Current Affairs – April, 2014

Latest Current Affairs April, 2014 with Current Affairs, news summary on current events of National and International importance of April, 2014 for Banking, SSC, CLAT, UPSC, State PCS, IBPS, Railways and other Competitive Examinations.

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Indian Navy’s first aircraft carrier INS Vikrant sold to ship-breaker for only Rs 60 Crore

Indian Navy’s first aircraft carrier INS Vikrant has been sold for mere Rs 60 Crore via an online auction to an Alang ship-breaker. The decommissioned aircraft carrier played an crucial role in the 1971 Indo-Pak war.

The carrier was sold via an online auction to a ship-breaker following the dismissal a PIL (Public-Interest Litigation) filed by Kiran Paigankar (founder of the “Save Vikrant Committee”) by the Bombay High Court. The Court dismissed the PIL stating that the carrier’s tatterdemalion condition did not justify her conservation, also the requisite funds or government support are also not available.

Timeline: INS Vikrant

Under United Kingdom:

  • Named: “HMS Hercules”; Builder: Vickers-Armstrong/Harland and Wolff; Never commissioned
  • 1943: Laid down on November 12, 1943
  • 1945: Launched on September 22, 1945
  • 1957: Sold to India

Under India:

  • 1961: Commissioned on March 4, 1961
  • 1971: Played a crucial role in imposing the naval encirclement on East Pakistan during the Indo-Pakistan War of 1971.
  • 1997: Decommissioned on January 31,1997
  • Preserved as a museum ship in Cuffe Parade, Mumbai. But there was a lack of funding for its proper preservation. INS Vikrant was the only World War II-era British-built aircraft carrier to be preserved as a museum.
  • 2010: Maharashtra government had conveyed its unfitness to maintain Vikrant
  • 2012: Museum was closed after Vikrant was viewed as unsafe.
  • 2013: On December 3, 2013, the Indian government adjudicated to auction the ship, due to its upkeep difficulties.

RBI accepts P. Vijaya Bhaskar Committee’s recommendations relating to Financial Benchmarks; asks establishing an independent body for recommending benchmark foreign exchange rate

RBI has accepted the P. Vijaya Bhaskar Committee’s recommendations relating to Financial Benchmarks. RBI has asked for establishing an independent body for recommending benchmark foreign exchange rate in order to avoid any potential manipulation by the bankers.

The Bhaskar Committee had suggested Indian money and currency markets should move their benchmarks towards transaction-based from poll-based in an attempt to comb out manipulation.

In 2013, RBI had appointed a committee under the chairmanship of P Vijaya Bhaskar, Executive Director of RBI, as it wanted to avoid issues caused by the manipulation of London Interbank Offered Rate (LIOBOR) and exchange rates all over Europe.

RBI has suggested FIMMDA (Fixed Income Money Market and Derivatives Association of India) and FEDAI (Foreign Exchange Dealers Association of India) to act as administrators to the Indian rupee, interest rate, and foreign exchange benchmarks, respectively. In order to defeat any potential conflicts of interest in the benchmark fixing procedure originating from the present governance structure of the FIMMDA and FEDAI (which are industry nodal agencies), RBI has suggested that an independent body, either individually or conjointly, may be formed by the FIMMDA and FEDAI for administration of the benchmarks.

Some key measures that are anticipated to beef up the governance model for benchmark submission:-

  1. The benchmark submitters have to essentially take part in the polling process and abide by several provisions specified in the code of conduct
  2. The benchmark submitters have to introduce place an efficient conflict of interest policy helping identification of potential and genuine conflicts of interest
  3. The benchmark submitters also have to lay down an effective whistle-blowing policy to help early detection of any potential misconduct in benchmark data presentations
  4. Benchmark submissions are subject to periodic internal audit and, where appropriate, to external audit
  5. Submissions by way of written communications or via full-bodied contribution devices which leave an audit trail. This is done in order to do away with possibilities of errors

Why was P. Vijaya Bhaskar Committee constituted by the RBI?

World over, financial benchmarks viz. LIBOR, EURIBOR, TIBOR, MIBOR (Mumbai Interbank Offered Rate), etc. are primarily used for pricing, valuation and settlement purposes in financial contracts. Now since, the aggregate volume of financial contracts which are valued via these Financial benchmarks is very huge, therefore these benchmarks need to be highly reliable as they play a vital role in stability of any country’s financial system.

But, late global developments with respect to manipulation of various key global benchmark rates, viz. LIBOR, EURIBOR, TIBOR, etc. have raised questions about the reliability of these financial benchmark rates, in particular who governs them and how they are governed.

Thus, world over, various international standard setting bodies, national regulators, central banks, and self regulatory market bodies have reexamined the subsisting benchmark determining process and have come out with wide-ranging reform measures and governing principles for enhancing the robustness and reliability of these crucial financial benchmarks.

The Challenges undertaken by the Vijaya Bhaskar Committee on Financial Benchmarks:

  1. Study all key financial benchmarks in India, in reference to evaluating their present significance/utilization.
  2. Propose changes, if any, for addition of new benchmarks or elimination of some of the existent benchmarks.
  3. Study international experience in dealing with problems concerning benchmarks and learn lessons there from them which applicable to Indian context.
  4. Analyse the governance mechanisms within the organizations calculating the benchmarks with a view to evaluating conflicts of interest, if any, and propose measures for removing such conflicts and increasing transparency.
  5. Analyse the need for regulators’ participation in calculation of benchmarks.
  6. Propose worthy mechanisms for handling with transition issues coming up out of legacy contracts in the case of markets changing to a fresh benchmark.
  7. Suggest a system of supervisory oversight with regard to institutions caught up in calculating /broadcasting the benchmarks.
  8. Analyse and suggest on any other associated issues.

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