Feb 16, 2016: Section 124-A of Indian Penal Code & & Recommendations of Narasimham Committee –II

Feb 16, 2016: Section 124-A of Indian Penal Code & Recommendations of Narasimham Committee –II

General Studies: Daily Capsule

Curtain Raiser –News Update (Feb 16, 2016)

Sedition and Section 124-A of the Indian Penal Code:

A relic of our colonial past

The colonialists used the clause in three separate, successful trials of Bal Gangadhar Tilak, and also in persecuting Mahatma Gandhi in 1922. ‘Section 124-A under which I am happily charged, is perhaps the prince among the political secions of the IPC designed to suppress the liberty of the citizen,’ said Gandhi in response to the charges made on him.

Source: Sedition and the Government by Suhrith Parthasarathy, Feb 16, 2016, The Hindu

Recommendations of Narasimham Committee –II (Committee on Banking Sector Reforms):

Committee on Banking Sector Reforms (Narasimham Committee II)	Structural Issues : 31. The Committee has taken note of the twin phenomena of consolidation and convergence which the financial system is now experiencing globally. In India also banks and DFIs are moving closer to each other in the scope of their activities. The Committee is of the view that with such convergence of activities between banks and DFIs, the DFIs should, over a period of time, convert themselves to banks. There would then be only two forms of intermediaries, viz. banking companies and non-banking finance companies. If a DFI does not acquire a banking licence within a stipulated time it would be categorised as a non-banking finance company. A DFI which converts to a bank can be given some time to phase in reserve requirements in respect of its liabilities to bring it on par with the requirements relating to commercial banks. Similarly, as long as a system of directed credit is in vogue a formula should be worked out to extend this to DFIs which have become banks (Chapter V, para 5.6) . https://www.rbi.org.in/Scripts/PublicationReportDetails.aspx?ID=251
‘Conversion of DFIs into universal commercial bank as per recommendation’ and the present malady of PSBs.	·         Following the recommendations of the Narasimham Committee-II, DFIs like the ICICI and IDBI, which were created in the post-Independence period to provide long-term finance for industry, were converted into universal commercial banks. ·         The committee’s presumptions regarding the capacity and skills of the commercial banks and capital markets in India being sufficient in meeting the financing needs of the industrial sector have turned out to be gross overestimates. ·         NPAs have not only made a comeback, but are threatening the very stability of the banking system.
Cause of accumulation of bad loans in public sector banks	·         “A key systemic cause behind such intense corporate debt distress and the accumulation of bad loans within the public sector banks is to be found in the premature euthanasia of the Development Financial Institutions (DFIs) in India.”
Revival of Development Financial Institutions	·         “Delinquent corporate borrowers and negligent bankers need no state support. Development Financial Institutions should be revived for industrial and infrastructure financing.”

Source: No bailout with taxpayer money, Feb 16, 2016, The Hindu