Daily Prelims Notes 29 December 2023

December 29, 2023
Posted by: OptimizeIAS Team
Category: DPN

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Daily Prelims Notes

29 December 2023

Table of Contents

1. Why more Indians seem to be travelling to Nicaragua

Subject :IR

Section: Places in news

More about the news:

Interest in traveling to Nicaragua has surged in India, leading to increased queries about visas.
A recent incident involved a Nicaragua-bound chartered flight from the UAE with 303 Indian passengers detained in France on suspicion of ‘human trafficking.’
The Airbus A340 made a technical stop in Vatry, France, where an anonymous tip prompted concerns.
The flight returned to Mumbai, but 25 passengers sought asylum in France, highlighting a notable rise in Indian interest and travel to Nicaragua.

Why have cases of Indians seeking to travel to Nicaragua led to some concerns

Increased interest in traveling to Nicaragua from India has raised concerns about potential misuse as a route for illegal entry into the United States and Canada.
US Customs and Border Patrol data reveals a significant rise, with 96,917 Indians arrested for attempting illegal entry into the US in the fiscal year 2023, marking a 51.61% increase.
While some travelers may have legitimate reasons, the surge in inquiries, especially from individuals with limited international travel history, has led to suspicions.
Notably, a large number of queries are coming from Punjab, followed by Gujarat.

Is the process for obtaining a visa from Nicaragua easy

Obtaining a visa for Nicaragua can be challenging for Indian passport holders due to a lack of clarity and an absence of a Nicaraguan embassy in India.
The country only has an honorary consul general in India, Vivek Burman of the Dabur group, whose office lacks the authority to issue visas or authenticate related documents.
While Indian passport holders are technically eligible for a visa on arrival in Nicaragua, the unclear policy and lack of information in the public domain contribute to confusion in the application process.

How do Indians reach Nicaragua

Indians with valid visas for the US, Canada, and Schengen countries can reportedly reach Nicaragua and obtain a visa on arrival by paying the necessary fee.
However, those without valid visas to these countries are advised to apply for travel authorization directly with the Nicaraguan Ministry of the Interior.
Travel agents recommend even those with valid visas to apply for advance travel authorization due to potential complications in Nicaragua’s immigration procedure, language barriers (Spanish being prevalent), and limited familiarity with regulations for Indian citizens.
The honorary consul general’s office in India directs travelers to contact the Nicaraguan Ministry of the Interior for further information on the visa on arrival process.

Some facts about Nicaragua:

The Republic of Nicaragua is the largest country in Central America, bordered by Honduras to the north, the Caribbean to the east, Costa Rica to the south, and the Pacific Ocean to the west.
Managua is the country’s capital and largest city.

2. Telecom act doesn’t give power to break encryption

Subject :IR

Section: Places in news

Context: Telecom act doesn’t give power to break encryption

More about the news:

The new Telecom Act in India does not grant the government or service providers the authority to break encryption or intercept messages on over-the-top (OTT) platforms, according to Ashwini Vaishnaw, the Minister of Communications and Information Technology.
Addressing concerns about the vague definition of telecom service, Vaishnaw emphasized that the government lacks the power to request service providers to break encryption or intercept messages, and its authority is limited to blocking fraudulent numbers.
He clarified that OTTs are not regulated by the Telecom Act, which aims to bring structural reforms and introduces principles for spectrum allocation and dealing with insolvent telcos.

Some facts About Telecommunications Bill, 2023:

The Telecommunications Bill, 2023 amends and consolidates the laws relating to:
- development, expansion and operation of telecommunication services and telecommunication networks;
- Assignment of spectrum; and for matters connected therewith.
The new Bill seeks to replace the Indian Telegraph Act, 1885, the Indian Wireless Telegraphy Act, 1933, and the Telegraph Wires (Unlawful Possession) Act, 1950.

Some Key Features of Telecommunications Bill, 2023

Authorization for Telecom Activities:
- Central government approval required for telecommunication services, network operations, and radio equipment possession.
Spectrum allocation through auction, except for specific purposes like national security, disaster management, and satellite services.
Interception and Search Powers:
- Messages may be intercepted or blocked for public safety or emergencies.
- Telecom services may be suspended under similar grounds.
- Authorized officers can search premises or vehicles for unauthorized telecom equipment.
User Protection Measures:
- Central government is empowered to implement user protection measures.
- Measures include prior consent for specified messages, creation of “Do Not Disturb” registers, and a mechanism for reporting malware.
Right of Way for Telecom Infrastructure:
- Entities laying telecom infrastructure can seek right of way over public or private property.
- Right of way provided on a non-discriminatory and non-exclusive basis to the extent possible.
TRAI Appointments Amendment:
- Amendments to the TRAI Act allow individuals with at least 30 years of professional experience to serve as Chairperson and 25 years for members.
Digital Bharat Nidhi:
- Universal Service Obligation Fund renamed Digital Bharat Nidhi.
- Fund usage expanded to include research and development in telecom.
Offences and Penalties:
- Criminal and civil offences specified in the Bill.
- Providing unauthorized telecom services or breaching terms incurs penalties, including imprisonment and fines.
Adjudication Process:
- Central government appoints adjudicating officers for civil offences.
- Officers must hold the rank of joint secretary or above.

3. US allies reluctant on Red Sea Task force

Subject :IR

Section: Places in news

Context:

More about the news:

The U.S. initiated Operation Prosperity Guardian to safeguard Red Sea shipping from Houthi attacks.
While the Pentagon claims over 20 nations are part of the defensive coalition, some allies, like Italy and Spain, seem reluctant to associate publicly.
The conflict’s backdrop includes tensions over Israel’s Gaza offensive.
Houthi attacks on commercial ships prompted Maersk to reroute vessels.
Notable absentees from the coalition include China.
The new initiative will be coordinated by the existing Combined Task Force 153, established in April 2022 to enhance maritime security in the region.

What is Combined Task Force 153:

Combined Task Force 153 (CTF 153) is a task force that focuses on maritime security and capacity building in the Red Sea, Bab al-Mandeb, and Gulf of Aden.
It was established on April 17, 2022, and is one of five task forces operated by the Combined Maritime Forces (CMF)

What is Combined Maritime Forces (CMF):

4. India’s stationary course in the shipping value chain

Subject : Geography

Section: Places in news

Yangtze river:

The Yangtze, Yangzi or Changjiang is the longest river in Eurasia, the third-longest in the world, and the longest in the world to flow entirely within one country.
It rises at Jari Hill in the Tanggula Mountains of the Tibetan Plateau and flows 6,300 km (3,915 mi) in a generally easterly direction to the East China Sea.
It is the fifth-largest primary river by discharge volume in the world. Its drainage basin comprises one-fifth of the land area of China and is home to nearly one-third of the country’s population.
The prosperous Yangtze Delta generates as much as 20% of China’s GDP. The Three Gorges Dam on the Yangtze is the largest hydroelectric power station in the world that is in use.
Merchant ships navigate the river, importing raw materials and exporting finished products globally.

India and China’s maritime histories:

Indian seafarers were prominent globally due to English proficiency and labour arbitrage.
Indians excelled in ship management, contributing billions in foreign exchange yearly.
However, India lagged in ship owning, chartering, financing, and shipbuilding.
State-owned Indian shipyards suffered, impacting India’s shipbuilding capacity.
China, propelled by government initiatives, became a dominant force in global shipbuilding by 2020.
India’s Maritime Agenda 2020 aimed for a modest increase in shipbuilding, but India’s share dropped instead.
The Maritime India Vision (MIV) 2030 lacked a plan for shipbuilding and ownership.
Shipbuilding could strengthen India’s manufacturing capacity, strategic power, and global presence.
Shipbuilding plays a vital role in military strength and international trade.

What is MIV 2030?

To develop global standard ports in India, the Ministry of Ports, Shipping and Waterways under the MIV 2030 has identified initiatives such as
- Developing world-class Mega Ports,
- Transhipment hubs and
- Infrastructure modernization of ports.
It estimates the investments to the tune of 1,00,000-1,25,000 crore for capacity augmentation and development of world-class infrastructure at Indian Ports.

Indian Shipping Industry:

India has a coastline of more than 7,517 kilometres, interspersed with more than 200 ports, and most cargo ships that sail between East Asia, America, Europe, and Africa pass through Indian territorial waters. So, the shipping industry is a vital part of the Indian economy.
In 1941, India’s first shipbuilding factory was established in Visakhapatnam. In 1952, the Indian government adopted it and renamed it ‘Hindustan Shipyard Limited.’
The Shipping Corporation of India Ltd. (SCI) was established in 1961 and changed from a private limited company to a public limited company in 1992.
It was given the status of ‘Navratna’ in August 2009.
According to the Ministry of Shipping, maritime transport accounts for approximately 95 per cent of India’s trading volume and 70 per cent of its trading value.
India is also one of the top five ship recycling countries globally, with a 30% share of the global ship recycling market.
The largest major container handling port in India is the Jawaharlal Nehru Port Trust (JNPT) in Maharashtra, while the largest private port in India is Mundra in Gujarat.

5. Bulk carrier hits mine in Black Sea, two persons injured

Subject : Geography

Section: Places in news

In the news:

A Panama-flagged bulk carrier, headed to a River Danube port to load grain, has hit a mine in the Black Sea injuring two persons.
It was the latest incident of a civilian vessel hitting an explosive in the Black Sea.

Black Sea:

It is a marginal sea of the Atlantic Ocean lying between Europe and Asia. It is bordered by Bulgaria, Georgia, Romania, Russia, Turkey, and Ukraine.
It is supplied by major rivers, principally the Danube, Dnieper, and Don.
The Black Sea ultimately drains into the Mediterranean Sea, via the Turkish Straits and the Aegean Sea.
The Bosporus Strait connects it to the small Sea of Marmara which in turn is connected to the Aegean Sea via the Strait of the Dardanelles.
To the north, the Black Sea is connected to the Sea of Azov by the Kerch Strait.
The Black Sea covers 436,400 km2 (not including the Sea of Azov), making it the world’s largest inland body of water.

Panama:

It is a transcontinental country in Central America, spanning the southern tip of North America into the northern part of South America.
It is bordered by Costa Rica to the west, Colombia to the southeast, the Caribbean Sea to the north, and the Pacific Ocean to the south.
Isthmus of Panama: Also called the Isthmus of Darien, is the narrow strip of land that lies between the Caribbean Sea and the Pacific Ocean, linking North and South America.
The Panama Canal is an artificial 82-kilometre (51-mile) waterway in Panama that connects the Atlantic Ocean with the Pacific Ocean, cutting across the Isthmus of Panama, and is a conduit for maritime trade.

Placing stone crushers in the ‘green’ category will create a huge environmental mess

Store Crusher Units:

A stone crushing plant typically works by crushing large stones into smaller pieces. The crushed stones are then transported through a conveyor belt to a storage area, where they are screened, separated, and sorted according to size and other criteria.
In July 2023, the Central Pollution Control Board (CPCB) proposed a new draft of classification criteria for industries into the red, orange, green and white categories.
The stone crusher units are currently categorised into the ‘orange category’.
Stone crusher units are source of fugitive emissions, total suspended particles (TSP) and fine particulate matter (PM) 10, and ultrafine PM2.5.
Health impact: Environmental pollution by stone crushing units affected 36 per cent workers with diseases like eye irritation, asthma, chest pain, tuberculosis, etc.
Noise pollution from the operation of the crusher units is another cause for concern.

fugitive emissions:

Fugitive emissions are leaks and other irregular releases of gasses or vapours from a pressurized containment – such as appliances, storage tanks, pipelines, wells, or other pieces of equipment – mostly from industrial activities.
In addition to the economic cost of lost commodities, fugitive emissions contribute to local air pollution and may cause further environmental harm. Common industrial gases include refrigerants and natural gas, while less common examples are perfluorocarbons, sulfur hexafluoride, and nitrogen trifluoride.
Most occurrences of fugitive emissions are small, of no immediate impact, and difficult to detect.

6. History of Metrological Services in India

Subject: Geography

Section: Climatology

Historical perspective:

Meteorology in India dates back to ancient times with discussions on cloud formation, rain processes, and seasonal cycles found in philosophical writings like the Upanishadas. Varahamihira’s Brihatsamhita and Kautilya’s Arthashastra show early scientific knowledge about atmospheric processes and rainfall measurement’s relevance to agriculture.
Kalidasa in his epic, ‘Meghdoot’, written around the seventh century, even mentions the date of onset of the monsoon over central India and traces the path of the monsoon clouds.
The 17th century marked meteorology’s scientific foundation with inventions like the thermometer and barometer. Halley’s treatise (a British scientist) in 1636 attributed the Indian summer monsoon to seasonal wind reversals.

Modern meteorology in India:

India boasts some of the world’s oldest meteorological observatories, established by the British East India Company in Calcutta and Madras in the late 18th century.
The Asiatic Society of Bengal (1784) and Bombay (1804) encouraged meteorological studies.
Captain Harry Piddington‘s work introduced the term “cyclone” and detailed tropical storms in the 19th century. In 1842 he published his monumental work on the “Laws of the Storms”.

Indian Meterological Department (IMD):

The IMD was established in 1875 after calamitous events like cyclones and monsoon failures, appointing H. F. Blanford as the first Meteorological Reporter.
The first Director General of Observatories was Sir John Eliot who was appointed in May 1889 at Calcutta headquarters.
The headquarters of IMD were later shifted to Shimla, then to Poona (now Pune) and finally to New Delhi.
The IMD has expanded its infrastructure and scientific growth since its modest beginnings, embracing contemporary technology like telegraphs, computers, and geostationary satellites (INSAT). It’s been a pioneer in meteorology and atmospheric science, fostering growth for 140 years, and stands at the cusp of an exciting future.

IMD is the National Meteorological Service of the country and the principal government agency in all matters relating to meteorology and allied subjects. Its mandate:

To take meteorological observations and to provide current and forecast meteorological information for optimum operation of weather-sensitive activities like agriculture, irrigation, shipping, aviation, offshore oil explorations, etc.
To warn against severe weather phenomena like tropical cyclones, norwesters, dust storms, heavy rains and snow, cold and heat waves, etc., which cause destruction of life and property.
To provide meteorological statistics required for agriculture, water resource management, industries, oil exploration and other nation-building activities.
To conduct and promote research in meteorology and allied disciplines.

7. Heavy rainfall in Thoothukudi causes severe damage to salt stock worth ₹100 crore

Subject: Geography

Section: Eco geography

Context:

Nearly 6 lakh tonnes of salt ₹100 crore worth has been washed away in the coastal district of Thoothukudi due to the unprecedent rainfall witnessed on December 17 and 18. The salt were ready to be despatched to various clients in India and abroad.

Salt Industry in India:

India is the third largest Salt producing Country in the World after China and USA with Global annual production being about 230 million tonnes.
When India attained Independence in 1947, salt was being imported from the United Kingdom & Adens to meet its domestic requirement.

The main sources of salt in India are:

Sea brine
Lake brine
Sub-soil brine and
Rock salt deposits

MAJOR SALT PRODUCING CENTERS:

Sea water is an inexhaustible source of salt.
The major salt producing centres are Marine Salt works along the coast of Gujarat (Jamnagar, Mithapur,Jhakhar, Chira, Bhavnagar, Rajula, Dahej, Gandhidham, Kandla, Maliya, Lavanpur), Tamil Nadu (Tuticorin, Vedaranyam, Covelong), Andhra Pradesh (Chinnaganjam, Iskapalli, Krishnapatnam, Kakinada & Naupada), Maharashtra (Bhandup, Bhayandar, Palghar), Orissa (Ganjam, Sumadi) and West Bengal (Contai).
Inland Salt Works in Rajasthan using lake brine and sub-soil brine viz. Sambhar Lake, Nawa, Rajas, Kuchhaman, Sujangarh and Phalodi Rock Salt Deposits at Mandi in the State of Himachal Pradesh.

Top 5 Largest Salt Production States of India:

Major salt producing states of India are Gujarat, Rajasthan, Tamil Nadu, Maharashtra, Andhra Pradesh, Karnataka and Odisha.

GOVERNMENT OF INDIAS ROLE IN DEVELOPMENT OF SALT INDUSTRY:

Salt is a Central subject in the Constitution of India and appears as item No.58 of the Union List of the 7th Schedule, which reads:
- Manufacture, Supply and Distribution of Salt by Union Agencies; and
- Regulation and control of manufacture, supply and distribution of salt by other agencies.
Central Government is responsible for controlling all aspects of the Salt Industry. Salt Commissioners Organisation, an attached Office under the Ministry of Commerce & Industry (Department of Industrial Policy & Promotion), Government of India, is entrusted with the above task.
Government of India has delicensed Salt Industry in 1996-97.

8. Water crisis: Atishi writes to Chief Secy. over delay in ammonia treatment plant

Subject: Environment

Section: Pollution

Context:

Water Minister said the delay in setting up a plant to treat high ammonia content present in the Yamuna has impacted the drinking water supply in the capital.

About Ammonia Gas

Ammonia Gas or NH3 is a compound of Nitrogen and Hydrogen. It is a colourless gas with a pungent and penetrating odour. It is highly reactive and is a soluble alkaline gas.
Mode of Production: It can be produced both through natural means as well as anthropogenically.
- Natural: Produced in soil from bacterial processes. It is also produced naturally from decomposition of organic matter, including plants, animals and animal wastes. Bacteria found in the intestines can produce ammonia, also, a small amount of ammonia is generated when lightning strikes.
- Commercial: Through steam reforming of natural gas and coal gasification.

Uses:

It serves as a starting material for the production of many commercially important nitrogen compounds such as:
Fertilizers: Urea, (H2N)2C=O, is the most commonly used source of nitrogen for fertilisers worldwide. It can be applied directly into soil on farm fields for crops, lawns, and plants.
As household and industrial cleaners
In the form of ammonium salts, such as ammonium nitrate, ammonium sulfate, and various ammonium phosphates.
In manufacturing commercial explosives
As a refrigerant and coolant

Ammonia Gas as a Pollutant:

Emission source: Agriculture, including animal husbandry because of NH3-based fertilizer applications. Other sources include industrial processes, vehicular emissions and volatilization from soils and oceans.

Effects:

It Increases the Biological Oxygen Demand of water by reducing oxygen availability for its aquatic life.
Source of nutrient pollution in water bodies leading to eutrophication due to excessive agricultural field runoff.
Excessive urea usage leads to soil acidification.
Prolonged exposure of containers to fire or heat may result in violent rupturing and rocketing.

Ammonia Gas as a Toxic Gas:

Direct toxic damage to leaves and alters the susceptibility of plants to frost, drought and pathogens (including insect pests and invasive species).
Long-term exposure to low concentrations or short-term exposure to high concentrations may result in adverse health conditions from inhalation, which manifest as burning nose, throat and respiratory tract irritation.

9. Pegasus infection found on Indian journalists’ phones after Apple alert

Subject: Science and Tech

Section: Awareness in IT

Context:

The founder editor of The Wire news website, the South Asia editor of the Organised Crime and Corruption Report Project (OCCRP) and other journalists in India were targeted with Pegasus spyware this year, the Security Lab of Amnesty International announced after testing their devices.

About Organised Crime and Corruption Reporting Project (OCCRP)

The Organized Crime and Corruption Reporting Project is a global network of investigative journalists with staff on six continents.
Founded in 2006, it specializes in organized crime and corruption.
It publishes its stories through local media and in English and Russian through its website.
The entity was involved in the coverage of Pegasus spyware as well as Panama Papers leak.
The OCCRP conducted research and published a report on the Adani Group (AG).

About Pegasus Spyware

Pegasus is a malware/spyware developed by Israel’s NSO Group.
The spyware suite is designed to access any smartphone through zero-click vulnerabilities remotely.
Once a phone is infiltrated, the spyware can access entire data on that particular phone.
It also has real-time access to emails, texts, phone calls, as well as the camera and sound recording capabilities of the smartphone.

Zero-click exploit

A zero-click exploit refers to malicious software installed on a device without the device owner’s consent.
More importantly, it does not require the device owner to perform any actions to initiate or complete the installation.

10. Life through geometry in Warli

Subject: History

Section: Art and Culture

Context:

Warli Whisperers by the Inherited Arts Forum traces the artistic journey of the Mashe family from Maharashtra.

About Warli Paintings

Warli is a traditional art form of Maharashtra. Its roots can be traced to as early as the 10th century A.D.
These paintings are distinctive with their vivid contrast expressions.
These paintings are mainly dominated by basic geometric shapes like circles, triangles and squares.
These geometric shapes stand as a symbol of natural elements in our environment.
For example, the circles represent the sun and moon, the triangles represent the mountains and the squares are considered as the central motifs of the painting.
People and animals are represented by two inverted triangles joined together, where the upper triangle is the torso and the lower triangle is the pelvis.
The central theme of the paintings are scenes portraying hunting, fishing, farming, festival and dances, trees and animals are used to surround the central theme.
Warli art form is being used by many artists to beautify cities and spread awareness through wall paintings.
It is also being used to beautify bags, bed sheets and many other items.
Warli is the vivid expression of daily and social events of the Warli tribe of Maharashtra, used by them to embellish the walls of village houses.

Warli Tribe

They are an indigenous tribe or Adivasis, living in the Mountainous as well as coastal areas of Maharashtra-Gujarat border and surrounding areas.
They speak an unwritten Varli language which belongs to the southern zone of the Indo-Aryan languages.

11. Government Issues PMLA Notice to Offshore Crypto Firms

Subject: Economy

Section: Monetary Policy

Show Cause Notices:

The Financial Intelligence Unit India (FIU-IND) issues show cause notices to nine offshore cryptocurrency and virtual digital assets service providers (VDA SPs).

Non-Compliance with PMLA:

Reason: VDA SPs found non-compliant with the Prevention of Money Laundering Act (PMLA).

Compliance Action:

The Finance Ministry terms the notices as “compliance action.”

Request to Block Web Addresses:

FIU-IND requests the Union Information Technology ministry to block the web addresses (URLs) of non-compliant entities.

Role of FIU-IND:

FIU-IND is the national agency responsible for receiving, processing, analyzing, and disseminating information related to suspect financial transactions.

PMLA Requirements for VDA SPs:

Registration Requirement: VDA SPs engaged in activities like exchange between virtual digital assets and fiat currencies, transfer of virtual digital assets, and safekeeping or administration of virtual digital assets must register with FIU-IND.
Activity-Based Requirements: Requirements are “activity-based” and not contingent on physical presence in India.

AML-CFT Framework:

VDA SPs were brought under the ambit of the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework under the PMLA in March 2023.

Regulatory Obligations:

Reporting entities must maintain KYC details, records of documents, and file statements of financial transactions with the tax department.

FIU-IND (Financial Intelligence Unit India):

FIU-IND is the national agency responsible for receiving, processing, analyzing, and disseminating information related to suspect financial transactions.
It operates under the Finance Ministry and plays a crucial role in the Anti-Money Laundering (AML) and Counter Financing of Terrorism (CFT) framework.
FIU-IND monitors financial transactions to identify and combat money laundering and terrorist financing activities.

PMLA (Prevention of Money Laundering Act):

PMLA is an Act passed by Parliament of India enacted to prevent money laundering and related offenses.
It provides a legal framework to combat money laundering and applies to financial institutions and intermediaries to ensure they follow measures for customer identification, record-keeping, and reporting of transactions.
The Act also designates certain authorities, such as FIU-IND, to oversee and enforce its provisions.

AML-CFT (Anti-Money Laundering and Counter Financing of Terrorism):

AML-CFT refers to a set of regulations and practices designed to prevent and combat money laundering and the financing of terrorism.
It involves implementing measures to detect and deter illicit financial activities, ensuring compliance with regulatory requirements, and enhancing transparency in financial transactions.
Financial institutions, including virtual digital assets service providers (VDA SPs), are subject to AML-CFT regulations to prevent their services from being misused for illegal activities.

12. Domestic Systemically Important Banks (D-SIBs)

Subject :Economy

Section: Monetary Policy

The Reserve Bank of India (RBI) has designated State Bank of India (SBI), HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs) and has placed them in specific buckets based on their Systemic Importance Scores (SISs).

ICICI Bank:
- ICICI Bank continues to be in the same bucketing structure as the previous year.
State Bank of India (SBI):
- SBI has moved from bucket 3 to bucket 4.
HDFC Bank:
- HDFC Bank has shifted from bucket 1 to bucket 2.
Effective Date of Higher D-SIB Buffer Requirements:
- For SBI and HDFC Bank, the higher D-SIB buffer requirements resulting from the bucket increase will be effective from April 1, 2025.
- The additional Common Equity Tier 1 (CET1) requirement will be in addition to the capital conservation buffer.
D-SIB Framework:
- The D-SIB framework requires the RBI to disclose the names of banks designated as D-SIBs and place them in appropriate buckets based on their SISs.
- Based on the bucket in which a D-SIB is placed, an additional common equity requirement is applied.
Foreign Banks with Branch Presence in India:
- In the case of a foreign bank with a branch presence in India that is a Global Systemically Important Bank (G-SIB), it must maintain an additional CET1 capital surcharge in India, proportionate to its Risk Weighted Assets (RWAs) in India.
Historical Designation:
- The RBI had previously designated SBI and ICICI Bank as D-SIBs in 2015 and 2016.
- Based on data collected as of March 31, 2017, HDFC Bank was also classified as a D-SIB.
- The current update is based on data collected as of March 31, 2023, and considers the increased systemic importance of HDFC Bank post the merger of erstwhile HDFC Ltd into HDFC Bank on July 1, 2023.

Domestic Systemically Important Banks (D-SIBs) in India:

The Reserve Bank of India (RBI) has identified State Bank of India (SBI), ICICI Bank, and HDFC Bank as Domestic Systemically Important Banks (D-SIBs). This designation reflects the significance of these banks in the Indian economy, with considerations for their size, complexity, lack of substitutability, and interconnectedness.

What are D-SIBs?

D-SIBs are banks that are considered “too big to fail,” meaning their failure could have severe implications for the overall economy. The concept of D-SIBs was introduced globally in the aftermath of the 2008 financial crisis to address the risks posed by large and interconnected banks.

Determination of D-SIBs:

Factors Considered: The RBI determines D-SIBs based on factors such as size, complexity, lack of substitutability, and interconnectedness with the financial system.
Classification into Buckets: D-SIBs are classified into five buckets based on their importance to the national economy.
Asset Threshold: To be designated as a D-SIB, a bank must have assets exceeding 2 percent of the national GDP.
Regulatory Requirements: D-SIBs are subject to higher regulatory requirements. They need to maintain a higher share of risk-weighted assets as tier-I equity.

Regulatory Requirements for D-SIBs:

Additional Capital: D-SIBs are required to maintain Additional Common Equity Tier 1 (CET1) capital based on their risk-weighted assets.
Risk Mitigation: These requirements aim to mitigate the risks associated with the failure of a D-SIB and ensure their ability to absorb losses.

Significance:

Economic Importance: D-SIBs play a crucial role in the economy, and their failure could lead to significant disruption in essential banking services and overall economic activities.
Government Support: The “too big to fail” designation implies that, in times of distress, the government is expected to provide support to prevent the failure of these banks.
Advantages and Policy Measures: D-SIBs may enjoy certain advantages in funding due to the perception of government support. Additionally, they are subject to specific policy measures addressing systemic risks and moral hazard issues.

CET1 and Risk-Weighted Assets (RWA):

CET1 is high-quality regulatory capital absorbing losses immediately.
RWA link minimum capital requirements to the risk profile of a bank’s lending activities.

13. Proposal to verify the rumours in the Stock Market – SEBI

Subject :Economy

Section: Monetary Policy

The Industry Standards Forum (ISF), a body established by the Securities and Exchange Board of India (SEBI) under the aegis of stock exchanges, has proposed a change in the criteria for rumour verification for listed firms.

The suggestion is to make the requirement for rumour verification applicable whenever there is a material “price movement” of the entities’ securities, rather than a material “event.”

Key points of the proposal:

Material Price Movement: Rumour verification would be triggered by a material price movement in the securities of listed entities.
Percentage Variation: To determine material price movement, a lower percentage variation may be considered for securities falling under a high price range, and a higher percentage variation may be considered for securities falling under a low-price range.
Indexing to Market Movements: The price variation in the securities of the listed entity may be indexed to the movement in Nifty 50 or the Sensex to factor in market dynamics.
Extension of Timeline: SEBI has extended the timeline for rumour verification to February 1 and August 1 for the top 100 and top 250 listed firms by market capitalization, respectively.
Unaffected Price for Transactions: The unaffected price would be considered to determine the pricing of transactions when the listed entity confirms the market rumour due to material price movement.
Obligation on Promoters and Management: There is a proposal to cast an obligation upon promoters, directors, Key Managerial Personnel (KMP), and senior management to provide adequate, accurate, and timely responses to queries raised or explanations sought.
Use of Classified Information: If a listed entity has classified certain information as Unpublished Price Sensitive Information (UPSI) and does not confirm, deny, or clarify a market rumour related to such information, the media reports should not be used later by an insider as a defense that the information was “generally available.”

This proposed change aims to align rumour verification with market movements and enhance transparency and timely communication in response to material developments.

About Price Move and Material Movement?

Price Move:
- Definition: A price move refers to a change in the price of a security, such as a stock, bond, or commodity, over a specific period of time.
- Significance: Traders and investors closely monitor price moves to make informed decisions about buying or selling securities. Price moves can be influenced by various factors, including market news, economic indicators, corporate earnings, and geopolitical events.
Material Movement:
- Definition: Material movement, in the context of market regulations, often refers to a significant change or event related to a company or its securities that could impact the market value of those securities.
- Significance: Material movements are typically associated with information that is considered “material” or important enough to influence an investor’s decision. Material information is often non-public and may include details about financial performance, mergers and acquisitions, regulatory approvals, or other events that could affect the company’s stock price.

About SEBI (Prohibition of Insider Trading) Regulations, 2015

The Securities and Exchange Board of India (SEBI) (Prohibition of Insider Trading) Regulations, 2015, aims to prevent insider trading in securities.

Insider trading refers to the buying or selling of a company’s securities by individuals who have access to non-public, material information about the company. The regulations aim to maintain a level playing field for all market participants and ensure fairness and transparency in the securities market.

The regulations define insider trading and specify who qualifies as an “insider.” Insiders include company officials, connected persons, and those in possession of unpublished price-sensitive information (UPSI).

The regulations prescribe penalties for insider trading violations, which may include monetary fines, disgorgement of profits, and prohibition from trading in the securities market.

The SEBI (Prohibition of Insider Trading) Regulations, 2015, play a crucial role in fostering investor confidence and ensuring the integrity of the securities market in India by preventing the misuse of confidential information for trading purposes.

14. Role of DFS in improving bank asset quality in 2023

Subject :Economy

Section: Monetary Policy

Reduction of Non-Performing Assets (NPAs):
- The DFS have played a crucial role in significantly reducing NPAs in Scheduled Commercial Banks (SCBs).
- Gross NPAs decreased from ₹9,33,779 crore in March 2019 to ₹5,71,515 crore in March 2023.
Measures Affecting NPAs:
- The effectiveness of measures such as the Insolvency and Bankruptcy Code (IBC), amendments to the SARFAESI Act, and the Prudential Framework for Resolution of Stressed Assets is highlighted.
Financial Inclusion Initiatives:
- The DFS emphasizes initiatives taken for financial inclusion, including schemes such as Pradhan Mantri Jan Dhan Yojana (PMJDY), Pradhan Mantri Jeevan Jyoti Bima Yojana, Pradhan Mantri Suraksha Bima Yojana, MUDRA, Stand Up India, and Atal Pension Yojana.
- These initiatives aim to provide basic banking services, insurance, and pension schemes to vulnerable sections of society.
Debt Recovery Measures:
- The government and RBI have taken comprehensive measures for debt recovery, enabling SCBs to recover a total amount of ₹7.16 lakh crore during the last five financial years.
- Changes in credit culture, especially through the IBC, are highlighted.
Digital Payments and Financial Reforms:
- The DFS has been actively promoting a robust digital payments ecosystem.
- The DIGIDHAN Mission, under the DFS, has contributed to the significant growth of digital payment transactions.
- The DFS continued the momentum of financial reforms, focusing on risk assessment, NPA management, financial inclusion, customer service, digital transformation, and more.
Agriculture Sector Initiatives:
- The DFS facilitated robust credit disbursement in the agriculture sector, with agricultural credit increasing from ₹8.45 lakh crore in FY15 to ₹21.55 lakh crore in FY23.
- The Kisan Credit Card (KCC) scheme is mentioned as playing a pivotal role in providing credit to farmers.
EASE Reforms:
- The DFS continued the momentum of reforms, building on initiatives like the Enhanced Access and Service Excellence (EASE) Reform agenda.
- The EASE Reforms focus on various aspects, including digital customer experience, analytics-driven business improvement, tech and data-enabled capability building, and HR operations enhancement.

Brief on various schemes under DFS –

Pradhan Mantri Jan Dhan Yojana (PMJDY):

Objective: PMJDY, launched in August 2014, aims to provide financial inclusion to every household in India.
Key Features:
- Opening of basic savings bank accounts with no minimum balance requirement.
- Access to financial services such as insurance, credit, and pension.
- RuPay debit card for account holders.
- Direct Benefit Transfer (DBT) and subsidies directly credited to the accounts.
- Overdraft facility for eligible account holders.

Pradhan Mantri Jeevan Jyoti Bima Yojana (PMJJBY):
- Objective: PMJJBY, launched in May 2015, provides life insurance coverage at an affordable premium.
- Key Features:
  - Life insurance coverage of ₹2 lakhs in case of the insured’s death due to any reason.
  - Annual premium is low, making it accessible to the economically weaker sections.
  - The scheme is available to individuals aged 18 to 50 years.

Pradhan Mantri Suraksha Bima Yojana (PMSBY):
- Objective: PMSBY, also launched in May 2015, provides accidental death and disability insurance coverage.
- Key Features:
  - Accidental death and disability coverage of ₹2 lakhs.
  - Premium is affordable, making it accessible to a large population.
  - The scheme is available to individuals aged 18 to 70 years.

MUDRA (Micro Units Development and Refinance Agency) Scheme:
- Objective: Launched in April 2015, MUDRA aims to provide financial support to microenterprises and promote entrepreneurship.
- Key Features:
  - MUDRA provides funding to microenterprises through various loan products.
  - Three categories of loans: Shishu (up to ₹50,000), Kishor (₹50,000 to ₹5 lakhs), and Tarun (₹5 lakhs to ₹10 lakhs).
  - The loans support a variety of income-generating activities.

Stand Up India:
- Objective: Launched in April 2016, Stand Up India promotes entrepreneurship among women and SC/ST communities.
- Key Features:
  - Provides bank loans between ₹10 lakhs and ₹1 crore to at least one SC/ST borrower and one woman borrower per bank branch.
  - Aims to support greenfield enterprises in the non-farm sector.

Atal Pension Yojana (APY):
- Objective: Launched in May 2015, APY encourages the unorganized sector to save for their retirement.
- Key Features:
  - Provides a fixed pension between ₹1,000 and ₹5,000 per month after the age of 60.
  - Contributions based on age and chosen pension amount.
  - Accessible to individuals aged 18 to 40 years.

DIGIDHAN Mission:
- Objective: DIGIDHAN Mission focuses on promoting a robust ecosystem for digital payments in India.
- Key Features:
  - Aims to reduce cash transactions and promote digital financial transactions.
  - Encourages the use of digital payment methods such as UPI (Unified Payments Interface), mobile wallets, and digital banking.
  - Seeks to enhance financial inclusion and reduce the reliance on physical currency.
  - Enhances the security and efficiency of transactions in the digital space.

Kisan Credit Card (KCC):
- Objective: The Kisan Credit Card scheme was introduced to provide timely and hassle-free credit to farmers.
- Key Features:
  - Offers farmers a revolving credit facility to meet their agricultural needs.
  - Enables farmers to access short-term credit for crop cultivation, harvest, and post-harvest expenses.
  - Simplifies the credit delivery process for farmers, making it more accessible and farmer-friendly.
  - Promotes financial inclusion and ensures farmers have timely access to credit.

Enhanced Access and Service Excellence (EASE) Reform:
- Objective: The EASE Reform agenda aims to bring about positive changes in the functioning of Public Sector Banks (PSBs) in India.
- Key Features:
  - Focuses on multiple areas, including risk assessment, NPA (Non-Performing Asset) management, financial inclusion, customer service, and digital transformation.
  - Aims to improve the overall efficiency, transparency, and accountability of PSBs.
  - Promotes the use of technology and data-driven approaches for better decision-making.
  - Evolved through multiple versions (EASE 1.0 to EASE 6.0) with a focus on digital customer experience and operational enhancements.
  - EASE index is prepared by the Indian Banking Association (IBA) and Boston Consulting Group and commissioned by the Finance Ministry.

15. Guidelines for Government Securities Lending Directions, 2023 by RBI

Subject :Economy

Section: Monetary Policy

The Reserve Bank of India (RBI) has issued guidelines to permit lending and borrowing in government securities (G-Secs), excluding Treasury Bills.

Objective:
- The move aims to deepen the bond market and enhance liquidity in the Government Securities (G-Sec) market.
- A well-functioning securities lending and borrowing market is expected to contribute to efficient price discovery.
Draft and Finalization:
- In February, the RBI released the draft RBI (Government Securities Lending) Directions, 2023.
- The guidelines have been finalized based on the comments received on the draft.
Eligibility Criteria:
- Government securities issued by the Central Government excluding Treasury Bills shall be eligible for lending/borrowing under a GSL transaction. Securities obtained under a repo transaction, including through Reserve Bank’s Liquidity Adjustment Facility, or borrowed under another GSL transaction shall also be eligible to be lent under a GSL transaction.
- Government securities issued by the Central Government (including Treasury Bills) and the State Governments shall be eligible for placing as collateral under a GSL transaction. Securities obtained under a repo transaction, including through Reserve Bank’s Liquidity Adjustment Facility, or borrowed under another GSL transaction shall also be eligible to be placed as collateral under a GSL transaction.
Collateral Eligibility:
- G-Secs, including Treasury Bills and state government bonds, are eligible for placing as collateral under a GSL transaction.
Maturity Tenor:
- The minimum tenor of a GSL transaction is one day, and the maximum tenor is the maximum period prescribed to cover short sales.
Impact and Purpose:
- The lending and borrowing of G-Secs are expected to augment the existing market for ‘special repos.‘
- The system aims to facilitate broader participation in the securities lending market, allowing investors to deploy idle securities and enhance portfolio returns.

The introduction of these guidelines is part of the RBI’s efforts to create a more robust and liquid securities lending and borrowing market, fostering a healthier bond market ecosystem.

Government Securities (G-Secs):

Government Securities (G-Secs) are debt instruments issued by the government to raise funds from the market. These securities are considered one of the safest forms of investment because they are backed by the government’s credit. The government pays periodic interest to the bondholders and repays the principal amount at maturity.

Issued by Government:
- G-Secs are issued by the central government and state governments to meet their financial needs.
Low Risk:
- They are considered low-risk investments as they are backed by the government’s commitment to repayment.
Fixed Interest Payments:
- G-Secs pay periodic interest to bondholders, usually semi-annually or annually.
Fixed Maturity Period:
- G-Secs have a predetermined maturity period, ranging from a few years to several decades.
Liquidity:
- They can be traded in the secondary market before maturity, providing liquidity to investors.
Types of G-Secs:
- G-Secs include Treasury Bills (T-Bills), Government Bonds, and State Development Loans (SDLs).
Primary Issuance and Secondary Market:
- G-Secs are initially issued through auctions in the primary market and later traded in the secondary market.

Treasury Bills (T-Bills):

Treasury Bills, often referred to as T-Bills, are a specific type of short-term government security. They are issued by the government to meet short-term financing needs. T-Bills are typically issued for maturities of 91 days, 182 days, and 364 days.

Short-Term Debt:
- T-Bills have short maturities, making them suitable for investors looking for short-term investments.
Discounted Purchase:
- T-Bills are issued at a discount to their face value. The difference between the issue price and face value represents the investor’s earnings.
No Interest Payments:
- Unlike other bonds, T-Bills do not pay periodic interest. Instead, investors earn returns by purchasing them at a discount and receiving the face value at maturity.
High Liquidity:
- T-Bills are highly liquid and can be easily traded in the secondary market.
Risk-Free:
- T-Bills are considered risk-free because they are backed by the government.
Primary Issuance and Auctions:
- Like other G-Secs, T-Bills are issued through auctions in the primary market.
Role in Monetary Policy:
- T-Bills play a role in the implementation of monetary policy by the central bank.

G-Secs encompass a broader category of government debt, including Treasury Bills, Government Bonds, and State Development Loans. Treasury Bills are a specific type of short-term G-Sec with unique characteristics suitable for investors with short-term investment horizons.