Daily Prelims Notes 7 June 2022

Daily Prelims Notes

7 June 2022

Table Of Contents

1. Carbon dioxide levels
2. Sant Kabir
3. Tamil Nadu Sculptures recovered from Australia and US
4. Kalahari Bird
5. Invasive freshwater fish in the Ganges
6. Bonn Climate Conference
7. Vermin
8. CTC Tea Prices hit by Pesticide Issue
9. IMD to offer area-specific weather forecasts to farmers free of cost
10. Kidney rackets
11. FM reviews progress on ‘bad bank’ rollout, status of regulatory nods
12. Provisioning and NBFC
13. EPFO and its investments
14. Jan samarth portal
15. SEBI and Crypto-assets

1. Carbon dioxide levels

Subject: Environment

Section :Climate Change

Context:

• Carbon level in atmosphere hits new milestone, 50 percent higher than pre-industrial levels.

Carbon dioxide levels in atmosphere:

• Carbon dioxide measured at the Mauna Loa Atmospheric Baseline Observatory, Hawaii, run by the US National Oceanic and Atmospheric Administration (NOAA), peaked for 2022 at 421 parts per million in May.
• This has pushed the atmosphere further into territory not seen for millions of years.
• NOAA’s measurements averaged 420.99 parts per million (ppm), an increase of 1.8 ppm over 2021. Scientists at Scripps independently calculated a monthly average of 420.78 ppm.
• Prior to the Industrial Revolution, carbon dioxide levels were consistently around 280 ppm for almost 6,000 years of human civilisation. Since then, humans have generated an estimated 1.5 trillion tonnes of carbon dioxide pollution, much of which will continue to warm the atmosphere for thousands of years.
• Compared to the 280 ppm before the Industrial Revolution, the currently 420 ppm is 50% higher than those levels.
• The reason it was much warmer and seas were higher millions of years ago at the same carbon dioxide level as now is that in the past the natural increase in carbon dioxide levels was far more gradual.

IPCC reports on Carbon emissions:

• The Assessment report 6 if IPCC showed that the world can emit only about 500 gigatonnes of carbon dioxide (GtCO2) starting January 1, 2020 for a 50 percent chance of limiting warming to 1.5°C. For a 67 percent chance of avoiding 1.5°C, the budget will come down to 400 GtCO2.
• For a 50 percent chance of limiting temperatures to 2°C, the world can emit 1,350 GtCO2; and 1,150 GtCO2 for a 67 per cent chance.
• Current trends also point to wealthy countries like the United States, the European Union and China eating into a disproportionate share of the budget while developing countries are left with negligible ‘carbon space’ to improve their standards of living.
• Economic growth is still inextricably linked to a rise in energy demand, which leads to higher emissions despite dubious claims of ‘green growth’ and decoupling of gross domestic product and energy use / emissions.

2. Sant Kabir

Subject: History

Section: Medieval Indian

Context:

• President Ram Nath Kovind inaugurated the Sant Kabir Academy and Research Centre Swadesh Darshan Yojana and paid tribute to the Bhakti saint, Kabir at Maghar (Uttar Pradesh).

Kabir and the Bhakti movement

• The Bhakti movement, which began in the 7th century in South India, had begun to spread across north India in the 14th and the 15th centuries.
• The movement was characterized by popular poet-saints who sang devotional songs to God in vernacular languages, with many preaching for the abolishing the Varna system and some kind of Hindu-Muslim unity. They emphasized an intense emotional attachment with God.
• One school within the Bhakti movement was the Nirguni tradition and Sant Kabir was a prominent member of it. In this tradition, God was understood to be a universal and formless being.
• Many of the saints of the Bhakti movement came from the ranks of the lower to middle artisanal classes. Kabir was a ‘low caste’ weaver (Julaha), Raidas was a leather worker and Dadu a cotton carder.
• Their radical dissent against orthodoxy and rejection of caste made these poet-saints extremely popular among the masses and their ideology of egalitarianism spread across India.

Historical and legendary accounts of Kabir:

• Kabir’s compositions can be classified into three literary forms – dohas (short two liners), ramanas (rhymed 4 liners), sung compositions of varying length, known as padas (verses) and sabdas (words).
• Most historians agree on the following facts about Kabir.
  • He was born in Varanasi and lived between the years 1398 and 1448, or till the year 1518 according to popular belief.
  • He was from a community of ‘lower caste’ weavers of the Julaha caste, a group that had recently converted to Islam.
  • He learned the art of weaving, likely studied meditative and devotional practices under the guidance of a Hindu guru and grew to become an eminent teacher and poet-singer.
  • Kabir’s beliefs were deeply radical, and he was known for his intense and outspoken voice which he used to attack the dominant religions and entrenched caste systems of the time.
  • He composed his verses orally and is generally assumed to be illiterate.
• There are myriad legendary accounts on the other hand, for which there exists less of a factual historical basis. However, they play a more crucial role in forming the shared identity of Kabir’s followers and their social, moral and religious values.
  • According to one, Kabir was born to a Brahmin widow, who placed him in a basket and set him afloat on a pond, after which he was rescued and adopted by a Muslim couple.
  • In another myth, he was immaculately conceived by his mother and emerged from the palm of her hand.
• He is also believed to be (but not on strong historical grounds) a disciple of the famous guru Ramananda, a 14th century Vaishnava poet-saint. Kabir knew that the saint would visit a certain ghat in Varanasi before the break of dawn. When Kabir saw him approaching, he lay down on the stairs which led to the river. Ramananda tripped over him and exclaimed his own mantra, ‘Ram, Ram!’. Kabir then claimed that the saint’s mantra had been transferred to him and therefore he must accept him as his disciple.

Kabir’s critique of religion and caste:

• Kabir is in modern times portrayed as a figure that synthesized Islam and Hinduism.
• In many of the popular bhajans associated with him today, his strong dissent towards religion is somewhat muted, according to religious studies scholar David Lorenzen.
• While he did borrow elements from different traditions, he very forcefully proclaimed his independence from them.
• He did not only target the rituals and practices of both Hinduism and Islam, but also dismissed the sacred authority of their religious books, the Vedas and the Quran.
• Kabir did use the name Rama in his poems, but he clarified that he was not referring to the avatar of Vishnu, but a formless and general Hindu name for the divine. Author Manu S Pillai writes that he even combined Allah and Ram.
• “Every man and woman born are forms of you, so says Kabir: I’m Ram and Allah’s foolish baby, he’s my guru and my pir,” he wrote.
• Instead of God being an external entity that resided in temples or mosques, Kabir argued that God existed inside everyone.
• “Why look for Me anywhere else, my friend, When I’m here, in your possession?…He is the very breath of our breaths.”
• Kabir’s revolt against the caste system also sought to do away with the complex rituals and ceremonies performed by the Brahmins. He, like the other prominent saints of his time, argued that it was only through bhakti, intense love or devotion to God could one attain salvation.
• In many of his verses, Kabir proclaimed that people of all castes have the right to salvation through the bhakti tradition.
• He sought to eradicate caste distinctions and attempted to create an egalitarian society, by stressing the notion that a Bhakt (devotee) was neither a Brahmin nor an ‘untouchable’ but just a Bhakt.

Kabir’s legacy:

• Kabir’s own humble origins and his radical message of egalitarianism fostered a community of his followers called the Kabir Panth.
• A sect in northern and central India, many of their members are from the Dalit community. Historians estimate that it was established in India between 1600 and 1650, one or two centuries after his death.
• Today, the sect exists as a large and distinct community, with various sects under different spiritual leaders. However, all regard Kabir as their guru and treat the Bijak as their holy scripture.
• The Bijak contains works attributed to Kabir and is argued by historians to have been written in the 17th century. Today, most of the followers continue to reject idol worship and are discouraged from praying at Hindu temples.
• The main festival of most branches is Kabir Jayanti, the birthday of Kabir which is celebrated every summer with collective feasts at the maths.
• Among the 5,00,000 indentured labourers that were taken to Trinidad, Mauritius, Fiji and Guyana by the British in the 19th to 20th centuries, many were and continue to be members of the Kabir Panth.
• Several of Kabir’s verses and songs form a vital part of the Guru Granth Sahib. Compiled in 1604, the text is the oldest written collection of Kabir’s work.
• Kabir’s combative positions and vehement critiques of established religions did not sit well with the elites of those communities, and there is evidence that both Hindus and Muslims were ready to assault him during his lifetime.
• After his death, however, both communities almost came to blows over the right to claim his body. According to legend, Kabir’s Hindu and Muslim followers got ready to battle, but before they could strike someone removed the shroud to find a stack of flowers that replaced his corpse. The two communities then divided the flowers and buried or burned them according to their rituals.
• Kabir’s teachings continue to shape various religious discourses in India today. In the Sikh tradition he is seen to have influenced Guru Nanak, for Hindus he is a Vaishnavite (devotees of Vishnu), and is revered by Muslims as a Sufi saint.

3. Tamil Nadu Sculptures recovered from Australia and US

Subject: History

Section: Art and Culture

Context: Ten antiquities retrieved from Australia and the United States were handed over to the Government of Tamil Nadu in Delhi last week.

Concept:

• Dvarapala: Retrieved in 2020 from Australia, this stone sculpture belongs to the Vijayanagar dynasty dating to the 15th-16th century. He is holding a gada in one hand and has another leg raised up to the level of his knee. The sculpture was burgled from Moondreeswaramudayar Temple, Tiruneveli in1994.
• Nataraja: Retrieved in 2021 from the US, this image of Nataraja, a depiction of Shiva, in his divine cosmic dance form, is in tribhanga posture, standing on the lotus pedestal. It is dateable to the 11th-12th century. Possibly, anandatandavaor the Dance of Bliss is portrayed here. The sculpture was burgled from the strong room of PunnainallurArulmiguMariyamman Temple, Thanjavur, in 2018.
• Kankalamurti: Retrieved in 2021 from the US, Kankalamurti is depicted as a fearsome aspect of Lord Shiva and Bhairava. The sculpture is four-armed, holding ayudhas such as damaru and trishula in the upper hands and a bowl and a trefoil shaped object, as a treat for the playful fawn, in the lower right hand. The idol is dateable to the 12th-13th century, and was stolen from Narasinganadhar Swamy Temple, Tirunelveli in 1985.
• Nandikeshvara: Retrieved in 2021 from the US, this bronze image of Nandikeshvara, dateable to the 13th century, is shown standing in tribhanga posture with folded arms, holding an axe and a fawn in the upper arms, with his forearms in namaskara mudra. This sculpture was stolen from Narasinganadhar Swamy Temple, Tirunelveli, in 1985.
• Four-armed Vishnu: Retrieved in 2021 from the US, dateable to the 11th century, and belonging to the later Chola period. The sculpture has Lord Vishnu standing on a padma pedestal holding attributes such as shankha and chakra in two hands; while the lower right hand is in abhaya mudra. It was stolen from ArulmiguVaradharaja Perumal Temple, Ariyalur, in 2008.
• Goddess Parvati: Retrieved in 2021 from the US, the image depicts a Chola-period sculpture dateable to the 11th century. She is shown holding a lotus in the left hand whereas the right is hanging down near her kati. This sculpture was also stolen from ArulmiguVaradharaja Perumal Temple, Ariyalur in 2008.
• Standing child Sambandar: Retrieved in 2022 from Australia. Sambandar, the popular 7th-century child saint, is one of the Muvar, the three principal saints of South India. The sculpture is dateable to the 11th century. The legend goes that after receiving a bowl of milk from Goddess Uma, the infant Sambandar devoted his life to composing hymns in praise of Lord Shiva. The sculpture displays the saint’s childlike quality, while also empowering him with the maturity and authority of a spiritual leader. It was stolen from Sayavaneeswarar Temple, Nagapattinam, between 1965 and 1975.

4. Kalahari Bird

Subject: Environment

Section: Climate Change

Context: A study led by the University of Cape Town has found that an increase in temperatures could see the hornbill disappear from parts of the Kalahari by 2027.

Concept:

• In the present study, the researchers collected data from pairs breeding in wooden nest boxes at the Kuruman River Reserve and compared their findings with climate trends for the region.
• The researchers studied the effects of high air temperate and drought on the breeding success of the birds in the Kalahari Desert from 2008-2019. Their findings revealed that breeding output collapsed during this time, with an increase in temperature.
• The southern yellow-billed hornbill, like other types of hornbills, has unusual breeding and nesting habits. The female seals herself in a cavity and stays there for about 50 days to brood and care for chicks.
• This type of nesting largely protects from predators, which means that breeding success depends primarily on other factors such as climate and food availability.
• The southern yellow-billed hornbill initiates breeding in response to rainfall in the arid western parts of its southern African range. They feed on insects, spiders and scorpions as well as seeds that they find on the ground. It is usually found in resident pairs or small family flocks.
• They struggle to breed above certain temperatures (35^oC) as they face greater difficulty in foraging and lose weight. Based on current global warming trends, that temperature will be exceeded for the birds’ entire breeding season by 2027 as per the study.

5. Invasive freshwater fish in the Ganges

Subject: Environment

Section: Climate Change

Context: Regional climate model studies in the Ganges River basin predict an increase in the mean annual temperature by 1 to 4 degrees Celsius between 2010 and 2050.This steep incline could potentially open up newer parts of the Ganges River to non-native species.

Concept:

• Most invasive species are able to adapt to changing climatic conditions due to the morphological plasticity which enable them to respond to new environments by changing their anatomical traits.
• Invasive fish are particularly prone to escaping from their pens and ponds. They also easily take hold in newer areas and can out-compete many local fish.
• Among the most abundantly captured invasive species that may benefit from rising temperatures are the common carp or Eurasian carp (Cyprinus carpio), Nile tilapia (Oreochromis niloticus) and African catfish (Clariasgariepinus).
• India’s National Biodiversity Authority (NBA) lists the Nile tilapia, African catfish and common carp as a great threat to the country’s freshwater biodiversity. These species are present in abundance, and farmed along the Ganges, given their high commercial value. However, according to the NBA, the introduction of these fish has critically depleted many native species, especially Indian carps, in major riverine systems, including the Ganges.
• Despite being widely documented as invasive, these species continue to be cultured world-over. For example, a study published by the Food and Agriculture Organization of the United Nations (FAO) in 2021 observed that global Tilapia Aquaculture production grew exponentially from 1990 to 2018, from 380,000 tonnes to six million tonnes, making it the fourth-largest species group in global aquaculture.
• However, the impacts of climate change – primarily rising temperatures – will only enable non-natives to thrive and spread. In the long term, they would have an adverse effect on the local ecosystem since they have the potential to interfere with ecological niches, biodiversity and can build their own environment to thrive in, thus disrupting ecosystem services.

To know about Biological Diversity Act, kindly refer: https://optimizeias.com/biological-diversity-act-2002/

6. Bonn Climate Conference

Subject: Environment

Section: Conventions

Context: The United Nations’ mid-year climate change conference commenced in Bonn, Germany, with a stand-off between developing and developed countries on the issue of loss and damage (L&D).

Concept:

• The Bonn summit, also known as the 56th session of the subsidiary bodies (SB 56) is led by two technical committees — the Subsidiary Body for Scientific and Technological Advice (SBSTA) and the Subsidiary Body for Implementation (SBI).
• It will take forward action items announced at CoP26 in Glasgow last November and advance some of the more technical and operational discussions in time for the 27th Conference of Parties (CoP27) to the United Nations Framework Convention on Climate Change, which is scheduled to take place in Sharm el-Shaikh, Egypt, this November.
• A stand-off occurred because developing countries complained that no commitments were being made to provide any kind of written inputs or have any concrete outcomes about L&D finance.

Background:

• L&D finance refers to money given to communities who are facing the brunt of the climate crisis today through displacement or destruction of their livelihoods — climate reparations, in other words.
• It all started when a request from theG77+China bloc of countries was put forth to add two agenda items to the official conference agenda — one on the Global Goal on Adaptation (GGA) and one on the Glasgow Dialogue on L&D Finance.
• The objective of adding agenda items into the sessions is to try to get draft text so that it is not just a dialogue but rather something that countries can tangibly carry on towards CoP27.
• Developing countries wanted to ensure that climate adaption and L&D were given as much attention as climate mitigation through the conference.
• Moreover, Developing countries, who are historically the smallest polluters when considering greenhouse gas emissions, have solely championed L&D as an issue. Developed countries, on the other hand, have shied away from L&D for years, owing to the potential for endless litigation.
• Thus, CoP26 had ended with the vague promise of a “dialogue” that developed countries would engage in to determine how to offer financial assistance for the climate damages they have wrought.

7. Vermin

Subject: Environment

Section: Acts and Policies

Context: Bill to amend Wild Life (Protection) Act gives Centre direct power to declare any species ‘vermin’, potentially impacting hundreds of species.

Concept:

WLPA:

• The Wild Life (Protection) Amendment Bill, 2021 brings in a major change by reducing the number of schedules from six to four. It proposes to remove Schedule V completely. 
• Originally, the WLPA, 1972 currently has six schedules that assign varying degrees of protection to animals and plants.
• Under Schedule I and II of the Act, for instance, animals and birds such as tigers and elephants are offered the highest protection.
• Schedule V lists species classified as ‘vermin’, such as common crows, fruit bats, rats and mice, which may be hunted freely.
• Though the act does not define the word ‘vermin’, WLPA’s 62^nd section grants the central government the power to declare any wild animal (other than those specified in Schedule I and Schedule II)as ‘vermin’ for any area and a specified period.

Background:

• The category of ‘vermin’ in the WLPA has distinct colonial origins. The British Raj brought to India the ideas of desirable animals (suitable for hunting and subsequent consumption being considered game) and problematic animals (considered vermin).
• British legislation was the first to mandate the extermination of vermin as seen in India under the WLPA, 1972. These were the Tudor Vermin Acts that allowed eradication of nuisance animals or agricultural pests.
• The Vermin Acts included The Preservation of Grain Act, 1532, which created an official list of ‘vermin’ animals. These included owls, otters, foxes, hedgehogs and others that were seen as bad omens or competitors of food with humans.

Dangers of Mass Culling:

• Ecological Imbalance due to blanket permission & financial incentives by Govt to eradicate vermin population
• Exacerbate Human Wildlife Conflict E.g.: unscientific killings of rhesus monkeys disrupt the power hierarchy among them and babies or sub-adults might not know how to behave and, thus, might cause havoc and create more conflict.
• Endanger targeted species and fatal for non-targeted species (traps and snares)
• long-lasting impact on the ecosystem and biodiversity.

8. CTC Tea Prices hit by Pesticide Issue

Subject: Geography

Section: Crops

Context: The rejection of certain lots of first flush teas by buyers, both in domestic and international markets, has created a storm in a cuppa with prices of CTC (curl-tear-crush) dropping by nearly ₹30-40 a kg over the last few days.

Concept:

• • A certain set of tea traders and buyers have recently cancelled their purchases, going by reports that indicate that the chemical content in some lots of teas is higher than the maximum residue levels (MRLs) and, hence, do not conform to the FSSAI standards.
  • Nearly 39,000 kg of tea in Kolkata auction have been returned by buyers.
  • Industry insiders are worried that this could well be a spoiler for tea prices during the peak quality second flush season. Second flush crop is very crucial for the tea industry, both in terms of production and prices.

MRLs:

• • Many developed and developing countries fix their own Maximum Residue Limit (MRL) of pesticides on Raw Agricultural Commodities (RAC) based on their country specific Good Agricultural Practices (GAP) and dietary consumption pattern.
  • In India, the Food Safety and Standard Authority of India (FSSAI) under Ministry of Health and Family Welfare evaluate the supervised trial residue data based on the approved GAP, for fixation of MRL.
  • The maximum residue limit (also maximum residue level, MRL), is the maximum amount of pesticide residue that is expected to remain on food products when a pesticide is used according to label directions, that will not be a concern to human health.
  • For tea, according to the Indian Tea Planters’ Association an MRL of10 mg/kg is currently established in India.

9. IMD to offer area-specific weather forecasts to farmers free of cost

Subject: Geography

Section: Climatology 

• The India Meteorological Department (IMD) is working on a plan to provide localised medium-range weather forecasts in regional languages through short message service (SMS) to farmers on request and for free.
• By dialing a dedicated number, farmers from anywhere in the country can request for weather information such as rains, temperature, humidity and wind speed for the next five days for their village or block.
• The requests made by the farmers would be processed by a dedicated team in IMD and information would be given to them in respective regional languages through SMS.
• This would help farmers to plan their agricultural activities such as use of fertilisers and other inputs, irrigation etc.
• Citizens can also request for information about their local weather forecasts using the common phone number.
• At present, under a joint initiative of IMD, Indian Institute of Tropical Meteorology and Indian Council of Agricultural Research (ICAR), a mobile app ‘Meghdoot’ provides district specific farm advisories on crop and livestock management in English and local languages.
• Under the Gramin Krishi Mausam Seva, the met department is providing district level weather forecasts twice a week in collaboration with state agricultural universities and affiliated institutes of ICAR.
• The district level weather forecast for the next five days includes information about rainfall, temperature, wind speed and direction, humidity and clouds.
• Currently, IMD also provides weekly crop specific agro-meteorological advisories in vernacular languages to more than 28 million farmers in the country using various communication tools such as SMS, interactive voice response using agriculture ministry’s Kisan portal and through private entities such as IFFCO Kisan Sanchar Limited, Reliance foundation and Mahindra Samriddhi under public private partnership mode.

10. Kidney rackets

Subject: Governance

Section: Act

Content

• The busting of yet another racket throws the spotlight on the shortage of kidneys to meet the demand.
• Donations from the dead are rare; experts say increasing these will reduce dependence on live donors.

Transplantation of Human Organs Act, 1994

• The Transplantation of Human Organs Act was passed in 1994. It provides various regulations for the removal of human organs and its storage.
• It also regulates the transplantation of human organs for therapeutic purposes and for the prevention of commercial dealings in human organs.
• The act recognises brain death identified as a form of the death process and defines criteria for brain death.
• It provides regulatory and advisory bodies for monitoring transplantation activity.
• It also provides for maintenance of a registry of donors and recipients of human organs and tissues.

National Organ Transplant Programme (NOTP)

• Provides financial grants for establishing ROTTOs, SOTTOs, developing new and upgrading existing retrieval and transplant centres.

Organ Donation Institutional Set up:

• The National Organ & Tissue Transplant Organization (NOTTO), the Regional Organ & Tissue Transplant Organisations (ROTTO) at regional level and the State Organ & Tissue Transplant Organisations (SOTTO) at state level.

State of Organ Donation in India:

• India ranked third in the world as per WHO Global Observatory on Donation and Transplantation (GODT) in terms of organ donation.

11. FM reviews progress on ‘bad bank’ rollout, status of regulatory nods

Subject: Economy

Section: banking and finance

Content:

• The National Asset Reconstruction Company Ltd (NARCL), popularly referred to as the “bad bank” is intended to take over large value NPA accounts (over ₹500 crore) from the banks.
• With the account-wise due diligence nearing completion, the first set of accounts is expected to be transferred during July 2022.
• The remaining accounts are proposed to be taken over within the third quarter of the current financial year.
• NARCL is expected to pay up to 15 percent of the agreed value for the loans in cash, and the remaining 85 per cent would be government guaranteed receipts.
• These guarantees can only be invoked by banks on resolution or liquidation of the said assets.
• NARCL will take up 100 percent of provided bad loans from lenders worth ₹2 lakh crore, of which ₹90,000 crore will be transferred in the first phase.
• Public sector banks have 51 percent ownership in NARCL, which was incorporated in August 2021.
• The NARCL has been incorporated under the Companies Act and has applied to the RBI for license for as Asset Reconstruction Company.
  NARCL is basically a bad bank created by the government in the mould of an asset. State-owned banks will hold 51% stake, while FIs or debt management companies will hold 49%.
  Along with NARCL, a debt resolution firm, India Debt Resolution Company Ltd (IDRCL), has now been set up.
• IDRCL is a service company or an operational entity that will manage assets and bring in market professionals and turnaround experts. Public Sector Banks PSBs and Public FIs will hold a maximum of 49% stake and the rest will be with private sector lenders.

12. Provisioning and NBFC

Subject: Economy

Section:  banking and finance

Context:

The Reserve Bank of India (RBI) on Monday unveiled norms for provisioning for loans extended by large non-banking financial companies (NBFCs) in the wake of the expanding role played by NBFCs in retail lending.

Details:

It also said the current credit exposures arising on account of the permitted derivative transactions will attract provisioning requirements as applicable to the loan assets in the ‘standard’ category, of the concerned counterparties.

Provisioning:

Under the RBI provisioning rules, banks have to put aside a minimum percentage of funds to cover anticipated losses in the future on account of lending. Banks/Financial Institutions are required to set aside a portion of their income as provision for the loan assets so as to be prepared for any contingent losses that may arise in the event of non-recovery of loans. 

The amount of provision to be kept by the bank/FI, will depend on the probability of loan recovery. This probability of loan recovery is identified based on the asset classification of the loan asset. The minimum provision that a bank has to create for various types of assets is as follows:

Exposure:

• Credit exposure is a measurement of the maximum potential loss to a lender if the borrower defaults on payment. It is a calculated risk to doing business as a bank. “Credit exposure” shall include funded and non-funded credit limits, underwriting and other similar commitments.
• Exposure limit determines the maximum amount a bank can lend to one business house. This is done to prevent the troubles at entities having a spillover effect on the bank which could lead to a systemic risk.
• The Reserve Bank of India has mandated the banks to fix limits on their exposure to specific industry or sectors and has prescribed regulatory limits on banks’ exposure to single and group borrowers in India. This measure of RBI is aimed at better risk management and avoidance of credit risks. In addition to credit exposure banks are required to observe certain statutory and regulatory exposure limits in respect of advances against / investments in shares, convertible debentures / bonds, units of equity-oriented mutual funds and all exposures to Venture Capital Funds (VCFs) as prudential norms.

Regulatory Structure for NBFCs:

NBFCs shall comprise four layers based on their size, activity, and perceived riskiness.

• NBFCs in the lowest layer – Base Layer (NBFC-BL).
• NBFCs in the middle layer –Middle Layer (NBFC-ML) 
• NBFC in the Upper level – Upper Layer (NBFC-UL) 
• The Top Layer is ideally expected to be empty and will be known as NBFC – Top Layer (NBFC-TL).

Base Layer

The Base Layer shall comprise of

(a) non-deposit taking NBFCs below the asset size of ₹1000 crore and

(b) NBFCs undertaking the following activities- (i) NBFC-Peer to Peer Lending Platform (NBFC-P2P), (ii) NBFC-Account Aggregator (NBFC-AA), (iii) Non-Operative Financial Holding Company (NOFHC) and (iv) NBFCs not availing public funds and not having any customer interface1.

Middle Layer

The Middle Layer shall consist of

(a) all deposit taking NBFCs (NBFC-Ds), irrespective of asset size,

(b) non-deposit taking NBFCs with asset size of ₹1000 crore and above and

(c) NBFCs undertaking the following activities (i) Standalone Primary Dealers (SPDs), (ii) Infrastructure Debt Fund – Non-Banking Financial Companies (IDF-NBFCs), (iii) Core Investment Companies (CICs), (iv) Housing Finance Companies (HFCs) and (v) Infrastructure Finance Companies (NBFC-IFCs).

Upper Layer

The Upper Layer shall comprise of those NBFCs which are specifically identified by the Reserve Bank as warranting enhanced regulatory requirement based on a set of parameters and scoring methodology.

Top Layer

The Top Layer will ideally remain empty. This layer can get populated if the Reserve Bank is of the opinion that there is a substantial increase in the potential systemic risk from specific NBFCs in the Upper Layer. Such NBFCs shall move to the Top Layer from the Upper Layer.

13. EPFO and its investments

Subject: Economy

Section: Employment

The Employees’ Provident Fund Organisation (EPFO) has held a “preliminary discussion” on raising the cap for investments linked to equity from 15 percent of incremental flows to 20-30 per cent, to shore up returns for the distribution of interest income to its six crore active subscribers, officials said.

Employees Pension Scheme (EPS):

• It is a social security scheme that was launched in 1995.
• The scheme, provided by EPFO, makes provisions for pensions for the employees in the organized sector after the retirement at the age of 58 years.
• Employees who are members of EPF automatically become members of EPS.
• Both employer and employee contribute 12% of employee’s monthly salary (basic wages plus dearness allowance) to the Employees’ Provident Fund (EPF) scheme.
• EPF scheme is mandatory for employees who draw a basic wage of Rs. 15,000 per month.

How the EPFO invests its money?

The EPFO follows a very simple and by-the-book strategy when it comes to investing. As per rules, 85%of annual accruals are invested in debt and 15% in equities. 

• Debt investments: While choosing the debt instruments, the organisation has to make sure-
  • To invest in government securities in the range of minimum of 45 % and maximum of 65%.
  • Again, another 20% to 50% needs to be invested in listed debt securities issued by corporate entities, including banks and public financial institutions.
  •  Apart from this, it is allowed to invest in short-term debt or related investment upto 5%, considering underlying papers have a minimum rating of A1+ by 2 rating agencies registered by Sebi.

• Equity investments: This contribution was limited to 5% and then increased to 10% and eventually raised to 15% in 2017. The EPF invests only through the primary market. Equity related investments include:
  • Exchange traded funds based on Sensex, Nifty 50, Central Public Sector Enterprises (CPSEs) and Bharat 22 indices.
  • The remaining is invested in fixed-income assets like government securities, bank fixed deposits and private sector bonds.
  • Before 2015, EPF contributions were purely invested in fixed income assets.
  • Further the EPFO does not invest in shares and equities of individual companies

Employees Provident Fund Organisation:

• It is a government organization that manages provident fund and pension accounts for the workforce engaged in the organized sector in India.
• It implements the Employees’ Provident Fund and Miscellaneous Provisions Act, 1952.
• The Employees’ Provident Fund and Miscellaneous Provisions Act, 1952 provides for the institution of provident funds for employees in factories and other establishments.
• It is administered by the Ministry of Labour & Employment, Government of India.
• It is one of the World’s largest Social Security Organisations in terms of clientele and the volume of financial transactions undertaken.

14. Jan samarth portal

Subject: Governance

Section: Schemes

Portal was launched during the ‘Iconic Week Celebrations’ of the Ministry of Finance and Ministry of Corporate Affairs at Vigyan Bhawan in New Delhi. The week, starting from June 6 to June 11, is being celebrated as part of ‘Azadi Ka Amrit Mahotsav’.

What is Jan Samarth Portal?

Jan Samarth Portal is a one-stop digital portal that links the government credit schemes. It is the first of its kind platform, connecting beneficiaries directly to the lenders.

This portal has been launched in a bid to encourage inclusive growth and development of several sectors by guiding and providing them the right government benefits by means of simple and easy digital processes. It ensures end-to-end coverage of all the linked schemes.

How many schemes will be linked to a single platform?

Jan Samarth Portal is a unique digital portal that will link 13 Credit Linked Government schemes on a single platform.

Significance of the Portal:

This portal will help in improving the lives of students, businessmen, farmers, MSME entrepreneurs as well as help them in realizing their dreams. The Portal has an open architecture, which will help state governments and other organisations to add their plans on it, in future.

It will check eligibility, give in principle sanction and send the application to the selected Bank. It will also keep the beneficiaries updated at each stage of the journey. Multiple visits to Bank branches not required.

15. SEBI and Crypto-assets

Subject: Economy

Section: banking and finance

SEBI has told lawmakers that consumer protection and enforcement of any regulatory regime over crypto assets would be challenging due to the decentralised nature of the digital instruments.

Key recommendations:

• It doesn’t seek a ban on crypto trading.
• It said that crypto assets related to the unregulated activities may be entrusted to an investigating authority appointed by the government.
• Clarity needs to be brought on whether cryptocurrencies can be legally defined as securities.
• There is a need for feature-based characterisation of crypto assets which may attract supervision of different sectoral regulators.
• Delineate the role for different regulators and authorities including for regulation purposes, it recommended.
• There could also be a crypto asset referencing goods or services offered by entities, which are not regulated by any sectoral regulator.
• Consumers availing such products should be protected through the Consumer Protection Act, 2019,
• It also suggested possible regulation of crypto trading platforms by the RBI under the FEMA as crypto assets are available for trading in foreign jurisdiction as well and consumers abroad can remit funds to India using such currency.
• It also proposed various measures to the Advertising Standards Council of India.

Advertising Standards Council of India

• ASCI was established in 1985
• It  is a voluntary self-regulatory organization, registered as a not-for-profit company under Section 25 of the Companies Act, 1956.
• The sponsors of ASCI, who are its principal members, are firms of considerable repute within Industry in India, and comprise Advertisers, Media, Advertising Agencies and other professional /ancillary services connected with advertising practice.
• ASCI is not a Government body. However, ASCI is represented in all committees working on advertising content in every Ministry of the Government of India.
• The aim of ASCI is to maintain and enhance the public’s confidence in advertising.
• Their mandate is that all advertising material must be truthful, legal and honest, decent and not objectify women, safe for consumers – especially children and last but not the least, fair to their competitors.
• The ASCI also invites complaints from consumers against any such unfair, untruthful and false claims and advertisements; all of such complaints are examined independently by the Consumer Complaints Council.