TOPIC : GS 2 Statutory, Regulatory and various Quasi-judicial Bodies.
Guarantor beware
What is the news?
- The Supreme Court judgment upholding creditors right to proceed against personal guarantors to loans provided by them to a corporate borrower
- It helps to lift the uncertainty over the extent to which banks and other financial lenders can pursue not only the corporate debtor but also the individuals
- The furnished personal guarantees to enable the flow of credit to the company they had stood surety for.
- This ought to be of significant consequence to the financial system already under a mountain of bad loans
- The process helping expedite the resolution of such stressed assets.
The provision Process
- The two judge Bench was considering a clutch of petitions challenging the government’s 2019 notification that made personal guarantors a separate category of individuals
- They could be proceeded against under the Insolvency and Bankruptcy Code as part of the insolvency proceedings initiated by lenders against defaulting corporate entities.
- In dismissing the petitions, the judges made clear that the government was right in carving out personal guarantors as a separate species of individuals
- It must be given the intimate connection between such individuals and corporate entities to whom they stood guarantee.
- Banks now stand a real chance of recovering substantially more from the resolution of a stressed corporate entity
- As in most cases it has been the relatively affluent promoters who have been standing as individual personal guarantors for the loans extended to the companies they promoted.
Consequences of Policies
- Several corporate leaders are set to be impacted.
- The promoters of many defaulting corporates which are facing action under the IBC had furnished guarantees for thousands of crores in loans availed by the companies they ran.
- The State Bank of India alone had submitted in the apex court that it had served demand notices aggregating to more than 39,000 crore
- This are the individuals who had signed as guarantors for credit provided to corporate entities.
- The judges also cleared issue that is bound to strengthen the creditors positions in all ongoing, future and even completed insolvency proceedings.
- The Bench ruled that the approval of a resolution plan for the corporate debtor does not extinguish the personal guarantor’s liability,
- It will arises out of an independent contract.
- Lenders can now proceed against the guarantors to enhance recovery given that most banks agree to haircuts
- It is done during negotiating a resolution plan with a new promoter for the defaulting company.
Way forward
- The only wrinkle here is that once the resolution plan becomes legally binding.
- The guarantor loses the recourse to remedy from the borrower when the creditor invokes the personal guarantee.
- Entrepreneurs will now have to think twice before signing a personal guarantee unless they can be very certain that the business they found
Mains question
Entrepreneurs signing guarantee will have to be certain that the business will not flounder. Crtically Examine
PRELIMS PUNCHERS
- White flies
Whiteflies are Hemipterans that typically feed on the undersides of plant leaves. Many are so small that their size complicates their control in greenhouses because they can only be excluded by screening with very fine mesh.
In fact they can enter mesh so fine that many of their natural enemies cannot come in after them, so that unchecked whitefly populations in greenhouses rapidly become overwhelming. In warm or tropical climates and especially in greenhouses, whiteflies present major problems in crop protection. Worldwide economic losses are estimated at hundreds of millions of dollars annually. Biological methods have also been proposed to control whitefly infestation, and may be paired with chemical methods. Washing the plant, especially the undersides of leaves, may help reduce the number of the pests on the plants and make their management by other methods more effective.
- Mutuation
Mutation is an alteration in the nucleotide sequence of the genome of an organism, virus, or extrachromosomal DNA. Viral genomes contain either DNA or RNA. Mutations result from errors during DNA or viral replication, mitosis, or meiosis or other types of damage to DNA such as pyrimidine dimers caused by exposure to ultraviolet radiation, which then may undergo error-prone repair especially microhomology-mediated end joining, cause an error during other forms of repair, or cause an error during replication. Mutations may also result from insertion or deletion of segments of DNA due to mobile genetic elements
Mutations in genes can have no effect, alter the product of a gene, or prevent the gene from functioning properly or completely. Mutations can also occur in nongenic regions. Due to the damaging effects that mutations can have on genes, organisms have mechanisms such as DNA repair to prevent or correct mutations by reverting the mutated sequence back to its original state
- Three striped Roofed Turtle
The three-striped roofed turtle is a species of turtle in the family Geoemydidae. The species is endemic to South Asia. Conservation Status is IUCN listed as Critically Endangered Indian Wildlife Protection Act is Schedule I and CITES is Appendix II.
The Three-striped roofed turtle ranges throughout northern India, Nepal, and Bangladesh. They are found in moderate to large rivers and nest on sand banks. Their peak nesting season is March and April. Males are omnivorous while the diet of females is unknown. Major Threats is the species is heavily exploited for its flesh and Loss of habitat, due to human interference.
Sources : https://www.wii.gov.in/nmcg/priority-species/reptiles/three-striped-roofed-turtle
- National Mobile Monitoring Software
The NMMS App permits taking real time attendance of workers at Mahatma Gandhi NREGS worksites along with geotagged photograph, which will increase citizen oversight of the programme besides potentially enabling processing payments faster. Area Officer Monitoring App facilitates them to record their findings online along with time stamped and go-coordinate tagged photograph for all the schemes of Deptarment of Rural Development- Mahatma Gandhi NREGS, PMAYG, PMGSY. This would also enable not only better record keeping of inspections by field and supervisory officials but also facilitate analysis of the findings for better programme implementation.
Field officials and volunteers like the GRS of Mahatma Gandhi NREGS, Panchayat Secretary, and other field functionaries and SHGs, who have kept the flag of the Scheme flying high during difficult time.
Sources : http://newsonair.com/Main-News-Details.aspx?id=417572
PRELIMS QUESTIONS
Qn 1.Consider the following statement with reference to three striped roofed turtle
- The Conservation Status is IUCN listed as Endangered
- The ranges distribution throughout northern India, Nepal, and Bangladesh.
sSelect the correct statement using code given below.
(a). 1only                                (b) 2 only
(c). Both of them                (d). None of the above
Answer : B
The three-striped roofed turtle is a species of turtle in the family Geoemydidae. The species is endemic to South Asia. Conservation Status is IUCN listed as Critically Endangered, Indian Wildlife Protection Act is Schedule I and CITES is Appendix II.
The Three-striped roofed turtle ranges throughout northern India, Nepal, and Bangladesh. They are found in moderate to large rivers and nest on sand banks. Their peak nesting season is March and April. Males are omnivorous while the diet of females is unknown. Major Threats is the species is heavily exploited for its flesh and Loss of habitat, due to human interference.
Qn 2.Consider the following statement with reference to mutation
1.Viral genomes contain only DNA
- Mutations in genes can have effect, alter the product of a gene, or prevent the gene from functioning
Select the correct statement using code given below.
(a). 1only                                (b) 2 only
(c). Both of them                (d). None of the above
Answer : D
Mutation is an alteration in the nucleotide sequence of the genome of an organism, virus, or extrachromosomal DNA. Viral genomes contain either DNA or RNA. Mutations result from errors during DNA or viral replication, mitosis, or meiosis or other types of damage to DNA such as pyrimidine dimers caused by exposure to ultraviolet radiation, which then may undergo error-prone repair especially microhomology-mediated end joining, cause an error during other forms of repair, or cause an error during replication. Mutations may also result from insertion or deletion of segments of DNA due to mobile genetic elements
Mutations in genes can have no effect, alter the product of a gene, or prevent the gene from functioning properly or completely. Mutations can also occur in nongenic regions. Due to the damaging effects that mutations can have on genes, organisms have mechanisms such as DNA repair to prevent or correct mutations by reverting the mutated sequence back to its original state