Current Affairs Current Affairs - 19 February 2018 - Vikalp Education

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Current Affairs - 19 February 2018

General Affairs 

Army Chief, NSA, FS visited Bhutan 2 weeks ago, discussed strategic issues
  • In a rare visit, Army Chief General Bipin Rawat, Foreign Secretary Vijay Gokhale and National Security Adviser Ajit Doval quietly travelled to Bhutan earlier this month where they held extensive talks with the Bhutanese leadership on key strategic issues including the situation in Doklam and the Chinese building defence infrastructure around the plateau, authoritative government sources said.

    The sources told PTI that the two sides reviewed bilateral security and defence cooperation with focus on China's increasing military posturing and infrastructure development around the Doklam plateau.

    The visit took place between February 6 and 7 and positive outcomes emerged from the meetings between the key Indian officials and the Bhutanese government, multiple government sources said, adding there were deliberations on how to further strengthen defence and security cooperation between the two countries.

    The visit by Gen Rawat, Doval and Gokhale was the first by top Indian officials from India to Bhutan after the Doklam standoff, and was kept under wraps by the Bhutanese and Indian sides.

    The visit came three days after Prime Minister Narendra Modi held talks with his Bhutanese counterpart Tshering Tobgay on the sidelines of an investors summit in Guwahati.

    The sources said the Bhutanese side apprised the Indians of the status of boundary talks between Bhutan and China, and emphasised that Thimphu wants peace in the Doklam tri-junction.

    Troops of India and China were locked in a 73-day-long standoff in Doklam from June 16 last year after the Indian side stopped construction of a road at the disputed Doklam tri-junction by the Chinese army. Bhutan and China have a dispute over Doklam. The face-off ended on August 28.

    China and Bhutan are engaged in talks over the resolution of the dispute in the area. India has argued that it has a say in the issue, especially in the backdrop of a 2012 agreement between special representatives of the two countries, that have till now held 20 rounds of talks.

    Bhutan has no diplomatic ties with China. As a close friend and neighbour, Bhutan enjoys diplomatic and military support from India.

    The sources said several other key officials of the army and the ministry of external affairs were also a part of the entourage. When asked about the foreign secretaryvisit, a diplomatic source called it routine.

    This was Gen Rawat's second visit to Bhutan in the last nine months. Gen Rawat has been calling for adequate focus by India on its nearly 4,000 km-long border with China. Last month, he had said the time had come for the country to shift its focus from the western to the northern frontier.

    Army sources said China has been keeping its troops in north Doklam and significantly ramping up its infrastructure in the area.

    The Indian Army has also been strengthening the presence of its troops in certain key sectors along the Sino-India border besides enhancing border infrastructure.

    Rawat had visited Bhutan in April last year, while the then Foreign Secretary S Jaishankar had travelled there in October last. In November last, Bhutanese King Jigme Khesar Namgyel Wangchuck had visited India.

YSR Congress ready to pass no confidence motion in Parliament against NDA: YS Jagan Mohan Reddy
  • Mounting more pressure on the ruling Telugu Desam Party (TDP), Andhra Pradesh leader of opposition and YSR Congress Party president YS Jagan Mohan Reddy dared TDP to bring a no confidence motion against BJP-led central government where it is an alliance partner.

    The principal opposition leader Reddy also asked Jana Sena chief and actor turned politician Pawan Kalyan, and TDP chief and state Chief Minister N Chandrababu Naidu to unite for the sake of Andhra Pradesh.

    It has also asked the ruling TDP to also support and submit resignation of its Lok Sabha MPs supporting the Special Category Status (SCS) demand which was announced by the then PM Manmohan Singh in the Parliament.

    READ | Budget 2018: No special package for Andhra Pradesh, TDP-BJP ties under strain

    Addressing a massive public meeting in Kandukur assembly constituency in Prakasham district, YS Jagan Mohan Reddy announced that his party will pass no confidence motion in the Parliament in the last week of March.

    ''YSRCP is even ready to support TDP led no confidence motion if they are ready to pass the same against the Centre'' added Reddy amidst cheering of his of supporters.

    Reddy said that CM Chandrababu Naidu and Pawan Kalyan should leave the demand for the 'special package' as it bears no fruit for the state, and should only fight for SCS.

    Taking potshots on Pawan Kalyan, Reddy said, ''There is no purpose with joint fact finding committee'' which the Jana Sena Chief has appointed.

    The YSR Congress has decided to submit resignation of its five Lok Sabha MPs on March 6 if the Centre does not clear the Special Category Status to Andhra Pradesh.

PM Narendra Modi slams previous govts for leaving projects worth Rs 10 lakh crore hanging
  • Prime Minister Narendra Modi accused "previous governments" of leaving projects worth Rs 10 lakh crore hanging, at a ceremony where he laid the foundation stone of the Rs 16,000 crore Navi Mumbai International Airport today.

    He also inaugurated India's largest container terminal at Jawaharlal Nehru Port Trust, constructed at a cost of Rs 4,719 crore.

    In his speech, Modi not only explained the importance and need of the Navi Mumbai airport, but also laid stress the need for good infrastructure.

    It is also planning to connect Mumbai International Airport to Navi Mumbai International Airport through an MRTRO rail line.

    The whole project is spread across approximately 2268 hectares. The core area's size is 1,160 hectares.

    City and Industrial Development Corporation (CIDCO, a government agency) has successfully acquired more than 90 per cent of the land so far. CIDCO will develop the project together with Mumbai International Airport Pvt. Ltd (MIAL).

    The upcoming airport will be bigger than the current international airport in Mumbai. It will have two runways.

    Maharashtra Chief Minister Devendra Fadnavis said his government hoped that the first flight from Navi Mumbai Airport will take off by December 2019.

    The new airport is expected to reduce the burden on the current one, and generate jobs.

Chattisgarh: 2 security personnel martyred and 6 injured in anti-Naxal encounter
  • One Special Task Force (STF) soldier and one District Reserve Guard (DRG) soldier were gunned down during an exchange of fire in Chhattisgarh's insurgency-hit Sukma district, police said today. The encounter started at 11 am and ended in the evening.

    Six Chattisgarh Police personnel were also injured in the incident. A contingent of 202 Cobra personnel of the Centralised Police Reserve Force (CRPF) has been deployed in the area as reinforcement. Two Naxals, including a woman, were gunned down by the security forces

    The skirmish took place in a forest near Tokanpalli village under Chintagufa police station limits when a joint team of DRG and STF was out on an anti-naxal operation, Deputy Inspector General of Police (south Bastar range) Sundarraj P said.

    The exchange of fire broke out between the two sides, when the patrolling team was cordoning off the forests adjoining Tokanpalli, he said.

    "After guns fell silent, bodies of two ultras, including that of a woman, were recovered from the spot along with country-made weapons, explosives and Maoist-related material," the DIG said.

Nirav Modi scam: Gokulnath Shetty, other arrested official say commission was paid for every LoU issued
  • Gokulnath Shetty, former Deputy Manager and Mohan Kharat, Single Window Operator, of Punjab National Bank's (PNB) Brady Branch, Mumbai, admitted that for every LoU (Letter of Undertaking), a percentage of amount was fixed depending on the amount of money which was to be sanctioned.

    The commission in exchange of issuing LoUs was distributed among all employees of PNB involved, arrested bank officials told the Central Bureau of Investigation (CBI) during their custodial interrogation.

    Sources have told India Today that both the accused have given names of few PNB employees who were actively involved in this scam and they will be questioned soon.

    A source on the condition of anonymity told India Today that the involvement and connivance of more PNB staff members and outsiders, including Nirav Modi and Mehul Chowksi, at this stage is being probed.

    The accused have also revealed that the logs in the SWIFT (messaging system) were used by many officials, including Gokulnath Shetty, by using passwords in the capacity of verifier/authorizer enabling the fraudulent Swift messages. According to sources, the password was shared with Nirav Modi as well.

    The CBI on Saturday arrested Gokulnath Shetty, Manoj Kharat and Hemant Bhat in the Nirav Modi-PNB scam.

    Kharat and Shetty have been named in the second FIR where the loss due to unauthorised LoUs is over Rs 4,800 crores.

    PNB detected a Rs 11,400 crore scam in which jeweller Nirav Modi acquired fraudulent letters of undertaking from one of its branches for overseas credit from other Indian lenders.

    The scam was started in 2011 and was detected in the third week of January this year, after which the PNB officials reported it to the concerned agencies.

    Meanwhile, the PNB filed a second complaint with the CBI on February 13.

    The CBI had received the complaint from PNB on January 28 and a case was registered in the case on January 31.

Business Affairs

Nirav Modi case: Bank officials may have made close to Rs 823 crore in PNB fraud
  • Officials at Punjab National Bank's (PNB) Brady House branch in South Mumbai may have made close to Rs 823 crore after receiving kickbacks for issuing fraudulent LoUs to Nirav Modi's firms. A chartered accountant has shared damning details of how the PNB staffers were allegedly handed out 2 per cent hush money per annum for several years.

    As per the information shared by a chartered accountant with India Today, PNB officials were charging a commission of around 2 per cent on each LoU per year which was never shown in bank's account books.

    Giving a break up of how PNB officials were allegedly charging commissions, the source explained: For instance, if the LoU amount is Rs 500 crore, than 2 per cent for one year which comes at Rs 10 crore was being charged as commission.

    In terms of LoUs which were issued by PNB for the last several years, the amount comes close to Rs 823 crore. For example, LoUs worth Rs 280 crore (in first complaint), Rs 4880 crore (in second complaint) and LoUs worth Rs 5000-Rs 6000 crore were given every year between 2011 and 2016-17.

    What makes the PNB fraud more scandalous is the way SWIFT codes were allegedly used by unauthorised officials. A SWIFT message cannot be sent without the authorization of at least three bank officials. It's only when all three bank officials put in their codes a SWIFT message can be sent.

    Manoj Kharat, who worked as single window operator (SWO) at PNB had allegedly obtained access to SWIFT password. On Saturday, Kharat was remanded to 14-day CBI custody.

    The lowest-ranking official authorised to use SWIFT at PNB's Brady House branch was Gokulnath Shetty who would have one of the passwords. Apart from Shetty, there were two senior level officials who had these passwords for clearance.

    It is highly unlikely that the DGM of PNB branch office may not have been aware about the alleged fraud. In addition to high level clearance, SWIFT messages for the entire year are audited by four different auditors.

    A bank has different audits - statutory audit, internal audit, audits during quarterly closing, RBI audit during inspections and a concurrent audit. A concurrent audit is recommended if lapses are found in any branch.

    What is surprising is that for all these years fraudulent activities were going on at PNB's Brady House branch without any auditor catching a whiff of swindling of hundreds of crores of taxpayers' money.

PNB officials gave Nirav Modi's firms access to bank computers: report
  • Days after Punjab National Bank (PNB) said that its Brady House branch in Mumbai was involved in a fraud of over Rs 11,400 crore, questions have been raised over the conduct of bank officials who granted Nirav Modi's firms LoUs without due diligence. While the theories on how India's biggest banking scam was executed are abound, the CBI has reportedly indicated that Nirav Modi's associates had access to PNB's computers.

    According to a report in Business Standard, the two PNB staffers who are now under the Central Bureau of Investigation's (CBI) custody have revealed that Nirav Modi's team was given 'unauthorised access' to PNB's computer systems for a 'commission' on every Letter of Understanding (LoU) issued.

    On Saturday, CBI had arrested a retired and a serving officials of Punjab National Bank and an executive of Nirav Modi's company - in connection with the alleged Rs 11,400-crore fraud, and carried out searches at the Brady Road branch of the bank in Mumbai, officials said.

    Those arrested include PNB's former deputy manager Gokulnath Shetty, the bank's single window operator Manoj Kharat, and Nirav Modi's accountant Hemant Bhat. A special court had remanded all the three accused to 14-day CBI custody.

    During interrogation, the arrested bank officials revealed that Nirav Modi's aides were logging into the SWIFT (Society for Worldwide Interbank Financial Telecommunication) system using passwords of PNB officials, including Shetty, in the capacity of verifier/authoriser and enabling the fraudulent SWIFT messages, the report quoted a CBI source as saying.

    The accused have revealed names of at least half a dozen more PNB employees who were involved in the scam, it said.

    The accused bank staffers were allegedly demanding commission on every LoU for unauthorised access and SWIFT password to the Nirav Modi's firms. The amount was divided among the PNB employees involved in the fraud, the report said.

Sensex, Nifty likely to remain volatile on derivatives expiry this week
  • The Sensex and Nifty are likely to focus on global cues and the unfolding bank fraud saga for the week starting tomorrow. Markets are likely to see volatile trade due to the expiry of futures and options contracts on Thursday.

    The benchmark indices ended lower in a volatile week after showing signs of recovery in the second half amid global markets recovering from the effects of higher US bond yields.

    While the Sensex closed 286 points lower to 34,010, Nifty fell 93 points to close at 10,452 points on Friday.

    "The market has corrected by 5% from the recent all time high and we can assume that a large portion of this consolidation is finding a floor in the short-term. But investors are cautious given widening of trade deficit, rise in bond yields and global volatility," Vinod Nair, head of research at Geojit Financial Services, said.

    The PNB fraud also  dampened sentiment since February 14 when it came into light. Bank stocks were the most hit, especially of SBI, PNB, Union Bank, Allahabad Bank and Axis Bank, which have direct exposure to the fraud.

    Shares of Gitanjali Gems , firm owned by Nirav Modi's uncle Mehul Choksi tanked another 20% after the detection of Punjab National Bank's Rs 11,400-crore fraud. Gitanjali Gems is one of the companies charged by investigating agencies for colluding with Nirav Modi in carrying out the fraud.

    The stock closed 9.35 points lower to 37.55 level on BSE. The stock fell 40.25 percent on BSE since Wednesday . Its market capitalisation has fallen by Rs 300.1 crore.

    "Repercussion of the scam in a large public sector bank reverberated through markets and led to some nervous investors selling off their positions," said V K Sharma, Head - Private Client Group (PCG), HDFC Securities.

    Sentiment also turned weak after the country's trade gap soared to $16.3 billion in January on account of a 26.1 per cent increase in imports to $40.68 billion due to increased inbound shipments of crude oil, as per data released by the commerce ministry.

    India's exports grew by 9 per cent to $24.38 billion in January, helped by a healthy growth in shipments of chemicals, engineering goods and petroleum products.

    Besides domestic developments, the movement of funds and crude oil prices are expected to dictate the market sentiment this week.

    Market commentator Ambareesh Baliga in a piece on Reuters said: 

    The coming week is expected to be volatile due to expiry of derivatives contracts on Thursday. With the results season almost out of the way, investor focus will be on global cues and the unfolding bank fraud saga.

    The last few weeks of correction in Indian markets has resulted in massive losses, especially for retail investors who were chasing momentum in mid and small-caps.

    There seems to be a pattern of distribution where frontline indices are holding steady within a band while the mid and small-caps continue to correct heavily. However, this should provide a good opportunity for an entry in the near future.

Sebi may give fresh push to loan default disclosure by listed firms
  • Concerned over a massive Rs 11,000-crore fraud at PNB remaining undetected for years, markets regulator Sebi may give a fresh push to its "on-hold" proposal to mandate listed firms to disclose all loan defaults within a day.

    While billionaire jewellery designer Nirav Modi, the alleged perpetrator of this fraud, is not directly linked to any listed company, his relative and business associate Mehul Choksi's Gitanjali Gems is a listed firm and has been involved in some other cases of suspected market manipulations.

    Sebi has already launched a probe into trading and disclosure related issues in the matter of Punjab National Bank (PNB) and Gitanjali Gems in connection with the biggest fraud in the Indian banking industry so far, allegedly perpetrated by absconding Modi.

    Ever since the fraud came to light last week, investors wealth has seen a massive erosion worth billions of dollars at PNB, Gitanjali Gems and several listed firms, including public sector banks with direct or indirect exposure to Modi.

    With an aim to help investors take an informed decision at the earliest in cases of loan default, Sebi had proposed to mandate listed companies to make immediate disclosure about their loan defaults.

    However, the proposal had to put "on-hold" apparently after reservations expressed by the banking industry that such a move can create a panic like situation.

    "With the PNB fraud coming to light, it has become important to ensure timely disclosure of even a small loan default rather than the situation to balloon into a major crisis," a senior official said.

    Sebi is planning to make a fresh push on its earlier proposal, although it is open to make a constructive changes to the proposed framework, he added.

    The regulator plans to go ahead with its earlier proposal that mandated listed companies to disclose any payment defaults to banks and financial institutions within one working day of such a miss.

    Earlier, the regulator had put off implementation of its directive "until further notice" that required listed firms to inform exchanges if they default on loan payments to banks and financial institutions, just a day before it was supposed to be implemented on October 1.

    Banks had asked for more time for the rules as the Indian credit market was different from its Western counterparts where such a disclosure is mandatory.

PNB fraud: Assocham urges govt to cut stake in PSBs to below 50%
  • The fraudulent transactions of Rs 11,400 crore detected at Punjab National Bank should act as a strong trigger for the government to reduce its stake to less than 50 per cent in public sector banks (PSBs), industry body Assocham said today.

    It argued that PSBs should then be allowed to function on the lines of private sector lenders with a full sense of accountability to their shareholders, protecting the interest of depositors.

    The USD 1.77 billion (about Rs 11,400 crore) scam in PNB involves billionaire jeweller Nirav Modi allegedly acquiring fraudulent letters of undertaking (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders.

    "The PSU banks, ironically, are slipping from one crisis to the other and there is a limit the government can keep bailing them out at the cost of taxpayers' money, even if it is the principal shareholder in these lenders, Assocham said.

    It claimed that top banking positions are treated as extension of a government job and the senior most managements spend bulk of their quality time, receiving and implementing directions from the bureaucrats even for innocuous issues.

    In the process, the core banking functions, including all important risk mitigation and management, take a back seat, it said.

    Once the government equity in the banks is reduced below 50 per cent, there would be much more autonomy along with accountability and responsibility of the senior management, it added.

    The boards should then be truly taking the policy decisions while the CEOs would run the banks with full authority, coupled with the commensurate responsibility, instead of looking towards the bureaucrats for directions.

    It observed that the problem has become more grave with the banking sector adapting to new technologies which can prove both boon and bane, depending on how effectively they are implemented.

    Assocham Secretary General D S Rawat said it was time the industry also did some introspection.

    While we seek more autonomy for the banks, we from the industry must also set certain standards for us for ensuring a clean and best banking and business practices, Rawat said.

    He called upon the Reserve Bank of India to take a lead and engage with the industry in finding ways to do clean business in the entire financial sector, be it the public sector or private sector banks or even the non-banking finance companies.

General Awareness

Statutory, regulatory and various quasi-judicial bodies.
Central Geological Programming Board

  • Context: The 57th Meeting of the Central Geological Programming Board (CGPB) was recently held. Representatives of State Departments, Central Ministries/ organizations, PSUs, academic institutes and private entrepreneurs attended the 57th CGPB meeting.

    Apart from discussion on achievements of GSI(Geological Survey of India) during the current year, the proposed Annual Programme for ensuing 2018-19 was presented before all Board members.

    About CGPB:

    The Central Geological Programming Board (CGPB) is the apex body at the national level to overview the programme of geoscientific activities including mineral exploration in the country. It was established through Government of India Resolution in 1966, and subsequently revamped in 2009 with the constitution of 12 theme based committees. CGPB meetings are held twice in a year.

    Composition: The Secretary (Mines) is the chairman of CGPB. Geological Survey of India is the nodal department (Member Secretary) and the State Geology and Mining departments and Central Government institutions, permanent and special invitees are its participating members.

    Functions: CGPB coordinates activities on geological mapping, mineral prospecting, exploration and exploitation in the country. It is responsible for providing the general strategic direction of geosciences activity; effecting programmatic coordination among agencies; enabling better interaction between central agencies and state level organizations; human resource, and research capability; identifying new areas and new technologies for geoscientific activities; advising on geosciences partnerships between GSI, and State and Central – level agencies; actively promoting use of information technology; and approving five-year detailed sub-sectoral targets on a rolling plan basis.

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