Business, Economy & Banking Current Affairs

ICEX launches world’s first diamond futures contracts

The Indian Commodity Exchange (ICEX) as launched world’s first diamond futures contracts to provide exporters with a hedging tool.

India is a global diamond polishing hub where 14 out of every 15 rough diamonds in the world are polished. The futures contracts will enable companies involving in cut and polished gems business to better hedge price risks.

ICEX has received approval from market regulator Securities Exchange Board of India (SEBI) to commence trading with diamond futures contracts.

Key Facts

The ICEX has started trading in 1 carat/100 cent contracts and eventually in future will add 50 cent and 30 cent contracts. It has put in place necessary infrastructure to handle deposits, grading and sealing, vaulting and delivery of diamonds for the diamond futures contracts.

To avail futures contracts sellers will need to get the diamond certified by De Beers-promoted International Institute of Diamond Grading and Research. The certification will allow getting credit in electronic form equivalent to the carat deposited.

Indian Commodity Exchange (ICEX)

ICEX is deemed recognized Stock exchange providing a nation-wide on-line trading platform in commodity derivative. It is a public-private partnership with Reliance Capital, MMTC Ltd, Indiabulls Housing Finance Ltd, Indian Potash Ltd, KRIBHCO and IDFC Bank as major shareholders. It was established under the SCRA, 1956 in terms of Section 131(B) of Finance Act, 2015 pursuant to central Government notification issued in August 2015.

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Government notifies Banking Regulation (Amendment) Act, 2017

The Union Government has notified the Banking Regulation (Amendment) Act, 2017. The Parliament had approved the Banking Regulation (Amendment) Bill, 2017 which replaced an ordinance in this regard.

It amended the Banking Regulation Act, 1949 by adding provisions for handling cases related to stressed assets or non-performing assets (NPAs) of banks.

Key Facts

The Act empowers the Central government to authorize the Reserve Bank of India (RBI) to direct banking companies to resolve specific stressed assets by initiating insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. The RBI can specify authorities or committees to advise banks on resolution of stressed assets. The members on the committees will be appointed or approved by the RBI. The Act also make these provisions applicable to the SBI and its subsidiaries and also Regional Rural Banks (RRBs).

Background

The banking sector in India is saddled with non-performing assets (NPAs) of over Rs.8 lakh crore, of which, Rs. 6 lakh crore are with public sector banks (PSBs). The Union Government in May 2017 had promulgated an ordinance authorising the RBI to issue directions to banks to initiate insolvency resolution process under the Insolvency and Bankruptcy Code, 2016. The RBI had identified 12 accounts each having more than Rs. 5000 crore of outstanding loans and accounting for 25% of total NPAs of banks for immediate referral for resolution under the bankruptcy law. The bulk of the NPAs are in various sectors including power, steel, road infrastructure and textiles.

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