Daily Prelims Notes 28 July 2023

Daily Prelims Note

28 July 2023

Table Of Contents

1. Small Finance Banks and Payment Banks
2. Economic census: Parliamentary panel questions ministry over delay in results
3. Govt clears CDMDF guarantee scheme for corporate debt, Sebi issues guidelines
4. Banknote with a star symbol is valid: RBI
5. 39 MNCs come together for circular economy coalition
6. Rajya Sabha passes Cinematograph Amendment Bill, 2023 aimed at curbing film piracy
7. Who killed Beethoven? Hepatitis B, says forensic DNA analysis
8. The relevance of the first over-the-counter birth control pill in U.S.
9. Niger’s president vows democracy will prevail after mutinous soldiers detain him and declare a coup
10. Egypt and Ethiopia are finally working on a water deal — what that means for other Nile River states
11. When Bhadohi rolled out the red carpet for new Parliament

1. Small Finance Banks and Payment Banks

Subject :Economy

Section: Monetary Policy

Small Finance Banks are the financial institutions which provide financial services to the unserved and unbanked region of the country.

• They are registered as a public limited company under the Companies Act, 2013.
• Small Finance Banks are governed by the provisions of the:
  • Banking Regulation Act, 1949;
  • Reserve Bank of India Act, 1934;
  • Foreign Exchange Management Act, 1999;
  • Payment and Settlement Systems Act, 2007;
  • Credit Information Companies (Regulation) Act, 2005;
  • Deposit Insurance and Credit Guarantee Corporation Act, 1961;
  • Other relevant Statutes and the Directives, Prudential Regulations and other Guidelines/Instructions issued by Reserve Bank of India (RBI) and other regulators from time to time.
• SFBs will be given scheduled bank status once they commence their operations, and found suitable as per Section 42 of the Reserve Bank of India Act, 1934.

Differentiated Banks vs Universal Banks

• There are two kinds of banking licences that are granted by the Reserve Bank of India – Universal Bank Licence and Differentiated Bank Licence.
• Differentiated Banks (niche banks) are banks that serve the needs of a certain demographic segment of the population. Small Finance Banks and Payment Banks are examples of differentiated banks in India.
• Differentiated banks are distinct from Universal Banks (Eg: Commercial Banks like SBI, HDFC, ICICI etc) as they are infused as niche segments. Niche banks typically target a specific market and tailor the bank’s operations to this target market’s preferences.
• The differentiation could be on account of capital requirement, the scope of activities or area of operations. As such, they offer a limited range of services/products or function under a different regulatory dispensation.

SFBs are expected to deploy 75 per cent of their loans in priority sectors (agriculture and allied activities; micro, small and medium enterprises; education; housing; others), with at least 50 per cent of loans below ₹25 lakh. The PSL threshold for a universal bank is lower at 40 per cent.

The minimum capital adequacy ratio that an SFB has to maintain is 15 per cent (against 9 per cent for universal banks).

As a universal bank, the priority sector requirements for Equitas will reduce from 75 per cent to 40 per cent, while the transition into an SFB will allow Fino to lend to its customers.

Payment Bank

A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk. In simple words, it can carry out most banking operations but can’t advance loans or issue credit cards. It can accept demand deposits (up to Rs 1 lakh), offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third-party fund transfers.

Why payments banks?

The main objective of payments bank is to widen the spread of payment and financial services to small business, low-income households, migrant labour workforce in secured technology-driven environment.

With payments banks, RBI seeks to increase the penetration level of financial services to the remote areas of the country.

2. Economic census: Parliamentary panel questions ministry over delay in results

Subject: Economy

Section: National Income

In News: Parliamentary panel questions the Ministry of Statistics and Programme Implementation (MoSPI) over the delay in the release of the  7th economic census results.

Key Points:

• The seventh economic census was launched in 2019 and completed in March 2021. The seventh economic census results are yet to be finalised as approval of provisional results is yet to be obtained from various state-level coordination committees.
• Parliamentary panel report notes that only 13 states and Union Territories have communicated their approval for provisional results so far.
• It is indicative of a lack of progress in obtaining approvals from the State Level Coordination Committees.
• The Standing Committee on Finance pointed out that MoSPI’s response on the seventh economic census is not proactive in addressing delays.
• The response of the government also does not provide clear information on how it plans to implement these recommendations.
• Further the committee has asked the ministry to accelerate data collection, foster close collaboration with states and ensure timely approval of the provisional results by the state-level coordination committees.

3. Govt clears CDMDF guarantee scheme for corporate debt, Sebi issues guidelines

Subject :Economy

Section: Capital Market

In News: The Union government has approved a scheme providing complete guarantee cover for debt raised by the Corporate Debt Market Development Fund (CDMDF), a backstop facility for investment-grade corporate debt that launches today.

Key Points:

• Sebi said CDMDF will be launched as a close-ended scheme with an initial tenure of 15 years (extendable) from the date of its initial closing, that is, the date on which contribution from all AMCs and specified schemes is received by CDMDF, extendable at the discretion of the DEA in consultation with Sebi.
• Department of Economic Affairs (DEA) said the Guarantee Fund for Corporate Debt (GFCD) will manage the Guarantee Scheme for Corporate Debt (GSCD).
  • The GFCD will be a trust fund formed by the Department of Economic Affairs (DEA) and managed by the National Credit Guarantee Trustee Company Ltd, a wholly-owned company of the Department of Financial Services under the Ministry of Finance.
  • CDMDF, an alternative investment fund, will act as a backstop for purchase of investment-grade corporate debt securities. It will enhance secondary market liquidity by creating a permanent institutional framework for activation in times of market stress.
• During normal times, CDMDF will deal in low duration government securities (G-sec), treasury bills, tri-party repo on G-secs and guaranteed corporate bond repo with maturity not exceeding seven days.
• Corporate debt securities to be bought by CDMDF during market dislocation include listed money market instruments, for which the long-term rating of issuers will be considered.
• SEBI Guidelines:
  • Released guidelines for investment by mutual fund schemes and asset management companies in CDMDF units.
  • CDMDF will buy only investment-grade securities from secondary markets, listed and having residual maturity of up to five years.
  • It will not buy any unlisted, below-investment-grade or defaulted debt securities or securities in respect of which there is a material possibility of default or adverse credit news or views.
  • It will buy at a fair price (adjusted for liquidity risk, interest rate risk and credit risk) but not at distress price.
  • CDMDF will be launched as a close-ended scheme with an initial tenure of 15 years, (extendable) from the date of its initial closing.
  • The units of CDMDF will be subscribed by AMCs of mutual funds and specified debt-oriented MF schemes – open-ended debt oriented mutual fund schemes excluding overnight funds and gilt funds and including conservative hybrid funds.
  • Specified debt-oriented mutual fund schemes will invest 25 basis points (bps) of their assets under management (AUM) in the units of CDMDF.
  • AMCs will make a one-time contribution equivalent to two bps of the AUM of specified debt-oriented mutual fund schemes managed by them.

4. Banknote with a star symbol is valid: RBI

Subject :Economy

Section: Monetary Policy

In News: RBI clarifies that the star (*) symbol present on the number panel of a banknote is an identifier that it is a replaced or reprinted banknote.

Key Points:

• A star symbol is added between the prefix and the serial number in some of the notes.
• The Reserve Bank of India (RBI) has clarified that a banknote with a star (*) symbol is identical to any other legal banknote, except that in the number panel a star (*) symbol is added between the prefix and the serial number.
• The central bank said the star (*) symbol present on the number panel of a banknote is an identifier that it is a replaced/reprinted banknote.
• This clarification comes in the wake of the validity of banknotes with a star (*) symbol present on the number panel recently becoming the subject of discussion on some social ­media platforms.

5. 39 MNCs come together for circular economy coalition

Subject: Environment

Section: Pollution

Context:

• The Resource Efficiency Circular Economy Industry Coalition (RECEIC)iwas launched on the sidelines of the 4th G-20 Environment and Climate Sustainability Working Group (ECSWG) and Environment and Climate Ministers’ meeting in Chennai.

Details:

• As many as 39 multinational corporations (MNCs) from sectors such as steel, FMCG, electronics came together to pledge to adopt resource efficiency and circular economy principles to address environmental challenges rising from waste, including plastics, microplastics, e-waste, and chemical waste.
• The coalition would be led by industries and the government would only play a supporting role.

Plastic waste and their recycling:

• About 41 lakh tonnes of plastic waste were generated in the country in 2021-22, of which 30 lakh tonnes were allocated to 2,000-odd registered recyclers and plastic waste processing units.
• Under Extended Producers’ Responsibility (EPR) guidelines established through the Plastic Waste Management (Amendment) Rules, 2022, 2.6 million tonnes worth of EPR certificates had been generated by plastic waste processors and around 1.51 million tonnes of those certificated had been purchased by PIBOs (Producers, Importers and Brand owners) against 2022-23 obligations.

Circular economy:

• A Circular Economy is the one where products are designed for durability, reuse and recyclability and thus almost everything gets reused, remanufactured, and recycled into a raw material or used as a source of energy.
• It includes 6 R’s – Reduce, Reuse, Recycle, Refurbishment, Recover, and Repairing of materials.

Plastic Waste Management (Amendment) Rules, 2022:

Key points:

• The guidelines on EPR(Extended Producer Responsibility) coupled with the prohibition of identified single-use plastic items, which have low utility and high littering potential, with effect from 1st July 2022.
• EPR(Extended Producer Responsibility) means the responsibility of a producer for environmentally sound management of the product until the end of its life.
• In India, the Plastic Waste Management Rules, 2016-which is issued under Environment (Protection) Act, 1986– introduced the concept of EPR to manage plastics in India.

Classification of plastics: 

• The new rules classify plastics into four categories:
  • Category 1 will include rigid plastic packaging
  • Category 2 will include flexible plastic packaging of single layer or multilayer (more than one layer with different types of plastic), plastic sheets and covers made of plastic sheet, carry bags, plastic sachet or pouches.
  • Category 3 will include Multi-layered plastic packaging (at least one layer of plastic and at least one layer of material other than plastic)
  • Category 4 will include plastic sheet or like used for packaging as well as carry bags made of compostable plastics fall.

Details of recycling certificates: 

• According to the new rules, the producers, importers and brand-owners shall have to provide the details of recycling certificates only from registered recyclers along with the details of quantity sent for end-of-life disposal, by June 30 of next financial year while filing annual returns on the online portal.

Environmental compensation: 

• It shall be levied based upon polluter pays principle, with respect to non-fulfilment of EPR targets by producers, importers and brand owners, for the purpose of protecting and improving the quality of the environment and preventing, controlling and abating environment pollution.
• The funds collected shall be utilized for the collection, recycling and end of life disposal of uncollected plastic waste in an environmentally sound manner.

6. Rajya Sabha passes Cinematograph Amendment Bill, 2023 aimed at curbing film piracy

Subject: Science and Technology

Section: Intellectual Property

Context:

• The Rajya Sabha on July 27, 2023 passed the Cinematograph (Amendment) Bill, 2023 that introduces stringent anti-piracy provisions, expanding the scope of the law from censorship to also cover copyright.

Key Points:

Central Board of Film Certification (CBFC):

• It is a statutory body under the Ministry of Information and Broadcasting, regulating the public exhibition of films under the provisions of the Cinematograph Act 1952.
• The Board consists of non-official members and a Chairman (all of whom are appointed by Central Government) and functions with headquarters at Mumbai.
• Films can be publicly exhibited in India (on cinema halls, T.V. channels) only after they have been certified by the Central Board of Film Certification.
• At present, films are certified under 4 categories: U, U/A, A& S.
  • Unrestricted Public Exhibition (U)
  • Unrestricted Public Exhibition – but with a word of caution that Parental discretion required for children below 12 years (U/A)
  • Restricted to adults (A)
  • Restricted to any special class of persons (S)

Provisions for Censorship:

• Article 19(2) of the Constitution authorises the government to impose, by law, reasonable restrictions upon the freedom of speech and expression in the interests of the sovereignty and integrity of India, the security of the State, friendly relations with foreign States, public order, decency or morality or in relation to contempt of court, defamation or incitement to an offence.
• The Cinematograph Act, 1952 also provides for similar provisions as stated under Article 19(2).

7. Who killed Beethoven? Hepatitis B, says forensic DNA analysis

Subject: Science and Technology

Section: Health

Context:

• Ludwig von Beethoven, a prominent music composer from Germany,  died in 1827 due to a disease unknown of that time. Researchers have analyzed the cause of death of Beethoven.

About his disease:

• Most of the details about the disease was known from the letters he wrote to his brother and the collection of letters came to be known as the Heiligenstadt Testament of 1802.
• In 2007, a group of researchers led by Christian Reiter of the Medical University of Vienna claimed that the cause of Beethoven’s death was lead poisoning.
• Beethoven suffered from three major issues – progressive hearing loss, recurrent abdominal pain and diarrhoea and two attacks of jaundice, the last one towards the end of 1826, culminating in his death.

New findings:

• Now in 2023 researchers used modern DNA extraction techniques along with a masterful method called genome-wide association studies using ancestry DNA databases on the item recovered from Beethoven centuries ago – all eight locks of his hair found by private collectors.
• The genetic data study suggests that Beethoven had died of liver disease. His autopsy showed cirrhosis.
  • Cirrhosis is a complication of liver disease that involves loss of liver cells and irreversible scarring of the liver.
• The genome analysis found two genes that are now notoriously known to cause liver cirrhosis – the PNPLA-3 gene and HFE-gene mutation both of which are associated with chronic liver damage.
• Researchers also found the Hepatitis B virus in his hair.

Genetic data study:

• Genetic data are used to estimate the geographic origins of a person’s recent ancestors in genetic ancestry testing.
• It entails comparing the frequencies of a large number of DNA variants measured in an individual to the frequencies of these variants in reference populations collected from around the world.
• The geographic region with the highest frequency of an individual variant is thought to be the most likely location of an ancestor who passed the variant on to the person being tested.
• Traditional ancestry analysis includes testing for the mitochondrial DNA (transmitted only by females and reflecting the origin of one maternal ancestor) and the Y chromosomal DNA (transmitted only from father to son and reflecting the origin of one paternal ancestor).

About Hepatitis B:

• Hepatitis B is an infection in the liver which happens because of the Hepatitis B virus or HBV.
• The virus usually spreads through blood, semen or other body fluids.

Symptoms:

• The most common symptoms of Hepatitis B are jaundice, fever, fatigue that lasts for weeks or even months, vomiting, loss of appetite, and pain in joints or belly.
• When it is acute, the virus lasts a small time and doesn’t always necessarily need treatments although it can get serious and lead to life-threatening diseases like organ scarring, liver failure and even cancer.

Prevention:

• It can be prevented or protected against through vaccination.

8. The relevance of the first over-the-counter birth control pill in U.S.

Subject: Science and Technology

Section: Health

Context:

• The U.S. Food and Drugs Administration (FDA) on July 13 approved the first birth control pill that can be purchased over the counter without prescription.

What is Opill?

• Opill’s story goes back to 1973 when norgestrel was first approved for use in the U.S.
• TheOpill, or the ‘mini pill’, is a progestin-only pill (POP) using a synthetic version of the hormone progesterone called norgestrel.
• The typical combination birth control pill contains a formulation of both progesterone and estrogen.
• Opill uses low doses (0.075-milligram) of progestin to thicken the cervical mucus and thin the uterus’s lining, blocking the sperm from the cervix. POPs also stop ovulation in some cases (40% of women continued to ovulate).
• The nonprescription approval means the over-the-counter pill for women will be made available in pharmacies.
• OPs are advised for those with breast feed, are estrogen-intolerant, have a history of blood disorders, high blood pressure and heart problems.

FDA advisory:

• The FDA advises against using Opill alongside hormonal birth controls — oral contraceptive tablet, vaginal ring, contraceptive patch, contraceptive implant, contraceptive injection or an intra-uterine device (IUD).
• Like other minipills, Opill is not an emergency contraceptive (which prevents pregnancy after unprotected sex).
• FDA scientists previously flagged that the minipill is not suitable for people with a history of breast cancer and undiagnosed vaginal bleeding. Other side effects include irregular menstrual bleeding, headaches, decreased libido, dizziness, nausea, acne, increased appetite, abdominal pain, cramps or bloating, per the FDA.
• Medicines that interact with Opill can result in decreasing its efficacy, potentially resulting in unintended pregnancy.

Indian scenario:

• India made birth control pills an over-the-counter drug in 2005 to tackle unwanted pregnancies and unsafe abortions.
• India offers access to OTC pills and has extended abortion care to women irrespective of marital status, but contraceptive use remains the lowest among women from marginalised communities.
• The National Family Health Survey-5 found the burden of family planning responsibility falls mostly on women.
• Although abortion is legal, a report found 67% of abortions in India are unsafe.
• Entrenched stigma, shortage of doctors, public health gaps feed into contraceptive inequities.

9. Niger’s president vows democracy will prevail after mutinous soldiers detain him and declare a coup

Subject: International Relations

Section: Places in news

Context:

• Niger’s mutinous soldiers have detained the President of Niger and the coup because of the West African country’s deteriorating security situation.

Details:

• Capital: Niamey
• President Mohamed Bazoum was elected in 2021 in Niger’s first peaceful, democratic transfer of power since its independence from France in 1960.
• The Economic Community of West African States sent Benin President Patrice Talon to lead mediation efforts.

Western influence on Niger:

• Bazoum is a key ally in the West’s efforts to battle jihadists linked to al-Qaida and the Islamic State group in Africa’s Sahel region.
• Russia and the West have been vying for influence in the fight against extremism in the region.
  • The Wegner group is trying to spread their influence in Niger.
• American, French and Italian troops train the country’s soldiers, while France also conducts joint operations.

Niger:

• Niger is a landlocked country in West Africa.
• It is a unitary state bordered by Libya to the northeast, Chad to the east, Nigeria to the south, Benin and Burkina Faso to the southwest, Mali to the west, and Algeria to the northwest.
• It is the largest landlocked country in West Africa.
• Over 80% of its land area lies in the Sahara.
• The capital Niamey is located in Niger’s southwest corner.
• Niger is the world’s seventh-largest producer of uranium in 2022.

About Wagner Group:

• The Wagner Group also known as PMC Wagner is a Russian paramilitary organization.
• Origin: The group is believed to have been founded in 2014 by a Russian veteran of the Chechen war who so admired Hitler he named the group after Richard Wagner, the führer’s favorite composer.
• The skull is the symbol of the Wagner Group.
• The organization first came to the world’s attention in 2014, fighting alongside Russian-backed separatists in the Donbas region of eastern Ukraine.
• The organization has also been active across Africa in recent years — Libya, Sudan, Mozambique, Mali, Niger and the Central African Republic.
• Today there are thought to be some 10,000 Wagner Group members.
• The U.S. government has called Wagner a “proxy force” of Russia’s defense ministry.

10. Egypt and Ethiopia are finally working on a water deal — what that means for other Nile River states

Subject: Geography

Section: Places in news

Context:

• Egypt and Ethiopia have waged a diplomatic war of words over Ethiopia’s massive new dam — the Grand Ethiopian Renaissance Dam — on the Blue Nile, which started filling up in July 2020.

Details:

• Now the two countries have finally agreed to conclude “a mutually acceptable agreement” within four months.
• Countries in conflict are: Ethiopia, Egypt and Sudan.

What is the context of the current tussle?

• Ethiopia, whose highlands provide more than 85 per cent of the water that flows into the Nile, has long argued that it has the right under international law to manage resources within its own borders for its national development.
• Egypt, which depends on the Nile for more than 90 per cent of its fresh water, has argued that the Ethiopian dam represents a threat to its water security and its very existence as a people.
• In February 2022, the Ethiopian dam started producing electricity. Egyptians claimed that Addis Ababa (Capital of Ethiopia) was “violating its obligations under the 2015 Declaration of Principles” and endangering Egyptian “water interests”.

Rights over Nile river:

• The most important are Egypt’s and Sudan’s historically acquired rights to Nile waters.
• The rights were granted by the 1929 Anglo-Egyptian Treaty and the 1959 bilateral agreement between Egypt and Sudan (1959 Nile Treaty).
• After estimating the average annual flow of the Nile River as measured at Aswan to be 84 billion cubic metres, the two treatises granted 66 per cent of Nile waters to Egypt,22 per cent to Sudan and 12 per cent to account for seepage and evaporation.
• Egypt was also granted veto power over all construction projects on the Nile and its tributaries.
• These rights came to be known as Egypt’s and Sudan’s acquired rights.
  • They have been the main sticking point in efforts to conclude a treaty between all 11 Nile riparian states for the allocation of the waters of the Nile, as well as between Egypt, Ethiopia and Sudan over the Ethiopian dam.
• While Ethiopia and other upstream riparian states see these two treaties as colonial anachronisms that have no relevance to modern Nile governance, Egypt and Sudaninsist that they are binding.

Other issues include:

• Ethiopia’s right to water for agriculture and household consumption is an issue that has not yet been agreed upon by all three countries.

Grand Ethiopian Renaissance Dam

• It is formerly known as the Millennium Dam and sometimes referred to as Hidase Dam.
• Led by Ethiopia, the 145 meter tall hydropower project will be Africa’s largest dam after completion.
• It is located in the Horn of Africa which is a peninsula and the easternmost extension of the African continent, consisting of the countries namely, Djibouti, Eritrea, Ethiopia, and Somalia.
• The construction was initiated in 2011 on the upper Blue Nile tributary.

Nile river:

• The Nile, the longest river in the world, has been at the centre of a dispute involving several countries that are dependent on the river’s waters.
• The main waterways of the Nile run through Uganda, South Sudan, Sudan and Egypt and its drainage basin runs through several countries in East Africa, including Ethiopia.
• Blue Nile and White Nile are two tributaries of the Nile.
• While the White Nile is the longer tributary, the Blue Nile is the main source of water and fertile soil.
• The White Nile is called so because of the light-coloured clay sediment in the water giving the river a light graycolor.
• The Blue Nile flows for about 1,400 km to Khartoum from Lake Tana which is 1,800 meters above sea level in the Ethiopian mountains.
• The White Nile and Blue Nile merge near Khartoum, becoming the proper Nile.

11. When Bhadohi rolled out the red carpet for new Parliament

Subject :History

Section: Art and Culture

Context:

• It took 900 skilled artisans in UP’s Bhadohi 10.80 lakh man hours to hand-knot 18 shades from the Indian agave-green family to make 158 carpets bearing motifs inspired by the peacock for the Lok Sabha hall in the new Parliament building.
• For the new Rajya Sabha hall, 156 carpets bearing a motif inspired by the lotus were woven in shades of kokum red.

Bhadohi: The carpet city of India:

• Carpets like these have been intricately hand-knotted for decades in Bhadohi ‘the carpet city of India’.
• In 2009, these handmade carpets were awarded the coveted Geographical Indications tag. Obeetee, which won the tender to make the carpets, started the Parliament project in 2020.
• In the late 1980s, it made a hand-knotted carpet commissioned by Rashtrapati Bhavan.
• The carpet is still laid out in the Ashoka Hall.
• While hand-knotted carpets are usually made for big manufacturers and exporters, the smaller ones focus on handwoven, hand-tufted and flat-woven (or dhurries) carpets.
• According to UP, Bhadohi district alone employs 22 lakh rural artisans of the 32 lakh employed in the carpet industry in the Mirzapur-Bhadohi region.

Carpet raw materials:

• It takes the entire country for a carpet to come together.
  • Sheep wool comes from Rajasthan and is processed in Haryana’s Panipat.
  • While weavers belong to UP, Jharkhand and West Bengal, most exporters have offices in Delhi.
• For the Parliament carpets, however, the wool was imported from New Zealand.

About the Bhadohi carpet:

• Name of GI Registered Product: Hand made Carpet of Bhadohi
• Name of State: Uttar Pradesh
• A prominent woven carpet is the hand-knotted carpet.
• This type of carpet is manufactured on a vertical wooden loom.
• Thick cotton and woollen yarns are used in the warp ends while wool is used in the width direction.
• Designs depicting flowers, animals, gardens, trees and trellises are used in various hues and ways to liven up these floor coverings.
• The wool used in carpets varies according to the quality, design and style and so do the colours. Usually the best grade of Indian wool is used for medium quality carpets.