Daily Prelims Notes 25 July 2020

  • July 25, 2020
  • Posted by: OptimizeIAS Team
  • Category: DPN
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Table Of Contents

  1. Financial Stability Report
  2. Currency swap facility
  3. Neutralizing antibodies
  4. NATGRID
  5. Online audit
  6. Governor calling House

1. Financial Stability Report

Subject: Economy

Context:

Reserve Bank of India (RBI)has  released its Financial Stability Report which reflects the collective assessment of the Sub-Committee of the Financial Stability and Development Council (FSDC) on risks to financial stability, and the resilience of the financial system in the context of contemporaneous issues relating to development and regulation of the financial sector.

Findings:

  • Gross nonperforming assets (GNPA) ratio of all scheduled commercial banks (SCBs) may increase from 8.5 per cent in March 2020 to 12.5 per cent by March 2021.
  • In the case of public sector banks, the GNPA ratio of 11.3 per cent as of March 2020 might elevate to 15.2 per cent by March 2021
  • The capital to risk-weighted assets ratio (CRAR) of banks edged down to 14.8 per cent in March 2020 from 15 per cent in September 2019.
  • At the same time, the provision coverage ratio (PCR) improved to 65.4 per cent from 61.6 per cent over this period.

Concept:

Scheduled commercial banks

  • By definition, any bank which is listed in the 2nd schedule of the Reserve Bank of India Act, 1934 is considered a scheduled bank.
  • The list includes the State Bank of India and its subsidiaries, all nationalised banks, regional rural banks (RRBs), foreign banks and some co-operative banks.
  • These also include private sector banks, both classified as old and new.
  • To qualify as a scheduled bank, the paid up capital and collected funds of the bank must not be less than Rs 5 lakh.
  • Scheduled banks are eligible for loans from the Reserve Bank of India at bank rate, and are given membership to clearing houses.

Capital to risk-weighted assets ratio

  • Capital Adequacy Ratio (CAR) is the ratio of a bank’s capital in relation to its risk weighted assets and current liabilities.
  • It is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.
  • Capital Adequacy Ratio = (Tier I + Tier II + Tier III (Capital funds)) /Risk weighted assets
  • The risk weighted assets take into account credit risk, market risk and operational risk.
  • The Basel III norms stipulated a capital to risk weighted assets of 8%.
  • However, as per RBI norms, Indian scheduled commercial banks are required to maintain a CAR of 9% while Indian public sector banks are emphasized to maintain a CAR of 12%.

2. Currency swap facility

Subject: Economy

Context:

The Reserve Bank of India has agreed to a $400 million currency swap facility for Sri Lanka till November 2022.

Concept:

  • A currency swap between two countries is an agreement or contract to exchange currencies (of the two countries or any hard currency) with predetermined terms and conditions.
  • Often the popular form of currency swap is between two central banks.
  • The main purpose of currency swaps is to avoid turbulence and other risks in the foreign exchange market and exchange rate.
  • Central banks and governments engage in currency swaps with foreign counterparts to ensure adequate foreign currency during the time of foreign currency scarcity.

3. Neutralising antibodies

Subject: Science and tech

Context:

A recent serological survey in Delhi found the presence of coronavirus-specific antibodies in about 23% of the samples tested.

Concept:

  • The mere presence of antibodies does not mean that the person is protected against the disease.
  • The important thing is the amount of antibodies present and whether it is neutralizing antibodies.
  • A neutralizing antibody (NAb) is a type of antibody that is capable of keeping an infectious agent from infecting a cell by neutralizing or inhibiting its biological effect.
  • It is produced naturally as part of immune system responses to inhibit the effects of receptors on the foreign invaders.
  • Neutralizing antibodies are different with binding antibodies.
  • A binding antibody can bind to a specific antigen and flagging it. The antibody-antigen complex can trigger white blood cells destroying the flagged antigen.
  • While a neutralizing antibody can directly stop the function of the agents without the need for white blood cells by binding its target and negates its downstream cellular effects, such as cell proliferation or chemotaxis.

4. NATGRID

Subject: Government organization

Context:

Income Tax Department is going to sign an MoU with National Intelligence Grid (NATGRID) to facilitate automatic exchange of information linked to bank accounts, PAN, tax returns and any other “mutually agreed” information with 10 agencies .

Concept:

  • National Intelligence Grid (NATGRID) is an attached office of Ministry of Home Affairs
  • It has been created as an IT platform to assist the intelligence and law enforcement agencies in ensuring national and internal security, with the ultimate aim to counter terror.
  • NATGRID, an integrated intelligence grid which will connect databases of core security agencies, gathered pace in 2016
  • NATGRID will have data related to all immigration entry and exit, banking and financial transactions, credit card purchases, telecom, individual taxpayers, air flyers, train travellers besides others to generate intelligence inputs.
  • The 10 agencies which will be able to access the NATGRID data on real-time basis are: Intelligence Bureau (IB), Research & Analysis Wing (R&AW), Central Bureau of Investigation (CBI), Enforcement Directorate (ED), Directorate of Revenue Intelligence (DRI), Financial Intelligence Unit (FIU), Central Board of Direct Taxes (CBDT), Central Board of Excise and Customs (CBEC), Directorate General of Central Excise and Intelligence (DGCEI) and Narcotics Control Bureau (NCB).
  • Initially, no state agencies will be given direct access to the NATGRID data. However, whenever any relevant information is required, they can approach the NATGRID through any of the 10 user agencies.

5. Online audit

Subject:Polity

Context:

Ministry of Panchayati Raj has decided to conduct an online audit of 20 per cent of the estimated 2.5 lakh gram panchayats (GPs) across the country for the current financial year.

Concept:

  • Article 243J provides for audit of accounts of Panchayats.
  • The Legislature of a State may, by law, make provisions with respect to the maintenance of accounts by the Panchayats and the auditing of such accounts

6. Governor calling House

Subject:Polity

Context:

Rajasthan CM has demanded governor to convene assembly

Concept:

  • Under Article 174, the Governor shall from time to time summon the House or each House of the Legislature of the State to meet at such time and place as he thinks fit, but six months shall not intervene between its last sitting in one session and the date appointed for its first sitting in the next session
  • The Governor may from time to time prorogue the House or either House or  dissolve the Legislative Assembly.
Prelims Notes