Daily News Mail - News of 31/03/2015

Flood alerts issued in Indian-administered Kashmir

• A flood alert has been issued in Indian-administered Kashmir following torrential rain and a surge in the water level of the Jhelum river.
• Authorities have asked people living near the river to leave their homes and move to safer places.
• At least 10 people are missing after landslides buried a number of houses.

Excavation to begin in search of Saraswati

• The Haryana government would soon start the excavation of the mythical Saraswati river from Adi Badri, the point from where it is said to have originated.
• Chief Minister Manohar Lal Khattar on March 30 said his government would ensure development of Adi Badri Heritage Board to increase the importance of the site. At a public meeting in Yamunanagar district, he announced the start of the excavation, among the biggest projects to be undertaken in the area.
• Since assuming office last October, the BJP government has worked to preserve and promote Hindu cultural sites. Earlier in February, the Forest Department started work on bringing the Saraswati to the surface by creating a stream at its point of origin at Saraswati Udgam Sthal at the foothills of the Shivaliks in the Adi Badri area.
• Department officials visited the Udgam Sthal and surrounding areas to find ways to create a water channel that would retrace the path of the river which is believed to have flowed all the way to Allahabad.
• Forest department official Randhir Kumar said to create a stream, water would be collected from sources in and around the Udgam Sthal. “We will take the water from the stream that originates here, the water from a drain which flows nearby and from two-three tubewells that would be sunk at spots along the route of the ancient river.”

China releases details of Silk Road plans

• China has provided details about its proposed Silk Road initiatives, which would impact 4.4 billion people and, within a decade, could generate trade above 2.5 trillion dollars.
• A vision document jointly prepared by a composite team from the Ministries of Commerce, Foreign Affairs and the National Development and Reform Commission (NDRC) — a top organisation that steers the Chinese economy — has with precision revealed the geographic parameters of China’s “One belt One Road” initiative.
• The “belt and road” have two components — the Silk Road Economic Belt (SREB) that would be established along the Eurasian land corridor from the Pacific coast to the Baltic Sea, and the 21st century Maritime Silk Road (MSR).
• Analysts say that the “belt and road” initiative, backed by an extensive China-led funding infrastructure, could shift the centre of geo-economic power towards Eurasia, and undermine the “Asia Pivot” of the United States and its allies.
• Chinese President Xi Jinping is hopeful that the mega-trade volumes among the Silk Road economies would touch $ 2.5 trillion over the next 10 years.
• The “belt and road” run through the continents of Asia, Europe and Africa, connecting the vibrant East Asia economic circle at one end and developed European economic circle at the other, says the government report.
• Specifically, the SREB focuses on bringing together China, Central Asia, Russia and Europe (the Baltic); linking China with the Persian Gulf and the Mediterranean Sea through Central Asia and West Asia; and connecting China with Southeast Asia, South Asia and the Indian Ocean.

Silk Road Economic Belt

Safe food, from the farm to the plate

• Do we know the food we are eating is free of bacteria, viruses, parasites, chemicals, other contaminates, additives and adulterants which can cause over 200 diseases ranging from diarrhoea to cancer? Every year, diarrhoea caused by contaminated food and water kills 2.2 million people, including 1.9 million children, globally. Unsafe food and water kills an estimated 7,00,000 children in the World Health Organization’s South-East Asia Region every year. Access to safe food remains a challenge in the region. Whether as individuals, families, farmers, contributors to and handlers of the food chain or policymakers, we need to make food safety our priority.
• Food safety is critical for public health as food-borne diseases affect people’s health and well-being. Unsafe food creates a vicious cycle of disease and malnutrition, particularly affecting infants, young children, the elderly and the sick. Food-borne diseases impede socio-economic development by straining health care systems and adversely impacting national economies, tourism and trade.

RBI tightens takeover norms for shadow banking

• The Reserve Bank of India (RBI) plans tougher rules for takeovers involving non-banking financial companies (NBFCs), according to draft guidelines published on March 30, outlining a demand that all substantial deals seek its prior approval.
• In its latest effort to boost transparency and strengthen its grip on the alternative lenders that account for a large part of the domestic shadow-banking sector, the RBI said any purchase of a stake of 26% or more in a company, or a change in more than 30% of its directors, would need the central bank’s permission.
• “The RBI has been continuously trying to strengthen this sector so that this should not be a back yard for people we don’t know,’’ said Sanjay Agarwal, Managing Director of Au Financiers (India), an NBFC from Rajasthan.
• There are some 12,000 NBFCs registered with the RBI, and they largely offer loans. Some, like traditional banks, also take deposits.
• The RBI also said in its circular that the source of funds behind new investors in any NBFC will have to be disclosed. It also asked for an undertaking that the new proposed investors are not associated with any existing but unregistered body that accepts public deposits.
• NBFCs play a critical role in extending credit to areas where traditional finance cannot reach in a country where only just over half of the population has access to the mainstream banking system. However, controlling these NBFCs has been made a key priority for the RBI, given their size and reach.

Difference between NBFC and Bank

NBFC vs Bank 

• In a country like India with a huge population, it is impossible for banks to cater to all sections of the society as many areas are inaccessible and remote. Also, to provide banking facilities to the illiterate and the poor, finance institutions that work on similar lines as banks are required. In India, this requirement has traditionally been fulfilled by NBFC, or non banking financial company. As the name suggests, NBFC is not a bank though it performs many functions similar to that of banks. This article intends to find out the major differences between NBFC and banks and other features of these entities.
• NBFC were created by the government of India as it felt the need to provide banking facilities to the poor and underprivileged who could not get access to banks. NBFC is required to be registered under the Companies Act 1956 to be able to perform functions similar to a bank. Normally, a NBFC is engaged in the business of loans and advances, acquisition of shares, debentures, stocks, bonds and securities issued by the government. It also indulges in hire-purchase, leasing, insurance and chit business.

However, there are several notable differences between NBFC and a bank.

• NBFC cannot collect deposits in the manner of a bank.
• NBFC cannot issue checks drawn on itself.
• NBFC cannot issue Demand Drafts like banks.
• NBFC cannot indulge primarily in agricultural or industrial activity.
• NBFC cannot engage in construction of immovable property.
• NBFC cannot accept demand deposits.
• While banks are incorporated under banking companies act, NBFC is incorporated under company act of 1956.

NBFC is required to register with Reserve Bank of India. There are many types of NBFC registered with RBI.

• Equipment leasing company
• Hire-purchase Company
• Loan Company
• Investment Company