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  • AT-1 bonds

    India’s fourth-largest private lender YES bank was placed under a moratorium by RBI and its perpetual debt additional tier-1 (AT1 bonds) would become worthless if RBI does ask mutual funds to write down their value.

    What are AT1 bonds?

    • AT-1, short for Additional Tier-1 bonds, are a type of unsecured, perpetual bonds that banks issue to shore up their core capital base to meet the Basel-III norms.
    • AT-1 bonds are complex hybrid instruments, ideally meant for institutions and smart investors who can decipher their terms and assess if their higher rates compensate for their higher risks.
    • They carry a face value of ₹10 lakh per bond.
    • There are two routes through which retail folk have acquired these bonds — initial private placement offers of AT-1 bonds by banks seeking to raise money; or secondary market buys of already-traded AT-1 bonds based on recommendations from brokers.

    Why are they important?

    AT-1 bonds have several unusual features lurking in their fine print, which make them very different from plain bonds.

    • One, these bonds are perpetual and carry no maturity date. Instead, they carry call options that allow banks to redeem them after five or 10 years. But banks are not obliged to use this call option and can opt to pay only interest on these bonds for eternity.
    • Two, banks issuing AT-1 bonds can skip interest payouts for a particular year or even reduce the bonds’ face value without getting into hot water with their investors, provided their capital ratios fall below certain threshold levels. These thresholds are specified in their offer terms.
    • Three, if the RBI feels that a bank is tottering on the brink and needs a rescue, it can simply ask the bank to cancel its outstanding AT-1 bonds without consulting its investors. This is what has happened to YES Bank’s AT-1 bond-holders who are said to have invested ₹10,800 crore.

  • [pib] ARI-516 Grape Variety

     

    Pune’s Agharkar Research Institute (ARI), an autonomous institute of the DST has developed a hybrid variety of grapes which is resistant to fungal diseases, high yielding and has excellent juice quality.

    ARI-516

    • The hybrid variety ARI-516 has been developed by interbreeding of two species from the same genus — Catawba variety of Vitis labrusca and Beauty seedless variety of Vitis vinifera.
    • It is a result of collaboration between Maharashtra Association for the Cultivation of Science (MACS) and ARCI and can benefit farmers, the processing industry and consumers.
    • This variety of grapes is resistant to fungal diseases, high yielding and has excellent juice quality.
    • The fungal resistance of ARI-516 has been derived from Catawba, which is an American grape variety.

    Commercial benefits

    • It is also suitable for preparation of juice, raisin, jam and red wine and farmers are enthusiastically adopting the variety.
    • It has superior quality fruits and higher yield per unit area.
    • An early ripening hybrid, it matures in 110 – 120 days after pruning.
    • Being moderately resistant to a majority of fungal diseases, its cost of production is lower.

    Back2Basics

    Grape production in India

    • India ranks twelfth in the world in terms of grape production.
    • About 78% of grape production in India is utilized for consumption, 17-20 % for raisin production, 1.5 % for wine and 0.5 % for juice.
    • Maharashtra leads in the production of grapes in India with a share of 81.22 %. A negligible share of grapes is used for juice production.
    • A majority of farmers in Maharashtra cultivate ‘Thompson seedless’ and its clones for table purpose or raisin making.

  • A prescription for revival

    Context

    The root cause of the present malaise in our economy is the “death of demand”.

    How demand matters for growth?

    • The relation between demand and growth: Growth in any economy depends on the growth in demand, both for investment as well as consumer goods.
    • How slackened demand leads to a vicious cycle: If demand slackens, then the installed capacity will not be fully utilised, the fresh investment will not take place, employment will slacken and the economy will get caught in a vicious cycle, as we are experiencing today.

    What needs to be done to break the vicious cycle?

    • What sequence to follow in reviving demand? The basic challenge, therefore, is to revive demand in the economy in a sequence where the revival takes place first in the investment goods sector, automatically followed by a boost in demand for consumer goods through enhanced employment opportunities.
    • Past precedents: This is the prescription we had followed in the Atal Bihari Vajpayee government when we were faced with the East Asian crisis and the post-Pokhran global economic sanctions soon after the government assumed office in March 1998.

    Demand in India

    • No dearth of demand in India: In a developing country like India, there is no dearth of “good” demand.
      • We still have to provide so many goods and services to our people in order to improve their “quality of life”.
    • Need to create new infrastructure: Simultaneously, we have to create new infrastructure and improve the existing ones to reduce the transaction cost in our economy and make it more competitive.
    • How infrastructure creation lead to the creation of demand: The emphasis on the construction of roads of all kinds — rural, state and national highways, the new telecom policy, the investment in railways, the emphasis on housing construction and development of the real estate, the improvement in rural infrastructure and reform in the agricultural sector were all meant to lead to the creation of demand in the economy.
    • Creation of the virtuous cycle: The creation of demand should be in such a way that the demand for investment goods picks up first and faster, which creates the virtuous cycle of full capacity utilisation.
      • Demand for consumer goods: Demand for investment goods is followed by fresh investment for new capacity creation, larger employment opportunities of various kinds — unskilled, skilled and highly skilled — which reached money into the pockets of people leading to a surge in demand for consumer goods.

    How the government should deal with the situation

    • Deal with the demand side instead of supply-side: All commentators are agreed now that instead of tackling the demand side government is dealing with the supply side.
      • Tax relief to corporates: For instance, if, instead of wasting a precious amount of Rs 1,45,000 crore on tax relief to a limited number of corporates the government had spent that money on rural infrastructure and agriculture and a part of it on railways and highways, it would have led to the creation of demand both for investment goods as well as consumer goods.
    • Issue of sticking to the fiscal deficit target: There is also the issue of resources. The government claims that it has stuck to the fiscal deficit targets.
      • But the provisions of Fiscal Responsibility and Budget Management (FRBM) Act have been treated in a cavalier manner by all subsequent governments.
      • What was the basic purpose of the act? The basic purpose of the act was to eliminate the revenue deficit completely within a short period of time and live with a limited fiscal deficit.
      • The original FRBM Act, therefore, mandated that revenue deficit should be eliminated completely and the rest of the fiscal deficit should be limited to one per cent of GDP.
      • In special circumstances like today, the fiscal deficit should be allowed to go up to even two per cent of the GDP, which will mean an amount of Rs four lakh crore.

    Figures of the latest budget and need for the reforms

    • Fiscal deficit figures: The government has taken credit in the Budget for the fact that it has successfully restricted total fiscal deficit for this fiscal to 3.8 per cent and for next fiscal at 3.5 per cent of the GDP.
    • The issue involved in fiscal deficit figures: The revenue deficit for the current fiscal is 2.4 per cent of the GDP and for the next fiscal it is 2.7 per cent. In other words, minus the revenue deficit the fiscal deficit is only 1.4 per cent of GDP for this year and for the next year, it is 1.7 per se.
    • Need for managing the expenditure: So, the real villain of the piece is revenue deficit and not fiscal deficit per se.
      • Need for the reforms: It is clearly the government’s responsibility to manage its expenditure and carry out reforms in it, including austerity in expenditure.
      • How will the reforms help? Controlled fiscal deficit will make more money available in the market for private sector investment and help RBI in reducing interest rates — things which will have an overall benign influence on the economy.

    Conclusion

    A lot of other things apart from austerity majors will have to be done, no doubt, like preventing companies, especially banks from failing, to further strengthen the growth impulses but in the present situation, the key is government spending and in the desired sequence.

  • Explained: Sir Creek Dispute

     

     

    Former Pakistan Minister recalls plan for Sir Creek pact.

    Sir Creek

    • Sir Creek is a 96-km strip of water disputed between India and Pakistan in the Rann of Kutch marshlands. Originally named Ban Ganga, Sir Creek is named after a British representative.
    • The Creek opens up in the Arabian Sea and roughly divides the Kutch region of Gujarat from the Sindh Province of Pakistan.

    What’s the dispute?

    • The dispute lies in the interpretation of the maritime boundary line between Kutch and Sindh. Before India’s independence, the provincial region was a part of the Bombay Presidency of British India.
    • But after India’s independence in 1947, Sindh became a part of Pakistan while Kutch remained a part of India.
    • Pakistan claims the entire creek as per paragraphs 9 and 10 of the Bombay Government Resolution of 1914 signed between then the Government of Sindh and Rao Maharaj of Kutch.
    • The resolution, which demarcated the boundaries between the two territories, included the creek as part of Sindh, thus setting the boundary as the eastern flank of the creek popularly known as Green Line.
    • But India claims that the boundary lies mid-channel as depicted in another map drawn in 1925, and implemented by the installation of mid-channel pillars back in 1924.

    The Genesis 

    • The marshland of Sir Creek first became disputed in the early 20th century when the Rao of Kutch and the Chief Commissioner of Sindh Province of British India, due to different perceptions of the boundaries, laid claims over the creek.
    • The case was taken up by then Government of Bombay, which conducted a survey and mandated its verdict in 1914.
    • This verdict has two contradictory paragraphs, which make the India and Pakistan contenders on the same issue.
    • Paragraph 9 of this verdict states that the boundary between Kutch and Sindh lies ‘to the east of the Creek,’ (Green Line) which effectively implied that the creek belonged to Sindh and, therefore, to Pakistan.
    • On the other hand, Paragraph 10 states that since Sir Creek is navigable most of the year.
    • According to international law and the Thalweg principle, a boundary can only be fixed in the middle of the navigable channel, which meant that it has be divided between Sindh and Kutch, and thereby India and Pakistan.
    • India has used this para to consistently argue that the boundary needs to be fixed in the middle of the creek.
    • Pakistan, however, claims that Sir Creek isn’t navigable but India claims that since it’s navigable in high tide, the boundary should be drawn from the mid channel.

    What’s the importance of Sir Creek?

    • Apart from the strategic location, Sir Creek’s core importance is fishing resources. Sir Creek is considered to be among the largest fishing grounds in Asia.
    • Another vital reason for two countries locking horns over this creek is the possible presence of great oil and gas concentration under the sea, which are currently unexploited thanks to the impending deadlock on the issue.

    UNCLOS supports India’s stand

    • If Thalweg principle is to be upheld, Pakistan would lose a considerable portion of the territory that was historically part of the province of Sindh.
    • Acceding to India’s stance would mean shifting of the land/sea terminus point several kilometres to the detriment of Pakistan, leading in turn to a loss of several thousand square kilometres of its Exclusive Economic Zone under the United Nations Convention on Law of the Sea (UNCLOS).

    War in 1965 and tribunal

    • After the 1965 war, British Prime Minister Harold Wilson successfully persuaded both countries to end hostilities and set up a tribunal to resolve the dispute.
    • The verdict of the tribunal came in 1968 which saw Pakistan getting 10% of its claim of 9,000 km (3,500 sq. miles).
    • Since 1969, 12 rounds of talks have been held over the issue of Sir Creek, but both sides have denied reaching any solution.
    • The region fell amid tensions in 1999 after the Pakistan Navy shot down a MiG-21 fighter plane, but the last rounds of talks were held in 2012. Since then it’s been status quo.

  • Haryana’s ‘quota within SC quota

    The Haryana Assembly last week passed a Bill to split the 20% quota for Scheduled Castes (SCs) in the state’s higher educational institutions into two, creating a quota within the quota for a new group of “Deprived Scheduled Castes”.

    Deprived Scheduled Castes

    • This category has 36 communities including Valmiki, Bazigar, Sansi, Deha, Dhanak, and Sapera.

    What does the new law say?

    • Fifty per cent of the 20 per cent seats reserved for SCs for admission in any Government educational institution shall be set aside for candidates belonging to DSCs.
    • Where a seat set aside for candidate from deprived Scheduled Castes is not filled up in any academic year due to non-availability of such candidate; it shall be made available to candidate of Scheduled Castes.

    Constitutional Provisions incited

    • Article 15(5) of the Constitution authorizes the State to make special provisions for the advancement of any socially and educationally backward classes of citizens or for SCs/STs for admission to educational institutions.
    • However Article 15(5) did not mention powers to bifurcate the quota.

    Is this sub-quota a new idea?

    • The present Haryana government has replicated the initiative of the state government in 1994.
    • Then government bifurcated the Scheduled Caste quota into two categories: Block A and Block B.

    Why such move?

    • The Statement of Objects and Reasons of the Act says that the representation of the SCs now categorised as DSCs” is “only 4.7%, 4.14% and 6.27% in Group A, Group B and Group C services respectively, even though their population is about 11% of the total State population.
    • The population of other SCs in Haryana is also about 11% of the total State population but in respect of representation in Government Services their share is 11%, 11.31% and 11.8% in Group A, B and C, respectively.”
    • The reason for the poor representation of the DSCs in government jobs can be found in their educational qualifications.
    • Thus, even though the “minimum prescribed educational qualification for majority of the posts of Group A, B & C services… is Graduation, the Socio-Economic Caste Census data reveals that in terms of education.
    • Only 3.53% population of the DSCs is Graduate, 3.75% of them are Senior Secondary level and 6.63% are Matric/Secondary level. Also 46.75% of them are illiterate.

  • Donation to Political Parties from unknown sources

     

     

    As much as 67% of donations to national parties in 2018-19 came from “unknown sources,” an increase from 53% in the previous financial year, said a report released by the Association for Democratic Reforms.

    About ADR

    • The Association for Democratic Reforms (ADR) is an Indian non-partisan, non-governmental organization which works in the area of electoral and political reforms.
    • Along with National Election Watch (NEW), ADR is striving to bring transparency and accountability in Indian politics and reducing the influence of money and muscle power in elections.
    • The ambit and scope of work in this field are enormous, hence, ADR has chosen to concentrate its efforts in the following areas pertaining to the political system of the country:
    1. Corruption and Criminalization in the Political Process
    2. Empowerment of the electorate through greater dissemination of information relating to the candidates and the parties, for a better and informed choice
    3. Need for greater accountability of Indian Political Parties
    4. Need for inner-party democracy and transparency in party-functioning

    income sources of Political Parties

    • The total income of the parties was ₹3,749.37 crore, of which ₹951.66 crore was from known donors.
    • Electoral bonds accounted for 78% of the ₹2,512.98 crore, or 67%, income from unknown sources.
    • While parties are required to give details of all donations above ₹20,000, donations under ₹20,000 and those via electoral bonds remain anonymous.
    • Out of the total income from unknown sources, 64% went to the BJP and 29% to Congress.

  • How plants dissipate excess sunlight as heat?

    Photosynthesis is a life-sustaining process by which plants store solar energy as sugar molecules. However if sunlight is in excess it can lead to leaves being dehydrated and damaged.

    What is Photosynthesis?

    • Photosynthesis is the process used by plants, algae and certain bacteria to harness energy from sunlight and turn it into chemical energy.
    • There are two types of photosynthetic processes: oxygenic photosynthesis and anoxygenic photosynthesis.
    • The general principles of anoxygenic and oxygenic photosynthesis are very similar, but oxygenic photosynthesis is the most common and is seen in plants, algae and cyanobacteria.
    • During oxygenic photosynthesis, light energy transfers electrons from water (H2O) to carbon dioxide (CO2), to produce carbohydrates.
    • Ultimately, oxygen is produced along with carbohydrates. Oxygenic photosynthesis is written as follows:

    6CO2 + 12H2O + Light Energy → C6H12O6 + 6O2 + 6H2O

    Here, six molecules of carbon dioxide (CO2) combine with 12 molecules of water (H2O) using light energy. The end result is the formation of a single carbohydrate molecule (C6H12O6, or glucose) along with six molecules each of breathable oxygen and water.

    How do plants dissipate heat?

    • To prevent such damage, plants dissipate extra light as heat.
    • While this was known there has been a debate over the past several decades over how plants actually do so.
    • Now for the first time researchers have directly observed one of the possible mechanisms through which plants dissipate extra sunlight.
    • The new research has been able to determine–by using a highly sensitive type of spectroscopy–that excess energy is transferred from the pigment chlorophyll, which gives leaves their green colour, to other pigments called carotenoids.
    • The carotenoids then release the energy as heat. After the carotenoids accept excess energy, most of it is released as heat, thus preventing damage to the cells.

    Why does plant dissipate light?

    • During photosynthesis, light-harvesting complexes play two seemingly contradictory roles.
    • They absorb energy to drive water-splitting and photosynthesis, but at the same time, when there’s too much energy, they have to also be able to get rid of it.
    • Plants quickly adapt to changes in sunlight intensity. Even in very sunny conditions, only 30 per cent available sunlight is converted into sugar, and the rest is released as heat.
    • The excess energy, if not released, leads to the creation of free radicals that can damage proteins and other important cellular molecules.

    Significance of the research

    • So far, it had been difficult to observe the heat dissipation phenomenon, given that it occurs on a very fast time scale, in femtoseconds or quadrillionths of a second.
    • Using the new technique, researchers could observe that chlorophylls absorb red light and carotenoids absorb blue and green light, thus being able to monitor energy transfer.

  • Pyramid of Djoser

     

     

    Last week, Egypt reopened the Pyramid of Djoser, the first pyramid ever built, after a 14-year restoration. The structure is believed to be designed by Imhotep, described by some as the first architect of the world.

    The Pyramid of Djoser

    • The 4,700-year-old pyramid is 60 metres tall, and consists of six stacked steps over a burial shaft tomb 28 metres deep and seven metres wide.
    • It is located at the Saqqara archaeological site, 24 km southwest of Cairo, outside the royal capital of Memphis. A complex of halls and courts is located around the pyramid.
    • It is the world’s oldest monumental stone building.
    • Today a UNESCO world heritage site, the pyramid was constructed during the era of Pharaoh Djoser, the second king of Ancient Egypt’s Third Dynasty (2650 BC– 2575 BC).
    • The Pharaoh’s 19-year reign saw significant technical innovations in stone architecture.
    • The pyramid’s architect, Imhotep, was also a physician and astrologer, and served as Djoser’s minister.

  • Don’t blame it on NSO

    Context

    The latest GDP data witnessed significant revisions that have gone largely unnoticed.

    The GDP data revision and its criticism

    • Revisions an act of due diligence: In the last few years there has been a lot of noise regarding the data revisions.
      • The need for closer examination: While part of revision requires closer examination, we must be fair to our statistical system as such revisions are, in large part, due diligence and happen globally.
    • Schedule of NSO estimates
      • First estimate: The NSO releases the first estimates of any fiscal year in January.
      • Revises the January’s first estimates in February.
      • And then again in May.
      • Simultaneous revision in February: Simultaneously, it revises the previous year estimates in February, alongside the February data release.
    • Suspicion of statistically protecting the 5% growth: The primary criticism, with the current year’s fiscal data, is that the revisions in February for 2019-20 and the 4th revision in 2018-19 are almost identical, implying that the sanctity of 5 per cent growth was statistically protected.

    Examining the criticism purely on the data

    • Precedence of 1st and 2nd quarter revision: There is precedence to the first and second quarter revisions for the current financial year that happen in February.
      • For example, while in the current fiscal, the cumulative downward revision was close to Rs 30,000 crore.
      • In FY19, there was even a greater upward revision of roughly Rs 86,000 crore in February.
    • Is there precedence of such large first-time revisions? Yes, there has been since 2014-15. In 2018-19, the first-time data was revised by a sharp Rs 1.43 lakh crore, while in 2017-18, it was revised by an even larger Rs 1.69 lakh crore.
    • Revision in the same direction: The simultaneous revisions are mostly in the same direction, though different in magnitude, and hence it is unfair to say that the 2018-19 data was revised downwards to protect the 2019-20 numbers.

    What was the problem?

    • Uncertainty: The problem has been that the global and domestic uncertainties in 2017-18 and 2018-19 have been so swift that it has been virtually impossible to predict the outcome initially.
      • While in 2017-18, the final estimates were progressively higher.
      • In 2018-19, while the interim estimates were higher, they were drastically scaled-down later as the impact of the NBFC crisis began to unfold.
    • The US example: The US Fed had also missed the possibility of the US economy bouncing back in 2018 on the back of tax cuts when in 2015 it had projected the economy to expand by only 2 per cent, only to change it to 3 per cent in 2018 (almost at par with scale of revisions in India).

    Why such unconditional biases arise?

    • Asymmetric loss function: It is common for such unconditional bias to arise due to the fact that the statistical reporting agency produces releases according to an asymmetric loss function.
      • For example, there may be a preference for an optimistic/pessimistic release in the first stage, followed by a more pessimistic/optimistic one in the later stage.
    • Cost factor: Intuitively, one might argue that the cost of a downward readjustment of the preliminary data is higher than the cost of an upward adjustment.
    • This asymmetric loss function is not so relevant at the reporting stage but at the forecasting stage.
    • Interpreting the data revision: A statistical reporting agency like the NSO simply does not have all the data at hand and has to forecast the values of the yet to be collecting data.
      • It is at that moment that the asymmetric loss function comes into play.
      • So, we must be careful about interpreting data revisions by the NSO by attributing ulterior motives as we more often tend to do.

    India lagging in the use of data analysis

    • Unlike countries across the world, India is still significantly lagging in its use of data analysis.
      • Methodologies based on thin surveys: Some of the current methodologies of data collection is based mostly on thin surveys.
      • Not supported by the data in public domain: It is also not supported by data available in the public domain that are more comprehensive, less biased and real-time in nature, based on digital footprints.
      • The end result is that we end up publishing survey results that are misleading.

    Way forward

    • Development of big data and AI bases ecosystem: We must develop an ecosystem that is high quality, timely and accessible.
      • Big data and artificial intelligence are key elements in such a process.
      • Big data helps acquire real-time information at a granular level and makes data more accessible, scalable and fine-tuned.
    • Use of payment data: The use of payments data can also help track economic activity, as is being done in Italy.
      • Different aggregates of the payment system in Italy, jointly with other indicators, are usually adopted in GDP forecasting and can provide additional information content.

    Conclusion

    To be fair to both the RBI and the NSO, the volatility of oil prices and structural changes in the economy make the forecasting of inflation and GDP a difficult job indeed. However, we should supplement our existing measurement practices with “big data” to make our statistical system more comprehensive and robust.

  • What is ‘Yes Bank Crisis’?

    On the advice of the Reserve Bank of India (RBI), the government imposed a moratorium on Yes Bank with effect from 6 p.m. on March 5 up to April 3. This has created a furore among the account holders of the bank.

    What restrictions did RBI put?

    • The RBI superseded the private sector lender’s board and appointed as an administrator.
    • Under the moratorium, deposit withdrawals have been capped at ₹50,000.
    • Within 24 hours, the RBI proposed a reconstruction scheme under which SBI could take a maximum 49% stake in the restructured capital of the bank.

    Why was it imposed?

    • The RBI cited a steady decline in Yes Bank’s financial position mainly due to the lender’s inability to raise adequate capital to make provisions for potential non-performing assets.
    • This failing resulted in downgrades by credit rating agencies, which in turn made capital raising even more difficult — a vicious cycle that further worsened its financials.
    • This apart there were serious lapses in corporate governance.
    • The bank has also experienced serious governance issues and practices in the recent years which have led to steady decline of the bank.

    When did it all start?

    • As on March 31, 2014, the bank’s loan book was ₹55,633 crore and deposits were ₹74,192 crore.
    • Since then the loan book expanded fourfold to ₹2,24,505 crore while deposit growth failed to keep pace and increased less than three times to ₹2,09,497 crore.
    • Asset quality also worsened during the period with gross non-performing assets sharply rising from 0.31% as on March 31, 2014, to 7.39% at the end of September 2019.
    • The exponential growth at Yes Bank during that period also came under the regulator’s scanner.
    • The lender has substantial exposure to several troubled borrowers including the IL&FS.

    What will be the likely impact on depositors?

    • While deposit withdrawals have been capped at ₹50,000, there are exceptions under which a higher amount can be withdrawn, with the permission of the RBI.
    • The RBI can allow a customer to withdraw more than ₹50,000 under the following conditions:
    1. in connection with the medical treatment of the depositor or any person actually dependent on the depositor;
    2. towards the cost of higher education of the depositor or any person actually dependent on him for education in India or outside India;
    3. to pay obligatory expenses in connection with marriage or other ceremonies of the depositor or his/her children or of any other person actually dependent upon depositor;
    4. or any other unavoidable emergency.
    • The total withdrawal should, however, not exceed ₹5 lakh or the actual balance in the account, whichever is lower.

    What about deposit insurance?

    • In case Yes Bank goes belly up for any reason, depositors will not lose all their money since deposits up to ₹5 lakh are covered under deposit insurance.
    • While the deposit insurance cover was ₹1 lakh till recently, this was increased to ₹5 lakh in the aftermath of the crisis at the Punjab and Maharashtra Cooperative (PMC) Bank Limited.
    • Finance Minister has announced the increase in deposit insurance in this year’s Budget.

    What do such bank failures imply?

    • While the government and the regulator have asserted that the problem is solely related to this particular bank, the latest developments spotlight the governance risks in India’s banking sector.
    • There is a risk that the already poor operating environment for the banking sector could suffer further impairment if the government’s efforts to tackle problems in the bank fail to provide reassurance to depositors and investors.