Daily Current Affairs 19 August 2020 | UPSC Current Affairs 2020

 Current Affairs Of Today Are

1) RBI unveils framework for retail payments entity

• The Reserve Bank of India (RBI) released a framework for setting up of a pan-­India umbrella entity for retail payment systems. 
• This entity, to be incorporated under the Companies Act, 2013, would need to focus on retail payments systems
• The umbrella entity will set up, manage, and operate new payment systems in the retail space comprising ATMs, white-label PoS, Aadhaar­based payments, and remittance services.
• The entity will operate clearing and settlement systems for participating banks and non­banks, identify and manage relevant risks, monitor retail payments system developments and related issues in the country, and internationally. 
• It will be the responsibility of the entity to frame necessary rules and the related processes to ensure that the system is safe and sound and that payments are exchanged efficiently. The entity will be permitted to participate in Reserve Bank’s payment and settlement systems, including having a current account with Reserve Bank, if required. The formation of the umbrella entity has been authorized under the Payment and Settlement Systems Act, 2007.

Background

• RBI as the regulator of payment and settlement systems in the country sets the necessary regulatory framework to ensure that different types of payment systems operate in a safe, secure, and efficient manner to meet the needs of varied segments of society. Reserve Bank authorizes Payment Systems in terms of powers vested with it by the Payment and Settlement Systems Act, 2007 (PSS Act).
• For many years in India, banks have been the traditional gateway to extend payment systems (to make a payment from one entity to another through cheques, RTGS, NEFT, etc). Over some time, given the demand for varied payment services and in keeping with the fast pace of technological changes, non-bank entities have also been permitted access to the payment space. These non-banks are co-operating, as well as, competing with banks, either as technology service providers to banks or by directly providing retail electronic payment services. Reserve Bank has been issuing guidelines for various payment systems and grants authorization to non-banks for setting up and operating payment systems. It may be noted that licensed banks also need to obtain specific permission from RBI for setting up and operating a payment system. This is because banking function is different and operating a "payment system" (which facilitates payment from one entity to another) is different. 

National Payments Corporation of India (NPCI)

• National Payments Corporation of India (NPCI), is such a non-bank payment system operator authorized by RBI to operate the following payment systems under the PSS Act 2007.
• Immediate Payment System (IMPS)
• Aadhar Enabled Payment System (AEPS)
• Rupay Cards
• National Automatic Clearing House (ACH)
• Linking of ATMs across India (some other operators are also involved)
• National Electronic Toll collection (It provides an electronic payment facility to the customer to make the payments at national, state and city toll plazas by identifying the vehicle uniquely through a FASTag)
• National Financial Switch
• NPCI is a ‘Not for Profit’ company where 51% stake is owned by public sector banks.
  
• RBI wants to give permission/license to other private entities to operate the 'Retail Payment System' in India like NPCI under the PSS Act 2007. The entity should be registered under the Company's Act 2013 either as a "for-profit" OR "Not for profit" company. By creating more retail payment operators, RBI wants to create competition (to NPCI) so that better systems and cost-effective and innovative systems should evolve.

Retail Payment Operator

The new "Retail Payment Operator" (there can be more than one such entities) will:

• Set-up, manage and operate new payment systems in the retail space comprising of but not limited to ATMs, White Label PoS; Aadhaar based payments and remittance (just means the transfer of money and nothing specific about abroad) services; newer payment methods, standards, and technologies; monitor related issues in the country and internationally; take care of developmental objectives like enhancement of awareness about the payment systems.
• Operate clearing and settlement systems for participating banks and non-banks; identify and manage relevant risks such as settlement, credit, liquidity and operational and preserve the integrity of the system(s); monitor retail payment system developments and related issues in the country and internationally to avoid shocks, frauds, and contagions that may adversely affect the system(s) and/or the economy in general.
• The entity is also expected to interact and be interoperable, to the extent possible, with the systems operated by NPCI. It is also expected to interact and be interoperable, to the extent possible, with the systems operated by NPCI.

Source: The Hindu

2) Auto firms urged to cut royalty to parent

• India’s commerce minister has asked automakers to find ways to reduce royalty payments to foreign parent companies for the use of technology or brand names to boost local investment and reduce outflows.
• Top­selling carmakers Maruti Suzuki and Hyundai Motor’s local unit pay millions of dollars in royalties to parent companies in Japan and South Korea for using their technology and brand to build and sell cars.
• The outflow is high, even for old technologies
• India has debated imposing stricter caps on royalty payments which spiked after 2009 when foreign investment rules were eased and restrictions on such payments were removed.
• The market regulator had suggested imposing curbs on payments exceeding 2% of revenue. The limit was set at 5% after complaints from some sectors and fears it may dissuade foreign firms from investing or sharing technology
• While India does not restrict the amount that can be paid as royalty, any payment by a locally listed company exceeding 5% of revenues needs shareholder approval.
• Listed companies such as Maruti Suzuki and parts makers including Bosch, Schaeffler India, and Wabco India typically pay royalties of between 1%­-5% to their foreign owners.
• Maruti Suzuki paid ₹38.2 billion as royalty to  Suzuki Motor in the fiscal year ended March 31, 2020, amounting to 5% of its revenue
• Royalty provision has been important in attracting foreign investments into various sectors, especially autos
• Depending on the form in which the government brings back such caps ... it may impact the ability of auto companies to benefit from the use of foreign brands and technical know-how

Further Details

• Maruti Suzuki India is 56% owned by Suzuki Japan. Or we can say Suzuki is the parent company of Maruti Suzuki India. Or we can also say that Suzuki created a subsidiary in India named Maruti Suzuki by putting 56% capital. But both function as independent entities and all accounts are separated which means they need to make payment as per market for any sale/ purchase between them (as per law). 
• Now, Suzuki has a patented technology of car and it also has a patented name/logo "SUZUKI". Now since 'Maruti Suzuki' is a company in India and if it wants to use the patented technology of Suzuki Japan and it also wants to use the patent brand logo of SUZUKI, then it needs to pay a royalty to Suzuki Japan for both of these things. Also, Suzuki Zapan will get 56% of the profit of Maruti Suzuki India. So, foreign automakers (who have created their brand name in the international market) are interested in setting up subsidiaries in India and earn a royalty on technology,- and brand as well as profit. If an Indian businessman sets up his own in India and uses a foreign company technology or brand then they need to pay royalty only and not profit. 
• See, royalty Inyment by Maruti Suzuki India is a cost for it and if it does not pay (or pay less) royalty to Suzuki Zapan (maybe an agreement reached between them) then the profit of Maruti Suzuki India will increase and ultimately Suzuki Zapan will get this profit (that's another matter that it will get only 56%). But why royalty is then so much of an issue if the foreign owner owns the Indian company completely. This is because if üe profit of Maruti Suzuki will increase (in case of non-payment of royalty) then that money can be invested in India and there are few restrictions also on the outflow of this profit and Govt gets tax also on this profit. But if Maruti Suzuki has to make of royalty to Suzuki Zapan, then it's a cost and üere is no restriction of outflow and neither Govt. gets any tax Also, Maruti Suzuki India is bound to pay for its royalty cost to Suzuki Zapan, but the profit may or may not happen.

Some Fact: 

• There is no limit on royalty payments in India but companies in India generally pay a royalty to their foreign owners 1% to 5% of revenues. And if more needs to be then shareholders/owners' approval is required. 
• Earlier there were some caps on royalty payment but was then eased past 2009. If India brings such caps again then it may impact foreign investment and use of new technology,- in India.  

Source: The Hindu

3) National Cancer Registry Programme Report 2020

• Cancer cases in the country are likely to increase to 15.6 lakhs by 2025 — a 12% increase from currently estimated cases — based on current trends, according to the National Cancer Registry Programme Report 2020. The figures were released by the Indian Council of Medical Research (ICMR) and the National Centre for Disease Informatics & Research (NCDIR), Bengaluru
• The report also found that in 2020, tobacco­related cancers are estimated to contribute to 27.1% of the total cancer burden, and highest in the northeastern region of the country. Cancers of the lung, mouth, stomach, and esophagus were the most common cancers among men. Cancers of the breast and cervix uteri were the most common cancers among women
• According to a release issued by the ICMR, the report estimates that in 2020, cancer cases in the country will be at 13.9 lakhs. “These estimates are based on information related to cancer collected from 28 Population-Based Cancer Registries (PBCRs)
• Among women, breast cancers are estimated to contribute 2.0 lakhs (14.8%) and cervix cancer are estimated to contribute 0.75 lakhs (5.4%), whereas, for both men and women, cancers of the gastrointestinal tract is estimated to contribute 2.7 lakhs (19.7%) of the total cancer burden.

Source: The Hindu

4) Indian Railways introduces Drone-based surveillance system for Railway Security

• Drone surveillance technology has emerged as an important and cost-effective tool for security surveillance over large areas with limited manpower. Mumbai Division of Central Railway in Indian Railways has recently procured two Ninja UAVs for better security and surveillance in Railway areas like station premises, Railway track sections, yards, workshops, etc.
• A team of four staff of Railway Protection Force (RPF), Mumbai has been trained for drone flying, surveillance, and maintenance. These drones are capable of Real-Time Tracking, Video Streaming and may be operated on Automatic Fail Safe Mode.
• Railway Protection Force (RPF) has planned extensive use of drones for the purpose of Railway security. Nine (09) drones have been procured by RPF so far for Rs. 31.87 Lakhs at South Eastern Railway, Central Railway, Modern Coaching Factory, Raebareli, and South Western Railway.
• It is further proposed to procure seventeen (17) more drones in the future for Rs. 97.52 Lakhs. Nineteen (19) RPF personnel have so far been trained in operation and maintenance of drones out of which 4 have received licenses for flying drones. Six (06) more RPF personnel are being trained.
• The purpose of the drone deployment is to provide a force multiplier and aid to the effectiveness of the security personnel deployed. It can help in inspection of Railway assets and safety of Yards, Workshops, car sheds, etc. it can be used to launch surveillance on criminal and anti-social activities like gambling, throwing of garbage, hawking, etc in Railway premises. It may be deployed for data collection Analysis of such data collected may prove to be extremely useful in vulnerable sections for safe operations of trains.
• The drone may be pressed in service at disaster sites for helping in rescue, recovery, and restoration and coordinating of efforts of various agencies. It is very useful while undertaking mapping of railway assets to assess the encroachments on railway property. During large scale crowd management efforts, it may give vital inputs like crowd magnitude, probable time of arrival, and dispersal based on which crowd regulation efforts may be planned and executed. Drones were used to enforce lockdown and monitor the movement of migrants during the COVID-19 lockdown.
• A drone camera can cover a large area that requires 8-10 RPF personnel. Thus, it may lead to substantial improvement in the utilization of scarce manpower. Drone beats have been designed based on railway assets, the sensitivity of the area, the activity of criminals, etc. Drone acts as an “EYE IN THE SKY” and monitors the whole area. Any suspicious activity if noticed is intimated to the nearest RPF post of division to apprehend the criminal LIVE. One such criminal was apprehended on a real-time basis in the Wadibunder Yard area while he was trying to commit theft inside the railway coach stationed in the yard.

Source: PIB

5) Satya Pal Malik is Meghalaya Governor

• Goa Governor Satya Pal Malik has been appointed Governor of Meghalaya, a statement from the Rashtrapati Bhavan said
• Maharashtra Governor Bhagat Singh Koshyari has been given the additional charge of Goa
• Mr. Malik, who was Governor of Jammu and Kashmir when its special status under Article 370 was revoked last August, will replace Tathagata Roy in Meghalaya.

Source: The Hindu

6) Partial Credit Guarantee Scheme 2.0

The government has extended the scope of the Partial Credit Guarantee Scheme (PCGS) 2.0 to provide greater flexibility to state-owned banks in purchasing bonds and Commercial Papers (CPs) of Non-Banking Financial Companies (NBFCs).

Background:

• The PCGS was announced in July 2019, allowing public sector banks to purchase high-rated (BBB+ or above) pooled assets from financially sound NBFCs and Housing Finance Companies (HFCs).
• A pool of assets is basically a securitization of loan portfolio i.e. conversion of a loan into a marketable security, typically to raise cash by selling them to other investors.
• These are sold by NBFCs/HFCs to banks in return for an advance payment. NBFCs/HFCs get the much-needed money and banks get the interest-paying assets.
• Credit ratings are an analysis of the credit risk associated with a financial instrument or a financial entity. These range from AAA to C and D.
• As a part of the Aatmanirbhar initiative, the scheme was extended in May 2020 (PCGS 2.0) to cover primary market issuance of bonds/CPs by NBFCs, HFCs, and Micro Finance Institutions (MFIs) with low credit ratings.
• The Centre provided a 20% first loss sovereign guarantee to public sector banks for purchase of bonds/CPs, resulting in liquidity infusion of Rs. 45,000 crore into the system.
• The scheme covered papers with ratings of AA and below, including unrated papers, aimed at providing access to fresh liquidity support to non-bank lenders.

Latest Extension:

• The Scheme has been extended for three months, giving public sector banks time till 19th November 2020 to build their portfolios of bonds and CPs from non-banking financial institutions.
• Further, the government has allowed banks to invest upto 50% of total investments under the Scheme in AA and AA-rated bonds.
• This decision was taken as the earlier limit for such investments at 25% was almost met.

Criticism:

• The latest announcement is a step towards increased funding for bigger NBFCs which have higher ratings, while the actual objective was to provide greater funding to small and medium NBFCs.
• Less than 100 NBFCs have been covered under the scheme as a majority of small and medium NBFCs turn to term loans, instead of raising funds via bonds or CPs.

Note:

• Bonds: Borrowers issue bonds to raise money from investors willing to lend them money.
• Commercial Paper: It is a commonly used type of unsecured, short-term debt instrument issued by corporations, typically used for meeting the short-term liabilities.
• Primary Market: The primary market is where companies issue new security, not previously traded on any stock exchange. Securities issued through a primary market can include stocks, corporate or government bonds, notes, and bills.
• The secondary market is where investors buy and sell securities they already own.

• NBFCs play a crucial role in sustaining consumption demand as well as capital formation in the small and medium segment, thus they must continue to get funding without disruption, and the 
• extended PCGS is expected to systematically enable the same.
• The government can further expand the scope of the Scheme to extend the guarantee cover to term loans of banks and financial institutions given to NBFCs.

Source: PIB

7) Bhadbhut Project

• Recently, the Gujarat government has awarded the contract for the Bhadbhut project in Bharuch.
• The Inland Waterway Authority of India has given clearance for this project.
• The project has faced protests from local fishermen because it is likely to impact fishing patterns, mainly those of hilsa (Tenualosa ilisha).

Features of the Project:

• It is located across the river Narmada, 5 km from Bhadbhut village, and 25 km from the mouth of the river, where it flows into the Gulf of Khambhat.
• The project is part of the larger Kalpasar Project, which entails the construction of a 30-km dam across the Gulf of Khambhat between Bharuch and Bhavnagar districts.
• Kalpasar Project aims to store Gujarat’s 25% average annual surface water resources.
• This reservoir will store about 8,000 million cubic meters (MCM) of surface water and will be one of the world’s largest freshwater reservoirs in the sea.

Purpose:

• To prevent salinity ingress.
• Salinity ingress refers to the process of saltwater invading areas that previously contained only freshwater.
• Due to the reduced flow of fresh water, saline seawater gushes into the Narmada estuary during high tide, thus increasing salinity along the banks.
• It will stop most of the excess water flowing out of the Sardar Sarovar Dam from reaching the sea and will create a sweet water lake of 600 MCM on the river, solving the freshwater problems in Bharuch.
• This will tap the excess waters of the Narmada, Mahisagar, and Sabarmati rivers in the reservoir.

Impact:

• The barrage is expected to interfere with the migration and breeding cycle of hilsa, blocking their natural entry.
• Hilsa is a marine fish that migrates upstream and arrives in the brackish water of the Narmada estuary near Bharuch for spawning usually during the monsoon months of July and August and continues doing so till November.
• The reduced outflow of water from the dam, industrial effluents flowing into the river, and salinity ingress are believed to be the major causes of the decline of hilsa.
• Part of Aliya Bet, an island in the delta of the Narmada and known for shrimp farming, is likely to get submerged.
• A portion of the forest in Aliya Bet too will get affected by the project.

Source: Indian Express

8) Marthoman Jacobite Syrian Cathedral Church

Recently, the Kerala government has taken control of the Marthoman Jacobite Syrian Cathedral Church at Mulanthuruthy in Ernakulam district, Kerala.

Malankara Church

• The Church at Mulanthuruthy has been in the focus of a dispute between Jacobite and Orthodox factions of the Malankara Church, a prominent non-Catholic Christian community.
• The Malankara Church first split in 1912, into the Jacobite and Orthodox groups. However, the two Churches reunified in 1959, but the truce lasted only until 1972-73.
• Since then, the two factions have been engaged in a battle over ownership of churches and their wealth.

Management Shift

• The Church at Mulanthuruthy has been managed by the Jacobite faction, but as per a 2017 Supreme Court (SC) verdict, its ownership went to the rival Orthodox faction.
• The SC had upheld the validity of the 1934 constitution of the Malankara Orthodox Syrian Church to govern the parishes (administration) under the Church.
• However, the Orthodox faction was still denied access to the Church, therefore they appealed in the Kerala High Court, which directed the Kerala government to take over the Church and hand it over to Orthodox faction.

Kerala’s Church Groups

• The Christian population of Kerala comprises Catholic, Jacobite Syrian, Orthodox Syrian, Mar Thoma, Church of South India, Dalit Christians and Pentecostal Churches.
• The Catholics form 61% of Kerala’s Christian population.
• The Malankara Church constitutes 15.9% of the Christian population.

Mulanthuruthy Church

• The Marthoman Jacobite Syrian Cathedral Church at Mulanthuruthy was established in 1200 AD.
• The Church is a fine example of Gothic architecture.
• The carvings, sculptures, symbolic icons, and wall paintings, are a blend of Indian, West-Asian, and European architecture.

Gothic Architecture

• It is a European style of architecture popular in the 12th-16th century.
• Origin: This architecture has its roots in France and England.
• Features: Pointed arches, ribbed vaults, and flying buttresses.
• The Britishers merged some Indian features of architecture to the Gothic architecture, which resulted in the Indo-Gothic style of architecture.
• Examples of Indo-Gothic style of architecture: Madras High Court, Victoria Memorial, The Chhatrapati Shivaji Maharaj Terminus (previously Victoria Terminus), etc.

Source: Indian Express