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Daily Category  (Indian Economy )

RBI proposes 4-tier structure for tighter regulation of NBFCs


The Reserve Bank of India (RBI) has proposed a tighter regulatory framework for non-banking financial companies (NBFCs) by creating a four-tier structure with a progressive increase in intensity of regulation.

                                 Non Banking Financial Company (NBFCs) - An Overview | LegalRaasta


  • Four-layered structure: RBI has said the regulatory and supervisory framework of NBFCs should be based on a four-layered structure:
  1. Base Layer,
  2. Middle Layer,
  3. Upper Layer and
  4. Top Layer.
  • Classification of NPAs: Of base layer NBFCs
    • From 180 days
    • To 90 days overdue.
  • Classification of NBFCs:
  1. NBFC-BL: NBFCs in lower layer will be known as NBFC-Base Layer (NBFC-BL).
  2. NBFC-ML: NBFCs in middle layer will be known as NBFC-Middle Layer (NBFC-ML).
  3. NBFC-UL: An NBFC in the Upper Layer will be known as NBFC-Upper Layer (NBFC-UL) and will invite a new regulatory superstructure.
  4. There is also a Top Layer, ideally supposed to be empty.
  • NBFC in the Upper Layer: Once an NBFC is identified as NBFC-UL, it will be subject to enhanced regulatory requirement at least for four years from its last appearance in the category.
    • Even where it does not meet the parametric criteria in the subsequent year.
    • “Hence, if an identified NBFC-UL does not meet the criteria for classification for four consecutive years, it will move out of the enhanced regulatory framework,” it said.


BASE LAYER: It will consist of NBFCs, currently classified as non-systemically important NBFCs (NBFC-ND), NBFCP2P lending platforms, NBFCAA, NOFHC and Type I NBFCs.

MIDDLE LAYER: As one moves up, the next layer can consist of NBFCs currently classified as systemically important NBFCs (NBFC-ND-SI), deposit taking NBFCs (NBFC-D), housing finance companies, IFCs, IDFs, SPDs and core investment companies.

  • The regulatory regime for this layer will be stricter compared to the base layer.
  • Adverse regulatory arbitrage vis-à-vis banks can be addressed for NBFCs falling in this layer in order to reduce systemic risk spill-overs.

UPPER LAYER: NBFCs which are identified as systemically significant among. This layer will be populated by NBFCs which have large potential of systemic spill-over of risks and have the ability to impact financial stability.

  • There is no parallel for this layer at present, as this will be a new layer for regulation.
  • The regulatory framework for NBFCs falling in this layer will be bank-like.

TOP LAYER: It is possible that considered supervisory judgment might push some NBFCs from out of the upper layer of the systemically significant NBFCs for higher regulation/supervision.

  • It will occupy the top of the upper layer as a distinct set.
  • It will remain empty unless supervisors take a view on specific NBFCs.
  • If a Upper layer NBFCs pose extreme risks, they can be put into it.


The NBFC sector has seen tremendous growth in recent years. In last five years alone, size of balance sheet of NBFCs (including HFCs) has more than doubled from

  • Rs 20.72 lakh crore (2015)
  • Rs 49.22 lakh crore (2020)

Non-banking Financial Companies (NBFCs):

  • A company registered under the Companies Act, 1956. 
  • They cannot accept demand deposits like commercial banks as they are not a part of clearance and settlement system. 
  • They can be engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/ securities issued by government or local authority. 
  • NBFCs- two types- Deposit taking and Non deposit taking. 
  • It is mandatory for a NBFC to get itself registered with the RBI as a deposit taking company. 
  • Regulator- RBI. 
  • No activities in- Agri+ Industry+ Gold+ Construction of properties. 
  • NBFCs not regulated by RBI- Nidhi comp, Chit Fund, Housing financial comp, insurance comp, VCF, Merchant banks etc. 
  • Deposits are not insured in NBFCs. 
  • CAR-15% need to maintain. 

Source: The Indian Express

Global Innovation Index (GII)

India’s global position rises both in innovations & publications


India’s excellence in science has now been combined with the recognition of its brilliance as an innovative economy.

India now features among the top 50 innovative economies globally as per the Global Innovation Index (GII), placing it ahead of many developed and developing countries.


Third position in terms of publications: Country has already attained the third position in terms of publications.

Scientific excellence and innovation: The combination of scientific excellence and innovation has been possible through encouraging

  • Investments in scientific activities,
  • Infrastructure as well as
  • Manpower development along with
  • Boosting of the entire innovation chain
  • In an environment charged with
  • The start-up India movement.

5th National Science Technology and Innovation Policy: It will help us in creating knowledge and the innovation ecosystem.


NIDHI: At the same time, initiatives of DST like NIDHI have played a crucial role to reach this position.  The implementation of NIDHI has

  • Nurtured 3681 startups under incubation
  • Through the network of around 150 incubators created by dst,
  • Generated 1992 intellectual property.

Start-up India mission: At the same time, the start-up India mission has given a boost to convert these patentable innovative ideas into start-ups levitating India into the country among those with the highest number of start-ups.

  • It brought a paradigm shift in science and technology

India in R&D: India’s national investment in R&D has increased from

  • Rs. 1,13,825.03 crore in 2017-18 to
  • Rs. 1,23,847.71 crore in 2018-19.

Patents filed by Indians: Among the 13,045 patents sealed in the year 2017-18, 1,937 patents were by Indians.

  • However, some states held the lion’s share of patents filed.
  • 65% were filed from the States of Maharashtra, Karnataka, Tamil Nadu, and Delhi.

Publications: The number of publications has increased exponentially over the last 10 years.    

  • National Science Foundation (NSF) of USA: India is currently in third place, only behind China and the United States, with 135,788 scientific articles in the year 2018.
  • Growth rate of scientific publication was 12.9 percent, as against the world average of 4.9 percent.
  • India recorded the fastest average annual growth rate of publications between 2008 and 2018 with 10.73 percent.

The country’s  Per capita R&D expenditure increased to PPP $ 47.2 in 2017-18 from PPP $ 29.2 in 2007-08, as has the R&D manpower to 3.42 lakh in 2018 from 2.83 lakh in 2015. T


Lab to market: The movement to convert ideas to usable technologies and then to scale them up has now spread through the country.

Employment and economic wealth: Further, in the last five years, jobs generated in the form of direct employment were 65,864 and Rs 27,262 crores of economic wealth.


India jumps 5 places in Global Innovation Index - Times of India

Indicator of: The index is a leading reference for measuring an economy’s innovation performance.

13th edition of Global Innovation Index released.

Top 5: Switzerland, Sweden, the US, the UK and the Netherlands

Published by:

  1. Cornell University,
  2. INSEAD, and the
  3. World Intellectual Property Organization (WIPO), a specialized agency of the United Nations.

India’s Ranking:

  • At 48th position in World.
  • Top position among the nations in central and southern Asia.
  • Third most innovative lower middle-income economy in the world.
  • India ranks in the top 15 in indicators such as ICT (Information and Communication Technology) services exports, government online services, graduates in science and engineering, and R&D-intensive global companies.

Source: PIB

Recognition of Domestic Work-CARE ECONOMY-Women’s Economic Rights


Veteran actor Kamal Haasan recently promised salaries for housewives as a part of the party’s election manifesto, has revived the debate on the recognition of domestic work as work.

A report entitled ‘Women’s Economic Contribution through their Unpaid Work’ in 2009 had estimated the economic value of services by women to be to the tune of a whopping $612.8 billion annually.

The work women perform for the family should be valued equally with men’s work during the continuance of marriage.

“The wife owes service and labor to her husband as much and as absolutely as the slave does to his master.” This grates harshly upon the ears of Christendom; but it is made palpably and practically true all through our statute books said Antoinette Brown Blackwell, the first woman protestant minister of the United States.

  • Indians go a step ahead and glorify our women as goddesses but deny them equal rights.


As in the 2011 Census, while 159.85 million women stated household work as their main occupation, a mere 5.79 million men referred to it as their main occupation.

Justice N.V. Ramana in Kirti v. Oriental Insurance Company case has referred to the ‘Time Use in India-2019 Report’ of the National Statistical Office, Government of India.

  • Unpaid domestic services for household members
    • Indian women spend 299 minutes a day,
    • Men spend just 97 minutes.

A French government’s Commission on the Measurement of Economic Performance and Social Progress in 2009 that studied the situation in Germany, Italy, the United Kingdom, France, Finland and the U.S. drew similar conclusions.

A report entitled ‘Women’s Economic Contribution through their Unpaid Work: A Case Study of India’ (2009) had estimated the economic value of services by women to be to the tune of a whopping $612.8 billion annually.

British economist Arthur Cecil Pigou who had lamented that the household work by wives is not taken into consideration in calculating national income.


1. Arun Kumar Agrawal v. National Insurance Company (2010):

Supreme Court not only acknowledged the contribution of the housewives as invaluable but also observed that it cannot be computed in terms of money.

  • Her gratuitous services rendered with true love and affection cannot be equated with services rendered by others.

2. Arun Kumar Agrawal (2010)

Justice A.K. Ganguly referred to Census 2001: Women with household duties — i.e. about 36 crore women in India — as non-workers.

                               Can we Get Davos talking about the Care Economy and Feminist Economics? -  From Poverty to Power


English common law in 18th Centruy: For centuries, the English common law of marital status was starkly hierarchical. Women had no right even in respect of her work outside home.

  • If a housewife worked for pay in or out of the home, it was her husband’s prerogative to collect her wages.

Seventh century Islamic law: Strangely it clearly mandates husbands to pay wives if they decide to suckle their children and entitle them to spend certain portions of husband’s money without his consent.

19th century: American States started reforming the common law of marital status by enacting the “Married Women’s Property Acts”.

  • By 1850, the era of “earning statutes” started which granted wives property rights in earnings from their “separate” or “personal” labour.

After American Civil War: But the economy Census aftermath of the American Civil War characterised household work as “unproductive”.


Home and market: These two for centuries were considered as two distinct spheres.

Male-Market: The market was a male sphere of selfish competitiveness.

Female-Home:  but the home was celebrated as a female sphere, a site of spiritual uplift that offered relief from the vicissitudes of market struggle.

American feminist economist Nancy Folbre rightly remarked, “the moral elevation of the home was accompanied by the economic devaluation of the work performed there”.

Worcester Convention: In 1851, at the Worcester Convention, it was resolved: “that since the economy of the household is generally as much the source of family wealth as the labor and enterprise of man, therefore the wife should, during life, have the same control over the joint earnings as per husband, and the right to dispose at her death of the same proportion of it as he”.

They finally achieved success when the equal rights of wives in the matrimonial property were recognised.

The Third National Women’s Liberation conference, in England in 1972, for the first time, explicitly demanded payment of wages for the household work.

In India, Veena Verma did introduce a private member Bill in 1994 entitled The Married Women (Protection of Rights) Bill, 1994.

A married woman shall be entitled to have an equal share in the property of her husband from the date of her marriage and shall also be entitled to dispose of her share in the property.

National Housewives Association: But in 2010, even registration of the National Housewives Association as a trade union was denied.

  • As domestic work was treated as neither trade nor industry.


1. The United Progressive Alliance government: In 2012, had proposed to make it mandatory for husbands to pay a monthly ‘salary’ to their wives.

  • However it is indeed problematic as it indicates an employer-employee relationship. Wives do not deserve a master-servant relationship.

2. The United Nations’ Committee on the Elimination of Discrimination Against Women: In 1991, had recommended

  • Measurement and quantification of unremunerated domestic activities of women and
  • Their recognition in GDP
  • So that the de facto economic contribution of women is highlighted.

3. Matrimonial property laws: It do give women their share but only when the marital tie comes to an end.

The time has come to insist that the work women perform for the family should be valued equally with men’s work during the continuance of marriage.

4. Prenuptial marriage agreements: If women become a little assertive, prenuptial marriage agreements can easily solve this problem with the insertion of the clause on wives’ right in husband’s earnings and properties being included in such agreements.

Source: The Hindu

NITI Aayog's India Innovation Index Report


Karnataka has been ranked the most innovative among major states by the NITI Aayog while Delhi topped the category among Union Territories.

  • Delhi also stood out as the top performer among both states and UTs.

                                        NITI Aayog on Twitter:


These rankings were part of NITI Aayog’s India Innovation Index Report 2020, released by Vice Chairman Rajiv Kumar.

Prepared by: The Index is prepared by the NITI Aayog in collaboration with the Institute for Competitiveness.

Similar to Global Innovation Index: The exercise was initiated in 2019 and is on the lines of the Global Innovation Index (GII), which ranks countries annually.

  • In 2015, India ranked 81 among 141 countries in the GII. By 2020 it ranked 48 among 131 countries.

Globally considered parameters: The framework of the index includes globally considered parameters for measuring innovation, such as the percentage of GDP spent on research and development, while keeping them specific to the Indian economy.

Three categories: The Innovation Index is divided in to three categories—

  1. Major states,
  2. Union territories, and
  3. Hill and north east states.

Indicators: The indicators that the survey uses includes the

  1. Level and quality of education especially in research,
  2. Number of PHD students,
  3. Enrolment in engineering and technology,
  4. Number of highly skilled professionals,
  5. Investment in R&D,
  6. FDI inflows,
  7. Internet subscribers,
  8. Knowledge-intensive employment,
  9. Number of patents and trademark applications filed,
  10. Business environment, and
  11. Safety and legal environment


South as innovation hub: According to the Innovation Index report, southern India has consolidated its position as the innovation hub, as four states feature in the list of the top five innovative states.

Top Performer in Country: Delhi has scored the highest on the index in the country with a score of 46.6.

Delhi recorded the

  • Highest number of trademark and patent applications
  • Establishment of new start-ups and companies in the last financial year.

Lowest rank: Lakshadweep has the lowest score at 11.7.

Major states: Amongst the major states, Karnataka topped with a score of 42.5 for the second year running.

  • The state’s success has been attributed to a
    • High number of venture capital deals,
    • Registered GIS and ICT exports, and
    • High FDI inflow.

Second Place: Maharashtra follows with a score of 38, while Bihar finishes last at 14.5.

Four southern states – Karnataka, Tamil Nadu, Telangana and Kerala —occupy the top positions on the index, apart from Maharashtra.

North East and hill states: Himachal Pradesh has the highest score of 25.


Need to Improve: India needed to improve to meet global competitiveness in innovation, including increased expenditure in R&D by the private sector.

Low Private Investment: “The Indian government is a major spender in R&D, while the investment of the private sector is very low.

Low % of GDP on R&D: India also spends only 0.7 per cent of its GDP on R&D, much lower than the top spenders such as Israel (4.95 per cent).

  • like Israel (4.3%), South Korea (4.2%), the US (2.8%) and China (2.1%),

North-South divide: There is a North-South divide with the southern states having fared much better.

“We have also found a link that as states become more innovative, they have higher per capita GDP,’

Regional disparity in innovation: Himachal Pradesh scored only 25. This also brings to the fore the huge regional disparity in innovation.

SAMSUNG overweigh India: Huawei, Mitsubishi Electric, Samsung and Qualcomm filed more international patent applications each than the whole of India in 2019, according to World Intellectual Property Organization (WIPO). 

Source: Indian Express, Financial Express

Systemically Important Banks


The Reserve Bank of India (RBI) has retained following 3 banks as domestic systemically important banks (D-SIBs) or banks that are considered as “too big to fail”

  1. State Bank of India,
  2. ICICI Bank and
  3. HDFC Bank