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Type: Prelims Only

  • Police Reforms – SC directives, NPC, other committees reports

    What is Interim Bail?

    Prelims Only | Polity | Mains Paper 2: Executive & Judiciary

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Bail and its legal provisions

    Why in the news?

    The Supreme Court has granted interim bail to Delhi Chief Minister Arvind Kejriwal in the liquor policy case till to campaign for the Lok Sabha elections.

    What is Interim Bail?

    • Interim bail in India is a temporary release granted to an accused person from custody under Section 439 Cr.
    • It can be granted to address urgent matters such as medical emergencies, family crises, or other significant personal issues.

    Legal Provisions for Interim Bail

    Interim bail in India is NOT explicitly defined under a specific statute but is derived from the discretionary powers granted to courts under various legal provisions.

    The most relevant laws and principles include:

    1. Code of Criminal Procedure, 1973 (CrPC): While the CrPC does not explicitly mention “interim bail,” it provides the framework for granting bail in general. Sections like 437 (bail in non-bailable cases by Magistrate), 438 (anticipatory bail), and 439 (special powers of High Court or Court of Session regarding bail) are used by courts to grant bail, including interim bail, based on judicial discretion.
    2. Constitutional Provisions: The Constitution of India under Article 21, which guarantees the right to life and personal liberty, is often interpreted to include the right to bail as part of the fair and just legal process.

     

    Back2Basics: What is Bail?

    • Bail is the conditional release of a defendant with the promise to appear in court when required.
    • The term also means the security that is deposited in order to secure the release of the accused.
    • In India’s legal world, the term offense has been categorized as bailable offenses and non-bailable under the Code of Criminal Procedure.

    Why need Bail?

    • Bail is a fundamental aspect of any criminal justice system.
    • A person can defend himself/herself better when he/she is free, thus ensuring free trial.
    • The practice of bail grew out of the need to safeguard the fundamental right to liberty.
    • Liberty is the right of one whose guilt has not yet been proven.

    Types of Bail in India

    • Depending upon the sage of the criminal matter, there are commonly three types of bail in India:
    1. Regular Bail: Granted to a person who has already been arrested and is in custody. This type of bail is provided under Sections 437 and 439 of the Code of Criminal Procedure, 1973 (CrPC). It allows the accused to be released from custody while the trial is ongoing.
    2. Anticipatory Bail: Under Section 438 of the CrPC, anticipatory bail is a pre-arrest legal process. It is granted when a person apprehends arrest on an accusation of having committed a non-bailable offence. This type of bail ensures that the accused will be released on bail in the event they are arrested.
    3. Interim Bail: This is temporary bail granted for a short period. Interim bail is often granted to allow the accused some relief until a final decision on their regular or anticipatory bail plea is made.

    Conditions for Grant of Bail in Bailable Offences

    • Section 436 of the Code of Criminal Procedure, 1973, lays down that a person accused of a bailable offense under IPC can be granted bail if:
    1. There are sufficient reasons to believe that the accused has not committed the offence.
    2. There is sufficient reason to conduct a further inquiry in the matter.
    3. The person is not accused of any offence punishable with death, life imprisonment or imprisonment up to 10 years.

    Conditions for Grant of Bail in Non-Bailable Offences

    • Section 437 of Code of Criminal Procedure, 1973 lays down that the accused does not have the right to apply for bail in non-bailable offences.
    • It is discretion of the court to grant bail in case of non-bailable offences if:
    1. The accused is a woman or a child, bail can be granted in a non-bailable offence.
    2. There is a lack of evidence then bail in non-Bailable offenses can be granted.
    3. There is a delay in lodging FIR by the complainant, bail may be granted.
    4. The accused is gravely sick.

     

    PYQ:

    [2021] With reference to India, consider the following statements :​

    1. Judicial custody means an accused is in the custody of the concerned magistrate and such accused is locked up in police station, not in jail.​

    2. During judicial custody, the police officer in charge of the case is not allowed to interrogate the suspect without the approval of the court.​

    Which of the statements given above is/are correct?​

    1. 1 only ​
    2. 2 only​
    3. Both 1 and 2 ​
    4. Neither 1 nor 2​

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  • New Species of Plants and Animals Discovered

    Kerala bans Oleander Flowers in Temple Offerings

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Oleander Flowers

    Why in the news?

    Kerala temple authorities have banned the use of oleander flowers in offerings following the accidental poisoning of a woman who chewed oleander leaves.

    What is Oleander?

    • Nerium oleander, commonly known as oleander or rosebay, is a plant cultivated worldwide in tropical, subtropical, and temperate regions. 
    • Known for its drought tolerance, the shrub is often used for ornamental and landscaping purposes.
    • In Kerala, it’s called arali or kanaveeram and is used for natural fencing along highways and beaches.
    • According to the IUCN Red List, Nerium oleander (Oleander) is classified as Least Concern

    Traditional Medicinal Uses:

    • Termed as “desert rose” in ancient texts, oleander has been trusted with its medicinal properties such as a hangover cure, in cancer treatments, and as an antiviral.
    • The Ayurvedic Pharmacopoeia of India mentions oleander, particularly the use of oil from the root bark to treat skin diseases.
    • oleander’s use in treating skin diseases, leprosy, wounds, itching, and parasites.

    Toxicity of Oleander:

    • Oleander is highly toxic due to cardiac glycosides present in all parts of the plant.
    • Cardiac glycosides like oleandrin and digitoxigenin exert pharmacological effects on the heart, leading to nausea, vomiting, irregular heartbeat, and, in severe cases, death..

    PYQ:

    [2018] Why is a plant called Prosopis Juliflora often mentioned in the news?

    (a) Its extract is widely used in cosmetics

    (b) It tends to reduce the biodiversity in the area in which it grow

    (c) Its extract is used in the synthesis of pesticides

    (d) None of the above

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  • Police Reforms – SC directives, NPC, other committees reports

    What is an Interpol Blue Corner Notice?

    IOCRPrelims Only | International Relations | Mains Paper 2: Important International Institutions

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Interpol, Blue Corner Notice

    Mains level: NA

    Why in the news?

    • Karnataka’s political landscape is rocked by accusations of sexual abuse against a sitting MP belonging to a prominent political family.
    • Following explicit video leaks allegedly implicating him, Interpol has issued a Blue Corner notice, as he remains on the run.

    INTERPOL’s Notice System:

    • The Interpol issues various types of notices to its member countries about individuals who are either missing or wanted.
    • While these notices aren’t legally binding and countries aren’t required to act on them, they are commonly used to arrest and extradite suspects.

    The following entities can request for a notice:

    • Notice request by the Member Country
    • International Criminal Tribunals and the International Criminal Court can also request notices for individuals accused of serious crimes like genocide, war crimes, and crimes against humanity under their jurisdiction.
    • The United Nations can request notices related to enforcing sanctions imposed by the Security Council.

    What are Blue Corner Notice?

    • Purpose: Blue corner notice, also known as an “enquiry notice,” facilitates sharing critical crime-related information, including criminal records verification and locating individuals.
    • Example: In January 2020, Interpol issued a blue corner notice to locate fugitive Nithyananda, a self-styled godman.

    About INTERPOL (International Criminal Police Organization)

    Details
    Overview
    • Established in Vienna, Austria (1923), it enables cross-border police cooperation and supports and assists all organizations, authorities and services whose mission is to prevent or combat international crime.
    • An inter-governmental organization comprising 195 member countries,
    • Facilitates better coordination among police forces globally
    Functions
    • Enables member countries to share and access data on crimes and criminals
    • Offers technical and operational support to member countries
    • Manages 19 police databases containing information on crimes and criminals, accessible in real-time
    • Provides investigative support, including forensics, analysis, and assistance in locating fugitives worldwide.
    Working
    • Run by a Secretary General
    • Headquarters located in Lyon, France
    • Global complex for innovation based in Singapore.
    • Several satellite offices in different regions.

    I-24/7 Service: Global Police Communications System that provides a common platform for the member countries’ police organizations to share sensitive and urgent police information.
    India’s Membership
    • Joined in June 1956.
    Functioning in Member Countries
    • Each member country has a National Central Bureau (NCB), serving as the central point of contact for the general secretariat and other NCBs worldwide
    • NCBs are typically managed by police officials and situated in the government ministry responsible for policing (e.g., CBI in India)
    • Interpol’s databases contain various information, from names and fingerprints to stolen passports, accessible in real-time to member countries
    • Provides investigative support to member countries, aiding in forensic analysis and locating fugitives globally.
    Notices Interpol issues seven types of notices:

    1. Red Notice: Seeks the location and provisional arrest of fugitives.
    2. Blue Notice: Requests information about a person’s identity or activities.
    3. Green Notice: Warns about individuals likely to repeat crimes.
    4. Yellow Notice: Aids in locating missing persons.
    5. Black Notice: Seeks information about unidentified bodies.
    6. Orange Notice: Warns of imminent threats to public safety.
    7. Purple Notice: Seeks or provides information on criminal methods.

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  • Zoonotic Diseases: Medical Sciences Involved & Preventive Measures

    FLiRT Variants: Latest Twist in the COVID-19 Saga

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: FLiRT Covid Variant

    Why in the news?

    The emergence of new variants KP.2 and KP1.1, known as the FLiRT variants, has raised global concerns.

    • Despite vaccination efforts, these variants pose challenges, leading to concerns about a potential rise in COVID-19 cases.

    What are the FLiRT Variants of COVID-19?

    • KP.2 and KP1.1, dubbed ‘FLiRT’ variants, are descendants of the Omicron JN.1 which spread globally over the winter last year.

    Features and Differences from Other Variants

    • New Spike Mutations: The FLiRT group includes two specific mutations that are believed to enhance the virus’s ability to infect human cells.
    • Transmission and Evasion: Preliminary studies suggest that KP.2, the more prevalent of the two, may possess enhanced capabilities to evade immune responses generated by vaccines and previous infections.

    Are FLiRT Variants Riskier than JN.1?

    • Increased Immune Evasion: Research indicates that KP.2 shows a significant ability to escape immunity from both the latest vaccines and previous infections.
    • Reproduction Number: The reproduction number of KP.2 may be higher than that of JN.1, indicating a potentially greater ability to spread.
    • No definitive evidence: While there’s no definitive evidence that FLiRT variants cause more severe illness, their ability to circumvent immune defences can lead to more infections and, by extension, potential increases in hospitalizations.

    PYQ:

    [2022] In the context of vaccines manufactured to prevent COVID-19 pandemic, consider the following statements:

    1. The Serum Institute of India produced COVID-19 vaccine named Covishield using mRNA platform.
    2. Sputnik V vaccine is manufactured using vector based platform.
    3. COVAXIN is an inactivated pathogen based vaccine.

    Which of the statements given above are correct?

    (a) 1 and 2 only

    (b) 2 and 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

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  • Innovations in Sciences, IT, Computers, Robotics and Nanotechnology

    Artificial Rain through Cloud Seeding

    Prelims Only | Science Tech | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Cloud Seeding, Seeding Agents

    Why in the news?

    The Uttarakhand government faced scrutiny from the Supreme Court following Forest fires that claimed lives in the state.

    • Justices highlighted the inefficacy of relying solely on cloud-seeding or rain gods to address the crisis.

    Case Study: Experimenting Artificial Rain in India

    • A recent study published in the Bulletin of the American Meteorological Society (BAMS) highlighted the success of a cloud seeding trial in Maharashtra’s Solapur region, which resulted in an 18% increase in rainfall compared to normal patterns.
    • Scientists from the Indian Institute of Tropical Meteorology in Pune and other institutes conducted this study.
    • The experiment targeted warm convective clouds with a height above zero degrees Celsius, releasing calcium chloride particles to stimulate rainfall.
    • Spanning from 2017 to 2019, the experiment analyzed 276 clouds using advanced tools like automatic rain gauges, radars, radiometers, and aircraft.
    • Glaciogenic seeding, attempted in clouds containing both ice and water, did not significantly impact rainfall at the seeding location, according to the study’s findings.

    About Cloud-Seeding

    • Cloud seeding is a weather modification technique aimed at altering precipitation patterns by dispersing substances into clouds to stimulate rainfall or snowfall.
    • It is used to mitigate hail, disperse fog, and either induce precipitation or prevent it from occurring in subsequent days.
    • It involves the dispersal of substances like silver iodide, potassium iodide, dry ice, and hygroscopic materials such as table salt into the atmosphere.
    • Techniques include:
    1. Static seeding: promotes ice particle formation in supercooled clouds, and
    2. Dynamic seeding: enhances convective cloud development through the release of latent heat.
    • Dispersion methods range from aircraft and ground-based generators to newer approaches like drones delivering electric charges or infrared laser pulses.

    Limitations: Impact on Environment and Health

    • Concerns persist regarding the potential accumulation of seeding agents in sensitive ecosystems, although detailed studies have shown negligible impacts.
    • The chemicals used, such as silver iodide, may potentially damage the environment and cause health issues like iodine poisoning in high concentrations

    PYQ:

    [2019] In the context of which of the following do some scientists suggest the use of cirrus cloud thinning technique and the injection of sulphate aerosol into stratosphere?

    (a) Creating the artificial rains in some regions

    (b) Reducing the frequency and intensity of tropical cyclones

    (c) Reducing the adverse effects of solar wind on the Earth

    (d) Reducing the global warming

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  • Tiger Conservation Efforts – Project Tiger, etc.

    Tiger Translocation in Sahyadri-Konkan Wildlife Corridor  

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Sahyadri-Konkan Wildlife Corridor, Tadoba-Andhari TR

    Mains level: NA

    Why in the news?

    Maharashtra’s plan to increase tigers count in Sahyadri-Konkan Wildlife Corridor by translocating tigers from Tadoba-Andhari Tiger Reserve (TATR) (Chandrapur, Maharashtra) underscores the critical role of wildlife corridors in conservation efforts.

    About Tadoba-Andhari Tiger Reserve (TATR)

    • Tadoba became one of India’s earliest national parks when it was declared in 1955, alongside Kanha National Park.
    • The name “Tadoba” is derived from the deity “Tadoba” or “Taru,” worshipped by local Gond Tribals, and “Andhari” refers to the Andhari River flowing through the reserve.
    • It was later expanded and officially merged with the Andhari Wildlife Sanctuary in 1993 to form the TATR.
    • TATR is regarded as one of the world’s most preferred destinations for tiger sightings and is a critical part of Project Tiger, aimed at conserving tigers in India.
    • The reserve has 115 tigers, including 88 within the forest and 27 in the areas immediately surrounding the reserve.

    About Sahyadri-Konkan Wildlife Corridor  

    • The Sahyadri-Konkan corridor (Sahyadri-Radhanagari-Goa-Karnataka), plays a vital role in conserving wildlife, particularly tigers, in the northern Western Ghats region.
    • It spans throughout the states of Maharashtra, Goa, and Karnataka, specifically through the Western Ghats, one of the world’s eight biodiversity hotspots.
    • Protected Areas Connected:
    1. Sahyadri Tiger Reserve (includes Koyna Wildlife Sanctuary (WLS) and Chandoli National Park) and Radhanagari Wildlife Sanctuary (Maharashtra);
    2. Bhimgad Wildlife Sanctuary and Kali Tiger Reserve (includes Anshi National Park and Dandeli WLS) in (Karnataka);
    3. Mollem National Park, Netravali Wildlife Sanctuary (Goa).
    • Fauna: Tiger (Panthera tigris), Indian leopard (Panthera pardus), dhole (Cuon alpinus), and sloth bear (Melursus ursinus), etc.
    • The Western Ghats, including parts of the corridor, are designated as a UNESCO World Heritage Site in 2012 due to their outstanding universal value in terms of biodiversity and endemic species.

    PYQ:

    [2020] Among the following Tiger Reserves, which one has the largest area under “Critical Tiger Habitat”?

    (a) Corbett

    (b) Ranthambore

    (c) Nagarjunsagar-Srisailam

    (d) Sunderbans

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  • Health Sector – UHC, National Health Policy, Family Planning, Health Insurance, etc.

    Widal Test: Flaws of Typhoid Diagnosis  

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Diseases; Widal Test, Salmonella Typhi Bacteria;

    Mains level: NA

    Why in the news?

    Patients with fever in India often undergo testing and treatment for typhoid fever, primarily relying on the Widal test.

    • The Widal test, though widely used, has several limitations that affect its accuracy and reliability.

    Typhoid diagnosis using Widal Test

    • The Widal test is used primarily to diagnose typhoid fever.
    • Typhoid fever, caused by Salmonella Typhi and related bacteria, presents with symptoms like high fever, stomach pain, weakness, and gastrointestinal issues.
    • It detects antibodies in the patient’s blood against the O (somatic) and H (flagellar) antigens of Salmonella Typhi.
    • Procedure:
    1. The presence of these antibodies is detected through an agglutination reaction.
    2. The test involves serial dilution of the patient’s serum.
    3. The highest dilution at which agglutination occurs indicates the antibody titer, with higher titers suggesting an active infection.

    Diagnostic Challenges:

    • The gold standard for diagnosing typhoid involves isolating the bacteria from blood or bone marrow cultures, which is time-consuming and resource-intensive.
    • Widal test is commonly used due to its convenience and accessibility. However, the Widal test’s interpretation is complicated by factors like the need for multiple serum samples, variations in cutoff values, and potential cross-reactivity with antibodies from other infections or vaccines.

    Challenges with Widal Test:

    • Impractical: A single positive Widal test does not confirm typhoid.
    • Complicated result interpretation: High background antibody levels and variability in test cutoff values.
    • Cross-reactivity with antibodies from other infections and false negatives due to prior antibiotic therapy undermine test reliability.

    Consequences of Widal Test Use:

    • Erroneous results obscure the true burden of typhoid in India, leading to inappropriate treatment and financial strain on patients.
    • Overuse of antibiotics based on Widal test results contributes to antimicrobial resistance, exacerbating the challenge of treating typhoid.

    PYQ:

    [2016] Which of the following statements is/are correct?

    Viruses can infect

    1. Bacteria

    2. Fungi

    3. Plants

    Select the correct answer using the code given below.

    (a) 1 and 2 only

    (b) 3 only

    (c) 1 and 3 only

    (d) 1, 2 and 3

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  • Innovations in Biotechnology and Medical Sciences

    CRISPR’s Breakthrough in Treating Blindness

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

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: LCA, CRISPR Cas9;

    Mains level: NA

    Why in the news?

    Scientists have successfully used CRISPR-Cas9 gene editing to restore vision in individuals with a rare form of inherited or congenital blindness.

    • The groundbreaking clinical trial, named “BRILLIANCE,” demonstrated promising results in improving vision and quality of life for participants with Leber congenital amaurosis (LCA), a severe vision disorder.

    What is Leber Congenital Amaurosis (LCA)?

    • LCA is a rare genetic disorder that primarily affects the retina the ‘light-sensitive’ tissue at the back of the eye. It leads to severe visual impairment or blindness at birth or within the first few months of life.
    • It is inherited in an autosomal recessive manner, meaning a child needs to inherit one defective gene from each parent to develop the condition.
    • There are several genes associated with LCA, with mutations in at least 14 different genes known to cause the disorder.
    • These genes generally affect the development and function of photoreceptors or the retinal pigment.

    Key highlights of the BRILLIANCE trial:

    • The BRILLIANCE trial involved 12 adults and two children diagnosed with LCA, a condition characterized by early-onset vision loss.
    • Participants received a single dose of a CRISPR gene therapy called EDIT-101, designed to correct mutations in the CEP290 gene responsible for LCA.
    • In this case, CRISPR-Cas9 cuts out the faulty DNA segment in the CEP290 gene and replaces it with a healthy DNA sequence, restoring the function of the CEP290 protein crucial for vision.
    • Out of 14 participants, 11 experienced improved vision without serious side effects.

    Back2Basics: CRISPR-Cas9 Gene Editing

    • CRISPR-Cas9 stands for Clustered Regularly Interspaced Short Palindromic Repeats and CRISPR-associated protein 9.
    • It is a technology that allows geneticists and researchers to edit parts of the genome by altering sections of the DNA sequence.
    • Emmanuelle Charpentier and Jennifer Doudna’s work on CRISPR-Cas9 as a ‘molecular scissor’ earned them the 2020 Nobel Prize in chemistry.
    • The system consists of two key components:
    1. Cas9: This is the enzyme that acts like a pair of molecular scissors. It is responsible for cutting the DNA strand at a specific location, allowing for the removal, addition, or alteration of DNA at that site.
    2. Guide RNA (gRNA): This is a piece of RNA that is designed to find and bind to a specific sequence of DNA that matches its code. The gRNA guides the Cas9 enzyme to the exact spot in the genome where an edit is desired.
    • Mechanism:
      • The process begins with the design of a gRNA that matches the DNA sequence where an edit is needed.
      • Once inside the cell, the Cas9 enzyme and the gRNA form a complex that can identify and bind to the target DNA sequence.
      • The Cas9 then cuts the DNA at this location.
      • After the DNA is cut, the cell’s natural repair mechanisms can be harnessed to add or remove genetic material, or to make specific changes to the DNA.

     

    PYQ:

    [2019] What is Cas9 Protein that is often mentioned in news?

    (a) A molecular scissors used in targeted gene editing

    (b) A biosensor used in the accurate detection of pathogens in patients

    (c) A gene that makes plants pest-resistant

    (d) A herbicidal substance synthesized in genetically modified crops

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  • Wildlife Conservation Efforts

    Orangutan uses Plant to treat wound

    Prelims OnlyWorld Mapping | Enviro & Biodiversity | Mains Paper 3: Conservation, Environmental Pollution & Degradation, Eia

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Orangutan and its natural habitat

    Mains level: NA

    Why in the news?

    An orangutan was observed treating a wound with medicine from a tropical plant, showcasing how some animals employ natural remedies to alleviate their ailments.

    • This behavior, documented in a recent study published in Scientific Reports, represents a novel instance of self-medication among wild animals.

    About Orangutans

    • Orangutans, are distinguished by their vivid red fur, are the largest arboreal mammals and spend the majority of their time in trees and forests.
    • The name “orangutan” translates to “man of the forest” in Malay.
    • They possess long, powerful arms and grasping hands and feet that facilitate movement through the branches.
    • Highly intelligent, these great apes share 96.4% of genetic makeup of modern man.
    • Orangutans primarily inhabit the tropical rainforests of Southeast Asia, specifically on the islands of Borneo and Sumatra.
    • Conservation Status: Critically Endangered (IUCN Red list)
    • Population: Bornean (Approximately 104,700); Sumatran (Approximately 13,846); Tapanuli (Around 800);
    • Behavioral Features:
      • These apes lead mostly solitary lives in the lowland forests, dining on wild fruits such as lychees, mangosteens, and figs, and drinking water collected in tree cavities.
      • Orangutans are mainly frugivorous, they primarily eat fruits, and consume leaves, bark, insects, and occasionally small animals.
      • They construct nests in trees with vegetation for sleeping at night and resting during the day.
      • And, now they are found treating a wound with medicine from a Tropical plant.

    PYQ:

    [2013] Consider the following:

    1. Star tortoise
    2. Monitor lizard
    3. Pygmy hog
    4. Spider monkey

    Which of the above are naturally found in India?

    (a) 1, 2 and 3 only

    (b) 2 and 3 only

    (c) 1 and 4 only

    (d) 1, 2 and 3 and 4

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  • RBI Notifications

    CBDC pilot programmes for CPs, CDs likely: RBI

    Prelims Only | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: CBDC, CPs, CDs;

    Mains level: NA

    Why in the news?

    RBI Governor Shaktikanta Das unveiled plans for a pilot program targeting the wholesale segment of Central Bank Digital Currency (CBDC) focusing on commercial papers (CPs) and certificates of deposits (CDs).

    What is Central Bank Digital Currency (CBDC)?

    • CBDC is a legal tender to be issued by the central bank in digital form; like rupee notes or coins, which are in physical form.
    • It was announced in the Union Budget 2022-23.
    • Subsequently, the Government amended Section 22 of the RBI Act, 1934 through the Finance Bill 2022. [Ref].
    • Working of CBDC:
      • Like fiat currency, it can also be exchanged between people. Simply, put it’s just like rupee (₹) notes but in digital form (e₹). 
      • However, unlike fiat currency that’s usually stored in banks and hence their liability, CBDC is a liability on the RBI’s balance sheet.
      • That’s why one does not necessarily need to have a bank account to own a digital rupee.

     

    About Commercial Papers (CPs) and Certificates of Deposits (CDs)

    Commercial Papers Certificates of Deposits
    Type of Instrument Unsecured promissory note Fixed-income financial instrument
    Issuer Large corporations, primary dealers, financial institutions Scheduled Commercial Banks, All-India Financial Institutions
    Maturity Period 1 to 364 days 3 months to 1 year (for SCBs), 1 to 3 years (for financial institutions)
    Minimum Investment Rs. 5 lakh or multiples thereof Rs. 1 lakh or multiples thereof
    Credit Rating Requirement Minimum credit rating required (e.g., A-2) from recognized rating agencies Typically issued by highly rated banks and financial institutions
    Collateral Unsecured Not applicable
    Purpose Short-term funding for corporations Short to mid-term investment for individuals and institutions
    Interest Rate Typically higher than bonds, fluctuates with market conditions Typically fixed, higher than savings accounts, fluctuates with market conditions
    Investment Eligibility Individuals, banking companies, corporate bodies (registered or incorporated in India), NRIs, FIIs, etc. Individuals, banking companies, other corporate bodies, NRIs, FIIs, etc.
    Issuing and Paying Agent (IPA) Only scheduled banks act as Issuing and Paying Agent Not applicable
    Trading Actively traded in Over-the-Counter (OTC) market, reported on Fixed Income Money Market and Derivatives Association of India (FIMMDA) reporting platform Not publicly traded
    Dematerialized Holding Can be held in dematerialized form through Securities and Exchange Board of India (SEBI)-approved depositories Can be issued in dematerialized form through SEBI-approved depositories

     

    With inputs from: https://www.indiainfoline.com

    PYQ:

    [2020] With reference to the Indian economy, consider the following statements:

    1. ‘Commercial Paper’ is a short-term unsecured promissory note.
    2. ‘Certificate of Deposit’ is a long-term instrument issued by the Reserve Bank of India to a corporation.
    3. ‘Call Money’ is a short-term finance used for interbank transaction.
    4. ‘Zero-Coupon Bonds’ are the interest-bearing short-term bonds issued by the Scheduled Commercial Banks to corporations.

    Which of the pairs above is/are correctly matched?

    (a) 1 and 2 only

    (b) 4 only

    (c) 1 and 3 only

    (d) 2, 3 and 4 only

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