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 Why in news?

P-notes (Participatory notes) hit a 31-month high in November 2020, with the value of outstanding P-notes reaching Rs. 83,114 crore.

What are P-notes?

• Foreign portfolio investment (FPI) is a common way to invest in overseas economies.
• It includes securities and financial assets held by investors in another country.
• P-notes are issued by foreign portfolio investors (FPIs) registered with SEBI to overseas investors who are not registered as FPIs in India.
• In this, the final owner can be concealed from regulators.
• This anonymity provided by P-notes had led to entities using this route to round-trip funds.

What are the recent developments?

• P-notes have gained notoriety on account of their rampant misuse prior to 2008.
• The value of outstanding P-notes had exceeded 50% of FPI assets in late 2007.
• This led to SEBI clamping down on the issuances of, and disclosure and trading in, these instruments.
• Outstanding P-notes have reduced sharply since then.

Is increase in outstanding P-notes a problem?

• There is no real cause for alarm in the value of outstanding P-notes increasing.
• These instruments account for only 2% of FPI assets currently.
• The increase in value of outstanding P-notes can be explained by two factors:
  1. the rally in stock prices has resulted in inflating the value of existing P-note holdings
  2. there has been a great surge in FPI inflows this fiscal, with investments so far exceeding Rs. 2,42,000 crore
• So, increase in outstanding P-notes implies higher overseas demand for Indian stocks.
• Despite the impact of the pandemic on the economy, foreign investors have preferred Indian equities.
• This is due to the country’s demographic advantage and its consumption-led growth.
• Foreign investors already registered with SEBI can easily increase their investments into the Indian market at such times.
• But, those yet to obtain registration may prefer the P-note route for its speed and lower compliance requirements.
• It further needs to be noted that there are no P-notes issued on derivatives outstanding now.
  • Derivatives are securities that derive their value from an underlying asset or benchmark.
  • P-notes on derivatives are the riskiest.
  • This is because they are used by hedge funds and large traders in the international market who tend to move in and out of stocks very rapidly.
  • This may cause great volatility in stock prices.
• Since no P-notes issued on derivatives outstanding now, SEBI need not worry about scrutinising the P-note inflows or tightening the rules governing these instruments.
• However, this cannot be said about rules governing FPIs.

What are the reforms in this regard?

• SEBI has, of late, been trying to simplify rules governing FPIs which can dilute the existing checks against money laundering through this route.
• E.g. the re-categorisation of FPIs in 2018, wherein more institutional investors and funds were categorised as Category I FPIs needing lower compliance and KYC checks
• Similarly, SEBI simplified the registration of multiple investment managers.
• It also did away with the broad based eligibility criteria for institutional foreign investors.
• But these reforms could possibly lead to trouble.
  • Funds from overseas are necessary for increasing liquidity and better price discovery.
  • But the regulator cannot let down its guard on the kind of money that is entering India in the garb of FPIs.

Source: BusinessLines

1)  Election Commission rolls out digital voter ID cards “e-EPIC”

•The Election Commission has rolled out the electronic version of the voters’ photo identity card e-EPIC, which can be stored on mobile phones and downloaded on personal computers. The physical card takes time to print and reach the voter, and the idea is to provide faster delivery and easy accessibility to the document.

2)  Union Minister Nirmala Sitharaman opens NCLAT Chennai Bench

•Union Minister for Finance and Corporate Affairs Nirmala Sitharaman has virtually inaugurated the Chennai Bench of the National Company Law Appellate Tribunal (NCLAT). This will be the second NCLAT Bench in the country, after the Principal Bench in New Delhi.

3)  India Inks Strategic Partnership Agreement with IEA

•India has inked a strategic partnership agreement with the International Energy Agency (IEA), the world’s premier energy monitor, on 27 January 2021. The objective of the MoU is to strengthen cooperation in global energy security, stability and sustainability as well as strengthen mutual trust and cooperation between IEA members and the Government of India.

•The Memorandum of Understanding (MoU) was signed between Power Secretary Sanjiv Nandan Sahai and IEA Executive Director Fatih Birol. This deal will help India to gain full membership of IEA.

4)  India pledges $150,000 for UN Peacebuilding Fund for 2021

•India has announced a pledge of USD 150,000 to the United Nations Peacebuilding Fund (PBF) for the year 2021 to support the activities and programs this year. The Peacebuilding Fund has put forth its five-year strategy, which requires 1.5 billion dollars for 2020-2024. This was announced by TS Tirumurti, India’s permanent representative to the United Nations on January 25, 2021.

•UN Secretary-General António Guterres expressed that he was grateful to the countries that committed to providing over $439 million in support of the UN’s work toward peacebuilding & conflict prevention through the UN Peacebuilding Fund.

5)  TCS ranks third most valued IT services brand globally

•Tata Consultancy Services (TCS) has been ranked third most-valued IT services brand globally, after Accenture and IBM, according to a report by Brand Finance. Third-ranked TCS is rapidly closing the gap with IBM following a healthy 11% brand value increase to USD 15 billion.  Accenture retained the title of world’s most valuable and strongest IT services brand with record brand value of USD 26 billion, while IBM continued at the second place with a brand value of USD 16.1 billion.

•Four Indian IT services companies have secured spots in the top-10 globally, namely, TCS (3), Infosys (4), HCL (7) and Wipro (9). Accenture has retained the title of world’s most valuable and strongest IT services brand with a brand value of $26 billion. 

6)  HSBC inaugurates international banking unit in Gujarat

•Global financial services major HSBC has inaugurated it’s International Banking Unit (IBU) branch at GIFT City near Gandhinagar city in Gujarat. HSBC is one of the earliest global financial institutions setting up a branch at India’s GIFT City and was the first bank to get a licence from the newly set up International Financial Services Centres Authority (IFSCA). HSBC’s IBU branch at Gujarat International Finance Tec-City (GIFT City) will be operational for customer transactions with effect from January 27.

7)  Dhanlaxmi Bank Board approves appointment of J K Shivan as MD and CEO

•Board of Directors of Kerala-based Dhanlaxmi Bank have given the approval to appoint J K Shivan as managing director and CEO of the Bank. It may be recalled that the shareholders of the Kerala-based had voted against MD & CEO Sunil Gurbaxani On September 30, 2020. Then, in December that year, the lender appointed Shivan as the new MD & CEO.

•However, the banking regulator, Reserve Bank of India (RBI), had asked the Dhanlaxmi Bank Board to get shareholders’ approval before appointing J K Shivan as the next chief of the bank.

📰 Conservationist joins SC panel on elephant corridor case

1)  International Customs Day: 26 January

•The International Customs Day (ICD) is observed on 26 January every year. The day is celebrated to recognise the role of customs officials and agencies and focus on the working conditions and challenges that customs officers face in their jobs. This year International Customs Day theme: “Customs bolstering Recovery, Renewal and Resilience”.

2)  International Day of Commemoration in memory of the victims of the Holocaust

•International Day of Commemoration in memory of the victims of the Holocaust (International Holocaust Remembrance Day) is observed on 27 January every year since 2006 to commemorate the anniversary of the tragedy of the Holocaust that occurred during the Second World War. A genocide occurred during World War II in which Nazi Germany, aided by its collaborators, systematically murdered some six million European Jews, around two-thirds of the Jewish population of Europe, between 1941 and 1945.

•The theme of the International Holocaust Remembrance Day 2021 is “Facing the Aftermath: Recovery and Reconstitution after the Holocaust”.

3)  India Ranks 7th in Global Climate Risk Index 2021 of Germanwatch

•India has been placed among the top 10 most affected countries by climate change, in the Global Climate Risk Index 2021 published by the Bonn-based environmental think tank Germanwatch. India ranked as the seventh worst-hit country in terms of climate change in 2019.

•The Global Climate Risk Index 2021 is the 16th edition of the annual report and has taken into account the data available for 2019 and from 2000 to 2019. The index analyses and ranks to what extent countries and regions have been affected by impacts of climate-related extreme weather events (storms, floods, heatwaves etc.)

•Top 3 countries: Mozambique, Zimbabwe and Bahamas were the top three most affected countries in 2019 respectively.

•Top 3 Countries most affected in the past 20 years: Between 2000-2019, Puerto Rico, Myanmar and Haiti were the countries most affected by the impacts of such weather events.

4)  SpaceX breaks ISRO’s Record by launching 143 Satellites

•SpaceX successfully launched its ambitious rideshare mission called Transporter-1, carrying 143 small satellites, and created a new record of launching many satellites from a single rocket. With this launch, SpaceX broke the record set by ISRO in February 2017 for deploying 104 satellites onboard PSLV in a single mission.

•The SpaceX used two-stage Falcon 9 rocket for the mission, from the Space Launch Complex 40 at Cape Canaveral Space Force Station in Florida. The 143 satellites included 133 commercial and government satellites and 10 Starlink satellites of SpaceX.

5)  CM Shivraj Singh Chouhan launches ‘PANKH Abhiyan’ for Girl Child

•In Madhya Pradesh, Chief Minister Shivraj Singh Chouhan has launched a new scheme ‘PANKH Abhiyan’ on 24 January, to mark the occasion of National Girl Child Day. The scheme has been launched under the ‘Beti Bachao Beti Padhao’ scheme for the empowerment and growth of the girl child. The CM also announced scholarships worth Rs 6.47 crore for 26,099 girls under Ladli Laxmi Yojana.

‘PANKH Abhiyan’ is a year-long programme. The letter in the PANKH scheme stands for:

‘P’ – protection

‘A’ – awareness of their rights

‘N’ – nutrition

‘K’ – knowledge

‘H’ – health.

6)  UP becomes first Indian State to have 2 Expressway airstrips

•In Uttar Pradesh, a new 3,300-metre-long airstrip has been constructed near Kurebhar on Purvanchal Expressway. With this new airstrip, Uttar Pradesh has become the first state in India having two airstrips on expressways. Uttar Pradesh also has an airstrip on Lucknow-Agra Expressway. Airstrips on expressways are designed to facilitate emergency landing and take-off of fighter planes.

7)  Portugal President Marcelo Rebelo de Sousa wins second term

•The incumbent President of Portugal, Marcelo Rebelo de Sousa has won a second five-year term after winning the 2021 Portuguese presidential election with a landslide victory. The 72-year-old former leader of the Social Democratic Party won 61 per cent of the total votes. He is serving as the President of the country since 9 March 2016 and would start his second term on March 9, 2021.

8)  China surpasses United States as largest recipient of FDI

•China was the largest recipient of foreign direct investment (FDI) in 2020, according to a report released by the United Nations Conference on Trade and Development (UNCTAD). China overtook the United States to gain the top position in 2020. The country attracted $163 billion inflows in 2020, compared to $134 billion attracted by the United States.

•However, in 2019, the United States had received $251 billion in inflows and China received $140 billion. Overall, the global FDI had fallen by 42% in 2020, attracting an inflow of an estimated $859 billion, compared to $1.5 trillion in 2019.

9)  Indian Navy conducts exercise AMPHEX – 21 with Army and Air Force

•A large-scale tri-service joint amphibious exercise AMPHEX – 21 was held in Andaman & Nicobar group of islands. The exercise involved the participation of troops of Army, Navy as well as the Indian Air Force. The exercise was aimed at validating India’s capabilities to safeguard the territorial integrity of its island territories. The joint force executed multi-domain, high-intensity offensive and defensive manoeuvres in the Andaman Sea and Bay of Bengal.

10)  IMF revises India’s growth forecast to -8% in FY21

•The International Monetary Fund (IMF) has pegged the Indian economy to contract by 8 per cent in the current financial year 2020-21, in its latest World Economic Outlook, released on 26 January 2021. The IMF expects GDP of India to rise to 11.5 per cent in the next financial year i.e. 2021-22.

•Apart from this, the IMF projected the global growth to contract at 3.5 per cent in 2020. The global economy is projected to grow by 5.5 per cent in 2021 and 4.2 per cent in 2022 as per the IMF.

11)  DRDO successfully conducts maiden test launch of Akash-NG Missile

•The Defence Research and Development Organisation (DRDO) conducted successful maiden launch of Akash-NG (New Generation) Missile from Integrated Test Range off the coast of Odisha. Akash-NG is a new generation Surface-to-Air Missile for use by Indian Air Force (IAF) with an aim of intercepting high manoeuvring aerial threats. The launch met all the test objectives by performing high maneuvers during the trajectory.

•The performance of the Command and Control system, onboard avionics and aerodynamic configuration of the missile was successfully validated during the trial. The Multi Function Radar was tested for its capability of integration with the system. The Akash-NG system has been developed with better deployability compared to other similar systems with canisterized launcher and much smaller ground system footprint.

12)  Rajendra Kumar Bhandari wins Subhash Bose Aapda Prabandhan Puraskar 2021

•The Subhash Chandra Bose Aapda Prabandhan Puraskar 2021 has been conferred upon Dr Rajendra Kumar Bhandari in the Individual category and Sustainable Environment and Ecological Development Society (SEEDS) in Institutional category. The award carries a cash prize of Rs 51 lakh and a certificate for an institution and Rs 5 lakh and a certificate in case of an individual.

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Vision IAS Prelims 2021 Test 1 With Solution in Hindi PDF