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Type: Prelims Only

  • Land Reforms

    Unique Land Parcel Identification Number (ULPIN) to curb Land-Linked Illegal Activities

    Prelims Only | Governance | Mains Paper 2: E-Governance

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Unique Land Parcel Identification Number (UPLIN)

    Mains level: Land records digitalization

    land ulpin

    Central Idea

    • President Murmu emphasized the importance of implementing a Unique Land Parcel Identification Number (ULPIN).

    What is ULPIN?

    • ULPIN or Bhu-Aadhaar is a 14-digit Alpha–Numeric Unique ID for each land parcel.
    • This is the next step in the Digital India Land Records Modernisation Programme (DILRMP) which began in 2008.
    • The identification will be based on the longitude and latitude coordinates of the land parcel, and is dependent on detailed surveys and geo-referenced cadastral maps.
    • ULPIN is generated using the Electronic Commerce Code Management Association (ECCMA) standards during the importing of the geo-referenced shape file into BhuNaksha, a cadastral mapping solution of NIC.

    Digital India Land Records Modernisation Programme (DILRMP)

    • DILRMP is a central sector scheme implemented by the Department of Land Resources under the Ministry of Rural Development.
    • Erstwhile National Land Record Modernization Programme, it was revamped and converted as a Central Sector Scheme with effect from 1st April, 2016 with 100% funding by the Centre.
    • The program aims to develop an Integrated Land Information Management System (ILIMS) across the country by leveraging the commonalities in land records systems in different states.
    • It integrates land records processes and databases with financial institutions, banks, circle rates, registration offices, and other sectors.
    • The program includes the computerization of land records, survey/re-survey activities, and digitization of registration processes.

     

    Benefits of ULPIN

    • Curbing malpractices: The implementation of ULPIN and digitization of land records can significantly reduce unethical and illegal activities related to land. The transparency brought about by digitization enhances accountability and curbs malpractices.
    • Efficient Land Use: ULPIN will facilitate proper utilization of land parcels and aid in the formulation and implementation of new schemes.
    • Linkage with E-Courts: Connecting E-Courts with land records and registration databases offers multiple benefits, including improved accessibility to information and streamlined legal processes related to land disputes.
    • Indestructible documentation: Digitization of land records proves valuable in times of calamities such as floods and fires, as it helps in preventing loss of documents and expedites the recovery process.

    Impacts on Development and Welfare

    • Development Catalyst: By providing transparent and accessible land information, digitization supports informed decision-making and effective resource management.
    • Proper Scheme Implementation: Linking land records with various government departments facilitates the efficient implementation of welfare schemes ex. PM Awas Yojana.
    • Beneficiary targeting: Accurate and up-to-date land data helps identify beneficiaries and ensures the targeted delivery of benefits and services.

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  • Mother and Child Health – Immunization Program, BPBB, PMJSY, PMMSY, etc.

    India achieves record DPT3 vaccination coverage in 2022: WHO

    Prelims Only | Governance | Mains Paper 2: Health & Education

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: DPT3

    Mains level: Not Much

    dpt3

    Central Idea

    • The coverage rate for DPT3 vaccines (diphtheria, pertussis, and tetanus) in India reached an all-time high of 93% in 2022, surpassing the pre-pandemic record of 91% in 2019.
    • This significant increase from the 85% coverage in 2021 was reported by the World Health Organization (WHO).

    What is DPT3?

    • DPT3 vaccines refer to a combination vaccine that provides protection against three infectious diseases: diphtheria, pertussis (whooping cough), and tetanus.
    • The “DPT” in DPT3 stands for the initials of these three diseases:
    1. Diphtheria: It is a bacterial infection that primarily affects the respiratory system. It can cause severe throat and nose congestion, difficulty breathing, and in severe cases, it can lead to heart and nerve damage.
    2. Pertussis (Whooping Cough): It is a highly contagious respiratory infection caused by the bacterium Bordetella pertussis. It is characterized by severe coughing fits, often accompanied by a “whooping” sound when gasping for breath. Pertussis can be particularly dangerous for infants and young children.
    3. Tetanus: Also known as lockjaw, is a bacterial infection caused by the bacterium Clostridium tetani. It enters the body through wounds or cuts and produces a toxin that affects the nervous system, leading to muscle stiffness and spasms, particularly in the jaw and neck muscles.

    WHO records on immunization

    • DPT3 Coverage Recovery: The WHO South-East Asia Region saw the DPT3 coverage recover to pre-pandemic levels of 91% in 2022, a significant increase from 82% in 2021.
    • Measles Vaccine Coverage: The region also witnessed a six percent improvement in measles vaccine coverage, rising to 92% in 2022 from 86% in 2021.
    • Zero-Dose Children: The number of zero-dose children (those who have not received even the first dose of the DPT vaccine) halved from 4.6 million in 2021 to 2.3 million in 2022.
    • Partially Vaccinated Children: The number of partially vaccinated children (those who received at least one dose but not the complete three-dose series) decreased from 1.3 million in 2021 to 650,000 in 2022.

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  • Electoral Reforms In India

    EC to issue Online Airtime Vouchers for Campaigning

    Prelims Only | Polity | Mains Paper 2: Representation Of People’s Act

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Airtime Vouchers for Campaigning

    Mains level: Not Much

    air

    Central Idea

    • The Election Commission of India has implemented a fully online process for allotting airtime to political parties for campaigning on Akashvani and Doordarshan.
    • The new system replaces the traditional method of collecting physical vouchers and instead issues digital time vouchers through an online platform.

    Airtime Vouchers for Campaigning

    • Objective: To provide equitable access to government-owned electronic media during elections for campaigning purposes.
    • Legal basis: The allotment of time on public broadcasters during campaigning is governed by a scheme notified in January 1998, based on Section 39A of the Representation of People Act, 1951.
    • Allotment Criteria: Each National party and recognized State party receive an equitable base time on Doordarshan (DD) and Akashvani.
    • Scope for additional time: Factors such as past electoral performance, representation in the legislature, and the number of candidates fielded by the party are considered to ensure equitable distribution of airtime.
    • Predefined Schedule: The date and time for telecasts and broadcasts by authorized party representatives are predetermined by Prasar Bharati, in consultation with EC and in the presence of party representatives.

    Regulation of these Vouchers

    • Scrutiny of Party Transcripts: Party transcripts undergo scrutiny to ensure compliance with relevant codes. These codes prohibit content that criticizes other countries, attacks religions or communities, incites violence, or engages in personal attacks.
    • Role of Apex Committee: Disagreements over vetted content are referred to an Apex Committee comprising members from Akashvani and DD. The committee’s decision is final.

    Significance of Digital Vouchers

    • Process Improvement: The decision reflects its commitment to leveraging technology for an improved electoral process and enhanced convenience for all stakeholders.
    • Eliminating Physical Collection: Political parties will no longer need to send representatives to the commission’s offices to collect time vouchers during elections.

    Operational Challenges

    • Limited Access: The scheme is exclusively available to national and recognized State parties, leading to concerns about its true equity.
    • Conflict of Interest in the Apex Committee: The Apex Committee consists of officials from Akashvani and DD, raising concerns about potential conflicts of interest.
    • Row over transcript content: These officials are expected to review their own decisions when conflicts arise with political parties over the transcript content.

    Also read:

    How is a ‘National Party’ in India defined?

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

    Crimean-Congo Haemorrhagic Fever (CCHF)

    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: Crimean-Congo Haemorrhagic Fever (CCHF)

    Mains level: NA

    cchf

    Central Idea

    • Europe is currently experiencing a heatwave and wildfires, leading to concerns about the spread of viruses that are typically not found in colder climates.
    • The WHO has issued an alert regarding the Crimean-Congo haemorrhagic fever (CCHF), a potentially fatal infection transmitted by ticks.

    What is CCHF?

    • CCHF is a viral haemorrhagic fever primarily transmitted by ticks.
    • It can also be contracted through contact with viraemic animal tissues during animal slaughter.
    • CCHF outbreaks can lead to epidemics with a high case-fatality ratio (10-40%) and pose challenges for prevention and treatment.

    Transmission and Hosts

    • The virus exists in the tick family of insects.
    • Animals such as cattle, goats, sheep, and hares serve as amplifying hosts for the virus.
    • Humans can contract CCHF through contact with infected ticks or animal blood.
    • The virus can also be transmitted between humans through contact with infectious blood or body fluids.
    • Migratory birds can host ticks, allowing the virus to spread over long distances.

    Symptoms and Treatment

    • Common symptoms of CCHF include fever, muscle aches, dizziness, neck and back pain, headache, sore eyes, and sensitivity to light.
    • Early symptoms may also include nausea, vomiting, diarrhea, abdominal pain, and sore throat, followed by mood swings and confusion.
    • Later stages may involve sleepiness, depression, and lassitude.
    • There is no vaccine available for CCHF in humans or animals, and treatment focuses on managing symptoms.
    • The antiviral drug ribavirin has been used to treat CCHF infection with some apparent benefit.

    Spread of CCHF in Europe

    • CCHF is endemic to Africa, the Balkan countries, the Middle East, and parts of Asia.
    • In 2016, Spain reported the first fatality from CCHF in Europe.
    • Scientists warn that CCHF, which can have a fatality rate between 10% and 40%, is spreading northward and westward in Europe.
    • Cases of CCHF have been reported in Spain, Russia, Turkey, and the UK.

    Reasons for this spread

    • Disrupted temperature patterns due to climate change are creating favorable conditions for pathogens.
    • CCHF ticks are moving northward through Europe due to longer and drier summers caused by climate change.
    • Climate change contributes to the spread of diseases by expanding tick habitats, altering water habitats, and facilitating the movement of animals and human interactions.

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  • Foreign Policy Watch: India-SAARC Nations

    EAM attends BIMSTEC Foreign Ministers’ Meet

    Prelims Only | International Relations | Mains Paper 2: Bilateral, Regional and Global Groupings and agreements involving India

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: BIMSTEC, Bangkok Vision 2030

    Mains level: Not Much

    bimstec

    Central Idea

    • The first-ever Foreign Ministers’ meeting of the Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) commenced in Bangkok, Thailand.

    Understanding BIMSTEC

    bimstec

    • Origins and Membership: BIMSTEC, initially known as BIST-EC (Bangladesh-India-Sri Lanka-Thailand Economic Cooperation), was established in 1997 with the signing of the Bangkok Declaration.
    • Newest members: Myanmar joined in 1997, followed by Bhutan and Nepal in 2004.
    • Population and GDP: The organization comprises seven member countries located around the Bay of Bengal, representing approximately 22% of the world’s population. The combined GDP of the member states is close to $2.7 trillion.
    • Sectoral Focus: BIMSTEC’s cooperation initially focused on six sectors: trade, technology, energy, transport, tourism, and fisheries.
    • India’s role: India’s sectoral responsibilities within BIMSTEC include security, counter-terrorism, transnational crime, disaster management, and energy.

    Significance of BIMSTEC as a Regional Forum

    (A) Revitalization and Engagement:

    • BIMSTEC received limited attention until India reinvigorated its engagement in October 2016, following the terrorist attack in Uri.
    • India hosted an outreach summit with BIMSTEC leaders alongside the BRICS summit in Goa.

    (B) Regional aspirations

    Each BIMSTEC member has strategic incentives for the organization’s growth.

    1. Bangladesh seeks regional significance
    2. Sri Lanka aims to connect with Southeast Asia and become a hub for the Indo-Pacific region
    3. Nepal and Bhutan aim to access the Bay of Bengal region
    4. Myanmar and Thailand aim to balance China’s influence in Southeast Asia by strengthening ties with India

    India and BIMSTEC

    • BIMSTEC offers India a platform to prioritize its foreign policy goals of “Neighborhood First” and “Act East”.
    • This is longer run seeks to connect South and Southeast Asia, as well as the Himalayas and the Bay of Bengal.

    China’s Role and India’s Agenda

    • Chinese Influence and Concerns: China’s expanding presence in South and Southeast Asia through the Belt and Road Initiative has increased its interest in the Bay of Bengal region.
    • Act of counterbalancing: BIMSTEC becomes an arena for India to counterbalance Chinese investments.
    • Promoting Connectivity: India can utilize BIMSTEC to promote connectivity projects aligned with international norms, countering Chinese projects that are perceived to violate these norms.
    • Bay of Bengal as a Peaceful Region: India can showcase the Bay of Bengal as a region of openness and peace, highlighting the contrast with China’s behavior in the South China Sea.
    • Regional Stability: BIMSTEC could establish codes of conduct for regional freedom of navigation and advocate for a Bay of Bengal Zone of Peace to limit extra-regional powers’ military actions.

    Conclusion

    • BIMSTEC has the potential to contribute to peace, stability, and economic development in the Bay of Bengal region and beyond.
    • Continued efforts and collaboration among member states are necessary to harness the full potential of BIMSTEC and achieve common goals.

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  • International Space Agencies – Missions and Discoveries

    What is Rho Ophiuchi Cloud Complex?

    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: Rho Ophiuchi Cloud Complex

    Mains level: NA

    rho

    Central Idea

    • NASA recently released an image obtained by the James Webb Space Telescope, showcasing the Rho Ophiuchi cloud complex, which is the closest star-forming region to Earth.
    • This image marked one year since NASA unveiled the telescope’s first scientific results.

    What is Rho Ophiuchi Cloud Complex?

    • The Rho Ophiuchi Cloud Complex is a molecular cloud located in the constellation Ophiuchus.
    • It is centered 1° south of the star ρ Ophiuchi and extends to other parts of the constellation.
    • At an estimated distance of about 140 parsecs, or 460 light years, it is one of the closest star-forming regions to the Solar System.
    • It consists of several dark nebulae, which are dense regions of interstellar dust and gas that block background starlight.
    • The cloud complex contains numerous young stellar objects, including protostars, young stars, and brown dwarfs.
    • These stellar objects form as the dense material in the cloud collapses under gravity, leading to the birth of new stars.

    Observations from the Image

    • Material Jets and Surrounding Gas/Dust: The image illustrates how the material jets emanating from young stars influence the surrounding gas and dust while illuminating molecular hydrogen.
    • Glowing Cave Carved by Stellar Winds: One part of the image shows a star inside a glowing cave carved out in space by its stellar winds.
    • Impressive Nebula with Bright Young Stars: The image showcases an impressive nebula with three bright young stars at the top, revealing the size and detail of the jets and outflows.

    Insights from the new findings

    • Formation of New Suns: Rho Ophiuchi image demonstrates the formation of new suns and planet-forming disks, resembling what scientists believe the early solar system looked like over 4.5 billion years ago.
    • Violent Outbursts and Dusty Cocoons: The image unveils the process of stars and planetary systems assembling, as well as the dusty cocoons being disrupted by violent outbursts, portrayed as red jets cutting through the cloud.
    • Visibility through Dust: The Rho Ophiuchi core is usually obscured by extensive amounts of dust, making it invisible to telescopes working in visible light, like the Hubble telescope. However, JSWT penetrates the dust, revealing the young stars within and providing insights into the early stages of star formation.

    Back2Basics: James Webb Space Telescope

    Collaboration NASA, European Space Agency (ESA), Canadian Space Agency
    Launch December 2021
    Location Sun-Earth L2 Lagrange point, approximately 1.5 million km beyond Earth’s orbit
    Size and Capability Largest, most powerful infrared space telescope
    Successor to Hubble Telescope
    Time Observations Can see backwards in time to just after the Big Bang
    Objectives Examine every phase of cosmic history, including the formation of galaxies, stars, and planets.

    Look back 13.5 billion years to see the first stars and galaxies forming.

    Compare early galaxies to today’s spirals to understand galaxy assembly.

    Observe star and planetary system formation.

    Study the atmospheres of extrasolar planets and search for signs of life elsewhere in the universe.

     

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  • Disasters and Disaster Management – Sendai Framework, Floods, Cyclones, etc.

    Lightning not a Natural Disaster: Centre

    Prelims Only | Enviro & Biodiversity | Mains Paper 3: Disaster Management

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Lightning

    Mains level: NA

    light

    Central Idea

    • A senior government official stated that lightning deaths can be prevented through education and awareness, and thus, the government is against declaring it a natural disaster.

    Why discuss this?

    • State Demands: States like Bihar and West Bengal have requested that lightning-related deaths be considered natural disaster, making victims eligible for compensation from the State Disaster Response Fund (SDRF).
    • Increased fatalities: According to the National Crime Records Bureau, lightning caused 2,880 deaths in 2021, accounting for 40% of all accidental deaths from “forces of nature.”

    What is Lightning?

    Lightning is a rapid and powerful discharge of electricity in the atmosphere, often directed towards the Earth.

    • Genesis: Lightning discharges occur in giant, moisture-bearing clouds that are several kilometers tall.
    • Ice Crystal Formation: Water vapor in the clouds condenses into small ice crystals as temperatures drop below 0°C.
    • Electron Release and Collision: Collisions between ice crystals generate a release of electrons, leading to a chain reaction and the formation of a positive and negative charge within the cloud.
    • Types: Lightning can occur within clouds (inter-cloud and intra-cloud) or between the cloud and the ground (cloud-to-ground).

    Intensity of Lightning Strikes

    • Voltage and Amperage: A typical lightning flash can reach around 300 million volts and 30,000 amps, significantly higher than household current.
    • Comparisons: Household current is 120 volts and 15 amps, highlighting the immense power of lightning.

    Mitigating Lightning Incidents

    • Early Warning System: India has established an early warning system for lightning, saving numerous lives.
    • Focus on Rural Areas: Over 96% of lightning deaths occur in rural areas, necessitating mitigation and awareness programs targeted at these communities.
    • Deployment of Protection Devices: Low-cost lightning protection devices need to be deployed more widely, especially in rural areas.
    • Lightning Action Plans: States are encouraged to develop and implement lightning action plans, similar to heat action plans, to mitigate lightning-related risks.
    • International Centre for Excellence: Efforts are underway to establish an international center for excellence in lightning research to enhance detection and early warning systems.

     

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  • Modern Indian History-Events and Personalities

    Who was Nawab Wajid Ali Shah (1822-1887)?

    Prelims Only | History | Mains Paper 1: Arts & Culture

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Nawab Wajid Ali Shah

    Mains level: NA

    nawab

    Central Idea

    • An exhibition, heritage walk, and talk will be held in Kolkata to commemorate the bicentenary year of Nawab Wajid Ali Shah, the last king of Awadh.

    Nawab Wajid Ali Shah

    • Mirza Wajid Ali Shah (30 July 1822 – 1 September 1887) was the eleventh and final King of Awadh, reigning from 13 February 1847 to 11 February 1856.
    • He is remembered as a poet, playwright, dancer, and patron of the arts who made significant contributions during his rule.

    Reign and fall

    • Ascension to the Throne: Wajid Ali Shah became the King of Awadh in February 1847, assuming the position during a period of decline for the kingdom.
    • British Annexation: The British East India Company annexed Awadh on 11 February 1856, just two days before the ninth anniversary of Wajid Ali Shah’s coronation. He was subsequently exiled to Garden Reach in Metiabruz, near Kolkata, living on a pension.

    Patron of the Arts

    • Contributions to Music: Wajid Ali Shah was a generous patron of music and a talented composer. He nurtured the Lucknow Gharana of Kathak dance and enriched the light classical form of thumri. He composed ghazals and introduced new ragas, leaving a lasting impact on Hindustani music.
    • Kathak Dance: Wajid Ali Shah’s patronage elevated Kathak dance in Lucknow. He emphasized artistic expression, incorporating drama, emotion, and literature. The king popularized Kathak as a court dance and made it accessible to the common people.
    • Hindustani Theatre: The king established the Jogia Jashan, a grand pageant, and staged Rahas (dance-dramas) filled with poetry, lyrical compositions, and Kathak performances. His contributions laid the foundation for the development of Hindustani theatre.

    Literary Pursuits

    • Prose and Poetry: Wajid Ali Shah was a prolific writer in both Persian and Urdu. His works covered various subjects, including history, literature, and personal reflections. Notable works include “Huzn-i-Akhtar,” an autobiographical piece, and “Bani,” a treatise on music and dance.
    • Patronage of Writers: The king patronized numerous poets and writers in his court, including Mirza Ghalib. He granted pensions to renowned literary figures and encouraged the production of works that reflected the culture and life of the era.

    Exile Years and Legacy (1856-1887)

    • Exile in Metiabruz: After losing his kingdom, Wajid Ali Shah settled in Metiabruz near Kolkata. He created a miniature version of Lucknow and maintained his lavish lifestyle. Matiya Burj, a magnificent complex, served as a reminder of his beloved city.
    • Enduring Impact: Wajid Ali Shah’s compositions, including his famous thumri “Babul Mora Naihar Chhooto Jaay,” remain influential and have been performed by various artists. His contributions to music, dance, literature, and theatre continue to shape the cultural landscape, preserving his legacy.

    Conclusion

    • Mirza Wajid Ali Shah, the last King of Awadh, reigned from 1847 to 1856 before being exiled.
    • His patronage of the arts, including music, dance, theatre, and literature, left an indelible mark on the cultural heritage of Awadh.
    • Despite the challenges he faced and the loss of his kingdom, Wajid Ali Shah’s artistic endeavors and enduring legacy continue to inspire and enrich the region’s cultural identity.

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  • Indian Air Force Updates

    India to buy Rafale Marine Jet from France

    Prelims Only | Security Issues | Mains Paper 3: Various Security Forces, Agencies & Their Mandates

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: Rafale fighter jets

    Mains level: NA

    rafale

    Central Idea

    • DAC Approval for Rafale: The Defence Acquisition Council (DAC) cleared proposals to procure 26 Rafale Marine fighter jets and three Scorpene submarines for the Indian Navy.

    Rafale Marine Fighter Jets

    • Naval Variant: Rafale Marine fighters are the naval version of the Rafale jets, with the Indian Air Force operating 36 of them.
    • Advanced Multirole Fighters: Manufactured by Dassault Aviation, the Rafales are advanced twin-engine, multirole fighter jets equipped with modern sensors, radar, and the latest weapon systems.
    • India-Specific Enhancements: The jets feature India-specific enhancements and have the capability to carry out various missions.
    • Differences in Marine Version: The naval variant has foldable wings, a longer airframe for carrier landings, a tail hook for arrested landing, and reinforced landing gear suitable for aircraft carriers’ conditions.
    • Expanded Weapon Capabilities: Rafale Marine jets can carry a wider range of weapons, including anti-ship and air-to-surface missiles, and have specialized radar for maritime operations.

    Current Fleet and Need for Additional Fighters

    • MiG-29Ks: The Indian Navy currently operates MiG-29Ks from INS Vikramaditya aircraft carrier, which are carrier-based multirole fighter aircraft.
    • Procurement Requirement: With some MiG-29Ks expected to retire in a decade and the Navy having two operational carriers, additional deck-based fighters were needed to meet operational requirements until the indigenous Twin Engine Deck-Based Fighter (TEDBF) is developed.
    • Criteria and Selection: Only Boeing’s F/A-18 E/F Super Hornet and Dassault Aviation’s Rafale-M met the Navy’s criteria, with Rafale-M having an advantage due to common spares and support with the Indian Air Force’s Rafale jets.

    Export and Usage of Rafale Jets

    • Importance for France: The Rafale is a key component of France’s nuclear deterrence capabilities.
    • Orders and Deliveries: France has ordered a total of 192 Rafales, with 153 already delivered by the end of 2022.
    • Future Orders: Plans for a further order of 30 fighters and additional Rafales to offset those sold to Greece and Croatia are in the pipeline.
    • Flight and Operational Hours: The aircraft has accumulated a total of 405,000 flight hours, including 63,500 operational hours flown by French pilots since 2007.

    Conclusion

    • The Rafale Marine jets, with their advanced features and expanded weapon capabilities, will strengthen the Navy’s deck-based fighter fleet.
    • This procurement decision marks another step towards bolstering India’s defense preparedness and self-reliance in defense manufacturing.

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  • Capital Markets: Challenges and Developments

    What are AT-1 Bonds?

    Prelims Only | Economics | Mains Paper 3: Indian Economy

    Note4Students

    From UPSC perspective, the following things are important:

    Prelims level: AT-1 Bond

    Mains level: NA

    Central Idea

    • Subscription Disappointment: State Bank of India (SBI)’s additional tier-1 (AT-1) bond issue saw a very low response from investors, raising ₹3,101 crore against an issue size of ₹10,000 crore.
    • Market Sentiment Impact: The lackluster response is expected to dampen market sentiment and make fundraising more challenging for other PSU banks, potentially leading to delays in their fundraising plans.

    What are AT1 Bonds?

    • Definition: AT-1 bonds, or Additional Tier-1 bonds, are unsecured, perpetual bonds issued by banks to strengthen their core capital base in compliance with Basel-III norms.
    • Complex Hybrid Instruments: AT-1 bonds are complex instruments suited for institutions and knowledgeable investors who can analyze their terms and determine if the higher rates compensate for the higher risks involved.
    • Face Value: Each AT-1 bond typically carries a face value of ₹10 lakh.
    • Acquisition Routes: Retail investors can acquire these bonds through initial private placement offers by banks or by purchasing already-traded AT-1 bonds in the secondary market based on broker recommendations.

    Key Features and Importance of AT1 Bonds

    • Perpetual Nature: AT-1 bonds do not have a maturity date. Instead, they include call options that allow banks to redeem them after a specific period, usually five or ten years. Banks can choose to pay only interest indefinitely without redeeming the bonds.
    • Flexibility in Interest Payments: Banks issuing AT-1 bonds can skip interest payouts or even reduce the bonds’ face value if their capital ratios fall below certain thresholds specified in the offer terms.
    • Regulatory Intervention: If a bank faces financial distress, the RBI has the authority to ask the bank to cancel its outstanding AT-1 bonds without consulting the investors.

    Back2Basics: Basel Norms

    • Basel is a city in Switzerland and the headquarters of the Bureau of International Settlement (BIS).
    • The BIS fosters cooperation among central banks to achieve financial stability and common standards of banking regulations.
    • Basel guidelines are broad supervisory standards formulated by the Basel Committee on Banking Supervision (BCBS).
    • The Basel accord is a set of agreements by the BCBS that primarily focuses on risks to banks and the financial system.
    • The purpose of the Basel accord is to ensure that financial institutions maintain sufficient capital to meet obligations and absorb unexpected losses.
    • India has accepted the Basel accords for its banking system.

     

    Basel I Basel II Basel III
    Year Introduced 1988 2004 2010
    Focus Credit Risk Credit, Market, Operational Risks Capital, Leverage, Funding, Liquidity
    Capital Requirement Fixed at 8% of Risk-Weighted Assets (RWA) Minimum Capital Adequacy Requirement of 8% of Risk Assets Strengthening capital requirements
    Pillars – 1. Capital Adequacy Requirements 2. Supervisory Review 3. Market Discipline –
    Objective Define capital and risk weights for banks Encourage better risk management and disclosure Promote a more resilient banking system
    Implementation in India Adopted in 1999 Yet to be fully implemented March 2019 (postponed to March 2020 due to COVID-19)
    Key Parameters – – Capital: 12.9% capital adequacy ratio, Tier 1 and Tier 2 capital ratios, capital conservation buffer, and counter-cyclical buffer; Leverage: minimum 3% leverage rate; Funding and Liquidity: LCR and NSFR ratios

     

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