September 2018
« Aug   Oct »

[op-ed snap] How Basel III plugged regulatory loopholes


Mains Paper 3: Environment | Conservation, environmental pollution and degradation, environmental impact assessment

From UPSC perspective, the following things are important:

Prelims level: Basel II, Basel III

Mains level: Need for financial regulation via various mechanisms


Regulatory mechanism for financial institutions

  1. There is a vast gulf between academic discourse on the financial regulation and actual practice
  2. The regulatory architecture for depository institutions proved ineffective in the global financial crisis
  3. The crisis originated in non-deposit taking financial institutions, it spread to the regulated deposit accepting entities with remarkable agility

Basel II proved ineffective

  1. Basel-II, the international accord for banking regulation that was formalized just before the onset of the crisis, was an important improvement over its earlier version in many ways
  2. But, it gave excessive discretion to financial institutions for computing crucial parameters like risk weights
  3. These parameters are important inputs in the computation of risk-weighted assets (RWAs), which in turn determined the level of required capital buffers
  4. In this, banks had a skewed incentive to underestimate their risk weights by using complex models
  5. Additionally, divergent methodologies used to compute risk weights meant that there was enormous variability in reported numbers, making any meaningful comparison across banks virtually impossible
  6. The risk weight for the mortgage, the very instrument that precipitated the crisis, was reduced

Improvements in Basel III

  • It has mandated a higher capital adequacy ratio to absorb potential losses originating in both trading and banking books, including additional capital conservation buffers
  1.  The idea is that once this buffer is depleted, regulators should be worried
  2. The financial institution must build its reserves before it is allowed to distribute its profits by way of dividends, share buybacks and employee bonuses
  • It has taken steps to reduce the variability of the risk-weighted assets by constraining the discretion of banks
  1. For many asset classes, use of more sophisticated and complex models (so-called “advanced approach”) is disallowed
  2. Moreover, many crucial parameters used to calculate risk weights
  • The realization that financial institutions can build leverage while apparently complying with capital adequacy norms has led to the adoption of new risk metrics such as leverage ratio which is insensitive to precise risk weights
  1. In many cases, banks built up excessive leverage while apparently maintaining strong risk-based capital ratios
  2. At the height of the crisis, financial markets forced the banking sector to reduce its leverage in a manner that amplified downward pressures on asset prices
  3. This deleveraging process exacerbated the feedback loop between losses, falling bank capital and shrinking credit availability
  • The need for an integrated and enterprise-level risk management approach is emphasized
  1. Besides the capital requirement and new liquidity/ leverage ratios, Basel-III envisages forward-looking supervisory control that includes periodic stress testing
  2. It is hoped that these measures, together with mandatory disclosure requirements and associated market discipline, will reduce the frequency and severity of financial crises

Way Forward

  1. It would be too early to claim that the final word on banking regulation has been written
  2. Still, Basel-III has plugged many loopholes and reduced the likelihood of such cataclysmic events taking place in future
Banking Sector Reforms

[op-ed snap] A higher policy burden


Mains Paper 2: Governance | Issues relating to development & management of Social Sector/Services relating to Health, Education, Human Resources

From UPSC perspective, the following things are important:

Prelims level: Not much

Mains level: Debate around institutes of eminence


Recent developments in the education sector

  1. Two recent events seem like missteps in India’s efforts to chart a mature and productive path in the realm of higher education
  2. The first of these events is the effort of the government to produce an education policy and the second is its intent to foster “institutions of eminence”

The institution of eminence being created on the line of IITs

  1. At one time, the IITs were created with exactly the same intentions and in a similar manner
  2. But the performance of the IITs has been largely uninspiring
  3. The IITs failed to meet the urgent need of grasping the special aspirations and requirements of an independent India
  4. They failed to invent and innovate to address the country’s needs
  5. Three factors can be blamed for this situation
  • too much government control
  • largely mediocre faculty
  • no programme or activity to connect with India’s challenges and needs so as to inspire students

Other failures of IITs

  1. The IITs and the government neglected to put in place a major virtue of the American system that attracts, recognises and rewards good faculty at the global level
  2. The IITs also failed to recognise that diversity is the key to survival and they could not develop outstanding qualities and features that would distinguish one IIT from another
  3. The entrance examination does not differentiate between any special qualities that would make the abilities required of a civil engineering aspirant stand out and be recognised as different from the abilities needed of an electrical engineering aspirant

What actually is required to nurture such institutions

  1. The smart students of these institutions must be matched by highly inspiring faculty, and by creating programmes of learning that are in tune with societal challenges
  2. These institutions must be given time, freedom and an enlightened leadership to mature

Indian universities also not innovative

  1. Universities are failing at an alarming pace in their responsibility to foster research
  2. Their only major innovation in recent years is the adoption of a semester mode
  3. By this, only the courses they teach have been mechanically split from an annual mode into two halves
  4. Along with this, the restrictive and overbearing policies of government agencies have made true innovation and experimentation near impossible
  5. The choice-based credit system, a mutilated version of an American concept, has forced universities to collectively drop diversity and adopt a largely common curriculum imposed from above, compelling them to sink to abysmal levels
  6. Another mechanism India has not paid attention to is the use of government funding agencies to raise and foster high-quality research
  7. These funding agencies have not nudged research in the universities towards the needs and challenges of the nation, and of society, as much as they could have

Way Forward

  1. A top-down effort to create institutions of eminence in such a selective manner leaves the vast majority of educational institutions struggling and mired in the deathly quicksand of bureaucratic control and mediocrity
  2.  India must chart its own original path rather than replicating American system of higher education
Higher Education – RUSA, NIRF, HEFA, etc.

[pib] National Conference of District Disability Rehabilitation Centres


From UPSC perspective, the following things are important:

Mains Paper 2: Governance | Issues relating to development & management of Social Sector/Services relating to Health, Education, Human Resources

Prelims level: DDRC

Mains level: Initiatives for disabled persons



  1. The Department of Empowerment of Persons with Disabilities (Divyangjan), Ministry of Social Justice & Empowerment is organizing a ‘National Conference of District Disability Rehabilitation Centres’.
  2. The participants in this one day conference include District Magistrates of 263 districts where DDRCs have been set up, Principal Secretaries Social Welfare, reputed NGOs, District Social Welfare officers, eminent Doctors etc.

District Disability Rehabilitation Centre (DDRC)

  1. DDRC provide comprehensive services to persons with disabilities and facilitate creation of infrastructure and capacity building at the district level for awareness generation, rehabilitation and training of rehabilitation professionals.
  2. The salient features of the District Disability Rehabilitation Centres are as under:-
  • 310 districts have been identified and 263 DDRCs have been set up
  • Awareness generation, early intervention and assessment of the need of assistive devices to divyangjans.
  • Therapeutic services such as Physiotherapy, Occupational Therapy and Speech Therapy etc. to divyangjans through rehabilitation professionals.
  • Equipment for rehabilitation services.
  • Cost norms of the Scheme has been revised and enhanced to 2.5 times.

[pib] First Tribal Circuit Project under Swadesh Darshan Scheme in Chhattisgarh


Mains Paper 2: Governance | Government policies and interventions for development in various sectors and issues arising out of their design and implementation

From UPSC perspective, the following things are important:

Prelims level: Swadesh Darshan Scheme

Mains level: Expanding tourism in Tribal areas



  1. The Minister of State for Tourism will inaugurate the project for Development of Tribal Circuit in Chhattisgarh under the Swadesh Darshan Scheme.
  2. This is the second project under the Swadesh Darshan Scheme being inaugurated in the country.

Particulars of the Project

  1. The project covers thirteen sites in Chhattisgarh i.e. Jashpur, Kunkuri, Mainpat, Kamleshpur, Maheshpur, Kurdar, Sarodadadar, Gangrel, Kondagaon, Nathiya Nawagaon, Jagdalpur, Chitrakoot, Tirthgarh.
  2. Chhattisgarh is known for its exceptional scenic beauty and uniquely rich cultural heritage and has always been synonymous with tribes and tribal culture.
  3. The project aims to acknowledge the sovereignty of tribes, promote the rich and diverse primitive assets in the state.
  4. Major components sanctioned include eco log huts, craft haats, souvenir shops/ kiosk, tourist reception & facilitation centres, open amphitheatre, tribal interpretation centres, workshop centres, tourist amenities centres etc.
  5. These components are perceived to improve existing tourist facilities and enhance the overall tourist experience thereby help in getting more visitors which in return will increase job opportunities in the area.


Swadesh Darshan Scheme

  1. Swadesh Darshan Scheme is one of the flagship schemes of the Ministry of tourism, for development of thematic circuits in the country in a planned and prioritized manner.
  2. The scheme was launched in 2014 -15 as a Central Sector Scheme.
  3. It aims for integrated development of theme-based tourist circuits in the country.
  4. “Development of North East Circuit: Imphal & Khongjom” is the first project implemented under the Scheme.
  5. Development of Tribes and Tribal Culture is one of the prime areas of focus for the Ministry of Tourism.
  6. Under the tribal circuit theme of the scheme the Ministry has sanctioned 4 projects to Nagaland, Telangana and Chhattisgarh for Rs. 381.37 Crores.
Tribal Development

[pib] UN Interagency Task Force (UNIATF) Award


Mains Paper 2: Governance | Issues relating to development & management of Social Sector/Services relating to Health, Education, Human Resources

From UPSC perspective, the following things are important:

Prelims level: UNIATF

Mains level: India’s efforts for prevention and control of NCDs



  • Shri Manoj Jhalani, Additional Secretary & Mission Director (NHM), Ministry of Health and Family Welfare, has been conferred with the prestigious UNIATF Award for his outstanding contribution towards prevention and control of non-communicable diseases (NCDs) and related SDGs.

India’s efforts for prevention and control of NCDs

  1. It is in recognition of Government of India’s efforts made in the field of prevention and control of Non-Communicable Diseases.
  2. National Programme to control NCDs has been scaled up by more than eight times in the past four years and covers all the 36 States/Union Territories now.
  3. The govt. has also initiated population level prevention, control, screening and management initiative in almost 200 districts under NHM which will cover people above 30 years of age.
  4. When fully rolled out, the population-based screening will reach over 500 million adults with health promotion, risk reduction, screening, early detection and management of common NCDs.
  5. Free diagnosis, treatment, follow-up, referral and back referral have been integrated into the program with an IT platform developed through a multi-stakeholder partnership.
  6. The intervention also forms the core of Ayushman Bharat, comprehensive primary health care program.

Addressing multi-sectoral nature of Health issues

  1. The risk factors of NCDs are multi-sectoral and many of the interventions to control these lies outside the health sector.
  2. A National Multi-sectoral Action Plan has been developed which outlines the interventions for different sectors of the Government and other stakeholders.


United Nations Interagency Task Force (UNIATF)

  1. The UNIATF on the Prevention and Control of Non-communicable Diseases was established by the UN Secretary-General in June 2013 and placed under the leadership of WHO.
  2. It aims to support governments, in particular in low- and middle-income countries, to tackle non-communicable diseases (NCDs) such as cardiovascular disease, cancer, diabetes, and chronic respiratory disease.
  3. Following the 2030 Agenda for Sustainable Development in 2015, UNIATF’s scope of work was expanded in 2016 to include “NCD related SDGs” – i.e. mental health, violence and injuries, nutrition, and environmental issues that impact on NCDs.
  4. The World Health Organization acts as a Secretariat and lead for the Task Force.
  5. The UNIATF coordinates the activities of relevant UN organizations and other inter-governmental organizations to support Governments to meet high-level commitments to respond to NCD epidemics worldwide.
  6. The Task Force reports once a year to the United Nations Economic and Social Council (ECOSOC).
Nobel and other Prizes

Explained: Ethics Panel in Indian Parliament


Mains Paper 2: Indian Polity | Historical underpinnings, evolution, features, amendments, significant provisions and basic structure.

From UPSC perspective, the following things are important:

Prelims level: Ethics Committee

Mains level: Role of Ethics Committee



  • Veteran parliamentarian L.K. Advani has been renominated as the Chairman of the Lok Sabha Ethics Committee by Speaker of Lok Sabha.

Ethics Committees in the Indian Parliament

  1. Lok Sabha has a new permanent Standing Committee on Ethics which came into force on 12th August, 2015.
  2. Until now, the ethics committee in Lok Sabha has been an ad hoc one.
  3. Rajya Sabha was the first among the two Houses to form an ethics committee, with a full standing committee status, on 30th May, 1997.
  4. Lok Sabha, in contrast, formed an ad hoc ethics panel in 2000 and has been operating as one until August 2015 when it was given a permanent standing committee status.
  5. Ethics committees function to uphold the standards of the Parliament and thus its functions are twofold:
  • Formulate a Code of Conduct for members and suggest amendments to it from time to time.
  • To oversee the moral and ethical conduct of the Members
  • To examine the cases referred to it with reference to ethical and other misconduct of the Members

What do Ethics Committees do?

  1. As mentioned above, ethics committees formulate, enforce and oversee the moral and ethical conduct for members of Parliament.
  2. While a certain form of code of conduct on speech, conduct and behaviour of members of parliament has existed in most Parliaments in the world, recent years have seen a great thrust on separation between the public and private interests of the MPs.
  3. Central to this principle is the obligation of the MPs to declare their personal financial interest to the parliament and for such information to be made public in the form of ‘Registers of members’ interests’.

Variations in two Houses

  1. Even while being two Houses of the Parliament; there is a significant degree of variation on the rules and procedures of the ethics committees in the Lok Sabha and Rajya Sabha.
  2. While both focus on codes of conduct for Members of Parliament, where they differ is the declaration of members’ pecuniary or financial interest.
  3. Rajya Sabha has explicitly provided for a ‘Register of Members’ Interest’, where MPs have to declare their interest in 5 categories:
  • Remunerative directorship
  • Remunerated activity
  • Majority shareholding
  • Paid consultancy
  • Professional engagement
  1. In addition to that, members are required to declare any financial interest on an issue that is being debated in the House or under consideration by any other standing committee and hence refrain from taking part to avoid conflict of interest.
  2. Lok Sabha does not maintain such a registry of members interests and apart from disclosing their assets and liabilities, MPs are not obliged to declare other financial interests that might be in direct or indirect conflict with their role as public servants.
  3. Another significant point of difference between the two Houses is that while Rajya Sabha’s Ethics Committee acts both on complaints as well as takes up issues suo motu, Lok Sabha’s committee acts only on complaints made either by any member of the public or any other member of the House.
  4. The Rajya Sabha’s registry though is not openly available on its website and can be accessed only through an RTI application. (Source)

[pib] Cabinet approves MoU on Collaborative Research on Distributed Ledger and Block Chain Technology under BRICS Interbank Cooperation Mechanism


Mains Paper 3: Science & Technology | developments & their applications & effects in everyday life

From UPSC perspective, the following things are important:

Prelims level: Blockchain technology, Xiamen Declaration

Mains level: How can blockchain technology be used across various sectors


Using blockchain in the financial sector

  1. The Union Cabinet has given its ex-post facto approval for the Memorandum of Understanding (MoU) on Collaborative Research on Distributed Ledger and Blockchain Technology
  2. This is in the context of Development of digital economy by Export-Import Bank of India (Exim Bank) with the participating member banks, under the BRICS Interbank Cooperation Mechanism

What is Distributed Ledger?

  1. A distributed ledger is a database that is consensually shared and synchronized across network spread across multiple sites, institutions or geographies.
  2. It allows transactions to have public “witnesses,” thereby making a cyberattack more difficult.

Impact of MoU

  1. The MoU intends to enhance understanding of Distributed Ledger/Block Chain technology, through the joint research efforts to identify areas within respective business operations where it may have the potential for applications aimed at enhancing the operational efficiencies
  2. Distributed Ledger/Blockchain technology holds potential for solutions to various challenges being faced in the financial sector space of the BRICS nations

Xianmen declaration

  1. The Xiamen Declaration signed in China on digital economy by the BRICS leaders had highlighted the importance of the digital economy and how the BRICS nations could leverage the thriving and dynamic digital economy that will foster global economic development and benefit everyone
Blockchain Technology: Prospects and Challenges

India among nations with ‘no or little enforcement’ against foreign bribery: Report


Mains Paper 2: Governance | Important aspects of governance, transparency & accountability

From UPSC perspective, the following things are important:

Prelims level: Exporting Corruption Report, OECD Anti Bribery Convention, UN Convention against Corruption, Prevention of corruption act

Mains level: Prevalence of corruption in India & how to stem its propogation


‘Exporting Corruption Report’ 2018

  1. India is among four countries with “no or little enforcement” mechanism to check foreign bribery, according to a report
  2. The 2018 edition of the ‘Exporting Corruption Report’ was released by anti-corruption organisation Transparency International
  3.  The classification of enforcement is based on the convention countries’ enforcement actions in the period 2014-2017

India included for the first time

  1. In this 2018 report, China, Hong Kong, India and Singapore are classified for the first time
  2. They all have 2 per cent or more of world exports but are not parties to the OECD Anti-Bribery Convention
  3. All 4 fall into the lowest level (little or no enforcement)
  4. They are, however, parties to the UN Convention against Corruption, which also calls for enforcement against foreign bribery

OECD Anti-Bribery Convention

  1. Officially known as Convention on Combating Bribery of Foreign Public Officials in International Business Transactions is a convention of the OECD aimed at reducing political corruption and corporate crime in developing countries, by encouraging sanctions against bribery in international business transactions carried out by companies based in the Convention member countries
  2. Its goal is to create a truly level playing field in today’s international business environment
  3. The Convention requires adherents to criminalise acts of offering or giving bribe, but not of soliciting or receiving bribes
  4. Countries that have signed the convention are required to put in place legislation that criminalises the act of bribing a foreign public official
  5. The OECD has no authority to implement the convention but instead monitors implementation by participating countries via its Working Group on Bribery
  6. The OECD Anti-Bribery Convention was adopted in 1997 to address the supply side of international corruption
  7. There are now 44 parties to the convention, 36 of them members of the OECD (Organisation for Economic Cooperation and Development)

Amendment to Prevention of corruption act

  1. In July 2018, the Indian Parliament passed a bill amending the present Prevention of Corruption Act, which covers bribe payers for the first time
  2. The bill also covers agents, subsidiaries and subcontractors of foreign firms working in India or doing business with Indian entities
  3. The Indian Penal Code and Prevention of Corruption Act prescribe criminal and civil liability only for domestic corruption
Corruption Challenges – Lokpal, POCA, etc