 60% for June to August. This means, it is going to be a devolving El Nino year, though retaining threshold value all through the season,” it said.
•According to the report, June is going to be sluggish, and deficit rains are likely to spill into July. Second half of the season would see better rainfall and August is expected to be a shade better than September. Both months would manage to see normal rains. Live storage of water in 91 reservoirs as per May 30 bulletin, is 114% of the same period last year. The Central Monitoring Commission keeps tab on the status of these reservoirs every week. Live storage available in these reservoirs is 31.65 BCM, which is 20% of the total live storage capacity of these reservoirs.
•Deficient rains, it said, were expected over Bihar, Jharkhand, West Bengal along with central parts of the country predominantly Vidarbha, Marathwada, southern parts of Madhya Pradesh and some parts of Gujarat. “With below normal monsoons, the possibility of deficient and largely deficient rains is more than 40% in 66% districts of the country,” the report said.
•The Skymet data revealed that between January and April, India received 10% lower than normal rainfall for the period. Winter rains (January and February) was 24% higher than the normal while pre-monsoon showers (March and April) were 30% lower than the normal rainfall for the period. “With 50% of India’s population dependent on agriculture and more than 50% of the cultivable area being rain-fed, the farm economy could be in a precarious situation with the ongoing rain deficiency,” it said.
•As per the analysis, 2019 being the second consecutive below normal monsoon year, yields will be adversely impacted in States such as Maharashtra, Gujarat, Karnataka, Andhra Pradesh and Telangana. These States are already under severe moisture stress, hence water scarcity at critical growth stages may damage the yield. In case of cotton, rains in September has the biggest impact on the yield. As per Skymet’s estimates and the monsoon forecast, expected national average yield will be 449 kg per hectare for Kharif 2019.
•Soybean and pulses in Maharashtra, groundnut in Gujarat, maize and turmeric in Telangana, paddy and groundnut in Andhra Pradesh are the competitive crops for cotton. Given the prices of cotton from last season and erratic and delayed rainfall in Maharashtra and Telangana, it is expected that some of these areas may shift towards cotton production this season. “Prices are expected to trade with firm undertone up to September 2019. Firm prices at the time of sowing is also expected to support higher area coverage under cotton,” it said.
•Similarly, paddy production the report said was likely to go down by about 4% in the upcoming Kharif season, to 97.78 as compared to the 101.96 million tonnes produced a year ago. In case of paddy, rains in July has the biggest impact on the yields. As per Skymet estimates and looking at forecast monsoon conditions, national average yield of paddy is expected to be around 2,545 kg per hectare.
📰 Food Corporation of India plans to boost storage space
•The Food Corporation of India (FCI) has commissioned a new roadmap to speed up silo construction to meet its target of 100 lakh tonnes of storage space by 2022.
•With record harvests and high procurement over the last few years, the FCI is sitting on a reserve stock of foodgrains that is almost double the required level, straining capacity and forcing the use of cover and plinth storage which is not entirely weather-proof.
•The previous government had constructed 6.75 lakh tonnes of storage capacity while work is ongoing for 22 lakh tonnes, said Food Minister Ram Vilas Paswan on Friday, adding that the reason for slow progress was due to the necessity of having 1.5 km rail sidings next to the silos. Engineering consultancy firm RITES Ltd. had been asked to prepare a roadmap for a new silo model within the next 90 days, he said.
•The FCI was also in talks with its unions to streamline its labour force and bring all 40,000 workers under a uniform direct payment system, Mr. Paswan added.
📰 International Space Station to be open to tourists from next year
A night’s stay is priced at $35,000 and travel costs $58 million
•U.S. space agency NASA said on Friday that it would open up the International Space Station to business ventures including space tourism — with stays priced at $35,000 a night — as it seeks to financially disengage from the orbiting research lab.
•“NASA is opening the International Space Station to commercial opportunities and marketing these opportunities as we’ve never done before,” NASA chief financial officer Jeff DeWit said in New York.
•There will be up to two short private astronaut missions per year, said Robyn Gatens, deputy director of the ISS.
•The missions will be for stays of up to 30 days. As many as a dozen private astronauts could visit the ISS per year, NASA said.
•These travellers would be ferried to the orbiter exclusively by the two companies currently developing transport vehicles for NASA: SpaceX, with its Crew Dragon capsule, and Boeing, which is building one called Starliner. These companies would choose the clients and bill for the trip to the ISS, which will be the most expensive part of the adventure: around $58 million for a round trip ticket.
•That is the average rate the companies will bill NASA for taking the space adventurers up to the ISS.
Food and life support
•The tourists will have to pay NASA for their stay in space, for food, water and use of the life support system on the orbiter.
•That will run about $35,000 per night per astronaut, said Mr. DeWit.
•The space station does not belong to NASA. It was built along with Russia starting in 1998, and other countries participate in the mission and send up astronauts.
•But the U.S. has paid for and controls most of the modules that make up the orbiter.
•The new space tourists to the ISS will not be the first: U.S. businessman Dennis Tito had that honour in 2001. He paid Russia around $20 million for the trip.
