Daily Prelims Notes 23 February 2021
- February 23, 2021
- Posted by: admin1
- Category: DPN
Daily Prelims Notes
23 February 2021
All 6 Prelims qualified
4 CSE Mains qualified
If I can do it, you can too
Table Of Contents
- Bond Yield
- CBI and Consent of States
- Rashtriya Kamdhenu Aayog (RKA)
- Genome Valley
- National Company Law Tribunal
- Animal Husbandry Infrastructure Development Fund (AHIDF)
- Special Purpose Acquisition Companies (SPAC)
- London Inter Bank Offered Rate (LIBOR)
- Iran IAEA reach deal on inspections
Context: The rise in bond yields across the world has disrupted the bull rally on the stock markets with the benchmark Sensex of the BSE plunging 1,145 points, or 2.25 per cent
- The rise in bond yields in India is in response to factors such as absorption of additional borrowing by the government, expectation of better growth in the economy and slippage in fiscal deficit.
About Bond Yield
- It is a return an investor realizes on that bond. It is generally a function of the bond’s market price and its coupon or interest payments.
- yield = coupon amount/price. When the price changes, so does the yield.
Understanding bond yield:
- In normal case: If a bond is bought at its $1,000 par value with a 10% coupon. If we hold on to it, the issuer pays $100 a year for 10 years, and then pays back the $1,000 on the scheduled date. The yield is therefore 10% ($100/$1000).
- If sold to the market: Bond prices change on a daily basis of prevailing interest rates (When interest rates are low, bond prices increase and yield decreases) because investors are seeking a better return. If the price of the bond in the market is $800, it’s selling under face value or at a discount. If the price of the bond in the market is $1,200, it’s selling above face value, or at a premium.
- Regardless of the market price of a bond, the coupon remains the same. However, the bond holder continues to receive $100 a year.
- What changes is the bond yield. Selling it for $800, the yield will be 12.5% ($100/$800). If sold for $1,200, the yield will be 8.33% ($100/$1,200).
Context: The SC sought the Centre, CBI reply in a plea challenging CBI’s jurisdiction in West Bengal mineral case as West Bengal withdrew general consent to the CBI in 2018.
- In last few years Mizoram, West Bengal, Rajasthan, Maharashtra, Chhattisgarh, Kerala and Jharkhand have withdrawn the general consent to the CBI.
- The CBI is governed by the Delhi Special Police Establishment Act (DPSEA). This law makes the CBI a special wing of Delhi Police and thus its original jurisdiction is limited to Delhi.
- The CBI needs consent of the state government in whose territorial jurisdiction, the CBI has to conduct an investigation (unlike NIA which enjoys All-India jurisdiction).
- Section 6 of the DPSE Act authorizes the central government to direct CBI to probe a case within the jurisdiction of any state on the recommendation of the concerned state government.
- However, the courts (SC and HC) can also order a CBI probe, and even monitor the progress of investigation in which case it won’t need states consent.
- However even after withdrawal of the general consent The CBI continues to probe in old cases until specifically taken back by the state government. Further, it continues to investigate cases that were given to it by a court order.
- When a state gives a general consent to the CBI for probing a case, the agency is not required to seek fresh permission every time it enters that state in connection with investigation or for every case.
- If the general consent is withdrawn CBI needs to seek case-wise consent for investigation from the concerned state government. If specific consent is not granted, the CBI officials will not have the power of police personnel when they enter that state.
- In case of lack of general consent the CBI can approach a local court for a search warrant and conduct investigation.
Subject: International Relations
Context: India extended $100 million line of Credit to Mauritius which occupies important place in India’s SAGAR initiative.
- Security and Growth for All in the Region focusses on the Blue economy in the region.
- It seeks to strenthen India’s relations with her neighboring countries and further strengthens the existing bond by prioristising the Indian Ocean region.
- Objectives of SAGAR:
- To seek a climate of trust and transparency
- Respect for international maritime rules and norms by all countries
- Sensitivity to(towards) each other’s interests
- Peaceful resolution of maritime issues
- Increase in maritime cooperation.
Context: RKA postponed the Cow Science exam after its chairman resigned yesterday.
- It was formed for conservation, protection and development of cows and their progeny by organizing animal husbandry on modern and scientific lines in 2019.
- It falls under the Department of Animal Husbandry and Dairying (Ministry of Fisheries, Animal Husbandry & Dairying).
- it will function as an integral part of RashtriyaGokul mission.
- It also includes development and conservation of indigenous breeds.
- This focus will help increased growth of livestock sector which is more inclusive, benefitting women, and small and marginal farmers.
- It will work in collaboration with Veterinary, Animal Sciences or Agriculture University or departments or organizations of the Central/State Government engaged in the task of research in the field of breeding and rearing of cow, organic manure, biogas etc.
Subject: Current Affairs
Context: Telangana health minister talked about Hyderabad as the vaccine capita citing foreign envoys and Indian PM’s visit to the Genome valley.
- It is India’s first systematically developed R&D cluster in Hyderabad.
- It houses over 150 Companies, making it the country’s largest cluster of multi-tenanted lab space infrastructure in a single location.
- It is a perfect blend of knowledge parks, special economic zones, multi-tenanted wet laboratories, incubation facilities, office spaces along with outstanding support facilities
- It houses company like Bharat Biotech which recently also developed Covaxin vaccine for Corona virus.
Subject: Science and Technology
Context: The DoT is attempting to outline an overall framework of 6G and to provide directional guidance for the subsequent 6G research.
- The department is going to organize a webinar on February 24 to analyse the technical requirements and challenges to introduce 6G in the country for standardisation of 6G, probable use cases, opportunities and challenges in the present ecosystem, and strategising for 6G in India.
- It is a successor to 5G cellular technology.
- It is anticipated that 6G networks will be able to use higher frequencies than 5G networks and this will enable higher data rates to be achieved and for the 6G network to have a much greater overall capacity.
- A much lower latency levels will be also one of the features.
- It seeks to utilize the terahertz band of frequency which is currently unutilized.
Context: The Supreme Court on Monday allowed the NCLT, Mumbai, to continue proceedings Future Retail’s plea seeking permission for calling a shareholders’ meeting to approve its Rs 24,713 crore retail asset sale deal with Reliance Retail but asked the tribunal not to pass final orders sanctioning the deal
- Earlier a fight arose between Amazon and the Biyani group, owner of the biggest retail chain in India through Future Retail, when FRL decided to dump Amazon to go with Reliance Retail.
- Amazon had cited its Rs 1,413 crore investment in Future group before the Singapore International Arbitration Centre’s Emergency Arbitrator (EA) to get a stay on the FRL-Reliance Retail deal, where Future Retail said EA had no authority over domestic deal with the Reliance.
- The matter than went to Delhi HC and now before the SC and in between the Future Retail went to NCLT for permission to call a shareholders’ meeting to approve the deal with Reliance Retail.
- It is a statutory body constituted under the section 408 of the Companies Act, 2013.
- The current NCLT traces its formation to the recommendations of the Justice Eradi Committee which was set up by Central Government in the year 1998
- It is a quasi-judicial authority incorporated for dealing with corporate disputes that are of civil nature arising under the Companies Act.
- It has power to regulate its own procedures.
- The NCLT composition is of the President and other Judicial and Technical members, to exercise and discharge powers and functions as prescribed by the Act or any other power delegated to them by way of any other enactment or a Notification by Ministry Of Corporate Affairs.
- Appeals against the order of the NCLT will go to NCLAT, exclusively dedicated for this purpose.
- It has been given jurisdiction over:
- Board for Industrial and Financial Reconstruction. (“BIFR”)
- The Appellate Authority for Industrial and Financial Reconstruction. (“AAIFR”)
- Jurisdiction and powers relating to winding up restructuring and other such provisions, vested in the High Courts.
- Company Law Board (“CLB”).
- It has following power:
- Most of the powers of the Company Law Board under the Companies Act, 1956.
- All the powers of BIFR for revival and rehabilitation of sick industrial companies;
- Power of High Court in the matters of mergers, demergers, amalgamations, winding up, etc.;
- Power to order repayment of deposits accepted by Non-Banking Financial Companies as provided in section 45QA of the Reserve Bank of India Act, 1934;
- Power to wind up companies;
- Power to Review its own orders.
Subject: Policy and schemes
Context: The secretary Ministry of Animal Husbandry, Dairying and Fisheries talked of potential social, economic and nutritional benefit investment in animal husbandry can bring from funds like AHIDF can ensure.
- Last year as part of Atma Nirbhar Bharat package announcement was made for setting up of Animal Husbandry Infrastructure Development Fund (AHIDF) worth Rs. 15000 crores.
- The AHIDF has been set up with an outlay of ₹15,000 crore. As per the provisions of AHIDF, a project will be eligible for a loan amount that covers up to 90% of the estimated cost – with an interest subvention of 3% for all eligible entities. Applicants can submit the proposal with a complete Detailed Project Report through the UdyamiMitra Portal
- It will benefit FPOs, MSMEs, ection 8 companies, Private Companies and individual entrepreneur with minimum 10% margin money contribution by them
- The loan from fund will have 2 years moratorium period for principal loan amount and 6 years repayment period thereafter
- Objectives of the fund
- Infrastructure for dairy.
- Meat processing and
- Value addition infrastructure and
- Establishment of animal feed plant in the private sector
Context: Many countries are today seeing SPAC as an alternative to Initial Public Offerings (IPOs)
- SPACs offer a new route for high-risk taking individuals to participate in the start-up euphoria.
- It is an empty corporate shell (or blank-cheque companies with no operations or business plans when seeking investment) that raises money from investors with the aim of acquiring private businesses by merging them.
- It takes companies or start-ups public through the back door route. In this they compete directly with private equity investors and strategic buyers for acquisition candidates
- Its significance lies in letting clients know about a piece of highly fancied emerging businesses that can quickly soar in value.
- Issue in process of IPOs which needs preparing for more disclosures, hiring investment bankers, getting the pricing right and then hoping investors will bite needs 18-24 months. SPAC reduce this time and risks. It can complete its offer in a matter of months and once done, the target company can simply merge with it.
- The people who sponsor SPACs are responsible for raising money and negotiating with target companies. For this service, the fee to the sponsor can be quite stiff.
Context: A new EY India report as majority of LIBOR rates are likely to be phased out by the end of 2021, the NBFCs in India need to plan for an effective Inter Bank Offered Rate (IBOR) transition.
- LIBOR-linked borrowings and derivative exposures of NBFCs need planning for this transition.
- NBFC, banks need to ensure contract amendments, financial reporting, tax and other risk
- It also needs to proactively engage with their corporate clients who will also be
- It also needs to engage with their clients impacted by LIBOR migration on account of their sizeable overseas borrowings and derivative exposure
- It is a globally benchmark rate referenced by contracts measured in trillions of dollars across global currencies.
- It is the key interest rate at which major global banks lend to one another in the international interbank market for short-term loans.
- LIBOR is administered by the Intercontinental Exchange, which asks major global banks how much they would charge other banks for short-term loans.
- The rate is calculated using the Waterfall Methodology, a standardized, transaction-based, data-driven, layered method.
Subject: International developments
Context: Diplomatic negotiations reached a fruitful outcome with the IAEA announcing a temporary deal for inspection of nuclear facilities in Iran.
- It is a 3-month arrangement for inspection of Iranian facilities.
- However, it will not have same access as before after a law comes into force in Iran.
- This is significant amidst recent USA withdrawal from Iran Nuclear deal.
- However, Iran will temporarily suspend so-called “voluntary transparency measures” (inspections of non-nuclear sites, including military sites suspected of nuclear-related activity).