Category: POLITY AND GOVERNANCE
- Parliament passes Insolvency and Bankruptcy Code Bill
The issue in news
The Lok Sabha passed the Insolvency and Bankruptcy Code (Second Amendment) Bill, which provides that insolvency proceedings against defaulting companies will not be initiated for at least six months starting from March 25, 2020. The bill was earlier passed in Rajya Sabha.
- The proposed amendments were brought in the form of an Ordinance in June 2020, in the wake of the COVID-19 Pandemic and the subsequent lockdown.
- It suspended the application of three provisions (Sections 7, 9 and 10 of the IBC) to prevent any company, stressed due to the COVID-19 situation, from being pushed into insolvency proceedings.
- Sections 7 and 9 pertain to the initiation of corporate insolvency proceedings by a financial creditor and an operational creditor, respectively.
- Section 10 relates to filing an application for insolvency resolution by a corporate.
- Minimum Support Prices (MSP) for Rabi Crops
The issue in news
Cabinet approves Minimum Support Prices (MSP) for Rabi Crops for marketing season 2021-22.
- The Cabinet Committee on Economic Affairs (CCEA) has approved the increase in the MSPs for all mandated Rabi crops for the marketing season 2021-22.
- This increase in MSP is in line with the recommendations of the Swaminathan Commission.
- In view of nutritional requirements and changing dietary patterns and to achieve self-sufficiency in pulses and oilseeds production, the government has fixed relatively higher MSP for these crops.
- The increase in MSP for Rabi Crops is in line with the principle of fixing the MSPs at least 1.5 times of the All-India weighted average cost of production as announced in the Union Budget 2018-19.
National Conference for Rabi Campaign 2020
- India has three major growing seasons: Kharif, Rabi and summer, for cultivating a large number of cereal, pulse, oilseed and cash crops.
- Rabi is an important cropping season contributing to more than half of the crop productions.
- National conferences are held before every season to take stock of the preparedness and ensure timely availability of seed, fertilizers and other inputs.
- The Rabi Conference held in September 2020 set a target of 301 million tonnes of food grains production for 2020-21.
- SBI raises 7000 crore through Basel-III bonds
The issue in news
The State Bank of India said it had raised ₹7,000 crore via Basel III compliant bonds.
- The Committee of Directors for Capital Raising at its meeting accorded its approval to allot 70,000 Basel III compliant non-convertible, taxable, redeemable debt instruments in the nature of debentures aggregating to 7,000 crore, to bond subscribers.
- The bonds qualify as tier II capital of the bank.
- The bonds have a face value of 10 lakh each, bearing a coupon rate of 6.24% per annum payable annually for a tenor of 10 years.
- There is a call option after 5 years and on the anniversary thereafter.
- Call option means the issuer of the bonds can call back the bonds before the maturity date by paying back the principal amount to investors.
Basel III Norms:
- Under the globally accepted Basel-III capital regulations, banks need to improve and strengthen their capital planning processes.
- Basel III norms are being implemented in phases since 2013 by Indian banks to mitigate concerns on potential stresses on asset quality and consequential impact on performance and profitability of banks.
- The banks have to comply with these regulations by end of September 2020.
The 3 main pillars or 3 main principles of Basel III are given below.
- Minimum Capital Requirements
- Leverage Ratio
- Liquidity Requirements
How Does Basel III Affect Banks?
The Cost of increasing capital ratios may lead banks to raise their lending rates and thereby resulting in a reduction of lending. This will have a significant impact on the economy due to lower investment, lower exports, and lower consumption.