Current Affairs – February 2017

India to pitch Trade Facilitation in Services at WTO

India will make a presentation on the proposed Trade Facilitation in Services (TFS) Agreement to World Trade Organisation (WTO) Director General Roberto Azevedo and India Inc.

The global pact proposed by India to boost services trade at the WTO-level aims to ease norms including those relating to movement of foreign skilled workers and professionals across borders for short-term work.

The proposed services pact is similar to the Trade Facilitation Agreement (TFA) in Goods adopted by the WTO Members in 2014 at Bali Summit to ease customs norms for boosting global goods trade.

Some proposed features TFS Agreement
  • Covers measures across all modes of supply for services delivery in cross-border trade, related to entry into the market as well as those applied post-entry.
  • Seeks to ensure portability of social security contributions, as well as make sure charges or fees for immigration or visas transparent, reasonable and non-restrictive in nature.
  • Pave the way for a single window mechanism for foreign investment approvals. Ensure cross-border insurance coverage to boost medical tourism.
  • Ensure publication of measures impacting services trade and timely availability of relevant information in all the WTO official languages as well as free flow of data and information for cross-border supply of services.

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RBI to set up separate Enforcement Department

The Reserve Bank of India (RBI) has decided to set up separate Enforcement Department to effectively monitor banks in case they violate regulations and speed up regulatory compliance.

The department will be operational from April 1, 2017 i.e. the next financial year (2017-18). It will mainly deal with the penalties imposed on banks for violation of norms.

Key Facts
  • Currently, the penalties are determined by the banking and non-banking supervision departments against banks violating rules.
  • The Enforcement Department will serve as centralised department to deal with penalties imposed on banks. This will help RBI follow-up and maintain a record on banks performance.
  • It will deal with cases of non-compliance with regulations noticed either through the surveillance process or otherwise.
Background

Regulation, enforcement and surveillance are three important facets of financial sector oversight mechanism. Regulations determine the framework in which financial entities function so that transparency, prudence and comparability are ensured on the one hand and customer interests are protected on the other. Surveillance is the process through which adherence to the regulations is monitored. Currently, in the RBI, there is a clear demarcation of the surveillance and regulatory functions, but it was not in the case with enforcement of rules.

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