What’s in Today’s Article?

• Mehul Choksi Extradition Latest News
• Next in Mehul Choksi’s Case
• Hurdles India May Face in Extraditing Mehul Choksi
• Allegations Against Mehul Choksi
• Mehul Choksi Extradition FAQs

Mehul Choksi Extradition Latest News

• Mehul Choksi, a key accused in the ₹13,500 crore Punjab National Bank fraud case, was arrested in Belgium. 
• India has requested his extradition for trial. Choksi had moved to Belgium last year for cancer treatment after living in Antigua and Barbuda as a citizen since 2018.

Next in Mehul Choksi’s Case

• Extradition Treaty with Belgium
  • India and Belgium have an extradition treaty dating back to 1901, which permits extradition based on dual criminality—the crime must be punishable in both countries. 
  • The treaty excludes extradition for political offences or if the accused claims political persecution.
• Legal Timeframe
  • Belgium must receive evidence of Choksi’s culpability from India within two months, or he will be released.
• Agencies Involved
  • Choksi was arrested following requests by the CBI and ED. These agencies will now prepare a detailed legal case aligned with Belgian laws.
• Mutual Legal Assistance Treaty (2020)
  • India and Belgium signed this treaty to facilitate better cooperation in legal matters, including extraditions.
• Challenges Ahead
  • Despite the arrest, Choksi’s return to India may take a long time. European extradition processes are typically slow and complex.
• Past Precedents
  • India’s extradition efforts in Europe—like those involving Nirav Modi and Vijay Mallya in the UK—have faced prolonged delays, indicating that Choksi’s extradition may also be drawn out.

Hurdles India May Face in Extraditing Mehul Choksi

• 2021 Dominica Kidnapping Allegation
  • Choksi’s lawyers are expected to highlight the controversial 2021 incident where he was allegedly abducted from Antigua and taken to Dominica. 
    • Photos showed him bruised and injured. 
  • Indian officials had arrived in Dominica to bring him back, but the attempt failed amid allegations of abduction and coercion.
• Allegations of Forced Consent
  • Choksi’s legal team claims he was forced to sign a document consenting to return to India, which was meant to bypass legal protections he enjoyed as a citizen of Antigua. 
  • His London-based lawyer argued this undermined his legal rights.
• Interpol Red Corner Notice Withdrawal
  • In 2023, Interpol withdrew its Red Corner Notice against Choksi, citing concerns over the alleged abduction and the risk of an unfair trial in India.
• Human Rights and Health Concerns
  • Choksi’s defence is likely to argue that poor prison conditions in India, possible human rights violations, and his deteriorating health make extradition unsafe and unjust.
• Complications Due to Antiguan Citizenship
  • Choksi’s status as a citizen of Antigua could further complicate the process, even though he is currently in Belgium. 
  • His lawyers may argue that Belgium must consider his citizenship status in Antigua before approving extradition to a third country.

Allegations Against Mehul Choksi

• Expansion Through Gitanjali Group
  • Choksi, hailing from a family of diamantaires, expanded his business under the Gitanjali Group, opening luxury jewellery stores in India and abroad. 
  • He, along with his nephew Nirav Modi, spent heavily on marketing, hiring international celebrities like Kate Winslet and Rosie Huntington-Whiteley.
• Fraudulent Use of Bank Credit
  • Between 2014 and 2017, Choksi and Modi allegedly colluded with officials at PNB’s Brady House branch in Mumbai to obtain fraudulent Letters of Undertaking (LoUs). 
  • These were used to secure overseas credit, which funded their business operations and personal assets.
• LoU Misuse and Loan Defaults
  • LoUs were meant to be repaid within 90 days, but bank officials kept rolling them over with interest, maintaining liquidity for the duo while debt ballooned. 
  • Eventually, PNB discovered the fraud and approached the CBI, by which time both had fled the country.
• Scale of the Scam
  • The total fraud amounted to over ₹13,500 crore, with Choksi alone accused of cheating the bank of more than ₹6,000 crore.
• ED Action and Fake Assets
  • The Enforcement Directorate attached Choksi’s assets, initially valued at over ₹5,000 crore. 
  • However, lab tests showed many diamonds were fake. 
  • The current estimated value of all his assets, including properties and investments, is around ₹2,500 crore.

Mehul Choksi Extradition FAQs

Q1. Why was Mehul Choksi arrested in Belgium?

Ans. He was arrested following CBI and ED requests, linked to his role in the ₹13,500 crore PNB fraud.

Q2. What is the PNB scam case against Mehul Choksi?

Ans. He allegedly secured fraudulent bank guarantees to obtain overseas credit, defrauding Punjab National Bank of over ₹6,000 crore.

Q3. What hurdles could delay Choksi’s extradition?

Ans. Legal claims of abduction, Antiguan citizenship, human rights concerns, and Belgium’s complex process may delay extradition significantly.

Q4. What happened in Dominica in 2021?

Ans. Choksi alleged Indian agents abducted and coerced him to return; this incident may impact his extradition from Belgium.

Q5. Is India likely to succeed in extraditing Choksi soon?

Ans. Unlikely. European extradition is slow and complicated, with previous cases like Nirav Modi and Vijay Mallya still pending.

Source: IE | IE

What’s in Today’s Article?

• RBI Gold Loan Guidelines Latest News
• Surge in Gold Loan NPAs
• RBI Flags Irregular Practices in Gold Loans
• Draft Guidelines Released
• The Attractiveness of Gold Loans
• RBI Gold Loan Guidelines FAQs

RBI Gold Loan Guidelines Latest News

• The Reserve Bank of India (RBI) is introducing a framework for gold loans amid a sharp rise in gold loan outstanding and non-performing assets (NPAs). 
• The surge in gold prices has led to increased gold loan disbursals, with NPAs rising by 28.58% and loan outstanding by 27.26% over the past year. 
• The new framework aims to regulate the gold loan segment and mitigate potential risks.

Surge in Gold Loan NPAs

• Gold loan NPAs rose sharply by over ₹1,500 crore to ₹6,824 crore as of December 2024, compared to ₹5,307 crore a year earlier.

Break-Up of NPAs

• Commercial banks reported gold loan NPAs of ₹2,040 crore, up from ₹1,404 crore in December 2023.
• NBFCs reported NPAs of ₹4,784 crore, compared to ₹3,904 crore last year.

Gold Loan Outstanding Growth

• Total gold loan outstanding of banks and NBFCs stood at ₹11,11,398 crore in December 2024, rising from ₹8,73,701 crore a year ago.

Banks' Share

• Commercial banks held the majority share with ₹9,23,636 crore in gold loan outstanding.

RBI Flags Irregular Practices in Gold Loans

• A review by the RBI revealed several deficiencies in gold loan practices, including:
  • Use of third parties for sourcing and appraisal without proper oversight
  • Valuation of gold in the absence of the customer
  • Inadequate due diligence and end-use monitoring
  • Lack of transparency in gold auctions after defaults
  • Weak monitoring of Loan-to-Value (LTV) ratio
  • Incorrect application of risk weights

RBI Directives to Lenders

• The RBI instructed banks and NBFCs to review their gold loan policies and processes, identify gaps, and take corrective measures within a set timeframe. 
• It also emphasized strict monitoring of the gold loan portfolio and greater control over outsourced activities and third-party service providers.

Curbing Evergreening of Loans

• Previously, borrowers could repledge jewellery by just paying interest, enabling indefinite loan extensions. 
• Post RBI intervention in September 2023, repledging now requires full repayment of principal and interest, making the process costlier and limiting loan evergreening.

Draft Guidelines Released

• On April 9, the RBI issued draft comprehensive guidelines for gold loans.

Prohibited Collateral

• Lenders are barred from granting advances against:
  • Primary gold/silver
  • Financial assets backed by primary gold/silver (e.g., ETFs, mutual fund units)

Loan-to-Value (LTV) Cap

• For consumption gold loans, the LTV ratio must not exceed 75% of the gold’s value.

Restrictions on Collateral Use

• Gold used as collateral for income-generating loans cannot be used simultaneously for consumption loans.

Ownership Verification

• Lenders must verify and maintain records of the ownership of gold collateral. Loans should not be extended where ownership is doubtful.

Tenor Cap for Bullet Repayment Loans

• Consumption loans requiring bullet repayment (principal and interest due at maturity) are to be limited to a maximum tenor of 12 months.

Operational Norms for Lenders

• Lenders must:
  • Integrate gold loan policies with credit and risk frameworks
  • Set borrower- and sector-specific exposure limits
  • Ensure loans are linked to repayment capacity via due diligence
  • Monitor end-use of funds and maintain detailed records

The Attractiveness of Gold Loans

• Ease and Accessibility
  • Gold loans are attractive due to easy availability, minimal documentation, and quick processing. 
  • PSU banks and major financial institutions offer instant loans with flexible repayment options.
• Higher Loan Value
  • The sharp rise in gold prices has enabled borrowers to secure higher loan amounts against their gold holdings.
• Cultural Significance and Emergency Use
  • Gold, often passed down through generations, is readily pledged during financial emergencies like medical or educational expenses.
• Economic Uncertainty and Stability of Gold
  • During economic slowdowns or uncertainty, gold is viewed as a stable asset, encouraging individuals to opt for gold loans.
• Digital Expansion
  • The rise of digital platforms and fintech solutions has made gold loans more accessible, even in remote areas, boosting their popularity.

RBI Gold Loan Guidelines FAQs

Q1. Why did RBI propose new gold loan rules?

Ans. Due to rising gold loan NPAs and irregular lending practices, RBI aims to regulate and safeguard the gold loan market.

Q2. What is the Loan-to-Value (LTV) cap for gold loans?

Ans. RBI’s draft guidelines cap the LTV ratio at 75% of the gold’s value for consumption-related gold loans.

Q3. What are RBI’s concerns with current gold loan practices?

Ans. Concerns include third-party involvement, weak monitoring, non-transparent auctions, and evergreening through repledging without principal repayment.

Q4. What changes were made to stop loan evergreening?

Ans. Since September 2023, repledging gold requires full repayment of principal and interest, curbing indefinite loan extensions.

Q5. Why are gold loans popular in India?

Ans. Gold loans are easily accessible, require minimal paperwork, offer high value due to gold prices, and suit emergency financial needs.

Source: IE | FE | CNBCTV18

What’s in Today’s Article?

• SC Sub-Categorisation Latest News
• Telangana’s Landmark Move on SC Sub-Categorisation
• Structure of Sub-Categorisation
• Supreme Court's Landmark Ruling
• Political and Social Context in Telangana
• Looking Ahead: 2026 Census and Further Reform
• Scheduled Caste Sub-Categorisation FAQs

SC Sub-Categorisation Latest News

• Telangana’s Congress government issued a gazette notification that formally implemented Scheduled Caste sub-categorisation, popularly called reservation within reservation.

Telangana’s Landmark Move on SC Sub-Categorisation

• Telangana has become the first Indian state to officially implement sub-categorisation of Scheduled Castes (SCs), a long-debated policy initiative. 
• The move follows the landmark judgment of the Supreme Court that upheld the constitutionality of further classification within SCs and Scheduled Tribes (STs) for targeted reservation benefits.
• The implementation comes through the Telangana Scheduled Castes (Rationalisation of Reservations) Act, 2025, which was notified in the state gazette on April 14, 2025, coinciding with the birth anniversary of Dr. B.R. Ambedkar.

Structure of Sub-Categorisation

• Under this new system, the state government has divided the SCs into three distinct groups:
• Group I:
  • Reservation Quota: 1%
  • Sub-Castes Included: 15
  • Justification: These communities are the most socio-economically and educationally backward among SCs.
  • Notable Detail: Although their population is just 0.5%, the government allocated 1% to increase their representation.
• Group II:
  • Reservation Quota: 9%
  • Sub-Castes Included: 18
  • Justification: These sub-castes have received only marginal benefits from the existing reservation structure.
• Group III:
  • Reservation Quota: 5%
  • Sub-Castes Included: 26
  • Justification: These groups have fared relatively better and enjoyed more benefits under the current system.
• The total reservation of 15% for SCs remains unchanged, but the internal distribution now aims to ensure equitable access to opportunities among all sub-groups.

Supreme Court's Landmark Ruling

• The legal foundation for this policy rests on a seven-judge Constitution Bench judgment delivered by the Supreme Court in August 2024. 
• The verdict affirmed that states have the power to sub-classify SCs and STs for the purpose of more nuanced reservation.
• Key highlights of the judgment include:
  • Recognition that benefits of reservation were being disproportionately cornered by certain sub-castes within SCs.
  • Validation of the principle of "reservation within reservation" to uplift the most marginalised sub-groups.
  • Clear ruling that such sub-categorisation does not violate Article 14 (Right to Equality) or Article 341 of the Constitution.
• This judgment overturned previous conflicting views and gave states the green signal to make caste-wise assessments within broader SC/ST categories.

Political and Social Context in Telangana

• The sub-categorisation was a long-standing demand of the Madiga community, which argued that dominant SC sub-castes like the Malas had monopolised reservation benefits.
• According to the Telangana Government, this policy aims to “ensure equitable access to education and employment” and will be immediately applicable to new recruitment processes.
• The categorisation process was based on extensive data, including social, economic, political, and educational indicators. 
• Recruitment and reservation for government jobs will now follow this new classification system.

Looking Ahead: 2026 Census and Further Reform

• The Telangana government has stated that it will revisit and possibly enhance reservations after the 2026 Census, depending on the revised demographic profile of SC communities. 
• Meanwhile, about 33 of the 59 SC sub-castes continue in their earlier grouping, with only 26 sub-castes reshuffled based on recent assessments.

Scheduled Caste Sub-Categorisation FAQs

Q1. Which state is the first to implement SC sub-categorisation?

Ans. Telangana is the first Indian state to implement SC sub-categorisation.

Q2. How many groups are created under Telangana’s new SC quota system?

Ans. SCs are divided into three groups – Group I, Group II, and Group III.

Q3. What was the basis for this sub-categorisation?

Ans. It was based on social, educational, and economic backwardness as well as a Supreme Court judgment.

Q4. Does this change increase the total SC reservation in Telangana?

Ans. No, the total SC reservation remains at 15%, but it is now internally reallocated.

Q5. What did the Supreme Court say about sub-categorising SCs and STs?

Ans. The Supreme Court upheld the constitutionality of sub-categorising SCs and STs for targeted reservation benefits.

Source: TH | IE | TOI