Citizens' Issues
Excessive judicialisation will deprive flexibility in CIC under RTI: Mishra

According to CIC Mishra, excessive judicialisation of information commissions will deprive the commission of this flexibility and the society must decide if this is the right path

New Delhi: Excessive 'judicialisation' of Information Commissions across the country would deprive them of a flexible style of functioning, Chief Information Commissioner Satyananda Mishra said on Friday, reports PTI.
Speaking at the Central Information Commission's annual convention, Mishra said the approach of the Commissions, including the state and centre, in all these years has been to act like an umpire standing right on the field along with the players and not sitting on a pedestal and pronounce oracles.
"Openness of approach, informality in style and simplicity of systems have characterised the functioning of all the commissions....Excessive judicialisation of information commissions will deprive the commission of this flexibility. The society must decide if this is the right path," he said.
The Supreme Court had recently termed the Commissions as quasi-judicial bodies and directed the government that Chief Information Commissioner at the Centre or State level should only be a person who is or has been a Chief Justice of the High Court or a judge of the Supreme Court of India.
Asking the government to amend the Right to Information (RTI) Act, a bench of of justices AK Patnaik and Swatanter Kumar had said that people from judicial background be also appointed as members of the Central and State Commissions which is to be done after consulting with the Chief Justice of India (CJI) and Chief Justice of the respective High Courts. 
Mishra said the efforts of the Commission to ensure complete mandatory disclosure by public authorities have not succeeded.
"All our efforts to ensure proactive disclosure as mandated under the RTI Act have been ineffective. Seven years after the enactment of the law, public authorities both at the state and the Centre, have not made complete disclosures which they were mandated to do in 120 days," the CIC said.
He said the efforts to ensure organised record keeping as mandated in the law have not been met with much success.
"We have been exhorting government authorities both at the Centre and the states to appoint responsible information officers, train them regularly and most importantly to organise record keeping at all levels. We have not met with much success," Mishra said.
The CIC said in the last seven years since the RTI Act came into being, the civil society attention has moved to new issues areas of concerns, consequently there is palpable decline in their engagement with issues related to right to information which was true for media as well.
He said media and civil society must not lose sight of the RTI Act in the process.
"Bulk of information received from public authorities is used for personal grievances. Many a times, information is also sought without any ostensible purpose. This is not a happy sign. Each time we seek any information from any public authority, we deprive someone else of the opportunity to make use of corresponding resources," he said.
Mishra said there are several instances of people making absolutely frivolous request or seeking information as a hobby or just to harass and blackmail others.
"It should be avoided not only it gives bad name to RTI Act but also because it increases wasteful expenditure of public authorities. Civil society should play an important role in this by training the RTI applicants," he said. 


Is a pre-approved home loan a good option?

How about the idea of getting a home loan approved even before you have finalised the property? But is this free of all hassles? Are there any reasons for not opting for one?

Imagine yourself wanting to buy your dream home. You zero in the property and apply for a home loan. Now, what happens if the property you choose for yourself gets sold off to someone else by the time your loan gets approved? Or, what if your loan application gets rejected? This is where pre-approved loan comes into picture.
Often you would have got calls from banks, trying to convince you to take a pre-approved loan with lower rate of interest, minimum documentation and faster processing, typically ones like 48 hours.
A pre-approved loan is essentially an in-principle approval given to you by a bank/financing institution on basis of your profile. The factors that the bank looks at when judging your EMI (equated monthly instalment) paying capacity include your income status, the current EMI outflow, your payback history and your net-worth. The bank then approves of a certain amount that you can avail as home loan, within a certain time period, usually six months.
Although it sounds great to have a loan approval letter on your palm even before you finalise the property you wish to buy, there are glitches you need to look out for-there are matters you really need to give a thought to before deciding whether to avail it or not.
A pre-approved loan is not guaranteed. Banks have the final discretion on whether or not to disburse the approved amount. For example, you select a property of your choice and the bank does not lend for properties of that area your house falls in, the bank has all the right to reject the final application on that basis.
Although the bank claims to have ‘approved’ the loan, the interest rates and other important terms and conditions are still at sea—they are ‘indicative’. You won’t know how much you require paying back and within what time frame. Some banks do work out a few terms and conditions at the time of pre-approval, but with a “subject to change at discretion of the bank” clause. Besides that, all documents related to loans need to be submitted again at the time of disbursal, without which banks have been known to reject the pre-approved loan. This effectively leads to an additional documentation burden on you.
A fact that you require to take into consideration is the amount that has been pre-approved versus the amount you actually require once you chose the property. If the final amount is higher, you require making a higher down payment since you have a limited chance to negotiate with the bank now-your budget could go haywire. 
Another factor you require to keep in mind is the type and amount of indicative interest rates mentioned on the letter. These rates are usually floating. In case you wish to take a loan at fixed rate of interest, pre-approved loan isn’t for you.
The costs involved in a pre-approved loan are never refundable. The processing fee involved is levied irrespective of whether you finally avail the loan or not. Loans are valid for a specific time frame—if you do not put up the ‘disbursal’ application within that specific period, the pre-approval gets null and void and you require to apply all over again the next time, and the fee involved will be levied again.
Last but not the least; your credit gets blocked to the extent of amount you have taken the pre-approval for. If during the period that your pre-approved loan is valid for, you require a personal or an education loan, your payback capacity will be calculated taking into consideration the pre-approved loan. In addition to that, if you have put up a pre-approval application numerous times, you get tagged as someone constantly looking out for credit, and that reduces your credit score.
You should go in for a pre-approved loan only once you have shortlisted the property of your choice. A pre-approved loan does make the process faster. Another added advantage if that you can negotiate with your builder on the basis of funds you already have in your pocket, the builder may bring down prices for you, who has ready cash to pay instead of someone who still has to raise it. 


Recent efforts at reviving infrastructure financing: A day too late, a rupee too less

It has been more than two-and-half years when the budget made a noise about infrastructure debt funds (IDFs). The Cabinet on 4th October finalised the tripartite agreement that will possibly pave the way for infrastructure debt funds (IDFs), but their acceptability by the capital market will only need to be seen


In the spate of so-called steps to restart the jammed tempo of Indian economy, infrastructure obviously must have taken the key place. And as for reviving infrastructure, infrastructure financing, the government has taken a few initiatives, but all this is still too little for reviving the sector which, going by the mood that we saw at our recent Infrastructure Finance Summit, is almost in tears. But for brave faces seemingly saying—we can cope up with this also—the participants at the Infrastructure Finance event were melancholy.

One of the things the Cabinet recently cleared is the tripartite agreement that will possibly pave the way for infrastructure debt funds (IDFs). Several proposals for IDFs, mostly in the mutual fund route and some in the NBFC mode, are currently lying before the Securities and Exchange Board of India (SEBI) or Reserve Bank of India (RBI). The IDF guidelines of the RBI came in September 2011, following an announcement in Budget 20101. The guidelines require that the IDFs sign a tripartite agreement between the lender, the concessionaire and the IDF. The format of the tripartite agreement was not firmed up for all these months. It was only on 4 October 2012 that the tripartite agreement was finalised. With this, possibly, SEBI and RBI will give go-aheads for the IDFs, for which several applications are currently pending.

Read here about infrastructure bonds being eligible for investment by charitable/religious trusts.

It is not that tonnes of money are waiting for the launch of IDFs. As regards international investors, practitioners confirm that currently there is no interest in the India story, and more so for the infrastructure sector, which has recently seen such episodes as cancellation of telecom licenses, revocation of coal block allotments, and so on. The overall image of India was already tarnished with the infamous proposals of the then finance minister on retrospective taxation; with that, the blows that the courts gave in response to corruption scandals were just too much to bear.

In addition, the schemes of IDFs suffer from several fundamental flaws. The two options—mutual funds and NBFCs—have so much of disparity that they seem to be two uncomparable instruments. An IDF-NBFC, as the RBI calls it, has capital as its essential corpus and raises funding by issuing bonds. The capital of the IDF-NBFC acts as a first-loss credit enhancement. Given the capital requirement of 15%, and risk weight of 50% for the infrastructure loans that an IDF-NBFC will acquire, this would mean a minimum 7.5% credit enhancement for the bondholders. Every IDF-NBFC may be visualised as a sort of pool of infrastructure loans. Hence, the bonds issued by an IDF-NBFC essentially represent securitisation of the pool of loans that that the IDF-NBFC holds. In case of a proper securitisation of infrastructure loan pools, the sizing of the enhancement will be derived looking at several factors such as the default rate, level of diversification, granularity of the pool, and so on. The regulatory minimum credit enhancement of 7.5% for a dynamic pool with no safeguards as to diversification is unlikely to be as appealing to investors as a securitised instrument would have been.

On the other extreme, the mutual fund option, or the tag of “mutual fund” for any collective investment scheme that invests in infrastructure loans, is wholly misconceived. It is notable that in the Alternative Investment Fund (AIF) regulations, there is an option to have an AIF for infrastructure funding. However, mutual funds are seen as instruments that invest in capital markets. There is no question of credit enhancement in case of the mutual fund option—hence, any one loan out of the pool of infrastructure loan going bad will expose the investors to NAV losses. Unlike a mutual fund that invests in capital market instruments, the one investing in infrastructure loans is unlikely to have either the granularity that a mutual fund needs, or the transparency in the fair valuation of its own assets—leaving investors to a substantial disadvantage. The investments that such a “mutual fund” will make will be infrastructure loans, which are big ticket, illiquid and long maturity assets. There is no transparency in pricing of such assets, and it would always be hard and subjective to declare the NAV of such a mutual fund. If such a mutual fund is an open-ended fund, the fund manager may find it hard to liquidate the units. If the fund is a closed-end fund, the fund goes through the entire rigmarole of listing. In any event, the mutual fund route is understood, world over, as the device to make capital market investments, and it would not be surprising if a mutual fund agent markets an infrastructure mutual fund to unsophisticated investors claiming it to be something like a mainstream mutual fund.

In essence, with the AIF route being available, the mutual fund option should not have been envisaged for infrastructure loans.

Despite this, the reason why most players have opted to go for the mutual fund route to IDFs is clearly because of the convenience and scope for wide discretion in case of the mutual fund option as compared to the NBFC route.

It has been more than two-and-half years when the budget made a noise about IDFs. The regulators have taken their own good time to clear the all-needed documentation. So, hopefully the finalisation of the tripartite agreement is the last of the regulatory steps, and now, IDFs are at least regulatorily ready to take off. Their acceptability by the capital market, of course, will only need to be seen.

In the meantime, the interim report of the High Level Committee on Financing of Infrastructure came out in August 20122. Note that the Committee was constituted almost two years ago—in November 2010—so, it is not sure whether it is the complexity and enormity of the problem, or the changes in the constitution of the Committee, that even an interim report has taken this long time. The interim report has made several sector-specific recommendations, besides making pointed recommendations regarding IIFCL. The recommendations for IIFCL relate to redirecting of its operations, so that the overlaps between IIFCL and banks/IFCs could be avoided.

The essence of the Committee making its interim report lay in the fact that there were measures which required immediate attention, and it is not safe to wait for the submission of the final report, which may come around March 2013. However, it does not seem whether the government has taken any action on any of the sector-specific recommendations of the Committee, most of which may be politically sensitive.

In short, India still seems to be going slow, and not steady, on the highway of infrastructure.

To read more articles by the same writer, click here.

(Vinod Kothari is a chartered accountant, trainer and author. He is an expert in such specialised areas of finance as securitisation, asset-based finance, credit derivatives, accounting for derivatives and financial instruments and microfinance. He can be contacted at [email protected]. Visit his financial services website at

1See our article commenting upon the IDF guidelines, at Among other things, the article provides an overview of different forms of special purpose entities for financing or refinancing of infrastructure.




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