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  • Freedom of Speech – Defamation, Sedition, etc.

    22nd Law Commission recommends retaining Criminal Defamation

    DOMR | Polity | Mains Paper 2: Indian Constitution – historical underpinnings, evolution, features, amendments, significant provisions and basic structure

    defamation

    Introduction

    • The 22nd Law Commission has recommended retaining criminal defamation as an offence in the new legal framework of Bharatiya Nyaya Sanhita.
    • The Law Commission’s report highlights the importance of protecting an individual’s reputation, grounded in Article 21 of the Constitution, which safeguards the right to life and personal liberty.

    Key Recommendations: Upholding Reputation

    • Invisible Asset: Reputation, a valuable asset, cannot be seen but is diligently built over a lifetime and can be tarnished in an instant.
    • Essence of Protection: The jurisprudence around criminal defamation laws is rooted in the essence of safeguarding one’s reputation.
    • Balancing Act: While acknowledging that criminal defamation might seem contradictory to freedom of speech and expression, the Law Commission suggests treading carefully.
    • Harmful Speech: The Commission advises that speech should only be deemed illegal when it intends substantial harm, and when such harm becomes a reality.

    What is Criminal Defamation?

    • Defamation: Defamation entails the act of publishing damaging content that diminishes an individual’s or entity’s reputation, from the viewpoint of an ordinary person. In India, defamation is both a civil and criminal offense.
    • Sections 499 and 500: These sections in the Indian Penal Code address criminal defamation. Section 499 defines the offense, while Section 500 outlines the associated punishment.

    Arguments in Favor of Retaining Criminal Defamation

    • Protection of Reputation: An individual’s reputation, an integral part of Article 21, is as vital as free speech.
    • Balancing Act: The right to free speech (Article 19(1)(a)) must be balanced against the right to reputation (Article 21).
    • Inadequate Compensation: Monetary compensation in civil defamation may not proportionately compensate for reputation harm.
    • Editorial Responsibility: Editors bear the responsibility for published content, with significant consequences for individuals and the nation.
    • Counteracting Online Defamation: In the absence of an effective internet censorship mechanism, criminalizing defamation is a necessary safeguard.
    • State’s Interest: Criminalizing defamation is part of the state’s compelling interest to protect citizens’ dignity and reputation.

    Arguments against Retaining  

    • Chilling Effect: Criminal defamation may have a chilling effect on free speech, with a lower threshold for prosecution than civil damages.
    • Media Freedom: Freedom of speech and media expression is crucial for vibrant democracies, and the threat of prosecution can stifle truth.
    • Misinterpretation of Dissent: Dissent may be misconstrued as unpalatable criticism, leading to imprisonment under Sections 499 and 500 of IPC.
    • Collective Reputation: The right to reputation cannot extend to collectives like the government, which can rectify reputational damage.
    • Redundancy: Since civil defamation remedies exist, retaining criminal defamation may serve little purpose except coercion and harassment.
    • Global Trend: Many nations, including neighbouring Sri Lanka and the UK, have decriminalized defamation.
    • International Perspective: The International Covenant on Civil and Political Rights urges states to abolish criminal defamation as it intimidates citizens and deters exposing wrongdoing.

    Conclusion

    • Criminal defamation cases have been used to suppress investigative journalism, hindering democratic accountability.
    • Criminal defamation should not be misused by the state, especially as the Code of Criminal Procedure gives public servants an advantage.
    • Interim measures can ensure fair proceedings and prevent excessive penalties.

    Back2Basics: Law Commission of India

    Details
    Establishment An executive body established by the Government of India, with the first commission established in 1955.
    Tenure Each Law Commission serves a term of three years.
    Function Acts as an advisory body to the Ministry of Law and Justice for legal reforms in India.
    Recommendations The recommendations made by the Law Commission are not binding.
    Historical Background The first Law Commission was established during the British Raj in 1834 by the Charter Act of 1833.
    First Chairman The first Chairman of the Law Commission was Macaulay, who recommended the codification of laws.
    Composition Typically consists of a full-time Chairperson, full-time Members, ex-officio Members, and part-time Members.
    Terms of Reference Undertakes research and reviews of existing laws, recommends reforms, and studies justice delivery systems.
    Major Reforms The Law Commission played a pivotal role in suggesting key enactments like the Indian Penal Code and Criminal Procedure Code.
    Role in Legal Reforms Serves as both an advisory and critical body, with its recommendations often influencing legal reforms in India.
    Supreme Court References The Supreme Court has referred to the work of the Law Commission and followed its recommendations in various cases.
    Promotion of Accountability Aims to promote an accountable and citizen-friendly government, transparency, and the right to information.

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  • Economic Indicators and Various Reports On It- GDP, FD, EODB, WIR etc

    A rising tide lifts all boats

    op-ed snap | Economics | Mains Paper 3: Government Budgeting

    BJP on X: "India emerges as the fastest growing economy of the world in IMF report with growth rate of 7.4%. https://t.co/Sta44gkaZI" / X

    Central Idea:

    India has experienced a significant economic transformation, becoming the world’s fastest-growing economy. The Interim Budget reflects this progress, emphasizing preventive healthcare, innovation, and medical value travel. The private sector’s rising role is crucial for economic development and improving the overall quality of life.

    Key Highlights:

    • India’s rapid economic growth, outpacing the global average.
    • Successful space program and adept management of renewable and non-renewable energy.
    • Interim Budget aligns with the aspirations of a new India, emphasizing opportunities.
    • Focus on preventive healthcare, particularly the promotion of HPV vaccination.
    • Maternal and child health prioritized to enhance women’s participation in the workforce.
    • Commitment to innovation with a ₹1 lakh crore corpus for research and technology.
    • Medical value travel’s rising prominence, making India a global healthcare destination.
    • Private sector’s significant role in economic growth and shaping the future.

    Key Challenges:

    • Ensuring sustained economic growth amidst global uncertainties.
    • Scaling up preventive healthcare initiatives to cover various diseases.
    • Balancing budget allocations to address healthcare needs adequately.
    • Overcoming infrastructure challenges for medical value travel.
    • Ensuring inclusive growth and managing disparities in economic development.

    Key Terms:

    • HPV Vaccination: Human Papillomavirus vaccination to prevent cervical cancer.
    • Medical Value Travel: Tourism driven by healthcare services.
    • Innovation Revolution: Emphasizing technology and research for development.
    • Interim Budget: A temporary budget presented in the middle of a fiscal year.

    Key Phrases:

    • “Buoyancy of metrics and spirit.”
    • “Innovation as a key pillar of development.”
    • “Medical value travel transforming the landscape.”
    • “Private sector rising beyond expectations.”

    Key Quotes:

    • “No country can afford it if its citizens fall ill.”
    • “Innovation has the potential to create a significant impact at scale.”
    • “India will truly be limitless if we continue to work together.”

    Anecdotes:

    • Reference to Aragonda in Andhra Pradesh, a village where HPV vaccination is being promoted.
    • Mention of ‘Heal in India’ transforming the healthcare landscape.

    Key Statements:

    • “India’s space program has won the admiration of the world.”
    • “Preventive health is crucial for the overall well-being of the nation.”
    • “The private sector plays a meaningful role not just in the economy but in how we live our lives.”

    Key Examples and References:

    • India’s success in achieving a 70-year life expectancy with less than 2% budgetary allocation for health.
    • The commitment of ₹1 lakh crore for innovation and technology in the Interim Budget.

    Key Facts:

    • India’s economic growth rate surpassing the global average.
    • Increase in life expectancy from 53 to 70 years in the last four decades.

    Key Data:

    • ₹1 lakh crore corpus for research and technology in the Interim Budget.
    • India’s growth rate compared to the global average.

    Critical Analysis:

    • The article provides an optimistic view of India’s economic growth and achievements.
    • Emphasis on preventive healthcare and innovation aligns with global trends.
    • Challenges include addressing healthcare needs comprehensively and ensuring inclusive growth.

    Way Forward:

    • Sustain economic growth through continued emphasis on innovation and technology.
    • Strengthen preventive healthcare initiatives for comprehensive disease prevention.
    • Address infrastructure challenges for medical value travel to enhance India’s global healthcare appeal.
    • Ensure inclusive growth, managing economic disparities effectively.

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  • Banking Sector Reforms

    Exposing India’s financial markets to the vultures

    op-ed snap | Economics | Mains Paper 3: Effects Of Liberalization On The Economy, Changes In Industrial Policy and their effects on Industrial Growth

    Internationalisation of Rupee - Rau's IAS

     

    Central Idea:

    The article discusses India’s efforts to integrate its government bonds into global indices, focusing on J.P. Morgan and Bloomberg’s recent moves. It explores the potential benefits and risks associated with opening local bond markets to foreign investors, emphasizing the broader initiative to internationalize the Indian rupee. The author cautions against underestimating the risks involved in such a move and suggests a more cautious approach to currency internationalization.

     

    Key Highlights:

    • Timeline of Initiatives: The process of incorporating Indian government bonds into global indices began in 2019, with J.P. Morgan and Bloomberg making significant announcements in 2023 and 2024, respectively.
    • Benefits of Internationalization: The article highlights potential benefits, including access to international resources, stability in funds tracking indices, and facilitating financing of current account and fiscal deficits.
    • Original Sin Problem: Opening local currency bond markets helps shift exchange rate risk onto international lenders, addressing the “original sin” problem faced by emerging economies borrowing in reserve currencies.
    • Loss of Autonomy and Risks: The internationalization of bond markets exposes emerging economies to a loss of autonomy, interest rate risks, and vulnerability to global liquidity conditions, as seen in past instances.
    • Currency Internationalization: Besides bonds, the article discusses the broader effort to internationalize the Indian rupee, involving offshore markets and trade settlement in INR.

     

    Key Challenges:

    • Exchange Rate Volatility: Opening local currency bond markets makes inflows volatile due to exchange rate risk, leading to sudden stops and exits by foreign investors.
    • Interest Rate Risks: Increased exposure to global interest rate fluctuations can impact long-term rates and domestic bond markets during periods of global market distress.
    • Speculation and Instability: The creation of offshore markets for the Indian rupee poses risks of speculation and potential instability, as seen in the experiences of Malaysia and Türkiye.

     

    Key Terms:

    • Original Sin: The inability of emerging economies to borrow internationally in their own currencies, exposing them to exchange rate risk.
    • Fully Accessible Route (FAR): A segment of Indian government bonds made officially accessible to foreign investors without constraints.
    • Government Bond Index-Emerging Markets (GBI-EM): An index suite that includes local currency government bonds from emerging market countries.

     

    Key Phrases:

    • “Original sin problem”
    • “Fully accessible route (FAR) bonds”
    • “Currency internationalisation”
    • “Offshore INR market”

     

    Key Quotes:

    • “Currency internationalisation cannot be decided in one day and pursued the next. It comes about after a long evolutionary process, when all the building blocks are in place.” – Y.V. Reddy

     

    Key Statements:

    • The move to include Indian government bonds in global indices is part of a broader effort to internationalize the Indian rupee.
    • The risks associated with opening local bond markets are underestimated, and caution is advised in pursuing currency internationalization.

     

    Key Examples and References:

    • Malaysia and Türkiye Experiences: Instances of offshore market speculation leading to financial distress, with Malaysia implementing capital controls in 1998 and Türkiye taking measures against offshore lira speculation in 2022.

     

    Key Facts:

    • Timeline: The process of incorporating Indian government bonds into global indices started in 2019, with J.P. Morgan and Bloomberg making significant announcements in 2023 and 2024, respectively.

     

    Key Data:

    • Number of Banks Authorized: The RBI has granted authorization to 17 banks for settling trade in the Indian rupee across 18 countries, establishing 65 offshore deposit accounts.

     

    Critical Analysis:

    • The article critically examines the potential benefits and risks associated with the internationalization of bond markets and currencies, emphasizing the importance of a sustained development process and improved economic performance.

     

    Way Forward:

    • Suggests a cautious approach to currency internationalization, highlighting the need for all building blocks to be in place and emphasizing the role of sustained financial system development and improved economic performance.

     

    In conclusion, the article provides a comprehensive overview of India’s efforts in integrating government bonds into global indices, discussing the associated benefits, risks, and broader initiatives for currency internationalization. It underscores the importance of a cautious approach and sustained development in managing financial integration.

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  • Wetland Conservation

    Five more Wetlands added to Ramsar List

    National Parks/WSPrelims Only | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    wetland

    Introduction

    • Five more Indian wetlands have been added to the global list of wetlands of international importance under the Ramsar Convention, taking the total number of such highly recognised waterlogged ecosystems in the country to 80.
    • India is now the fourth-largest nation on the Ramsar map, trailing only behind the UK (175), Mexico (144), and China (82).
    • Tamil Nadu continues to have the maximum number of Ramsar sites (16) followed by Uttar Pradesh (10).

    List of newly designated Ramsar Sites:

    [1] Ankasamudra Bird Conservation Reserve (Karnataka):

    • Spread over 98.76 hectares adjoining Ankasamudra village.
    • A biodiversity hotspot with over 210 plant species, 8 mammals, 25 reptiles, and 240 bird species.
    • Vital nesting and roosting ground for over 30,000 waterbirds, including the Painted Stork and Black-headed Ibis.

    [2] Aghanashini Estuary (Karnataka):

    • Covers 4,801 hectares at the confluence of Aghanashini River with the Arabian Sea.
    • Offers flood and erosion risk mitigation, biodiversity conservation, and livelihood support.
    • Sustains 6,000-7,500 families through fishing, agriculture, and traditional fish farming.
    • Acts as a natural barrier against storms and cyclones.

    [3] Magadi Kere Conservation Reserve (Karnataka):

    • A human-made wetland spanning nearly 50 hectares, originally designed for rainwater storage.
    • Home to 166 bird species, including 130 migratory birds.
    • Sanctuary for vulnerable and near-threatened species like the Common Pochard, River Tern, and Oriental Darter.
    • A crucial wintering ground for the Bar-headed Goose.

    [4] Karaivetti Bird Sanctuary (Tamil Nadu):

    • Encompassing 453.72 hectares, it’s one of Tamil Nadu’s largest inland wetlands.
    • Facilitates groundwater recharge and supports agricultural activities.
    • Hosts around 198 bird species, including the Bar-headed Goose and Common Teal.

    [5] Longwood Shola Reserve Forest (Tamil Nadu):

    • Named after “Solai,” meaning tropical rainforest in Tamil.
    • Integral to the Western Ghats’ unique biodiversity.
    • Provides sanctuary to globally endangered and vulnerable bird species like the Nilgiri Laughing Thrush, Nilgiri Blue Robin, and Nilgiri Wood-pigeon.
    • Home to 14 of the 26 endemic bird species of the Western Ghats.

    Back2Basics: Ramsar Convention

    Explanation
    Purpose International treaty aimed at conserving and promoting the sustainable use of wetlands.
    Establishment Established on February 2, 1971, in Ramsar, Iran.
    Participating Countries 171 contracting parties (countries) as of September 2021.
    India and Ramsar Convention The first Ramsar Site in India, the Chilika Lake in Odisha, was designated in 1981.

     

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  • New Species of Plants and Animals Discovered

    New Species of Burrowing Frog: Sphaerotheca Varshaabhu

    Species | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Sphaerotheca Varshaabhu

    Introduction

    • In a remarkable discovery, researchers have unveiled an entirely new frog species Sphaerotheca Varshaabhu, the rain-welcoming frog, thriving within the urban landscape of Bengaluru.

    About Sphaerotheca Varshaabhu

    • A Fresh Discovery: Sphaerotheca Varshaabhu is not just a frog; it’s a newly identified frog species.
    • Name’s Significance: The name ‘Sphaerotheca Varshaabhu’ derives its meaning from its unique behavior of emerging from burrows with the onset of early showers, symbolizing its affinity for rain.
    • Distinctive Attributes: This recently unearthed amphibian boasts distinctive characteristics that differentiate it from known frog species.
    • Urban Adaptation: What sets Sphaerotheca Varshaabhu apart is its remarkable adaptation to urban surroundings. It showcases behaviors and physical attributes that equip it to overcome challenges posed by urbanization.
    • Scientific Confirmation: The research team employed advanced genetic analysis, in-depth morphological studies, and bio-acoustics to definitively establish the distinctiveness of this newfound amphibian.

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  • Fertilizer Sector reforms – NBS, bio-fertilizers, Neem coating, etc.

    Nano DAP: Revolutionizing Fertilizers in Indian Agriculture

    Prelims Only | Agriculture | Mains Paper 3: Agriculture and related issues

    Introduction

    • The interim budget presented by Finance Minister Nirmala Sitharaman introduces the expansion of Nano DAP application in agriculture.

    Understanding Nano DAP

    • DAP: DAP, or di-ammonium phosphate, is a widely used fertilizer in India, rich in phosphorus for plant root development.
    • Nano DAPL: Introduced by Indian Farmers Fertiliser Cooperative (IFFCO), it is a liquid form of DAP with particle sizes less than 100 nanometers, enhancing its efficiency.

    Advantages of Nano DAP

    • Efficiency: Nano DAP’s small particle size allows it to penetrate seeds and plant openings more effectively, leading to higher seed vigor, increased chlorophyll, better photosynthetic efficiency, improved crop quality, and higher yields.
    • Affordability: Nano DAP is cost-effective compared to conventional DAP, with a 500 ml bottle equivalent to a 50 kg bag of DAP, priced at only Rs 600.
    • Convenience: The liquid form is easier to transport, store, and apply, making it farmer-friendly.
    • Reduced Imports: Adoption of domestically-produced Nano DAP from Kalol, Gujarat, reduces the need for importing fertilizers, enhancing self-reliance and benefiting Indian agriculture.

    Government’s Perspective

    • Subsidy Relief: Nano DAP’s cost-effectiveness alleviates the government’s subsidy burden on fertilizers, offering fiscal relief.
    • Self-Reliance: Producing Nano DAP domestically aligns with the goal of self-sufficiency in fertilizer production, reducing dependency on imports.
    • Agricultural Advancement: Wider Nano DAP adoption supports agricultural growth, increasing food grain production and benefiting farmers.

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  • Women Safety Issues – Marital Rape, Domestic Violence, Swadhar, Nirbhaya Fund, etc.

    700 One Stop Centres to be set across India

    Schemes | Governance | Mains Paper 2: Government Scheme/Policies

    Introduction

    • In a significant move towards women’s safety and empowerment, the Union Minister for Women and Child Development recently announced the establishment of One Stop Centres (OSCs) in over 700 districts across the nation.

    About One Stop Centre Scheme

    • Central Sponsorship: The One Stop Centre scheme is a Centrally Sponsored Scheme developed under the aegis of the Union Ministry of Women and Child Development (MWCD).
    • Inception: The scheme has been in operation since April 1, 2015, with a primary focus on addressing Gender-Based Violence.
    • Universal Reach: The One Stop Centre Scheme is committed to aiding all women, including girls below 18 years, who have suffered violence. Regardless of caste, class, religion, region, sexual orientation, or marital status, all women are eligible for support.
    • Protection for Minors: For girls below 18 years of age, the scheme collaborates with institutions and authorities established under the Juvenile Justice (Care and Protection of Children) Act, 2000, and the Protection of Children from Sexual Offenses Act, 2012.

    Objectives of the One Stop Centre Scheme

    • Holistic Support: The core objective is to provide comprehensive and integrated support to women who have endured violence, whether in private or public spaces. All assistance is conveniently accessible under one roof.
    • Immediate Access: These centres ensure immediate access to a wide array of services encompassing medical, legal, psychological, and counseling support. This collective approach stands resolute against all forms of violence targeting women.

    Funding and Administration

    • Financial Backing: The Scheme receives its funding through the Nirbhaya Fund, with the Central Government providing 100% financial assistance.
    • Local Administration: Day-to-day implementation and administrative responsibilities rest with the District Collector/District Magistrate.

    Services Offered by OSCs

    The One Stop Centres serve as a lifeline for women in need, offering an array of essential services:

    • Emergency Response and Rescue Services
    • Medical Assistance
    • Assistance with lodging FIR/ NCR/DIR
    • Psycho-social Support and Counseling
    • Legal Aid and Counseling
    • Shelter
    • Video Conferencing Facility

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  • Women empowerment issues – Jobs,Reservation and education

    Budgetary increase for Lakhpati Didi Scheme

    Prelims Only | Governance | Mains Paper 2: Government Scheme/Policies

    Introduction

    • The interim budget for 2024-25 has introduced an expansion of the ‘Lakhpati Didi’ scheme, designed to empower women’s self-help groups.

    About ‘Lakhpati Didi’ Scheme

    • Launch: The ‘Lakhpati Didi’ Scheme was inaugurated on August 15, 2023.
    • Objective: The government aims to create two crore prosperous sisters in rural villages, aligning with the broader mission of poverty alleviation and economic empowerment.
    • Skill Training: Women participants receive skill training to enable them to earn an income exceeding Rs 1 lakh annually.
    • Technology Integration: Women’s self-help groups (SHGs) will have access to drones for agricultural activities, harnessing technology to transform rural agriculture while empowering women.

    Leveraging Drone Technology

    • Drone Training: Approximately 15,000 women’s SHGs will undergo training in operating and repairing drones.
    • Income Generation: This initiative not only opens new avenues for income generation but also equips women with cutting-edge skills.
    • Agricultural Revolution: Drones hold the potential to revolutionize agriculture, facilitating precision farming, crop monitoring, and pest control.

    Skill Diversification

    • Skill Development: Women under this scheme receive training in diverse skills such as LED bulb making, plumbing, and more.
    • Eligibility Criteria: Participants must be active members of self-help groups.

    Application Process

    • Self-Help Groups: To apply for the ‘Lakhpati Didi’ Scheme, women should be part of self-help groups.
    • Local Anganwadi Centres: Additional information and application forms are available at local Anganwadi centres.

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

    Interim Budget mentions Blue Economy 2.0

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

    Introduction

    • The Interim Budget presented by Finance Minister underscores the importance of promoting an environment-friendly ‘blue economy’ for sustainable development.

    Understanding Blue Economy

    • Definition: The blue economy encompasses economic activities related to oceans, seas, and coastal regions, with a strong emphasis on sustainability.
    • Global Perspective: The European Commission defines it as a wide range of established and emerging sectors linked to ocean resources, while the World Bank emphasizes the sustainable use of ocean resources for economic growth and livelihoods.

    Significance for India

    • India’s Coastal Abundance: With its extensive coastline, diverse marine resources, and tourism potential, India stands to benefit significantly from the blue economy.
    • Balancing Growth: The blue economy seeks to achieve economic growth while preserving the health of ocean ecosystems.

    Budget Proposals

    • Restoration and Adaptation: A scheme focusing on climate-resilient activities, restoration, adaptation measures, and integrated coastal aquaculture and mariculture will be launched.
    • Integrated Aquaparks: The budget outlines plans for setting up five integrated aquaparks to boost aquaculture productivity.
    • Pradhan Mantri Matsya Sampada Yojana (PMMSY): PMMSY will be intensified to double exports to Rs 1 lakh crore and generate 55 lakh employment opportunities.

    India’s Blue Economy Policy

    • Blue Economy 2.0: The budget introduces the concept of Blue Economy 2.0, building upon a draft policy framework released in July 2022.
    • Policy Framework: The framework encompasses various aspects such as marine resources, coastal planning, tourism, fisheries, aquaculture, trade, technology, infrastructure, and international engagement.

    Global Engagement

    • G20 Summit: India, as the host of the G20 summit, prioritized blue economy discussions, emphasizing its significance on the global stage.
    • Responsibility and Collaboration: India recognizes the importance of responsible artificial intelligence and sustainable ocean governance in the context of the blue economy.

    Conclusion

    • India’s commitment to promoting the blue economy aligns with global efforts for sustainable development.
    • The Interim Budget’s proposals aim to harness the potential of India’s coastal resources while preserving the marine ecosystem, fostering economic growth, and creating employment opportunities.
    • This strategic shift underscores India’s dedication to responsible and inclusive development.

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  • RBI Notifications

    Payments Banks: A Closer Look at Their Features and Objectives

    Prelims Only | Economics | Mains Paper 3: Indian Economy

    Introduction

    • The Reserve Bank of India (RBI) imposed additional curbs on Paytm Payments Bank Ltd (PPBL), prohibiting it from operating its mobile wallet after February.
    • This article provides insights into what payments banks are, their objectives, features, and the regulatory framework governing them.

    Understanding Payments Banks

    • Definition: Payments banks are financial institutions similar to regular banks but operate on a smaller scale without engaging in credit risk.
    • Origin: The concept of payments banks was recommended by the Nachiket Mor Committee.
    • Objective: The primary goal is to advance financial inclusion by providing banking and financial services to unbanked and underbanked areas, catering to migrant laborers, low-income households, small entrepreneurs, and more.
    • Legal Framework: Payments banks are registered as public limited companies under the Companies Act 2013 and licensed under Section 22 of the Banking Regulation Act 1949.
    • Regulation: They are governed by various legislations, including the Banking Regulation Act, 1949; RBI Act, 1934; Foreign Exchange Management Act, 1999, among others.

    Key Features of Payments Banks

    • Differentiation: Payments banks are distinct entities, not universal banks.
    • Scale: They operate on a smaller scale compared to traditional banks.
    • Capital Requirements: Payments banks are required to have a minimum paid-up equity capital of 100 crores.
    • Promoter Contribution: The promoter must contribute at least 40% of the paid-up equity capital for the first five years from the commencement of business.

    Permissible Activities

    • Accept deposits up to Rs. 2,00,000.
    • Offer demand deposits in the form of savings and current accounts.
    • Invest deposits in secure government securities as Statutory Liquidity Ratio (SLR), accounting for 75% of the demand deposit balance.
    • Place the remaining 25% as time deposits with other scheduled commercial banks.
    • Provide remittance services, mobile payments/transfers/purchases, ATM/debit cards, net banking, and third-party fund transfers.
    • Act as a banking correspondent (BC) for other banks to offer credit and services beyond their capabilities.

    Activities Not Permitted

    • Loans and Credit Cards: Payments banks cannot issue loans and credit cards.
    • Time and NRI Deposits: They are not authorized to accept time deposits or NRI deposits.
    • Non-Banking Subsidiaries: Payments banks cannot establish subsidiaries to engage in non-banking financial activities.

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