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  • RBI Notifications

    Government Securities Acquisition Programme (GSAP 2.0)

    Prelims Only | Economics | Mains Paper 3: Mobilization Of Resources

    The Reserve Bank of India (RBI) has announced that it will conduct an open market purchase of government securities of ₹25,000 crore under the G-sec Acquisition Programme (G-SAP 2.0).

    Answer this PYQ in the comment box:

    Q.Consider the following statements:

    1. The Reserve Bank of India manages and services the Government of India Securities but not any State Government Securities.
    2. Treasury bills are issued by the Government of India and there are no treasury bills issued by the State Governments.
    3. Treasury bills offer are issued at a discount from the par value.

    Which of the statements given above is/are correct?

    (a) 1 and 2 only

    (b) 3 Only

    (c) 2 and 3 only

    (d) 1, 2 and 3

     

    Post your answers here:

    What are Government Securities?

    • These are debt instruments issued by the government to borrow money.
    • The two key categories are:
    1. Treasury bills (T-Bills) – short-term instruments which mature in 91 days, 182 days, or 364 days, and
    2. Dated securities – long-term instruments, which mature anywhere between 5 years and 40 years

    Note: T-Bills are issued only by the central government, and the interest on them is determined by market forces.

    Why G-Secs?

    • Like bank fixed deposits, g-secs are not tax-free.
    • They are generally considered the safest form of investment because they are backed by the government. So, the risk of default is almost nil.
    • However, they are not completely risk-free, since they are subject to fluctuations in interest rates.
    • Bank fixed deposits, on the other hand, are guaranteed only to the extent of Rs 5 lakh by the Deposit Insurance and Credit Guarantee Corporation (DICGC).

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  • Nuclear Energy

    Nuclear Fusion and the recent breakthrough

    Prelims Only | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    California based researchers have announced that their experiment has made a breakthrough in nuclear fusion research.

    What exactly is Nuclear Fusion?

    • Nuclear fusion is defined as the combining of several small nuclei into one large nucleus with the subsequent release of huge amounts of energy.
    • The difference in mass between the reactants and products is manifested as either the release or the absorption of energy.
    • Nuclear fusion powers our sun and harnessing this fusion energy could provide an unlimited amount of renewable energy.
    • An example of nuclear fusion is the process of four hydrogens coming together to form helium.

    What was the experiment?

    • In the experiment, lasers were used to heat a small target or fuel pellets.
    • These pellets containing deuterium and tritium fused and produced more energy.
    • The team noted that they were able to achieve a yield of more than 1.3 megajoules of heat energy.
    • This megajoule of energy released in the experiment is indeed impressive in fusion terms.

    How was the new breakthrough achieved?

    • The team used new diagnostics, improved laser precision, and even made changes to the design.
    • They applied laser energy on fuel pellets to heat and pressurize them at conditions similar to that at the center of our Sun. This triggered the fusion reactions.
    • These reactions released positively charged particles called alpha particles, which in turn heated the surrounding plasma.
    • At high temperatures, electrons are ripped from an atom’s nuclei and become a plasma or an ionized state of matter. Plasma is also known as the fourth state of matter.
    • The heated plasma also released alpha particles and a self-sustaining reaction called ignition took place.

    Future prospects: Benefits

    • It is expected that fusion could meet humanity’s energy needs for millions of years.
    • Fusion fuel is plentiful and easily accessible: deuterium can be extracted inexpensively from seawater, and tritium can be produced from naturally abundant lithium.
    • Future fusion reactors will not produce high activity, long-lived nuclear waste, and a meltdown at a fusion reactor is practically impossible.
    • Importantly, nuclear fusion does not emit carbon dioxide or other greenhouse gases into the atmosphere, and so along with nuclear fission could play a future climate change mitigating role as a low carbon energy source.

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  • Climate Change Negotiations – UNFCCC, COP, Other Conventions and Protocols

    India ratifies Kigali Amendment to the Montreal Protocol

    IOCR | Enviro & Biodiversity | Mains Paper 1: Arts & Culture

    The Union Cabinet has given its approval for ratification of the Kigali Amendment to the Montreal Protocol on Substances that Deplete the Ozone Layer for phase down of Hydrofluorocarbons (HFCs) by India.

    What is Montreal Protocol?

    • The Montreal Protocol on Substances that Deplete the Ozone Layer is an international agreement made in 1987.
    • It was designed to stop the production and import of ozone-depleting substances and reduce their concentration in the atmosphere to help protect the earth’s ozone layer.
    • It sits under the Vienna Convention for the Protection of the Ozone Layer.

    Objectives

    • The convention was adopted in 1985 and has highlighted the adverse effect of human activity on ozone levels in the stratosphere and the discovery of the ‘ozone hole’.
    • Its objectives are to promote cooperation on the adverse effects of human activities on the ozone layer.
    • It has since undergone nine revisions, in 1990 (London), 1991 (Nairobi), 1992 (Copenhagen), 1993 (Bangkok), 1995 (Vienna), 1997 (Montreal), 1998 (Australia), 1999 (Beijing) and 2016 (Kigali).

    India and the Protocol

    • India became a Party to the Protocol on 19 June 1992 and since then has ratified the amendments.

    What is the Kigali Amendment?

    • It is an international agreement to gradually reduce the consumption and production of hydrofluorocarbons (HFCs).
    • It is a legally binding agreement designed to create rights and obligations in international law.
    • While HFCs do not deplete the stratospheric ozone layer, they have high global warming potential ranging from 12 to 14,000, which has an adverse impact on climate.

    What are the Ozone Depleting Substances?

    Ozone-depleting substances are chemicals that destroy the earth’s protective ozone layer. They include:

    • chlorofluorocarbons (CFCs)
    • halons
    • carbon tetrachloride (CCl4)
    • methyl chloroform (CH3CCl3)
    • hydro Bromo fluorocarbons (HBFCs)
    • hydrochlorofluorocarbons (HCFCs)
    • methyl bromide (CH3Br)
    • bromochloromethane (CH2BrCl)

    Where are they used?

    The main uses of ozone-depleting substances include:

    • CFCs and HCFCs in refrigerators and air conditioners,
    • HCFCs and halons in fire extinguishers,
    • CFCs and HCFCs in foam,
    • CFCs and HCFCs as aerosol propellants, and
    • Methyl bromide for fumigation of soil, structures and goods to be imported or exported.

    Now answer this PYQ:

    Q.Consider the following statements:

    Chlorofluorocarbons, known as ozone-depleting substances are used:

    1. In the production of plastic foams
    2. In the production of tubeless tyres
    3. In cleaning certain electronic components
    4. As pressurizing agents in aerosol cans

    Which of the statements given above is/are correct? (CSP 2012)

    (a) 1, 2 and 3 only

    (b) 4 only

    (c) 1, 3 and 4 only

    (d) 1, 2, 3 and 4

    Post your answers here.

    Why phase them out?

    Implementation strategy and targets:

    • India will complete its phase-down of HFCs in 4 steps from 2032 onwards with a cumulative reduction of 10% in 2032, 20% in 2037, 30% in 2042, and 80% in 2047.

    Major Impact

    • HFCs phasedown is expected to prevent the emission of up to 105 million tonnes of carbon dioxide equivalent of GHGs, helping to avoid up to 0.5 degrees Celsius of global temperature rise by 2100, while continuing to protect the ozone layer.
    • It will achieve energy efficiency gains^ and carbon dioxide emissions reduction – a “climate co-benefit,”
    • HFCs phrase-down implementation will involve synergies to maximize the economic arid social co-benefits, besides environmental gains.
    • There would be scope for domestic manufacturing of equipment as well as alternative non-HFC and low-global warming potential chemicals to enable the industry to transition to the low global warming potential alternatives as per the agreed HFC phase-down schedule.
    • In addition, there would be opportunities to promote domestic innovation for new generation alternative refrigerants and related technologies.

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  • Capital Markets: Challenges and Developments

    [pib] International Bullion Exchange

    PIB | Economics | Mains Paper 3: Indian Economy

    The International Financial Services Centres Authority (IFSCA) has inaugurated the pilot run/soft launch of the International Bullion Exchange scheduled to go live on October 1, 2021.

    What is Bullion?

    • Bullion is gold and silver that is officially recognized as being at least 99.5% and 99.9% pure and is in the form of bars or ingots.
    • Bullion is often kept as a reserve asset by governments and central banks.
    • To create bullion, gold first must be discovered by mining companies and removed from the earth in the form of gold ore, a combination of gold and mineralized rock.
    • The gold is then extracted from the ore with the use of chemicals or extreme heat.
    • The resulting pure bullion is also called “parted bullion.” Bullion that contains more than one type of metal, is called “unparted bullion.”

    The Bullion Market

    • Bullion can sometimes be considered legal tender, most often held in reserves by central banks or used by institutional investors to hedge against inflationary effects on their portfolios.
    • Approximately 20% of mined gold is held by central banks worldwide.
    • This gold is held as bullions in reserves, which the bank uses to settle the international debt or stimulate the economy through gold lending.
    • The central bank lends gold from their bullion reserves to bullion banks at a rate of approximately 1% to help raise money.
    • Bullion banks are involved in one activity or another in the precious metals markets.
    • Some of these activities include clearing, risk management, hedging, trading, vaulting, and acting as intermediaries between lenders and borrowers.

    What is International Bullion Exchange?

    • This shall be the “Gateway for Bullion Imports into India”, wherein all the bullion imports for domestic consumption shall be channelized through the exchange.
    • The exchange ecosystem is expected to bring all the market participants to a common transparent platform for bullion trading.
    • It would provide efficient price discovery, assurance in the quality of gold, enable greater integration with other segments of financial markets and help establish India’s position as a dominant trading hub in the World.

    Answer this PYQ:

    What is/are the purpose/purposes of the Government’s ‘Sovereign Gold Bond Scheme’ and ‘Gold Monetization Scheme’?

    1. To bring the idle gold lying with India households into the economy
    2. To promote FDI in the gold and jewellery sector
    3. To reduce India’s dependence on gold imports

    Select the correct answer using the code given below:

    (a) 1 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

     

    Post your answers here.

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  • Celebrating Einstein’s century

    | Science Tech | Mains Paper 3: Awareness in various sc and tech fields

    Context

    In 1921, the Nobel Prize Committee concluded that Einstein would have to wait and the Committee decided not to award the Prize to anyone in 1921. Opinions changed in a year and when Einstein did receive the 1921 Prize in 1922.

    Background

    • Noble Prize was not awarded for his theories of relativity but for “his services to Theoretical Physics, and especially for his discovery of the law of the photoelectric effect”.
    • The citation harked back to the revolutionary theories that Einstein had established in 1905. ‘Annus Mirabilis’, or the Year of Miracles, is how 1905 is remembered by physicists because Einstein, only 26 then, published four remarkable papers that year.
    • One of them explained that light was made of photons and when the light shone on metal, each photon’s energy correlated to the electron’s speed on the metal’s surface.
    • This theory redefined the composition of light and Einstein himself dubbed it revolutionary.
    • It was for this that he received the Nobel Prize.

    Special theory of relativity

    • The special theory of relativity was published in 1905.
    • James Maxwell had established that light was an electromagnetic wave and the value of its speed was calculated. Building on this,
    • Speed of light remains constant for all observers: Einstein understood that while moving from one frame of reference to another, which is moving at a different speed, the speed of light remains a constant.
    • He gave a physical interpretation to the equations governing the transformation from one frame to another based on this fact.
    • Time slows down when measured from the rest: Einstein’s theory establishes that time moves slower within a moving body when measured from a point at rest (but moves normally within the moving body itself).
    • Length reduces: The length of the moving body contracts when measured from an outside point at rest.
    • When a moving body emits light, the length contraction and time slowdown of the moving body are just exactly what are needed to restore the speed of light to its constant value.
    • Einstein’s insight was that there was no absolute time because time was measured by the simultaneity of two events and this simultaneity would be observed differently.
    • As lagniappe to the scientific community, Einstein published his famous mass-energy equivalence E=mc2 in late 1905.
    • A mundane example of the application of the special theory of relativity is the use of GPS on our phones.

    General theory of relativity

    • The theory is general enough to apply to all forms of motion, including those where gravity does not appear.
    • Einstein worked out equations using tensors, the mathematical implement to describe the transformation of different dimensions.
    • In November 1915, Einstein completed the general theory of relativity.
    • As per this theory, space and time form a continuum, like a fabric, and every object in the universe distorts this fabric, much like how dropping a large ball distorts a taut trampoline sheet.
    • This distortion is gravity. It produces two effects.
    • One, the fabric causes any other object in the vicinity to move towards the heavier object and this is why gravity causes an object to pull things towards it.
    • Two, it bends light in the process of attracting it.

    Conclusion

    In just two decades, Einstein led physics out of its traditional moorings, laid the entablature of modern physics on Newtonian and Maxwellian pillars of classical physics and opened it up to newer questions.

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  • Foreign Policy Watch: India-Afghanistan

    Understanding the strategic flux and humanitarian crisis in Afghanistan

    op-ed snap | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Context

    The Afghan government and its defence forces have completely collapsed. The world over, television screens are full of images of the extraordinary takeover of Afghanistan by the Taliban.

    Background of the US intervention in Afghanistan

    • The original trigger for the US military intervention in Afghanistan was the 9/11 attacks.
    • The objective then was to eliminate the al Qaeda sanctuaries hosted by the Taliban.
    • That goal was quickly attained, as was another one — the elimination of Osama Bin Laden in Abbottabad, Pakistan, in 2011.
    • The US was thereafter stuck into a vortex in which its mission oscillated between counter-terrorism and counter-insurgency. 
    • The military presence in Afghanistan has been questioned by the US political firmament for a decade.

    Factors driving the US exit

    • China factor: The US now regards China as its principal strategic competitor.
    • China’s muscle-flexing in the East and South China Seas calls for a renewed effort by the US to protect its stakes.
    • The rise of China is the main geo-strategic threat for the US.
    • In 2001, the US had taken its eye off the ball in diverting its attention to the global war on terror.
    • Beginning with Afghanistan, it meandered through Iraq, Libya and Syria, with mixed results.
    • Taiwan: China’s recent ratcheting up of pressure on Taiwan has also sounded the alarm.

    Implications of Taliban’s return for region

    • The new regime in Kabul is likely to open the door to economic investments from China.
    • At the geopolitical level, the BRI may well receive a boost, given China’s interests in connectivity that could straddle the region, from Pakistan to Iran.
    • Pakistan has shown alacrity in welcoming the change of guard in Kabul.
    • The change in Afghanistan has security implications for India and the region at large.
    • A spill-over of any chaos and instability in Afghanistan beyond its borders could give terrorism a shot in the arm.
    • It could also singe Pakistan if it does not review its malevolent practices, which favour terror as an instrument of state policy.

    Way forward for India

    • India should prioritise the welfare of the Afghan people, whenever the opportunity presents itself.
    • Currently, about 2,500 Afghan students are enrolled in educational and vocational institutions across India.
    • They will no doubt wish to extend their scholarships.
    • As a close neighbour, India has keen stakes in ensuring a stable, secure and developed Afghanistan.
    • As the rotational President of the UN Security Council for August, India has an opportunity to engage important stakeholders on the way forward.
    • Beyond that too, India’s presence in the UN Security Council till the end of 2022 will provide a platform to explore options with greater flexibility.

    Conclusion

    The global community needs to underscore the continued participation of women in governance in Afghanistan and keep an eye on violations of human rights and international humanitarian law.

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  • Animal Husbandry, Dairy & Fisheries Sector – Pashudhan Sanjivani, E- Pashudhan Haat, etc

    Sub-Mission on Fodder and Feed

    op-ed snap | Agriculture | Mains Paper 3: Agriculture and related issues,Economics Of Animal-Rearing

    Context

    The government recently announced a Sub-Mission on Fodder and Feed.

    Why availability of good and affordable quality feed and fodder matters

    • A study by the Indian Grassland and Fodder Research Institute has observed that for every 100 kg of feed required, India is short of 23.4 kg of dry fodder, 11.24 kg of green fodder, and 28.9 kg of concentrate feed.
    • Low milk productivity: The lack of good quality feed and fodder impacts the productivity levels of cattle.
    • This is one of the chief reasons why Indian livestock’s milk productivity is 20%-60% lower than the global average.
    • High input cost: If we break down the input costs, we find that feed constitutes 60%-70% of milk production costs.
    • When the National Livestock Mission was launched in 2014, it focused on supporting farmers in producing fodder from non-forest wasteland/grassland, and cultivation of coarse grains.
    • However, this model could not sustain fodder availability due to a lack of backward and forward linkages in the value chain.

    Why Sub-Mission on Fodder and Feed is significant

    • As about 200 million Indians are involved in dairy and livestock farming, the scheme is important from the perspective of poverty alleviation.
    • The Sub-Mission on Fodder and Feed intends to create a network of entrepreneurs who will make silage (the hub) and sell them directly to the farmers (the spoke).
    • Bringing down the input cost: The large-scale production of silage will bring down the input cost for farmers since silage is much cheaper than concentrate feed.
    • Objective: The revised scheme has been designed with the objectives of increasing productivity, reducing input costs, and doing away with middlemen (who usually take a huge cut).
    • Since India has a livestock population of 535.78 million, effective implementation of this scheme will play a major role in increasing the return on investment for our farmers.

    About the Sub-Mission on Fodder and Feed

    • The scheme will provide 50% capital subsidy up to ₹50 lakh towards project cost to the beneficiary for infrastructure development and for procuring machinery for value addition in feed such as hay/silage/total mixed ration.
    • Private entrepreneurs, self-help groups, farmer producer organizations, dairy cooperative societies, and Section 8 companies (NGOs) can avail themselves of the benefits under this scheme.
    • The scheme can be used for covering the cost of infrastructure/machinery such as bailing units, harvester, chaff cutter, sheds, etc.

    Challenges and solution

    • Seasonal availability: A major challenge in the feed sector emanates from the fact that good-quality green fodder is only available for about three months during the year.
    • Fermenting green fodder: Ideal solution would be to ferment green fodder and convert it into silage.
    • Hence, under the fodder entrepreneurship program, farmers will receive subsidies and incentives to create a consistent supply chain of feed throughout the year.

    Conclusion

    The mission will help marginal farmers reduce their input costs and help them in increasing the return on capital employed.

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  • Oil and Gas Sector – HELP, Open Acreage Policy, etc.

    What are Oil Bonds?

    | Economics | Mains Paper 3: Infrastructure: Energy, Ports, Roads, Airports, Railways Etc.

    The Centre has argued that it cannot reduce taxes on petrol and diesel as it has to bear the burden of payments in lieu of oil bonds issued by the previous UPA government to subsidize fuel prices.

    What are Oil Bonds?

    • Oil bonds are special securities issued by the government to oil marketing companies in lieu of cash subsidy.
    • These bonds are typical of a long-term tenure like 15-20 years and oil companies are paid interest.
    • Before the complete deregulation of petrol and diesel prices, oil marketing companies were faced with a huge financial burden as the selling price of petrol and diesel in India was lower than the international market price.
    • This ‘under-recovery is typically compensated through fuel subsidies allocated in the Union budget.
    • However, between 2005 and 2010, the UPA government issued oil bonds to the companies amounting to Rs 1.4 lakh crore to compensate them for these losses.

    Why do governments issue such bonds?

    • Compensation to companies through issuance of such bonds is typically used when the government is trying to delay the fiscal burden of such a payout to future years.
    • Governments resort to such instruments when they are in danger of breaching the fiscal deficit target due to unforeseen circumstances that lead to a collapse in revenues or a surge in expenditure.
    • These types of bonds are considered to be ‘below the line’ expenditure in the Union budget and do not have a bearing on that year’s fiscal deficit, but they do increase the government’s overall debt.
    • However, interest payments and repayment of these bonds become a part of the fiscal deficit calculations in future years.

    Backgrounder: Deregulation of fuel prices

    • Fuel price decontrol has been a step-by-step exercise, with the government freeing up prices of aviation turbine fuel in 2002, petrol in 2010, and diesel in 2014.
    • Prior to that, the government would intervene in fixing the price at which retailers were to sell diesel or petrol.
    • This led to under-recoveries for oil marketing companies, which the government had to compensate for.
    • The prices were deregulated to make them market-linked, unburden the government from subsidizing prices, and allow consumers to benefit from lower rates when global crude oil prices tumble.
    • Price decontrol essentially offers fuel retailers such as Indian Oil, HPCL or BPCL the freedom to fix prices based on calculations of their own cost and profits.
    • However, the key beneficiary in this policy reform of price decontrol is the government.

    Impact: Loss of consumers

    • While oil price deregulation was meant to be linked to global crude prices, Indian consumers have not benefited from a fall in global prices.
    • The central, as well as state governments, impose fresh taxes and levies to raise extra revenues.
    • This forces the consumer to either pay what she’s already paying, or even more.

    Why are the Oil Bonds in news?

    • As prices of petrol and diesel climb steeply, the Centre has been under pressure to cut the high taxes on fuel.
    • Taxes account for 58 per cent of the retail selling price of petrol and 52 per cent of the retail selling price of diesel.
    • However, the government has so far been reluctant to cut taxes as excise duties on petrol and diesel are a major source of revenue, especially at a time the pandemic has adversely impacted other taxes such as corporate tax.
    • The government is estimated to have collected more than Rs 3 lakh crore from tax on petrol and diesel in the 2020-21 fiscal year.

    The blame game

    • The present government has blamed the UPA regime for its inability to cut taxes.
    • It pointed out that the bonds issued by the Manmohan Singh government have weakened the financial position of the oil marketing companies and added to the government’s fiscal burden now.
    • It is an argument that has been often repeated since 2018.

    What budget documents show

    • Budget documents show that such bonds will be up for redemption over the next few years — beginning with two to be redeemed in the current fiscal year — till 2026.
    • The government has to repay a principal amount of Rs 10,000 crore this year, according to these documents.
    • The government has paid around Rs 10,000 crore annually as interest over the last decade.
    • The government is likely to pay a similar amount of interest for the current fiscal as well.

    Is the issuance of such special securities restricted to the UPA era?

    • Besides oil bonds, the UPA era also saw the issuance of fertilizer bonds from 2007 to compensate fertilizer companies for their losses due to the difference in the cost price and selling price.
    • However, the issuance of such special securities is not limited to the UPA regime.
    • Over the years, the Modi government has issued bank recapitalization bonds to specific public sector banks (PSBs) as it looked to meet the large capital requirements of these PSBs without allocating money from the budget.

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  • NPA Crisis

    Why banks want inspection reports by RBI to be kept confidential?

    | Economics | Mains Paper 3: Indian Economy

    The contentious issue of whether banks should disclose inspection reports by the Reserve Bank of India (RBI) is back in the news once again after a division bench of the Supreme Court referred writ petitions filed by banks to another bench for reconsideration.

    What is RBI’s inspection on banks?

    • The Banking Regulation Act, 1949 empowers the Reserve Bank of India to inspect and supervise commercial banks.
    • These powers are exercised through on-site inspection and off-site surveillance.
    • RBI carries out dedicated and integrated supervision overall of credit institutions, i.e., banks, development financial institutions, and non-banking financial companies.
    • The Board for Financial Supervision (BFS) carries out this function.
    • Banks currently disclose the list of wilful defaulters and names of defaulters against whom they have filed suits for loan recovery.

    Note: CAMELS is an international rating system used by regulatory banking authorities to rate financial institutions, according to the six factors represented by its acronym. The CAMELS acronym stands for “Capital adequacy, Asset quality, Management, Earnings, Liquidity, and Sensitivity.”

    Why in news now?

    • In 2015, the Supreme Court had come down on the RBI for trying to keep the inspection reports and defaulters list confidential.
    • This was aimed for the public disclosure of such reports of the RBI, much against the wishes of the banking sector.
    • The SC had said the RBI has no legal duty to maximize the benefit of any public sector or private sector bank, and thus there is no relationship of ‘trust’ between them.
    • It added that the RBI was duty-bound to uphold the public interest by revealing these details under RTI.

    What is the issue?

    • The RBI was allowed to make such reports public following the Supreme Court order.
    • The SC had wanted full disclosure of the inspection report.
    • However, the court agreed that only some portions on bad loans and borrowers would be made public.
    • Banks have been refusing to disclose inspection reports and defaulters’ lists.

    Issues with report publication

    • Bank defamation: As banks are involved in dealing in money, they fear any adverse remarks — especially from the regulator RBI — will affect their performance and keep customers away.
    • Trust of the account holder: Banks are driven by the “trust and faith” of their clients that should not be made public.
    • The invalidity of RTI: On the other hand, private banks insisted that the RTI Act does not apply to private banks.
    • Right to Privacy: Banks also argued that privacy is a fundamental right, and therefore should not be violated by making clients’ information public.

    Why are banks against disclosing inspection reports?

    • Many feel that the RBI’s inspection reports on various banks, with details on alleged malpractices and mismanagement, can open up a can of worms.
    • As these reports have details about how the banks were manipulated by rogue borrowers and officials, banks want to keep them under wraps.
    • Obviously, banks don’t want inspection reports and defaulters’ lists to be made public as it affects their image.
    • Customers may also keep out of banks with poor track records.

    Try this PYQ now:

    Q.In the context of the Indian economy non-financial debt includes which of the following?

    1. Housing loans owed by households
    2. Amounts outstanding on credit cards
    3. Treasury bills

    Select the correct answer using the code given below:

    (a) 1 only

    (b) 1 and 2 only

    (c) 3 only

    (d) 1, 2 and 3

     

    Post your answers here (You need to sign-in for that).

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  • Financial Inclusion in India and Its Challenges

    RBI unveils Financial Inclusion Index

    DOMR | Economics | Mains Paper 3: Inclusive Growth & Issues

    The Reserve Bank of India (RBI) has announced the formation of a composite Financial Inclusion Index (FI-Index) to capture the extent of financial inclusion across the country.

    Financial Inclusion Index

    • The FI-Index will be published in July every year.
    • The index captures information on various aspects of financial inclusion in a single value ranging between 0 and 100, where 0 represents complete financial exclusion and 100 indicates full financial inclusion.
    • It has been conceptualized as a comprehensive index incorporating details of banking, investments, insurance, postal as well as the pension sector in consultation with the government and respective sectoral regulators.
    • It has been constructed without any ‘base year’ and as such it reflects cumulative efforts of all stakeholders over the years towards financial inclusion.

    Parameters of the index

    • The FI-Index comprises three broad parameters viz.,
    1. Access (35%),
    2. Usage (45%), and
    3. Quality (20%)
    • These parameters are the identification of the customer, reaching the last mile, and providing relevant, affordable and safe products.
    • The index is responsive to ease of access, availability and usage of services, and quality of services for all 97 indicators.

    This year’s highlight

    • The annual FI-Index for the period ended March 2021 stood at 53.9 compared with 43.4 for the period ended March 2017.

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