24th February, 2018-IAS Current Affairs
(DOWNLOAD THE PDF AT THE END OF THIS PAGE)
‘Financial Action Task Force’ (GS3: Global groupings and agreements)
Issue: The Financial Action Task Force (FATF) Plenary on February 23 decided to put Pakistan back on the “grey list,” subjecting it to direct monitoring and intense scrutiny by the International Co-operation Review Group (ICRG) on terror financing Pakistan will, under a “Compliance Document,” now be required to furnish a fresh report to the International Co-operation Review Group (ICRG). Accordingly, the country will undergo a review at the next Plenary in June, when it would be presented a full action plan on how it is expected to crack down on terror groups banned by the UN Security Council. Pakistan had been on the same list from 2012 to 2015.
A move such as this could see Pakistan face financial strictures, and ratings downgrades by international banking and credit rating agencies until Islamabad carries out a full crackdown on terror groups
The Financial Action Task Force (on Money Laundering) (FATF), also known by its French name, Groupe d’action financière (GAFI), is an intergovernmental organization founded in 1989 on the initiative of the G7 to develop policies to combat money laundering. In 2001 the purpose expanded to act on terrorism financing. It monitors countries’ progress in implementing the FATF Recommendations by ‘peer reviews’ (‘mutual evaluations’) of member countries. The FATF Secretariat is housed at the headquarters of the OECD in Paris.
FATF was formed by the 1989 G7 Summit in Paris to combat the growing problem of money laundering. The task force was charged with studying money laundering trends, monitoring legislative, financial and law enforcement activities taken at the national and international level, reporting on compliance, and issuing recommendations and standards to combat money laundering. At the time of its formation, FATF had 16 members, which by 2016 had grown to 37.
In its first year, FATF issued a report containing forty recommendations to more effectively fight money laundering. These standards were revised in 2003 to reflect evolving patterns and techniques in money laundering.
The mandate of the organization was expanded to include terrorist financing following the September 11 terror attacks in 2001. India is one of the members of the FATF
In addition to FATF’s “Forty plus Nine” Recommendations, in 2000 FATF issued a list of “Non-Cooperative Countries or Territories” (NCCTs), commonly called the FATF Blacklist. This was a list of 15 jurisdictions that, for one reason or another, FATF members believed were uncooperative with other jurisdictions in international efforts against money laundering (and, later, terrorism financing). Typically, this lack of cooperation manifested itself as an unwillingness or inability (frequently, a legal inability) to provide foreign law enforcement officials with information relating to bank account and brokerage records, and customer identification and beneficial owner information relating to such bank and brokerage accounts, shell company, and other financial vehicles commonly used in money laundering.
The effect of the FATF Blacklist has been significant, and arguably has proven more important in international efforts against money laundering than has the FATF Recommendations. While, under international law, the FATF Blacklist carried with it no formal sanction, in reality, a jurisdiction placed on the FATF Blacklist often found itself under intense financial pressure.
‘Lokpal’ (GS2: Government policies and interventions and issues arising out of their design and implementation)
Issue: The government will invite the leader of the single largest Opposition party to attend a meeting scheduled for March 1 to discuss the long-pending appointments to the anti-corruption ombudsman, Lokpal.
The idea of creating an anti corruption ombudsman, in the form of a Lokpal, was first conceptualized in 1968 in the fourth Lok Sabha.
The Bill as passed by Parliament creates a Lokpal at the centre which shall consist of a chairperson and up to eight members. Half of these members should have higher judicial experience and the other half should have experience in public administration, finance, insurance and banking laws, anti corruption and vigilance. It also provides that half the members of Lokpal shall be from amongst scheduled castes, scheduled tribes, other backward castes, minority communities and women. The chairman and members of Lokpal shall be appointed by a selection committee consisting of the Prime Minister, the Speaker of Lok Sabha, the Leader of Opposition in Lok Sabha, the Chief Justice of India or a sitting supreme court judge as nominated by the CJI and an eminent jurist to be nominated by the President based on the recommendations of the other members of the selection committee. The Bill specifies that the office of Lokpal shall investigate and prosecute cases of corruption. The jurisdiction of Lokpal extends to the Prime Minister, Ministers, current and former Members of Parliament and Members of Legislative Assemblies, government employees and employees of companies funded or controlled by the central or state government. Lokpal shall also have jurisdiction over institutions receiving foreign donations in excess of ten lakh rupees per year or such higher limit as specified. The Bill excludes, any allegation of corruption against a Member of Parliament in respect of anything said or a vote given in Parliament, from the jurisdiction of Lokpal.
It specifies a time limit of 60 days for completion of inquiry and 6 months for completion of investigation by the Central Bureau of Investigation. This period of 6 months can be extended by the Lokpal on a written request from CBI. Lokpal is also required to hear the explanation of the public servant before ordering an investigation. This however would not interfere with any search and seizure required to be undertaken by any agency. The bill also specifies that any inquiry against the Prime Minister has to be held in-camera and approved by two third of the full bench of the Lokpal. The Bill gives Lokpal the power of superintendence over CBI with respect to cases referred by it to CBI. It also specifies that CBI officers investigating cases referred by the Lokpal can only be transferred with the approval of the Lokpal. It proposes establishment of a Directorate of prosecution within CBI to be headed by Director who is an officer not below the rank of joint secretary for conduction prosecution of cases under the Lokpal Bill. The director of prosecution shall be appointed by the government on the recommendation of the Central Vigilance Commission. The CBI with the consent of Lokpal is empowered to appoint a panel of advocates, other than government advocates for conducting cases referred by Lokpal. The central government is entrusted with the responsibility of making funds available to CBI for conducting investigation into Lokpal referred matters. All expenses of Lokpal shall be charged to the Consolidated Fund of India.
The legislation provides an imprisonment of up to seven years for public servants on grounds of corruption. Criminal misconduct and habitually abetting corruption has a higher penalty and would result in imprisonment up to ten years. Making false and frivolous complaints to Lokpal would result in a fine of up to one lakh rupees and imprisonment of up to one year. In addition a person who is convicted for having made a false complaint shall be liable to compensate the public servant against whom the false complaint was made. However complaints made in good faith, that is with due care, caution and a sense of responsibility will be excluded from penalty.
‘TAPI’ (GS3: Infrastructure pertaining to Energy needs of India)
Issue: Turkmenistan, Afghanistan, Pakistan and India (TAPI) on Friday ceremonially broke ground on the Afghan section of an ambitious, multi-billion dollar gas pipeline, expected to help ease energy deficits in South Asia.
The Turkmenistan–Afghanistan–Pakistan–India Pipeline (TAPI), also known as Trans-Afghanistan Pipeline, is a natural gas pipeline being developed by the Galkynysh – TAPI Pipeline Company Limited with participation of the Asian Development Bank. The pipeline will transport natural gas from the Galkynysh Gas Field in Turkmenistan through Afghanistan into Pakistan and then to India.
The 1,814-kilometre (1,127 mi) pipeline will run from gas fields in Turkmenistan through Afghanistan and Pakistan to India. It starts from the Galkynysh gas field. In Afghanistan, TAPI pipeline will be constructed alongside the Kandahar–Herat Highway in western Afghanistan, and then via Quetta and Multan in Pakistan. The final destination of the pipeline will be the Indian town of Fazilka, near the border between Pakistan and India
‘Institute of Chartered Accountants of India’ (GS3: Indian Economy)
Issue: The Institute of Chartered Accountants of India (ICAI), a state-controlled regulator for the sector, has said it is probing whether auditors played a role in perpetrating the alleged Rs11,400 crore fraud that Punjab National Bank unearthed recently
The ICAI, which functions under the administrative control of India’s Ministry of Corporate Affairs, said it has set up a committee to study the systemic lapses that contributed to the fraud and to suggest remedial measures and improvement.
The Institute of Chartered Accountants of India (ICAI) is a statutory body established by an Act of Parliament, viz. the Chartered Accountants Act, 1949 (Act No.XXXVIII of 1949) for regulating the profession of Chartered Accountancy in the country. The Institute, functions under the administrative control of the Ministry of Corporate Affairs, Government of India. The ICAI is the second largest professional body of Chartered Accountants in the world, with a strong tradition of service to the Indian economy in public interest.
The affairs of the ICAI are managed by a Council in accordance with the provisions of the Chartered Accountants Act, 1949 and the Chartered Accountants Regulations, 1988. The Council constitutes of 40 members of whom 32 are elected by the Chartered Accountants and remaining 8 are nominated by the Central Government generally representing the Comptroller and Auditor General of India, Securities and Exchange Board of India, Ministry of Corporate Affairs, Ministry of Finance and other stakeholders.
Over a period of time the ICAI has achieved recognition as a premier accounting body not only in the country but also globally, for maintaining highest standards in technical, ethical areas and for sustaining stringent examination and education standards. Since 1949, the profession has grown leaps and bounds in terms of members and student base.
- Regulate the profession of Accountancy
- Education and Examination of Chartered Accountancy Course
- Continuing Professional Education of Members
- Conducting Post Qualification Courses
- Formulation of Accounting Standards
- Prescription of Standard Auditing Procedures
- Laying down Ethical Standards
- Monitoring Quality through Peer Review
- Ensuring Standards of performance of Members
- Exercise Disciplinary Jurisdiction
- Financial Reporting Review
- Input on Policy matters to Government
‘Non-Banking Financial Company (NBFC) Ombudsman’
Issue: In a bid to provide a cost-free and expeditious complaint redressal mechanism related to deficiency in services by NBFCs, the Reserve Bank of India (RBI) has launched the Ombudsman Scheme for NBFCs for redressal of complaints against non-banking financial companies registered with the RBI under Sec 45-IA of the RBI Act, 1934. The scheme is being introduced with effect from Feb 23, 2018.
Need for an ombudsman
To promote required credit culture among the Non-Banking Financial Companies and to regulate the credit system of the country to its advantage, it is necessary to provide for a system of Ombudsman for redressal of complaints against deficiency in services concerning deposits, loans and advances and other specified matters
Who is the NBFC Ombudsman?
The NBFC Ombudsman is a senior official appointed by the RBI to redress customer complaints against NBFCs for deficiency in certain services covered under the grounds of complaint specified under Clause 8 of the Scheme. At present 4 NBFC Ombudsman have been appointed with their offices located in Chennai, Kolkata, New Delhi and Mumbai.
Jurisdiction of NBFC ombudsman
The NBFCs which are authorized to accept deposits or have customer interface, with assets size of Rs 1 billion or above, are covered under the scheme. The scheme initially covers NBFCs authorized to accept deposits and would be gradually extended to cover other identified NBFCs. However, Non-Banking Financial Company – Infrastructure Finance Company (NBFC-IFC), Core Investment Company (CIC), Infrastructure Debt Fund – Non-banking Financial Company (IDF-NBFC) and NBFCs under liquidation are excluded from the ambit of the scheme.
Guidelines have also been mentioned regarding the grounds of complaints and other related issues
Rashtriya Sanskriti Mahotsav’ under ‘Ek Bharat Shrestha Bharat’ (GS1: Indian Culture)
To celebrate the idea of unity in diversity, Ministry of Culture is organising a Rashtriya Sanskriti Mahotsav under the Ek Bharat Shrestha Bharat
The Mahotsav will cover a profusion of art forms from classical and folk music and dance, theatre to literature and the visual arts and would offer the chance to experience the best in established and emerging virtuosity.A handloom and handicrafts-utsav is part of the proposed event.
Ek Bharat Shreshtha Bharat
The broad objectives of the initiative are as follows
1. To CELEBRATE the Unity in Diversity of our Nation and to maintain and strengthen the fabric of traditionally existing emotional bonds between the people of our Country;
2. To PROMOTE the spirit of national integration through a deep and structured engagement between all Indian States and Union Territories through a year-long planned engagement between States;
3. To SHOWCASE the rich heritage and culture, customs and traditions of either State for enabling people to understand and appreciate the diversity that is India, thus fostering a sense of common identity
4. TO ESTABLISH long-term engagements and,
5. TO CREATE an environment this promotes learning between States by sharing best practices and experiences
Ministry of Culture is the nodal agency for this programme
‘India-Germany Ties’ (GS2: Bilateral Relations)
Issue: An Indo-German MOU has been signed for an “Implementation Agreement in Sustainable Urban Development and Smart Cities in India
he objective of the programme is to develop and apply concepts for sustainable urban development about the provision of urban basic services and housing in selected cities and Smart Cities in India
About Smart City Mission
Smart Cities Mission is an urban renewal and retrofitting program by the Government of India with the mission to develop 100 cities across the country making them citizen friendly and sustainable. The Union Ministry of Urban Development is responsible for implementing the mission in collaboration with the state governments of the respective cities.
Smart Cities Mission envisions developing an area within 100 cities in the country as model areas based on an area development plan, which is expected to have a rub-off effect on other parts of the city, and nearby cities and towns. Cities will be selected based on the Smart Cities challenge, where cities will compete in a countrywide competition to obtain the benefits from this mission. As of January 2018, 99 cities have been selected to be upgraded as part of the Smart Cities Mission after they defeated other cities in the challenge.
It is a five-year program, where all of the Indian states and Union territories are participating, except West Bengal, by nominating at least one city for the Smart Cities challenge. Financial aid will be given by the central and state governments between 2017-2022 to the cities, and the mission will start showing results from 2022 onwards.
Each city will create a corporate company, headed by a full-time CEO, to implement the Smart Cities Mission. The execution of projects may be done through joint ventures, subsidiaries, public-private partnership (PPP), turnkey contracts, etc suitably dovetailed with revenue streams. Centre and state government will provide INR 1,000 Crore funding to the company, as equal contribution of INR 500 crore each. The company has to raise additional funds from the financial market as a debt or equity.