Daily Prelims Notes 1 May 2023

May 1, 2023
Posted by: OptimizeIAS Team
Category: DPN

Daily Prelims Notes

1 May 2023

Table Of Contents

1. RBI guidelines to help mobilise domestic capital towards green activities

Subject :Economy

Section Monetary policy

Context: Reserve Bank of India (RBI) has issued a framework for green deposits, which are investments meant to be used towards environmentally sustainable projects.

More on the News:

The purpose and rationale for the framework, RBI said is to encourage REs to “offer green deposits to customers, protect interest of the depositors, aid customers to achieve their sustainability agenda, address greenwashing concerns and help augment the flow of credit to green activities/projects”.

Key Features of the Framework for acceptance of green deposits

Applicability: The framework is applicable to Scheduled Commercial Banks, including Small Finance Banks, excluding Regional Rural Banks, Local Area Banks and Payments Banks and all deposit-taking Non-Banking Financial Companies (NBFCs), including Housing Finance Companies.
Allocation: REs will be required to allocate the proceeds raised through green deposits towards a list of green activities and projects that encourage energy efficiency in resource utilization, reduce carbon emissions and greenhouse gases, promote climate resilience and/or adaptation, and improve natural ecosystems and biodiversity.
Exclusion: Projects involving new or existing extraction, production and distribution of fossil fuels, including improvements and upgrades, nuclear power, direct waste incineration, alcohol, weapons, tobacco, gaming, or palm oil industries, renewable energy projects generating energy from biomass using feedstock originating from protected areas, landfill projects and hydropower plants larger than 25 MW have been excluded from green financing.
Financing Framework:
- To ensure effective allocation of green deposits, REs must put in place a Board-approved Financing Framework (FF). The green deposits shall be denominated in Indian Rupees only.
- The allocation of funds raised through green deposits by REs during a financial year shall be subject to independent third-party verification/assurance, which shall be done on an annual basis.

Green Bonds: https://optimizeias.com/rbi-unveils-plans-to-raise-%E2%82%B916000-crore-via-sovereign-green-bonds/

2. Stray Dogs and Poor Waste Management

Subject :Environment

Section Monetary policy

Context: Frequent reports of dogs chasing people down the road, attacking and even “mauling” people to death have made the management of stray dogs an administrative and legal issue. But what also determines how frequently, and where, these attacks happen is how efficiently a city’s sanitation and waste disposal facilities operate, experts say.

What do dog bites have to do with poor waste management?

The “carrying capacity” — the ability of a city to support a species — is determined by the availability of food and shelter. Free-ranging dogs, in the absence of these facilities, are scavengers that forage around for food, eventually gravitating towards exposed garbage dumping sites.
Dogs thus congregate around urban dumps, such as landfills or garbage dumps, due to feeding opportunities.
A population boom in Indian cities has contributed to a staggering rise in solid waste. Indian cities generate more than 1,50,000 metric tonnes of urban solid waste every day
United Nations Environment Program report, an estimated 931 million tonnes of food available to consumers ended up in households, restaurants, vendors and other food service retailers’ bins in 2019. Indian homes on average also generated 50 kg of food waste per person, the report said.
This food often serves as a source of food for hunger-stricken, free-roaming dogs that move towards densely-populated areas in cities, such as urban slums which are usually located next to garbage dumping sites and landfills.

What role do urbanisation and urban planning play?

Cities have witnessed a sharp increase in the stray dog population, which as per the official 2019 livestock census stood at 5 crore. However, independent estimates peg the number to be around 6.2 crore.
The number of dog bites has simultaneously doubled between 2012 and 2020 (researchers however note there is a paucity of data on dog bite deaths due to neglect in the management of rabies).
India also shoulders the highest rabies burden in the world, accounting for a third of global deaths caused due to the disease.
In 2015, a study conducted in 10 Indian metro cities — including Delhi, Mumbai, Chennai, and Bengaluru — found a strong link between human population, the amount of municipal and food waste generated, and the number of stray dogs in the cities.
Experts agree there may be a correlation between urbanisation and solid waste production, made visible due to the mismanagement of waste disposal. Tepid animal birth control programmes and insufficient rescue centres, in conjunction with poor waste management, result in a proliferation of street animals in India, research argues.
Urban local bodies are struggling to implement and sustain rules under the Solid Waste Management Rules 2016, such as the door-to-door collection of segregated waste, studies show.
All the waste collected should be transported to designated landfill sites, but estimates by the Ministry of Environment, Forest and Climate Change of India show that only 75-80% of the total municipal waste is collected, and only 22-28% of it is processed. The rest is dumped across cities, becoming food for stray dogs or clogging sewerage
The proximity of residential areas to dumping sites and the rise in dog attacks speak to “core issues of unplanned and unregulated urban development, the lack of serviced affordable urban housing for all, lack of safe livelihood options and improper solid waste management”, researchers at the World Resource Institute (WRI) wrote in a blog.

More about issue: https://optimizeias.com/stray-dog-population-control-is-dogged-by-bad-science/

Prevention of cruelty of animal act,1960: https://optimizeias.com/stray-dog-beaten-to-death-police-launch-hunt-to-nab-accused/

Solid Waste Management Rules, 2016: https://optimizeias.com/kochi-dump-yard-smoke-to-be-contained-in-two-days/

3. Shrinking glaciers and effective policy-level communication

Subject: Environment

Context: Climate change impacts on Indus river basin glaciers

More on the News:

Glaciologist says communicating about the uncertainties attached to glaciers with policymakers is one of the most challenging tasks.
The remote sensing models developed helps understand the Himalayan cryosphere and also estimate glacier mass balance.
Glaciers in the western Himalayas are “actively under the degradation phase,” as per one of the studies.
- Glaciers in the Alaknanda and Bhagirathi river basins in the Western Himalayas where the river Ganga originates. They find that around 96% of glaciers have continuously lost water between 2001 and 2013. Their findings strengthen the evidence that Himalayan glaciers are “actively under the degradation phase
Glaciologist talks about his experiences while studying glaciers, the state of glaciology in India and the need for revised water sharing practices between India and Pakistan with the backdrop of melting glaciers in the eastern Himalayas.
- Expert says the findings show the proportion of water distributed between India and Pakistan will be significantly affected by the middle of the centurydue to the non-uniform impacts of global warming in the region.

Indus water Treaty: https://optimizeias.com/india-sends-notice-to-pakistan-to-amend-indus-water-treaty/

4. Toxic gas kills 11 in Ludhiana

Subject : Science and technology

Section: Health

Concept :

At least 11 people have died following a gas leak in Ludhiana, Punjab. The death is due to the inhalation of neurotoxic gas.

Hydrogen sulfide: Fast Facts

Hydrogen sulfide is a chemical compound with the formula H2S.
It is a colorless chalcogen-hydride gas.
It is poisonous, corrosive, and flammable, with trace amounts in ambient atmosphere having a characteristic foul odor of rotten eggs.
Hydrogen sulfide is slightly denser than air. A mixture of H2S and air can be explosive.
In general, hydrogen sulfide acts as a reducing agent.

Effects

Hydrogen sulfide is toxic to humans and most other animals by inhibiting cellular respiration.
When it is inhaled or its salts are ingested in high amounts, damage to organs occurs rapidly with symptoms ranging from breathing difficulties to convulsions and death.
Despite this, the human body produces small amounts of this sulfide and its mineral salts, and uses it as a signaling molecule.

Sources

Hydrogen sulfide is often produced from the microbial breakdown of organic matter in the absence of oxygen,such as in swamps and sewers; this process is commonly known as anaerobic digestion, which is done by sulfate-reducing microorganisms.
It also occurs in volcanic gases, natural gas deposits, and sometimes in well-drawn water.
It can also be associated with animal farms, industrial plants, sewers or sewage treatment plants.

5. Gas leak in Ludhiana: 11 dead, 11 injured; NDRF team at spot to evacuate people

Subject: Polity

Section: MSc

NDRF

The National Disaster Response Force (NDRF) is an Indian specialized force constituted “for the purpose of special response to a threatening disaster situation or disaster” under the Disaster Management Act, 2005
The “Apex Body for Disaster Management in India is the National Disaster Management Authority (NDMA).
The Chairman of the NDMA is the Prime Minister.
The head of the NDRF is designated as Director General. The Director Generals of NDRF are IPS officers on deputation from Indian police organisations. Director General is a three-star officer.
The NDRF is a top-heavy organisation which in addition to the Director General has several Inspector Generals (IG) and Deputy IGs, who are flag officers and wear badges of rank
The ‘Nodal Ministry’ in the central government for management of natural disasters is the Ministry of Home Affairs (MHA).
The responsibility of managing disasters in India is that of the State Government.
When ‘calamities of severe nature’ occur, the Central Government is responsible for providing aid and assistance to the affected state, including deploying, at the State’s request, of Armed Forces, Central Paramilitary Forces, National Disaster Response Force (NDRF), and such communication, air and other assets, as are available and needed.

Composition of National Disaster Response Force (NDRF)

National Disaster Response Force (NDRF) is a force of 12 battalions, organized on para-military lines, and manned by persons on deputation from the para-military forces of India: three Border Security Force, three Central Reserve Police Force, two Central Industrial Security Force, two Indo-Tibetan Border Police and two SashastraSeema Bal.
The total strength of each battalion is approximately 1149. Each battalion is capable of providing 18 self-contained specialist search and rescue teams of 45 personnel each including engineers, technicians, electricians, dog squads and medical/paramedics.

State Disaster Response Force

As per of National Policy on Disaster Management 2009, the State Governments are required to raise their own SDRF for quickly responding to disasters.
As per information available, 24 State/UTs have raised their SDRF.
These SDRF are placed strategically at suitable locations well connected to the airport, rail heads and roads for their immediate deployment at the disaster sites.
The SDRF are also be used for Community Capacity Building and Awareness Generation programmes within the State.
During these programmes, SDRF can familiarize themselves with terrain, critical buildings and other existing infrastructure for prompt responses at the time of disasters and simultaneously work with the community, including school children, village volunteers and other stakeholders on what to do during disasters.

6. Life of 6000 villagers set to improve in Odisha

Subject :Polity

Section: Laws in news

Concept :

Over 6,000 villagers who lived devoid of essential government welfare schemes and developmental benefits for decades deep inside forests in Odisha’s Ganjam district are set to embrace a new life with the recognition of their villages as revenue villages under the Forest Right Act.
These people were part of 38 unsurveyed forest villages and for every small developmental activity, they required permission from the forest department.
In the census report, these villages are identified as ‘Zero’ villages, but inhabited by people.

Revenue Villages under FRA

Under Section 3(1)(h) of the Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006, the rights of settlement and conversion of all forest villages, old habitations, un-surveyed villages and other villages in forest, whether recorded, notified, or not, into revenue villages have been recognized as one of the forest rights of forest dwelling Scheduled Tribes and other traditional forest dwellers on all forest lands.
As per the provisions of the Act and the rules framed thereunder, the forest right related to conversion of forest villages into revenue villages is to be adjudicated by the Gram Sabha, Sub-Divisional Level Committee and the District Level Committee as per the laid down procedure, like any other forest right specified in the Act.
The Ministry of Tribal Affairs has issued guidelines to the State/ UT Governments to convert all such erstwhile forest villages, un-recorded settlements and old habitations into revenue villages with a sense of urgency in a time bound manner.
The conversion would include the actual land use of the village in its entirety, including land required for current or future community uses, like, schools, health facilities, public spaces etc.

7. Rajnath to hand over patrol vessel, landing craft to Maldives

Subject : International Relations

Section: Places in news

Concept :

Defence minister of India Rajnath Singh is on a visit to the Maldives from May 1 to 3,2023 to hold talks with the top leadership of Maldives on various fronts.
In line with India’s commitment to capacity building of friendly countries and partners in the region, he is expected to hand over one fast patrol vessel and a landing craft to the Maldives National Defence Forces.
India’s decision to provide the military platforms to the Maldives came amid China’s persistent efforts to expand its overall influence in the region.
In recent years, India’s relationship with the Maldives, particularly in the areas of defence and security, has been improving, as the Maldives is an important maritime neighbour for India in the Indian Ocean region.
India’s vision of SAGAR (Security and Growth for All in the Region) along with its ‘Neighbourhood First’ policy as well as Maldives’ ‘India First’ policy seek to work together to jointly develop the capabilities within the Indian Ocean region.

SAGAR (Security and Growth for All in the Region

In 2015, India unveiled it’sstrategic vision for the Indian Ocean i.e. Security and Growth for All in the Region (SAGAR). It is an increasing recognition of the increasing importance of maritime security, maritime commons and cooperation.
Through SAGAR, India seeks to deepen economic and security cooperation with its maritime neighbours and assist in building their maritime security capabilities.
For this, India would cooperate on the exchange of information, coastal surveillance, building of infrastructure and strengthening their capabilities.
Further, India seeks to safeguard its national interests and ensure Indian Ocean region to become inclusive, collaborative and respect international law.

8. Damascus

Subject: International Relations

Section: Places in news

Concept:

According to reports, Iran’s president Ibrahim Rai will travel to Syria.
Since the beginning of Syria’s Civil War in 2011, this will be the first tour of this kind.
The two-day visit takes place against the backdrop of improved relations between regional rivals Iran and Saudi Arabia as well as growing Arab engagement with Damascus.

Damascus

It is the capital of Syria, the oldest capital in the world and, according to some, the fourth holiest city in Islam.
Situated in southwestern Syria, Damascus is the center of a large metropolitan area.
It is nestled among the eastern foothills of the Anti-Lebanon mountain range 80 kilometres inland from the eastern shore of the Mediterranean on a plateau 680 metres (2,230 ft) above sea level.
Damascus experiences a dry climate because of the rain shadow effect. The Barada River flows through Damascus.

9. Lithium Industry of Chile

Subject :Geography

Section: Economic geography

News in Brief

Chile Government plans to take a majority stake in the country’s lithium industry.
A state-run lithium company will be set up to take control from private players.
Any new lithium contracts will only be issued as public-private partnerships with state control.
The two current contracts will not be terminated. They are with two big lithium producers, the local company SQM (till 2030) and the United States-based Albemarle (till 2043). Government may also try to boost state participation in the operations of these companies.
Some experts call this as “nationalization” of Lithium industry. Some call it quasi-nationalization with playing field being levelled in favour of the state.

About Chile

It is a South American Country
It has the world’s second-biggest producer of lithiumand has the largest reserves
Chile’s constitution defines lithium as a strategic and exclusively state-owned mineral, because of its possible use in nuclear fusion.

About Lithium

Referred to as “white gold”
Used in rechargeable batteries that power laptops, mobile phones
Used in rechargeable batteries to power electric vehicles (EVs), which is a crucial part of the world’s plan to tackle climate change.

Why Chilean Government wants Majority stake in Lithium Industry?

To boost Chile’s economy

As countries transit to green energy, demand for lithium rise.
Chile struggles to keep up with the demand and fell to the 2^nd position in the list of largest lithium producers, taken over by Australia.
State-run lithium company will “promote, expand and control” the lithium industry and prevent Chile from falling to the 3^rd position in 2028 (as predicted by JPMorgan)
Chilean President wants to set up the lithium company on the lines of Codelco, a Chilean government-owned mining company which is now the world’s largest copper producer.

To protect Chile’s Environment

The brine evaporation method used in current production consumes vast amounts of water.
Water is already scarce especially in the Atacama Desert – most of the lithium reserves are located.
Widely criticized by local indigenous groups and environmentalists
Lithium (Li) mining has damaged Chile’s biodiversity – a 2022 study – Li Mining led to decline in the number of flamingos in the area. Water becoming scarce in Atacama, fewer flamingos are reproducing, impacting herd numbers
Future mining projects to involve consultation with local communities to protect the salt flats

Brine Evaporation Method

Lithium brine recovery is a straightforward but time-consuming process. Salt-rich water is pumped to the surface and into a series of evaporation ponds. Over a period of months, the water slowly evaporates and a variety of salts precipitate out, leaving a brine with an ever-increasing concentration of lithium.

Salt Flats

A salt flat is a natural landscape in which a large area of flat land is covered by salt.
World’s most well-known salt flat is the Salar de Uyuni in Bolivia – largest in the world and also contains more than half of the planet’s lithium reserves.
A salt flat forms from a natural water body whose recharge rate is lower than the evaporation rate.
Over time, all the water evaporates, leaving behind the dissolved minerals, usually salts. They reflect sunlight strongly and thus appear bright.
The underlying soil is highly saline — even if the water table is shallow. The groundwater is too salty for humans to drink.

Salt Flats of Chile

Atacama Salt Flat is the biggest salt deposit in Chile. It has a rough white surface below which there is a large Salt Lake. It is surrounded by mountains, and has no drainage outlets. In the east it is enclosed by the main chain of the Andes, while to the west lies a secondary mountain range of the Andes called Cordillera de Domeyko. The lake under the salt flat has one of the largest lithium reserves in the world.

Challenges Involved

Getting it approved by Congress, where the President’s party doesn’t have a majority, and would need the support of Opposition parties
Creation of a state-run lithium company could take years for the government.
Codelco could take years to implement the proposal as it doesn’t have any experience in lithium mining.
National elections in 2025 could also impact the negotiations between the private players and the government.

10. G7 should adopt ‘risk-based’ AI regulation

Subject :Science and Technology

Section: Awareness in IT

News in Brief

G7 advanced nations should adopt “risk-based” regulation on artificial intelligence, their digital ministers agreed in a joint statement issued at the end of a two-day meeting in Japan.
They also insisted to “preserve an open and enabling environment” for the development of AI technologies and be based on democratic values.
This comes as European lawmakers hurry to introduce an AI Act to enforce rules on emerging tools such as ChatGPT.
Policy instruments to achieve the common vision and goal of trustworthy AI may vary across G7 members.
The top tech officials from G7 – Britain, Canada, the EU, France, Germany, Italy, Japan and the United States – met in Takasaki, a city about 100 km (60 miles) northwest of Tokyo.

ChatGPT

A generative AI tools
A chatbot developed by Microsoft Corp-backed OpenAI
Has become the fastest-growing app in history since its launch

Future G7 discussions on generative AI

To be convened on topics like

Governance
How to safeguard intellectual property rights including copyright
Promote transparency
Address disinformation including information manipulation by foreign forces

Previous Issues with AI Tools

Italy, a G7 member, took ChatGPT offline or banned it recently to investigate its potential breach of personal data rules. The move has inspired fellow European privacy regulators to launch probes. Italy lifted the ban.
EU lawmakers agree a new draft of its upcoming AI Act, including copyright protection measures for generative AI. It may include labelling obligations for AI-generated images or music.

Japan’s Positive View on AI

Japan took an accommodative approach on AI developers, pledging support for public and industrial adoption of AI.
Hopes for G7 to agree on agile or flexible governance, rather than hindering, catch-all regulation over AI technology
Japan while hosting the G7 Summit in Hiroshima in late May, will discuss AI rules with world leaders.

About Takasaki

A transport and business hub
A city of the daruma doll – associated with ShorinzanDarumaji Temple of Zen Buddhism. Daruma dolls – a popular handicraft and good luck charm, made from papier mache using a strong, fibrous traditional paper called washi, represented is the Bodhidharma – a legendary monk credited with bringing Buddhism to China.

About G7

The Group of Seven (G7) is an inter-governmental political forum consisting of Canada, France, Germany, Italy, Japan, the United Kingdom, and the United States.
Its members are the world’s largest IMF advanced economies and wealthiest liberal democracies
As of 2020, the collective group accounts for a little over 50% of global net wealth (which is $418 trillion), 32 to 46 percent of global gross domestic product, and about 770 million people or 10 percent of the world’s population
Since the start of 2023, Japan has taken over the presidency of the G7. Germany was 2022 chair.
The G7 was founded primarily to facilitate shared macroeconomic initiatives in response to contemporary economic problems.
Following the global financial crisis of 2007–2008, G7 finance ministers pledged to take “all necessary steps” to stem the crisis.
Presently, The G7 has continued to take a strong stance against Russia’s “destabilisingbehaviour and malign activities” in Ukraine and elsewhere around the world

11. Detecting Breast Cancer Risk

Subject :Science and Technology

Section: Health

Why in news?

A new study has found how breast tissue density plays a role in detecting breast cancer risk. A study has found that while breast density declines with age, a slower rate of decline in one breast often precedes a cancer diagnosis in that breast.

What is Breast Cancer?

Breast cancer is a disease in which cells in the breast grow out of control. There are different kinds of breast cancer. The kind of breast cancer depends on which cells in the breast turn into cancer.
Breast cancer can spread outside the breast through blood vessels and lymph vessels. When breast cancer spreads to other parts of the body, it is said to have metastasized.

The common kinds of breast cancer are—

Invasive ductal carcinoma: The cancer cells begin in the ducts and then grow outside the ducts into other parts of the breast tissue. Invasive cancer cells can also spread, or metastasize, to other parts of the body.

Invasive lobular carcinoma: Cancer cells begin in the lobules and then spread from the lobules to the breast tissues that are close by. These invasive cancer cells can also spread to other parts of the body.

Causes of Breast cancer

Breast cancer is not a transmissible or infectious disease. Unlike some cancers that have infection-related causes, such as human papillomavirus (HPV) infection and cervical cancer, there are no known viral or bacterial infections linked to the development of breast cancer.
Certain factors increase the risk of breast cancer including increasing age, obesity, harmful use of alcohol, family history of breast cancer, history of radiation exposure, reproductive history (such as age that menstrual periods began and age at first pregnancy), tobacco use and postmenopausal hormone therapy.

Behavioural choices and related interventions that reduce the risk of breast cancer include:

Prolonged breastfeeding
Regular physical activity
Weight control
Avoidance of harmful use of alcohol
Avoidance of exposure to tobacco smoke
Avoidance of prolonged use of hormones
Avoidance of excessive radiation exposure.

Unfortunately, even if all of the potentially modifiable risk factors could be controlled, this would only reduce the risk of developing breast cancer by at most 30%.

India Facts

According to a report by the Indian Council for Medical Research on the ‘Burden of cancers in India’, seven cancers accounted for more than 40% of the total disease burden: lung (10.6%), breast (10.5%), esophagus (5.8%), mouth (5.7%), stomach (5.2%), liver (4.6%) and cervix uteri (4.3%).

Policies and schemes in India

In order to prevent and control major Non-Communicable Diseases (NCD), the National Programme for Prevention and Control of Cancer, Diabetes, Cardiovascular Diseases and Stroke (NPCDCS) was launched in 2010 with focus on strengthening infrastructure, human resource development, health promotion, early diagnosis, management and referral.
Under NPCDCS, NCD Cells are being established at National, State and District levels for programme management, and NCD Clinics are being set up at District and CHC levels, to provide services for early diagnosis, treatment and follow-up for common NCDs
For the Cancer component, there is the Tertiary Care Cancer Centers (TCCC) scheme, which aims at setting up/strengthening of 20 State Cancer Institutes (SCI) and 50 TCCCs for providing comprehensive cancer care in the country. Under the scheme there is provision for giving a ‘one time grant’ of Rs. 120 crore per SCI and Rs. 45 crore per TCCC, to be used for building construction and procurement of equipment, with the Centre to State share in the ratio of 60:40 (except for North-Eastern and Hilly States, where the share is 90:10).

Treatment – WHO Guidelines

WHO outlines three pillars of action with specific key performance indicators:

Recommending countries to focus on breast cancer early-detection programmes so that at least 60 per cent of breast cancers are diagnosed and treated as an early-stage disease.
Diagnosing breast cancer within 60 days of the initial presentation can improve breast cancer outcomes. Treatment should start within three months of the first presentation
Managing breast cancer so that at least 80 per cent of patients complete their recommended treatment.

World Health Organization (WHO) announced an initiative called the “Global Breast Cancer Initiative”. GBCI employs 3 key strategies to achieve these objectives: health promotion and early detection; timely diagnosis; and comprehensive breast cancer management. Through GBCI, WHO provides guidance to governments across the world on ways to strengthen systems for detecting, diagnosing and treating breast cancer, to further their capacities to manage other types of cancer.

Global Breast Cancer Initiative:

Aim

The initiative aims to reduce global breast mortality by 2.5% by 2040.
The initiative will particularly focus on reducing deaths in low-income countries. There the progress to tackle the disease is relatively slow.

Key Features of the Initiative:

Guidance to Governments: Under the initiative, WHO will work with other UN agencies. They will provide guidance to governments on how to strengthen systems for diagnosing and treating breast cancer. It is expected to improve capacities to manage other types of cancer.
Evidence-based Technical Package: An evidence-based technical package will also be provided to countries as part of the initiative. It will incorporate existing WHO cancer tools and products.

Breast Density

The study published in JAMA Oncology finds that while breast density declines with age, a slower rate of decline in one breast often precedes a cancer diagnosis in that breast.
Breast density is now an acknowledged risk factor for breast cancer, albeit one of many.
Dense tissue also makes tumors harder to detect in imaging scans.

12. Don’t increase unsecured loans exposure: RBI to banks

Subject :Economy

Section: Monetary Policy

Why in News?

As part of increasing caution amidst growing macro-economic uncertainties and bank collapses in the US and Europe, India’s central bank is asking banks to be watchful over their retail portfolios, particularly the unsecured loans. These include personal loans, credit cards, small business loans and micro finance loans.

The overall share of unsecured loans as an average across private banks has increased by over 300 basis points since June.

Latest Credit Deployment Data

It is published by RBI.
Unsecured loans lent between February 2022 to February 2023 stood at ₹2.2-lakh crore, higher than the deployment towards large corporates at ₹1.18-lakh crore.
The size of the home loan market during this period was ₹2.49-lakh crore just marginally larger than the unsecured loans market.

What are Unsecured Loans?

In unsecured loans, the borrowers’ assets are not pledged as collateral.
Examples of such loans are personal loans, education loans, credit cards etc.
They are given out on the basis of credit worthiness of the borrowers.
The interest rates on unsecured loans is higher than the secured loans. This is mainly because the options for recourse for lender in case of unsecured loans are limited.

Previous Measures

In 2019, the risk weight on unsecured loans excluding credit cards was reduced from 125 per cent to 100 per cent to place them at par with other retail loans. It was also done to harmonise the risk weights to Basel-III requirements.
Despite repeated warning to banks, especially private banks, unsecured loans growing faster than the secured retail loans may lead to increase in risk weights by RBI.

Basel III Requirements

Basel III is an internationally agreed set of measures developed by the BCBS in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision and risk management of banks.

Basel 3 measures are based on three pillars:

Pillar 1: Improve the banking sector’s ability to absorb ups and downs arising from financial and economic instability

Pillar 2: Improve risk management ability and governance of banking sector

Pillar 3: Strengthen banks’ transparency and disclosures

Basel Committee on Bank Supervision (BCBS)

It is a committee under the Bank for International Settlements.
Established in 1930, the BISis owned by 60 central banks, representing countries from around the world that together account for about 95% of world GDP.
Its head office is in Basel, Switzerland.
Its mission is to serve central banks in their pursuit of monetary and financial stability,to foster international cooperation in those areas and to act as a bank for central banks.

No Proper Checks

Adequate credit checks may not be in place due to securitization of personal loans and 30-minutes sanctioning.
Difficult to assess the exact asset quality of such loans
So, to avert a systemic risk, the pace of growth in the unsecured loans should be reduced. Even on the Microfinance side banks should not overdo growth despite the improvement in demand and collection efficiencies of MFI loans.

Sachetisation of Loans

This means loans can be broken down into levels that actually suit the needs of the borrowers, while keep lenders interested
If the loan’s tenure and terms are designed flexibly to align with borrowers’ cash flow cycle, the whole exercise is bound to be sustainable

MFIs

Microfinance institutions (MFIs) are financial companies that provide small loans to people who do not have any access to banking facilities.

Small Finance Banks

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.

NBFCs

NBFCs are financial institutions that provide various financial services and products, including loans, insurance, and asset management, but do not have a banking license. Unlike banks, NBFCs do not have the authority to accept deposits from the public.