ILO Report Highlights
👆UPSC Commerce Optional Paper 2 of Industrial relations topic.
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The terms ‘Investing activities’ and ‘Financing activities’ are defined in paragraph 6 of Indian Accounting Standard (Ind AS) 7, Statement of Cash Flows, notified under the Rules, as below: “Investing activities are the acquisition and disposal of long-term assets and other investments not included in cash equivalents.”
“Financing activities are activities that result in changes in the size and composition of the contributed equity and borrowings of the entity.”
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👆🏻Cash flow

👆🏻All students are advised to study CA Journal topic which is matching with Commerce Optional syllabus.
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Page No. 34 is related with Govt grants.

Page No.42 Finance bill 2020

👆Highlights of Labour Reforms
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Q. What are the new announcements made by RBI?



A) Cutting Reverse-Repo Rate

To begin with, the RBI has cut the reverse repo rate further by 25 basis points (100 basis points make up one full percentage point).

The reverse repo rate now stands at 3.75 per cent while the repo rate is 4.40 per cent.

The idea behind repeatedly cutting reverse repo more than the repo is to incentivise banks to borrow from it at low rates and lend it forward to customers.

B) Targeted Long Term Repo Operations

RBI has announced another TLTRO of Rs 50,000 crore but this time it has mandated that 50 per cent of this amount borrowed by the banks must go to small and mid-sized NBFCs and Micro Finance Institutions (MFIs).

Again, the benefits of this move are two-fold. One, it provides more liquidity.

More importantly, it also provides it targeted to those institutions that are most hit by the economic slowdown and, as such, most in need of funds to survive themselves.

C) Credit to NBFCs and MFIs

All India financial institutions (AIFIs) such as the NABARD, etc. will be provided special refinance facilities for a total amount of Rs 50,000 crore by the RBI.

This credit will help the end consumer, especially in the rural sector, small industries, and housing finance companies.

D) Expanding Ways and Means Advances (WMAs)

On the issue of providing liquidity and fulfilling its role as “the lender of last resort”, the RBI also announced that it will provide more funding to state governments — under the WMA facility.

The WMA is essentially is a facility by which state governments borrow from the RBI to meet the shortfall between their revenues and their expenditure.

But the WMA is a short-term measure, only meant for exigencies.

E) Easing NPA norms

Apart from easing liquidity in the system like in the past, the other focus has been to provide an easier regulatory regime.

The global lockdown has almost completely halted economic activity.

Under the circumstances, it is natural that business will struggle to pay back their loans and there will be a steady accretion of non-performing assets (NPAs) across the board.

Similarly, to ensure that loans given to real estate projects, that are getting delayed due to the crisis, do not turn into NPAs, the RBI provided an extension of another year before they are recognised as NPAs.

F) Easing LCR norms

Lastly, given the stress on the system and the demand for cash, the RBI has allowed Scheduled Commercial Banks to reduce their Liquidity Coverage Ratio from 100 per cent to 80 per cent with immediate effect.

The LCR essentially mandates the amount of cash that a bank is required to keep with itself.

At 100 per cent LCR, a bank would have been required to keep 100 per cent of the net cash it expects to flow out of the bank over the next 30 days.

With this being reduced to 80 per cent, banks would have more cash to deal with.

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Recently, SEBI came up with set of wider
disclosure norms for the Credit Rating Agencies
(CRA).

• It introduced a “probability of default”
mechanism under which rating agencies have
to disclose the probability of default for the
issuers they rate by December 2019.
• It also provides for formulation of Uniform
Standard Operating Procedure for tracking
and timely recognition of default.

👆🏻Current affairs on Credit rating agencies

Credit Rating Agencies in India
• The Securities and Exchange Board of India (Credit
Rating Agencies) Regulations, 1999 empowers SEBI
to regulate CRAs operating in India.
• As per the Regulations, CRA is defined as “a body
corporate which is engaged in, or proposes to be
engaged in, the business of rating of securities
offered by way of public or rights issue”.
• SEBI (Credit Rating Agencies) Regulations, 1999
provide for a disclosure-based regulatory regime,
where the agencies are required to disclose their
rating criteria, methodology, default recognition
policy, and guidelines on dealing with conflict of
interest.
• There are seven Credit Rating Agencies registered
with SEBI, viz. CRISIL, ICRA, CARE, India Ratings and
Research, SMERA, Infomerics and Brickworks.

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Daily Answer Writing Practice- DAY-51
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Daily Answer Writing Practice- DAY-64
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Daily Answer Writing Practice- DAY-65
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