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INSIGHTS DAILY CURRENT AFFAIRS + PIB SUMMARY- 5 May 2020

current affairs, current events, current gk, insights ias current affairs, upsc ias current affairs

Table of Contents:

GS Paper 2:

1. Deposit Insurance and Credit Guarantee Corporation (DICGC).

2. African Swine Fever (ASF).

3. Gilgit-Baltistan.

 

GS Paper 3:

1. Voluntary retention route for foreign portfolio investors.

2. Bru-Reang refugee crisis.

 

Facts for Prelims:

1. Special corona fee.

2. Saras Collection.

 


GS Paper  : 2


 

Topics Covered: Government policies and interventions for development in various sectors and issues arising out of their design and implementation.

Deposit Insurance and Credit Guarantee Corporation (DICGC)

What to study?

For Prelims: What is Deposit Insurance? How is it regulated?

For Mains: Reforms needed.

Context: RBI has asked the Registrar of Co-operative Societies, Maharashtra to start the process of winding up operations of CKP Co-operative bank and appoint a liquidator.

On liquidation, every depositor of the bank is entitled to get up to Rs 5 lakh from the Deposit Insurance and Credit Guarantee Corporation.

What’s the issue?

Recently, the Reserve Bank of India (RBI) recently cancelled the licence of Mumbai-based CKP Co-operative Bank for the following reasons:

  1. Financial position of the bank was highly adverse and unsustainable.
  2. The bank is not in a position to pay its present and future depositors.
  3. The bank failed to meet the regulatory requirement of maintaining a minimum capital adequacy ratio of 9% and reserves.

What is Capital to Risk Weighted Assets Ratio (CRAR)?

The CRAR, also known as the Capital Adequacy Ratio (CAR), is the ratio of a bank’s capital to its risk. It is a measure of the amount of a bank’s core capital expressed as a percentage of its risk-weighted asset.

It is decided by central banks and bank regulators to prevent commercial banks from taking excess leverage and becoming insolvent in the process.

  • 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 CRAR of 9%.

What is deposit insurance? How is it regulated in India?

Deposit insurance is providing insurance protection to the depositor’s money by receiving a premium.

  • The government has set up Deposit Insurance and Credit Guarantee Corporation (DICGC) under RBI to protect depositors if a bank fails.
  • DICGC charges 10 paise per ₹100 of deposits held by a bank. The premium paid by the insured banks to the Corporation is paid by the banks and is not to be passed on to depositors.
  • DICGC last revised the deposit insurance cover to ₹5 lakh in Feb, 2020, raising it from ₹ 1 lakh since 1993.

What is the procedure for depositors to claim the money from a failed bank?

The DICGC does not deal directly with depositors.

  1. The RBI (or the Registrar), on directing that a bank be liquidated, appoints an official liquidator to oversee the winding up process.
  2. Under the DICGC Act, the liquidator is supposed to hand over a list of all the insured depositors (with their dues) to the DICGC within three months of taking charge.
  3. The DICGC is supposed to pay these dues within two months of receiving this list.

Who are insured by the DICGC?

The corporation covers all commercial and co-operative banks, except in Meghalaya, Chandigarh, Lakshadweep and Dadra and Nagar Haveli. Besides, Only primary cooperative societies are not insured by the DICGC.

The DICGC does not include the following types of deposits:

  1. Deposits of foreign governments.
  2. Deposits of central/state governments.
  3. Inter-bank deposits.
  4. Deposits of the state land development banks with the state co-operative bank.
  5. Any amount due on account of any deposit received outside India.
  6. Any amount specifically exempted by the DICGC with previous approval of RBI.

Insta Link:

Prelims Link:

  1. What is deposit insurance? What is the present limit? Who is not covered?
  2. What is DICGC?
  3. RRBs vs Urban cooperative banks.
  4. BASEL norms- important targets.
  5. Where is Basel?
  6. CRAR vs Leverage ratio.
  7. What is priority sector lending?

Mains Link:

Write a note deposit insurance scheme and discuss its significance.

Sources: the Hindu.

 

Topics Covered: Issues related to health.

African Swine Fever (ASF)

What to study?

For Prelims and mains: The Disease, spread, symptoms and concerns.

Context: Assam is gearing up to tackle African Swine Fever. Around 2,800 pigs have died in Assam since February due to the virus making the state the epicentre of ASF in India.

Background:

ASF has been seen in other Asian countries as well. Most recently, the Philippines had to cull more than 7,000 pigs to arrest the spread of ASF.

About African Swine Fever (ASF):

  • ASF is a highly contagious and fatal animal disease that infects domestic and wild pigs, typically resulting in an acute form of hemorrhagic fever.
  • It was first detected in Africa in the 1920s.
  • The mortality is close to 100 per cent, and since the fever has no cure, the only way to stop it spreading is by culling the animals.
  • ASF is not a threat to human beings since it only spreads from animals to other animals.
  • According to the FAO, “its extremely high potential for transboundary spread has placed all the countries in the region in danger and has raised the spectre of ASF once more escaping from Africa. It is a disease of growing strategic importance for global food security and household income”.

swine_fever

Insta Links:

Prelims Link:

  1. Difference between Swine fever and swine flu?
  2. Can swine fever affect humans?
  3. Is it a viral disease?
  4. Where was it first discovered?
  5. Which countries have been affected by this in 2020?
  6. Is there any vaccine available against this?

Mains Link:

Write a note African Swine Fever, symptoms and its spread.

Sources: the Hindu.

 

Topics Covered: India and its neighbourhood- relations.

Gilgit-Baltistan

What to study?

For Prelims: Location of Gilgit- Baltistan, eigth thousanders.

For Mains: Controversy over the administration of the region, India’s concerns, viable solution.

Context: The External Affairs Ministry issued a strong protest over an order by the Pakistan Supreme Court allowing the government to hold elections in the region of Gilgit-Baltistan of Pakistan-occupied Kashmir (PoK).

What’s the issue?

In a recent order, the Pakistan Supreme Court allowed the amendment to the Government of Gilgit-Baltistan Order of 2018 to conduct the general elections in the region.

Gilgit-Baltistan has functioned as a “provincial autonomous region” since 2009.

Besides, India has conveyed that the entire Union Territories of Jammu and Kashmir and Ladakh, including the areas of Gilgit and Baltistan, are an integral part of India by virtue of its fully legal and irrevocable accession.

Where is Gilgit Baltistan located?

Located in the northern Pakistan. It borders China in the North, Afghanistan in the west, Tajikistan in the north west and Kashmir in the south east.

It shares a geographical boundary with Pakistan-occupied Kashmir, and India considers it as part of the undivided Jammu and Kashmir, while Pakistan sees it as a separate from PoK.

It has a regional Assembly and an elected Chief Minister.

China-Pakistan Economic Corridor (CPEC) also passes through this region.

Gilgit-Baltistan is home to five of the “eight-thousanders” and to more than fifty peaks above 7,000 metres (23,000 ft). 

Three of the world’s longest glaciers outside the polar regions are found in Gilgit-Baltistan.

How Pakistan took over it?

  • The British sold it, along with the rest of Jammu and Kashmir, to the Dogra ruler of Jammu, Gulab Singh, after defeating the Sikh army in 1846, but retained controlled over the area through a lease extracted from the Maharaja.
  • This lease was last renewed in 1935. In 1947, a British army officer of the rank of Colonel imprisoned Maharaja Hari Singh’s governor in the region, and handed over the area for accession to Pakistan.

j&k

Recent developments:

Pakistan, in 2017, proposed to declare the strategic Gilgit-Baltistan region as its fifth Province.

Impediments ahead:

  • Gilgit- Baltistan is part of J&K and any such move would seriously damage Pakistan’s Kashmir case. Two UN resolutions of August 13, 1948 and January 5, 1949 clearly established a link between GB and the Kashmir issue.
  • Making the region its fifth province would thus violate the Karachi Agreement — perhaps the only instrument that provides doubtful legal authority to Pakistan’s administration of GB — as well as the UN resolutions that would damage its position on the Kashmir issue.
  • Any such move would also be violative of the 1963 Pak-China Boundary Agreement that calls for the sovereign authority to reopen negotiations with China “after the settlement of the Kashmir dispute between Pakistan and India” and of the 1972 Simla Agreement that mentions that “neither side shall unilaterally alter the situation”.

Sources: the Hindu.

 


GS Paper  : 3


 

Topics Covered: Inclusive growth and issues arising from it.

Voluntary retention route for foreign portfolio investors

What to study?

For Prelims and Mains: VRR- meaning, features and significance.

Context: In a big relief to the capital markets, even as the coronavirus pandemic continues to hit economies and markets worldwide, foreign portfolio investors (FPIs) significantly reduced the pace of outflows in April, after a record net outflow of Rs 1,18,203 crore in March 2020. In April, FPIs pulled out a net of Rs 14,858 crore from equity and debt markets.

They were, however, net positive investors in debt voluntary retention route (VRR) scheme. They invested a net of Rs 4,032 crore in debt VRR schemes in April.

What is VRR?

It is a new channel of investment available to FPIs to encourage them to invest in debt markets in India over and above their investments through the regular route. The objective is to attract long-term and stable FPI investments into debt markets while providing FPIs with operational flexibility to manage their investments.

VRR scheme allows FPIs to participate in repo transactions and also invest in exchange traded funds that invest in debt instruments.

When was this route proposed?

This new investment route was proposed by the central bank in October 2018 at a time the rupee was weakening against the dollar very sharply. There were also talks of a special NRI bond scheme to attract more dollar funds into the economy and stabilise the rupee.

How are they different from the regular FPI investments?

Guidelines say that investments through VRR will be free of the macro-prudential and other regulatory prescriptions applicable to FPI investments in debt markets, provided FPIs voluntarily commit to retain a required minimum percentage of their investments in India for a period of their choice. But the minimum retention period shall be three years, or as decided by RBI.

How much money can an FPI invest through this route?

Investments under this route as of now shall be capped at Rs 40,000 crore for VRR-GOVT and 35,000 crore per annum for VRR-COPR. But the limit could be changed from time to time based on macro-prudential considerations and assessment of investment demand. There will be separate limits for investment in government securities and investment in corporate debt.

Insta Links:

Prelims Link:

  1. Difference between FDI and FII.
  2. Limits on FII.
  3. What is VRR scheme? Limits.
  4. Limits on FDI in various sectors.

Sources: Indian Express.

 

Topics Covered: Role of external state and non-state actors in creating challenges to internal security.

Bru-Reang refugee crisis

What to study?

For Prelims: Who are Brus and issues associated.

For Mains: Agreement in this regard and the recent demands for relaxation of the norms in the agreement.

Context: A joint team of Nagarik Suraksha Mancha, mostly representing Bengali people displaced from erstwhile East Pakistan post-partition in 1947, and the Mizo Convention have submitted a memorandum to Tripura Chief Minister protesting the proposed settlement of the displaced Brus in Kanchanpur Sub-Division of North Tripura district.

What’s the issue?

The centre, in January 2020, signed a historic pact for permanent solution of Bru refugees’ issue.

The agreement was between Union Government, Governments of Tripura and Mizoram and Bru-Reang representatives to end the 23-year old Bru-Reang refugee crisis.

Opponents, now, do not want the Brus to settle in Kanchanpur Sub-Division of North Tripura district. The two organisations, however, clarified that they have no objection to the settlement of Brus in 22 other sub-divisions of Tripura.

Highlights of the agreement:

  1. Under the agreement, the centre has announced a package of Rs. 600 crore under this agreement.
  2. As per the agreement the Bru tribes would be given land to reside in Tripura.
  3. A fixed deposit of Rs. 4 lakh will be given to each family as an amount of government aid. They will be able to withdraw this amount after two years.
  4. Each of the displaced families will be given 40×30 sq ft residential plots.
  5. Apart from them, each family will be given Rs. 5,000 cash per month for two years.
  6. The agreement highlights that each displaced family will also be given free ration for two years and aid of Rs. 1.5 lakh to build their houses.

Background:

More than 30,000 Bru tribes who fled Mizoram, are residing in Tripura’s refugee camps.

Who are Brus?

The Brus, also referred to as the Reangs, are spread across the northeastern states of Tripura, Assam, Manipur, and Mizoram.

In Tripura, they are recognised as a Particularly Vulnerable Tribal Group. In Mizoram, they have been targeted by groups that do not consider them indigenous to the state.

What’s the issue?

  • A bout of ethnic violence forced thousands of people from the Bru tribe to leave their homes in Mizoram.
  • The displaced Bru people from Mizoram have been living in various camps in Tripura since 1997. In 1997, the murder of a Mizo forest guard at the Dampa Tiger Reserve in Mizoram’s Mamit district allegedly by Bru militants led to a violent backlash against the community, forcing several thousand people to flee to neighbouring Tripura.
  • The Bru militancy was a reactionary movement against Mizo nationalist groups who had demanded in the mid-1990s that the Brus be left out of the state’s electoral rolls, contending that the tribe was not indigenous to Mizoram.

Sources: the Hindu.

 


Facts for Prelims


Special corona fee:

The Delhi government has said it will charge a “special corona fee” on sale of alcohol. It will be 70% of the MRP (maximum retail price).

The tax will help in boosting the revenue, badly hit due to the Covid-19 lockdown.

Saras Collection:

It is an initiative of the GeM, the DAY-NRLM and the Ministry of Rural Development.

  • It showcases daily utility products made by rural self-help groups (SHGs) and aims to provide SHGs in rural areas with market access to Central and State Government buyers.

Under this initiative, the SHG sellers will be able to list their products in 5 product categories, namely (i) handicrafts, (ii) handloom and textiles, (iii) office accessories, (iv) grocery and pantry, and (v) personal care and hygiene.

 


Insights Current Affairs Analysis (ICAN) by IAS Topper