1.Next year on, medical admission from NEET
Admissions to medical, Ayush, agriculture, veterinary, fisheries and forestry courses would be made from the National Eligibility-cum-Entrance Test (NEET) rank list from the academic year 2017-18 onwards.
A press note here said the State government would not henceforth conduct entrance examinations to these courses. Admissions to the engineering courses would continue to be made from a rank list prepared on the basis of an entrance examination conducted by the State government.
In 2016 the Supreme Court had allowed Kerala, as a one-time measure to admit students from the State medical entrance rank list. That is how admissions were made to all government colleges and the government seats in self-financing colleges from the State list.
The number of students appearing for medical courses other than MBBS and BDS is so small that it would not be financially viable for the State to conduct an entrance examination for such students alone. It would also lead to a situation where students in Kerala would have to write three entrance examinations if they wanted to be considered for engineering, MBBS/BDS and the allied medical courses.
-----------------------------------------------------------
2.Airlines dumping waste mid-air to attract fine
NGT passed the order after a plea alleged dumping of human excreta by aircraft over residential areas near Delhi's IGI Airport
The menace of human waste being splattered on houses from airplanes while landing, led the National Green Tribunal (NGT) to slap a fine of Rs. 50,000 on the airline whose aircraft empties toilet tanks in the air.
The NGT directed aviation regulator DGCA to issue a circular to all airlines, whose planes are involved, to pay Rs. 50,000 as environmental compensation.
Slew of directions
A Bench headed by NGT Chairperson Swatanter Kumar passed a slew of directions while disposing of a plea by Lt. Gen. Satwant Singh Dahiya, a retired Army officer who alleged that aircraft dump human excreta over residential areas near the IGI Airport here.
“DGCA shall issue directions that aircraft on landing shall be subjected to surprise inspection to see that human waste tanks are not empty,” the Bench said.
--------------------------
3.Jet stream in Earth’s core discovered
Using the latest satellite data that helps create an ‘X-ray’ view of the planet, scientists discovered a jet stream within the Earth’s molten iron core.
“The European Space Agency’s Swarm satellites are providing our sharpest X-ray image yet of the core. We’ve not only seen this jet stream clearly for the first time, but we understand why it’s there,” said lead researcher Phil Livermore from the University of Leeds in Britain.
“We can explain it as an accelerating band of molten iron circling the North Pole, like the jet stream in the atmosphere,” Mr. Livermore said. Because of the core’s remote location under 3,000 kilometres of rock, for many years, scientists have studied the Earth’s core by measuring the planet’s magnetic field — one of the few options available.
---------------------
4.E-dhaga in Kannada by Jan.
Union Textiles Minister Smriti Irani on Tuesday said the Kannada version of mobile app E-dhaga will be launched by January 15, which will help weavers get information on raw material availability.
She said currently the app is available in Hindi, English and Telugu, and will soon be released in Bengali, Oriya, Urdu and Assamese. The app is developed by the National Handloom Development Corporation.
---------------------
5.SC may hear plea on tax relief for parties
Petitioner has challenged constitutionality of provisions of Income Tax Act and Representation of the People Act
The Supreme Court is likely to hear a writ petition to declare as unconstitutional certain provisions of the Income-Tax Act and the Representation of the People Act giving “100 per cent tax exemption” to political parties.
The petition filed by advocate M.L. Sharma has challenged the constitutionality of Section 13A of the Income-Tax Act of 1961 and Section 29 of the Representation of the People Act, 1951. The petition has asked why ordinary persons are taxed while the political parties enjoyed tax exemption.
“Political parties registered with the Election Commission are 100 per cent exempted from paying income tax if they file Income-Tax returns every assessment year along with audited accounts, income/ expenditure details and balance sheet,” the petition said.
Demonetised notes
Mr. Sharma said the petition necessitated when the Finance Secretary on December 16 declared that no investigation would be done against the political parties’ accounts and funding upon depositing of old demonetised notes owing to the 100 per cent tax exemption.
“This is a serious financial injury to the citizen of India. If it is not stopped and quashed it will endanger the whole society, life of the citizen of India,” the petitioner said. The petition also seeks the SC’s intervention to respond to several questions of law like whether the Constitution recognises the need for a political party membership for membership in Parliament and State Legislative Council and Assembly?
“In the present scenario, parties work for themselves to garner maximum seats in the House by hook and crook. They serve no social and moral service to the country. On the other hand, they have been at the root of corruption,” the petition alleged.
------------------
6.Cross-LoC trade funding terror: NIA
The National Investigation Agency is investigating if proceeds from trade across the Line of Control between Jammu and Kashmir and Pakistan-occupied Kashmir are being “used” to finance terrorist activities in the Valley.
Last week, the NIA registered a case under Section 17 — punishment for raising funds to indulge in terrorist acts — of the Unlawful Activities Prevention Act against unknown persons on the basis of “secret information”.
A senior NIA official told The Hindu the agency had credible information that fraudulent transactions coming to Rs. 2,100 crore at the Salamabad-Uri trade point and Rs. 670 crore at the Chakan Da Bagh-Poonch point since cross-LoC trade began in 2008.
The official claimed that a major portion of these proceeds were diverted to fund terrorist activities in the valley. Cross-LoC trade, a confidence-building measure between India and Pakistan, and takes place four times a week through the Uri-Muzaffarabad and Poonch-Rawalakote routes. The trade has so far touched approximately Rs. 3,500 crore, with the Indian side exporting goods estimated at around Rs. 1,900 crore while receiving goods for Rs. 1,600 crore from Pakistan. As of now, there are around 300-odd traders registered for the trade, down from close to 600 in 2008.
“We have collected 20 sacks of documents from the trade facilitation points at Uri and Poonch. We are analysing the records. There is a huge over-valuation of products that come from Pakistan,” the official said.
----------------------
7.National Law School forum puts some byte into consumer redress
University’s online centre will offer mediation facility to settle e-commerce disputes
E-commerce has changed the way people buy goods, but it sometimes comes with hidden surprises in the form of wrong orders or damaged goods landing at the buyer’s doorstep.
Now, there is some help at hand for customers who are unable to find an amicable resolution to disputes. The National Law School of India University, Bengaluru, is set to launch an Online Consumer Mediation Centre (OCMC) to help such customers get a remedy, for a fee of Rs.100.
In the initial stage, the centre will encourage a dialogue between customers and e-commerce companies via text-based negotiation on a tailor-made platform on the centre’s website.
The initiative, which is funded by the Centre’s Department of Consumer Affairs, will be launched on December 24 — National Consumer Rights Day.
Ashok R. Patil, Director, OCMC, said the aim is to support consumer redress by providing a platform that is quick, transparent, effective and enabling fair settlement of disputes. Its tag line is ‘Anytime, Anywhere Dispute Resolution’.
Register online
Customers can register their grievance online, after which the centre’s platform can be used to chat with the trader. Documents and relevant files can be uploaded, said Krishna Bharadwaj, the mediator at the centre.
“The consumer should mention whether she wants a full or partial refund, or replacement of product. If the dispute is not resolved after a week, a neutral mediator will be appointed. Both consumers and company representatives can chat only with the mediator or chat together with the mediator in a chat window,” said Mr. Bharadwaj. The mediators are professionally trained.
After the consumer and the company resolve the dispute, they will have to sign a settlement agreement, Prof. Patil said. “This method is pre-litigation mediation. However, even midway through the process, they can opt out,” he said.
Prof. Patil sees the process helping tech-savvy consumers as it is hassle- free. “Currently, a majority of the consumers do not approach redress forums as they feel it is time-consuming or that they may not get good compensation. We hope that this will change with our software,” he said.
Letters have been sent from the Ministry of Consumer Affairs, Food and Public Distribution, encouraging e-commerce companies to enter into an agreement with OCMC.
------------------
8.India, Kyrgyzstan seek a global pact against terror
India and Kyrgyzstan on Tuesday finalised plans for joint military exercises in the New Year and reiterated the need for a global convention against terrorism. Visiting President Almazbek Atambaev highlighted the common historical heritage and sought cooperation to deal with current global challenges like terrorism.
“Kyrgyzstan is home to the great Mughals of India and Emperor Babur came from the city Osh and even in his memoir the Baburnama, he refers to his place of origin in the mountains near Osh,” said Mr. Atambaev, referring to the shared heritage and values between his country and India and laid out a common plan to deal with emerging contemporary challenges.
Following a bilateral summit at the Hyderabad House, the delegations finalised plans to hold the annual joint military exercises named “Khanjar-IV” in February-March 2017. The Khanjar-II exercises were held in March 2015 in Kyrgyzstan and “Khanjar-III” in March-April 2016 in Gwalior. A joint statement which marked the end of the visit took note of the IT support that India had provided to the Kyrgyz military institutions including building three IT centres in the last two years.
It also noted the high altitude Kyrgyz-Indian Mountain Training Centre being built in the city of Balykchi which will be used to train Indian military personnel. The visiting delegation also welcomed India’s proposal for training Kyrgyz forces for U.N. peacekeeping assignments.
Addressing the media, Prime Minister Narendra Modi said, “The understandings concluded today [Tuesday] will support our thrust in these directions. In a first with the Central Asian region, we had initiated tele-medicine links with Kyrgyz Republic last year. We are taking steps to expand this project to other regions of the Kyrgyz Republic.”
Both sides also reiterated the demand for global counter-terror norms to fight terrorism in the Asiatic continent and called for the adoption by the United Nations of the draft Comprehensive Convention on Combating International Terrorism. Mr. Atambaev appreciated India’s support to building the transport network in Iran and Afghanistan and said, “This will increase regional connectivity and help connect Kyrgyztan with Iran, Afghanistan and beyond.”
Mr. Atambaev who completed a four-day visit to India also sealed agreements on foreign office consultations, sports, broadcast cooperation and bilateral investment.
----------------------
‘9.Key rural sectors need attention due to demonetisation’
Rural sectors such as vegetable growers, brick kiln labourers, transport industry and plantations need special attention even though there is a perception about a positive impact of demonetisation, representatives of the banking industry told Finance Minister Arun Jaitley.
Mr. Jaitley hinted at some more “out of the box” steps that the government would take to ease the adverse impact of demonetisation.
The bankers, during a pre-Budget consultative meeting with Mr. Jaitley, suggested special efforts for digitisation of primary agriculture cooperative societies, regional rural banks and co-operative banks to promote digital transactions and e-payments.
“The Finance Minister Arun Jaitley said that the current Financial Year 2016-17 is not a conventional year as many major reformative decisions have been taken during the year,” according to an official statement.
“He said that there is need for out-of-box thinking as series of steps are required about what the Government can do and what the banks can do. The Finance Minister further said that the banking sector is the backbone of our economy.”
Cost of demonetisation
A team of economists also met Mr. Jaitley on Tuesday and said that Budget 2017 should include a statement by the government detailing the costs incurred due to the demonetisation of high-value currency notes, such as the printing cost of new notes and the impact on toll charges. On the issue of cash that needed to be brought back into the economy in lieu of withdrawn currencies, they said that the market should be allowed to decide the quantum.
------------------
10.Credit costs hinder cashless economy
On November 18, Reserve Bank of India (RBI) issued a circular asking banks to waive charges levied on transactions by merchant establishments using point of sale (PoS) terminals. “Customer charges, if any, being levied on all such transactions (are) waived till December 30, 2016, subject to review,” the banking regulator had said.
Customer charges, in this case, are known as the Merchant Discount Rate (MDR) in banking parlance. Despite the circular, many banks, particularly the private sector ones, had been reluctant to waive the charges. However, these banks started falling in line after Economic Affairs Secretary Shaktikanta Das reiterated the same during a press conference in New Delhi.
“To promote greater use of debit cards, public sector banks and some of the private sector banks have decided to waive the MDR charges till 31.12.2016. Other private sector banks are expected to do likewise,” Mr. Das reported on November 23.
After that, private sector lenders like the ICICI Bank, Axis Bank and YES Bank issued statements saying they have waived MDR transaction fees on debit card usage until the end of December.
Merchants benefit
The move, however, benefited merchants but not the consumer. Merchants have not reduced their prices, even though they ended up not paying the charge.
Why is there a reluctance on the part of the banks to waive the fee, even if it is meant for a limited period?
MDR for debit cards has been capped by the banking regulator at 1 per cent per transaction while for credit cards — where there is no cap — the rate could go up to 2.5 per cent.
The charge is borne by the merchant and goes to the issuer bank (the bank that has issued the card), the acquirer banks (the bank that installed the PoS terminal) and payment gateways such as Mastercard, Visa and Rupay. The issuer bank gets the maximum share of the MDR.
First, let us take the case of debit cards. Debit cards are issued to customers who have a savings bank account and the money from that account gets debited immediately after the card is swiped for a transaction.
When a depositor keeps the funds in the savings account for which she earns 4 per cent, the bank, in turn, lends that money which can earn it at least 6.5 per cent, a risk-free rate.
Cost savings
Issuing a debit card to the customers saves cost for the bank. RBI studies have found that if a customer visits a bank branch for a transaction, the cost incurred by the bank is in the range of Rs.30-32, but when the customer visits automated teller machines, the cost comes down to Rs.14-15 per transaction.
Now the question arises: Why does a bank need to charge a merchant for debit card transactions; a charge that acts as a disincentive for the merchant to install the machine?
“Credit cost, imposed indirectly on the merchants is, in turn, passed on to all customers through increased selling price of goods and services,” according to a report titled ‘Sanitizing distortions in digital payments’ jointly written by Ashish Das, professor at Indian Institute of Technology, Bombay and Praggya Das, director in the monetary policy department at RBI.
“Thus, credit-less digital payments cross-subsidise the hidden cost of credit embedded in the payment system.”
Banks earn by lending the deposits made by their customers. So such a charge to the merchants acts as a disincentive for them to install PoS terminals.
So far as credit cards are concerned, banks charge merchants a fee ranging from 1.5 per cent to as high as 2.5 per cent. In the case of credit card — which is a credit product — the charges should be borne only by the person who is availing the credit and not by any other party.
PoS growth
Following the demonetisation exercise, installation of PoS terminals has seen an exponential growth.
State Bank of India (SBI), for example, saw 3.75 lakh transactions everyday in the PoS terminals before November 9 amounting to Rs.94 crore per day. After demonetisation the number increased to 16.43 lakh transactions amounting to Rs.324 crore per day, said Rajnish Kumar, managing director, SBI. “In the last financial year, we had installed 1 lakh PoS terminals which comes to a daily average of about 300 terminals. Post demonetisation the daily average installation has gone up to 1,000,” Mr. Kumar said.
The Centre has asked the banks to beef up installation of PoS terminals and has given them an ambitious target of installing 3 lakh terminals over three months, following the demonetisation.
Would waiving off the charge completely prove optimal?
According to a top central banking source, while there is scope for further rationalising the charges, waiving them off completely could be detrimental to decisions on further investments by banks.
Mr. Kumar said, “There are costs to it, there are investments. The issuer bank has to pay the acquirer bank and the payment gateway.”
Optimal rates
RBI had recently lowered the MDR cap for debit cards from January 1 to 0.25 per cent for transactions up to Rs.1,000 and 0.5 per cent for transactions between Rs.1,000 and Rs.2,000. This limit is applicable until March 31.
The committee, set up to present a roadmap for digital payments, headed by finance secretary Ratan Watal, said in its report that the MDR rate should be at an optimal level.
“The MDR must be low enough to ensure that merchants adopt the payment method, and encourage customers to use such payment methods. At the same time, the MDR must be high enough to cover costs, and incentivise issuers and acquirers to keep acquiring greater number of merchants,” the report, which was recently submitted to Finance Minister Arun Jaitley, observed.
The Watal Committee further said that regulatory caps placed upon MDR may ultimately hamper the growth of the payments industry. “Accordingly, the Committee believes that regulatory intervention with regard to pricing should be minimal, and that regulation should focus upon removal of entry barriers, and ensuring greater competition in the markets.
The committee has recommended that the setting of MDR should be market-driven. However, the interchange fees may be regulated on an evidence-based approach.
The vision of the committee was to present a roadmap for digital payments to grow significantly from the present level of twenty per cent of all transactions over the next three years.
The country’s cash to Gross Domestic Product (GDP) ratio, which is among the highest in the world, was envisioned to be reduced from about 12 per cent to six per cent.
Admissions to medical, Ayush, agriculture, veterinary, fisheries and forestry courses would be made from the National Eligibility-cum-Entrance Test (NEET) rank list from the academic year 2017-18 onwards.
A press note here said the State government would not henceforth conduct entrance examinations to these courses. Admissions to the engineering courses would continue to be made from a rank list prepared on the basis of an entrance examination conducted by the State government.
In 2016 the Supreme Court had allowed Kerala, as a one-time measure to admit students from the State medical entrance rank list. That is how admissions were made to all government colleges and the government seats in self-financing colleges from the State list.
The number of students appearing for medical courses other than MBBS and BDS is so small that it would not be financially viable for the State to conduct an entrance examination for such students alone. It would also lead to a situation where students in Kerala would have to write three entrance examinations if they wanted to be considered for engineering, MBBS/BDS and the allied medical courses.
-----------------------------------------------------------
2.Airlines dumping waste mid-air to attract fine
NGT passed the order after a plea alleged dumping of human excreta by aircraft over residential areas near Delhi's IGI Airport
The menace of human waste being splattered on houses from airplanes while landing, led the National Green Tribunal (NGT) to slap a fine of Rs. 50,000 on the airline whose aircraft empties toilet tanks in the air.
The NGT directed aviation regulator DGCA to issue a circular to all airlines, whose planes are involved, to pay Rs. 50,000 as environmental compensation.
Slew of directions
A Bench headed by NGT Chairperson Swatanter Kumar passed a slew of directions while disposing of a plea by Lt. Gen. Satwant Singh Dahiya, a retired Army officer who alleged that aircraft dump human excreta over residential areas near the IGI Airport here.
“DGCA shall issue directions that aircraft on landing shall be subjected to surprise inspection to see that human waste tanks are not empty,” the Bench said.
--------------------------
3.Jet stream in Earth’s core discovered
Using the latest satellite data that helps create an ‘X-ray’ view of the planet, scientists discovered a jet stream within the Earth’s molten iron core.
“The European Space Agency’s Swarm satellites are providing our sharpest X-ray image yet of the core. We’ve not only seen this jet stream clearly for the first time, but we understand why it’s there,” said lead researcher Phil Livermore from the University of Leeds in Britain.
“We can explain it as an accelerating band of molten iron circling the North Pole, like the jet stream in the atmosphere,” Mr. Livermore said. Because of the core’s remote location under 3,000 kilometres of rock, for many years, scientists have studied the Earth’s core by measuring the planet’s magnetic field — one of the few options available.
---------------------
4.E-dhaga in Kannada by Jan.
Union Textiles Minister Smriti Irani on Tuesday said the Kannada version of mobile app E-dhaga will be launched by January 15, which will help weavers get information on raw material availability.
She said currently the app is available in Hindi, English and Telugu, and will soon be released in Bengali, Oriya, Urdu and Assamese. The app is developed by the National Handloom Development Corporation.
---------------------
5.SC may hear plea on tax relief for parties
Petitioner has challenged constitutionality of provisions of Income Tax Act and Representation of the People Act
The Supreme Court is likely to hear a writ petition to declare as unconstitutional certain provisions of the Income-Tax Act and the Representation of the People Act giving “100 per cent tax exemption” to political parties.
The petition filed by advocate M.L. Sharma has challenged the constitutionality of Section 13A of the Income-Tax Act of 1961 and Section 29 of the Representation of the People Act, 1951. The petition has asked why ordinary persons are taxed while the political parties enjoyed tax exemption.
“Political parties registered with the Election Commission are 100 per cent exempted from paying income tax if they file Income-Tax returns every assessment year along with audited accounts, income/ expenditure details and balance sheet,” the petition said.
Demonetised notes
Mr. Sharma said the petition necessitated when the Finance Secretary on December 16 declared that no investigation would be done against the political parties’ accounts and funding upon depositing of old demonetised notes owing to the 100 per cent tax exemption.
“This is a serious financial injury to the citizen of India. If it is not stopped and quashed it will endanger the whole society, life of the citizen of India,” the petitioner said. The petition also seeks the SC’s intervention to respond to several questions of law like whether the Constitution recognises the need for a political party membership for membership in Parliament and State Legislative Council and Assembly?
“In the present scenario, parties work for themselves to garner maximum seats in the House by hook and crook. They serve no social and moral service to the country. On the other hand, they have been at the root of corruption,” the petition alleged.
------------------
6.Cross-LoC trade funding terror: NIA
The National Investigation Agency is investigating if proceeds from trade across the Line of Control between Jammu and Kashmir and Pakistan-occupied Kashmir are being “used” to finance terrorist activities in the Valley.
Last week, the NIA registered a case under Section 17 — punishment for raising funds to indulge in terrorist acts — of the Unlawful Activities Prevention Act against unknown persons on the basis of “secret information”.
A senior NIA official told The Hindu the agency had credible information that fraudulent transactions coming to Rs. 2,100 crore at the Salamabad-Uri trade point and Rs. 670 crore at the Chakan Da Bagh-Poonch point since cross-LoC trade began in 2008.
The official claimed that a major portion of these proceeds were diverted to fund terrorist activities in the valley. Cross-LoC trade, a confidence-building measure between India and Pakistan, and takes place four times a week through the Uri-Muzaffarabad and Poonch-Rawalakote routes. The trade has so far touched approximately Rs. 3,500 crore, with the Indian side exporting goods estimated at around Rs. 1,900 crore while receiving goods for Rs. 1,600 crore from Pakistan. As of now, there are around 300-odd traders registered for the trade, down from close to 600 in 2008.
“We have collected 20 sacks of documents from the trade facilitation points at Uri and Poonch. We are analysing the records. There is a huge over-valuation of products that come from Pakistan,” the official said.
----------------------
7.National Law School forum puts some byte into consumer redress
University’s online centre will offer mediation facility to settle e-commerce disputes
E-commerce has changed the way people buy goods, but it sometimes comes with hidden surprises in the form of wrong orders or damaged goods landing at the buyer’s doorstep.
Now, there is some help at hand for customers who are unable to find an amicable resolution to disputes. The National Law School of India University, Bengaluru, is set to launch an Online Consumer Mediation Centre (OCMC) to help such customers get a remedy, for a fee of Rs.100.
In the initial stage, the centre will encourage a dialogue between customers and e-commerce companies via text-based negotiation on a tailor-made platform on the centre’s website.
The initiative, which is funded by the Centre’s Department of Consumer Affairs, will be launched on December 24 — National Consumer Rights Day.
Ashok R. Patil, Director, OCMC, said the aim is to support consumer redress by providing a platform that is quick, transparent, effective and enabling fair settlement of disputes. Its tag line is ‘Anytime, Anywhere Dispute Resolution’.
Register online
Customers can register their grievance online, after which the centre’s platform can be used to chat with the trader. Documents and relevant files can be uploaded, said Krishna Bharadwaj, the mediator at the centre.
“The consumer should mention whether she wants a full or partial refund, or replacement of product. If the dispute is not resolved after a week, a neutral mediator will be appointed. Both consumers and company representatives can chat only with the mediator or chat together with the mediator in a chat window,” said Mr. Bharadwaj. The mediators are professionally trained.
After the consumer and the company resolve the dispute, they will have to sign a settlement agreement, Prof. Patil said. “This method is pre-litigation mediation. However, even midway through the process, they can opt out,” he said.
Prof. Patil sees the process helping tech-savvy consumers as it is hassle- free. “Currently, a majority of the consumers do not approach redress forums as they feel it is time-consuming or that they may not get good compensation. We hope that this will change with our software,” he said.
Letters have been sent from the Ministry of Consumer Affairs, Food and Public Distribution, encouraging e-commerce companies to enter into an agreement with OCMC.
------------------
8.India, Kyrgyzstan seek a global pact against terror
India and Kyrgyzstan on Tuesday finalised plans for joint military exercises in the New Year and reiterated the need for a global convention against terrorism. Visiting President Almazbek Atambaev highlighted the common historical heritage and sought cooperation to deal with current global challenges like terrorism.
“Kyrgyzstan is home to the great Mughals of India and Emperor Babur came from the city Osh and even in his memoir the Baburnama, he refers to his place of origin in the mountains near Osh,” said Mr. Atambaev, referring to the shared heritage and values between his country and India and laid out a common plan to deal with emerging contemporary challenges.
Following a bilateral summit at the Hyderabad House, the delegations finalised plans to hold the annual joint military exercises named “Khanjar-IV” in February-March 2017. The Khanjar-II exercises were held in March 2015 in Kyrgyzstan and “Khanjar-III” in March-April 2016 in Gwalior. A joint statement which marked the end of the visit took note of the IT support that India had provided to the Kyrgyz military institutions including building three IT centres in the last two years.
It also noted the high altitude Kyrgyz-Indian Mountain Training Centre being built in the city of Balykchi which will be used to train Indian military personnel. The visiting delegation also welcomed India’s proposal for training Kyrgyz forces for U.N. peacekeeping assignments.
Addressing the media, Prime Minister Narendra Modi said, “The understandings concluded today [Tuesday] will support our thrust in these directions. In a first with the Central Asian region, we had initiated tele-medicine links with Kyrgyz Republic last year. We are taking steps to expand this project to other regions of the Kyrgyz Republic.”
Both sides also reiterated the demand for global counter-terror norms to fight terrorism in the Asiatic continent and called for the adoption by the United Nations of the draft Comprehensive Convention on Combating International Terrorism. Mr. Atambaev appreciated India’s support to building the transport network in Iran and Afghanistan and said, “This will increase regional connectivity and help connect Kyrgyztan with Iran, Afghanistan and beyond.”
Mr. Atambaev who completed a four-day visit to India also sealed agreements on foreign office consultations, sports, broadcast cooperation and bilateral investment.
----------------------
‘9.Key rural sectors need attention due to demonetisation’
Rural sectors such as vegetable growers, brick kiln labourers, transport industry and plantations need special attention even though there is a perception about a positive impact of demonetisation, representatives of the banking industry told Finance Minister Arun Jaitley.
Mr. Jaitley hinted at some more “out of the box” steps that the government would take to ease the adverse impact of demonetisation.
The bankers, during a pre-Budget consultative meeting with Mr. Jaitley, suggested special efforts for digitisation of primary agriculture cooperative societies, regional rural banks and co-operative banks to promote digital transactions and e-payments.
“The Finance Minister Arun Jaitley said that the current Financial Year 2016-17 is not a conventional year as many major reformative decisions have been taken during the year,” according to an official statement.
“He said that there is need for out-of-box thinking as series of steps are required about what the Government can do and what the banks can do. The Finance Minister further said that the banking sector is the backbone of our economy.”
Cost of demonetisation
A team of economists also met Mr. Jaitley on Tuesday and said that Budget 2017 should include a statement by the government detailing the costs incurred due to the demonetisation of high-value currency notes, such as the printing cost of new notes and the impact on toll charges. On the issue of cash that needed to be brought back into the economy in lieu of withdrawn currencies, they said that the market should be allowed to decide the quantum.
------------------
10.Credit costs hinder cashless economy
On November 18, Reserve Bank of India (RBI) issued a circular asking banks to waive charges levied on transactions by merchant establishments using point of sale (PoS) terminals. “Customer charges, if any, being levied on all such transactions (are) waived till December 30, 2016, subject to review,” the banking regulator had said.
Customer charges, in this case, are known as the Merchant Discount Rate (MDR) in banking parlance. Despite the circular, many banks, particularly the private sector ones, had been reluctant to waive the charges. However, these banks started falling in line after Economic Affairs Secretary Shaktikanta Das reiterated the same during a press conference in New Delhi.
“To promote greater use of debit cards, public sector banks and some of the private sector banks have decided to waive the MDR charges till 31.12.2016. Other private sector banks are expected to do likewise,” Mr. Das reported on November 23.
After that, private sector lenders like the ICICI Bank, Axis Bank and YES Bank issued statements saying they have waived MDR transaction fees on debit card usage until the end of December.
Merchants benefit
The move, however, benefited merchants but not the consumer. Merchants have not reduced their prices, even though they ended up not paying the charge.
Why is there a reluctance on the part of the banks to waive the fee, even if it is meant for a limited period?
MDR for debit cards has been capped by the banking regulator at 1 per cent per transaction while for credit cards — where there is no cap — the rate could go up to 2.5 per cent.
The charge is borne by the merchant and goes to the issuer bank (the bank that has issued the card), the acquirer banks (the bank that installed the PoS terminal) and payment gateways such as Mastercard, Visa and Rupay. The issuer bank gets the maximum share of the MDR.
First, let us take the case of debit cards. Debit cards are issued to customers who have a savings bank account and the money from that account gets debited immediately after the card is swiped for a transaction.
When a depositor keeps the funds in the savings account for which she earns 4 per cent, the bank, in turn, lends that money which can earn it at least 6.5 per cent, a risk-free rate.
Cost savings
Issuing a debit card to the customers saves cost for the bank. RBI studies have found that if a customer visits a bank branch for a transaction, the cost incurred by the bank is in the range of Rs.30-32, but when the customer visits automated teller machines, the cost comes down to Rs.14-15 per transaction.
Now the question arises: Why does a bank need to charge a merchant for debit card transactions; a charge that acts as a disincentive for the merchant to install the machine?
“Credit cost, imposed indirectly on the merchants is, in turn, passed on to all customers through increased selling price of goods and services,” according to a report titled ‘Sanitizing distortions in digital payments’ jointly written by Ashish Das, professor at Indian Institute of Technology, Bombay and Praggya Das, director in the monetary policy department at RBI.
“Thus, credit-less digital payments cross-subsidise the hidden cost of credit embedded in the payment system.”
Banks earn by lending the deposits made by their customers. So such a charge to the merchants acts as a disincentive for them to install PoS terminals.
So far as credit cards are concerned, banks charge merchants a fee ranging from 1.5 per cent to as high as 2.5 per cent. In the case of credit card — which is a credit product — the charges should be borne only by the person who is availing the credit and not by any other party.
PoS growth
Following the demonetisation exercise, installation of PoS terminals has seen an exponential growth.
State Bank of India (SBI), for example, saw 3.75 lakh transactions everyday in the PoS terminals before November 9 amounting to Rs.94 crore per day. After demonetisation the number increased to 16.43 lakh transactions amounting to Rs.324 crore per day, said Rajnish Kumar, managing director, SBI. “In the last financial year, we had installed 1 lakh PoS terminals which comes to a daily average of about 300 terminals. Post demonetisation the daily average installation has gone up to 1,000,” Mr. Kumar said.
The Centre has asked the banks to beef up installation of PoS terminals and has given them an ambitious target of installing 3 lakh terminals over three months, following the demonetisation.
Would waiving off the charge completely prove optimal?
According to a top central banking source, while there is scope for further rationalising the charges, waiving them off completely could be detrimental to decisions on further investments by banks.
Mr. Kumar said, “There are costs to it, there are investments. The issuer bank has to pay the acquirer bank and the payment gateway.”
Optimal rates
RBI had recently lowered the MDR cap for debit cards from January 1 to 0.25 per cent for transactions up to Rs.1,000 and 0.5 per cent for transactions between Rs.1,000 and Rs.2,000. This limit is applicable until March 31.
The committee, set up to present a roadmap for digital payments, headed by finance secretary Ratan Watal, said in its report that the MDR rate should be at an optimal level.
“The MDR must be low enough to ensure that merchants adopt the payment method, and encourage customers to use such payment methods. At the same time, the MDR must be high enough to cover costs, and incentivise issuers and acquirers to keep acquiring greater number of merchants,” the report, which was recently submitted to Finance Minister Arun Jaitley, observed.
The Watal Committee further said that regulatory caps placed upon MDR may ultimately hamper the growth of the payments industry. “Accordingly, the Committee believes that regulatory intervention with regard to pricing should be minimal, and that regulation should focus upon removal of entry barriers, and ensuring greater competition in the markets.
The committee has recommended that the setting of MDR should be market-driven. However, the interchange fees may be regulated on an evidence-based approach.
The vision of the committee was to present a roadmap for digital payments to grow significantly from the present level of twenty per cent of all transactions over the next three years.
The country’s cash to Gross Domestic Product (GDP) ratio, which is among the highest in the world, was envisioned to be reduced from about 12 per cent to six per cent.
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