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02nd November Current Affairs

South China sea

In News:

Philippine government has decided to resume oil exploration in its exclusive economic zone, a 320-km stretch of waters where a coastal state can exclusively exploit maritime resources under the 1982 U.N. Convention on the Law of the Sea.

This includes Reed Bank, which China also claims. This region is located in the disputed South China Sea.

About the dispute:

It is a dispute over territory and sovereignty over ocean areas, and the Paracels and the Spratlys – two island chains claimed in whole or in part by a number of countries.

Alongside the fully fledged islands, there are dozens of rocky outcrops, atolls, sandbanks and reefs, such as the Scarborough Shoal.

Who Claims What?

China:

claims by far the largest portion of territory – an area defined by the “nine-dash line” which stretches hundreds of miles south and east from its most southerly province of Hainan.

Vietnam:

hotly disputes China’s historical account, saying China had never claimed sovereignty over the islands before the 1940s. Vietnam says it has actively ruled over both the Paracels and the Spratlys since the 17th Century – and has the documents to prove it.

Philippines:

both the Philippines and China lay claim to the Scarborough Shoal (known as Huangyan Island in China) – a little more than 100 miles (160km) from the Philippines and 500 miles from China.

Malaysia and Brunei:

They lay claim to territory in the South China Sea that they say falls within their economic exclusion zones, as defined by UNCLOS – the United Nations Convention on the Law of the Sea. Brunei does not claim any of the disputed islands, but Malaysia claims a small number of islands in the Spratlys.

New START treaty

In News:

President Vladimir Putin has proposed a one-year extension without conditions of the last major nuclear arms reduction accord- the New START treaty- between Russia and the U.S.

About the New START deal:

It is a nuclear arms reduction treaty between the United States and the Russian Federation with the formal name of Measures for the Further Reduction and Limitation of Strategic Offensive Arms.

Signed on 8 April 2010 in Prague, and, after ratification entered into force on 5 February 2011.

Replaced the Treaty of Moscow (SORT), which was to expire in December 2012.

Its name is a follow-up to the START I treaty, which expired in December 2009, the proposed START II treaty, which never entered into force, and the START III treaty, for which negotiations were never concluded.

Under terms of the treaty:

Number of strategic nuclear missile launchers will be reduced by half.

A new inspection and verification regime will be established, replacing the SORT mechanism.

The number of deployed strategic nuclear warheads is limited to 1,550.

Number of deployed and non-deployed inter-continental ballistic missile (ICBM) launchers, submarine-launched ballistic missile (SLBM) launchers, and heavy bombers equipped for nuclear armaments to 800 will be limited.

Timeline to meet these Targets:

These obligations must be met within seven years from the date the treaty enters into force.

The treaty will last ten years, with an option to renew it for up to five years upon agreement of both parties.

Open market operations (OMO)

In News:

The Reserve Bank of India (RBI) has said it would conduct Open Market Operation (OMO) purchase of State Developments Loans as per its October 9 announcement.

RBI will purchase the SDLs through a multi-security auction using the multiple price method. There is no security-wise notified amount.

What is OMO?

Open market operations is the sale and purchase of government securities and treasury bills by RBI or the central bank of the country.

Objective:

The objective of OMO is to regulate the money supply in the economy.

It is one of the quantitative monetary policy tools.

How is it done?

RBI carries out the OMO through commercial banks and does not directly deal with the public.

OMOs vs liquidity:

When the central bank wants to infuse liquidity into the monetary system, it will buy government securities in the open market. This way it provides commercial banks with liquidity.

In contrast, when it sells securities, it curbs liquidity. Thus, the central bank indirectly controls the money supply and influences short-term interest rates.

RBI employs two kinds of OMOs:

Outright Purchase (PEMO) – this is permanent and involves the outright selling or buying of government securities.

Repurchase Agreement (REPO) – this is short-term and are subject to repurchase.

Insurance Ombudsman

In News:

The Insurance Regulatory and Development Authority of India (IRDAI) has advised public sector general insurers to appoint a nodal officer each for the 17 insurance ombudsman offices to ensure proper and timely disposal of complaints.

About Insurance Ombudsman:

The Insurance Ombudsman scheme was created by the Government of India for individual policyholders to have their complaints settled out of the courts system in a cost-effective, efficient and impartial way.

Who can approach?

Any person who has a grievance against an insurer, may himself or through his legal heirs, nominee or assignee, make a complaint in writing to the Insurance ombudsman.

One can approach the Ombudsman with complaint only if:

One has first approached insurance company with the complaint and;

They have rejected it

Not resolved it to satisfaction or

Not responded to it at all for 30 days

And the value of the claim including expenses claimed should not be above Rs 30 lakhs.

Appointment of Ombudsman:

The Ombudsman is a person in the insurance industry, civil or judicial services, and is appointed by the insurance council.

The serving term of the Insurance Ombudsman is three years.

The settlement process:

Recommendation:

The Ombudsman will act as mediator and

Arrive at a fair recommendation based on the facts of the dispute

If you accept this as a full and final settlement, the Ombudsman will inform the company which should comply with the terms in 15 days

Award:

If a settlement by recommendation does not work, the Ombudsman will Pass an award within 3 months of receiving all the requirements from the complainant and which will be binding on the insurance company.

Once the Award is passed:

The Insurer shall comply with the award within 30 days of the receipt of award and intimate the compliance of the same to the Ombudsman.