Daily CURRENT AFFAIRS

Daily Current Affair - UPSC/KAS Exams - 24th Dec 2021

CONTEXT

• Finance Minister has announced the formation of India’s first-ever “Bad Bank
• “National Asset Reconstruction Company Limited” (NARCL) has already been incorporated under the Companies Act. It will acquire stressed assets worth about Rs 2 lakh crore from various commercial banks in different phases.
• Another entity — India Debt Resolution Company Ltd (IDRCL), which has also been set up — will then try to sell the stressed assets in the market.
• The NARCL-IDRCL structure is the new bad bank.

BAD LOAN & BAD BANK

• Commercial banks accept deposits and extend loans
• Deposits are a bank’s “liability” because that is the money it has taken from a common man, and it will have to return that money when the depositor asks for it.
• Loans that banks give out are their “assets” because this is where the banks earn interest and this is money that the borrower has to return to the bank.
• Business model is premised on the idea that a bank will earn more money from extending loans to borrowers than what it would have to pay back to the depositors.
• In a scenario where a bank finds a huge loan not being repaid because, say, the firm that took the loan has failed in its business and is not a position to pay back either the interest or the principal amount, BAD LOAN ORIGINATES
• When several banks in an economy face high levels of bad loans and all at the same time, that will threaten the stability of the whole economy.
• It was argued by many that the government needs to create a bad bank — that is, an entity where all the bad loans from all the banks can be parked — thus, relieving the commercial banks of their “stressed assets” and allowing them to focus on resuming normal banking operations, especially lending.
• While commercial banks resume lending, the so-called bad bank, or a bank of bad loans, would try to sell these “assets” in the market.

HOW WILL THE NARCL-IDRCL WORK

• The NARCL will first purchase bad loans from banks. It will pay 15% of the agreed price in cash and the remaining 85% will be in the form of “Security Receipts”. When the assets are sold , with the help of IDRCL, , the commercial banks will be paid back the rest.
• If the bad bank is unable to sell the bad loan, or has to sell it at a loss, then the government guarantee will be invoked and the difference between what the commercial bank was supposed to get and what the bad bank was able to raise will be paid from the Rs 30,600 crore that has been provided by the government.

WILL A BAD BANK RESOLVE MATTERS?

From the perspective of a commercial bank

• It will help
• When the recovery money is paid back, it will further improve the bank’s position.

From the perspective of the government and the taxpayer

• Recapitalising PSBs laden with bad loans or giving guarantees for security receipts, the money is coming from the taxpayers’ pocket.
• While recapitalisation and such guarantees are often designated as “reforms”, they are band aids at best.
• The only sustainable solution is to improve the lending operation in PSBs.

OTHER BENEFITS

• Could solve the coordination problem, since debts would be centralised in one agency.
• Effect speedier settlements with borrowers by cutting out individual banks.
• Drive a better bargain with borrowers and take more stringent enforcement action against them.
• Raise money from institutional investors rather than looking only to the Government.

CONCERNS

Suppose, say for example, a bank sells bad loans. Then, it has to take a haircut because when Rs 100 goes bad, the actual amount that can be expected is lower than Rs 100 and that leads to haircut. When it takes haircut that will impact the P&L (Profit & Loss).

So, till that particular aspect is not addressed, creating a new structure may not be as potent in addressing the problem.

CONCLUSION

The K V Kamath Committee, has said companies in sectors such as retail trade, wholesale trade, roads and textiles are facing stress.

• Sectors that have been under stress pre-Covid include NBFCs, power, steel, real estate and construction.
• Setting up a bad bank is seen as crucial against this backdrop.

NEWS

Plans afoot to uproot lantana bushes from BRT reserve, Bandipur in Karnataka

About Invasive Lantana Bushes

Lantana camara

• Species of flowering plant
• Native to the American tropics.
• Out-compete native species that leading to a reduction in biodiversity and can greatly reduce the productivity of farmland.
• Survive in a wide range of climatic conditions, including drought, different soil types, heat, humidity and salt.
• First introduced in 1807
• Spread to wildlife reserves, river banks and the Project Tiger areas where it had obliterated native grass and reduced biodiversity.
• In some regions, the plant has made inroads into pastures and shrunk the cattle grazing areas, affecting the livelihood of villagers.
• Natural grass has started growing in the Sajjangarh sanctuary and the spotted deer and other herbivores can be seen foraging on the vegetation.

NEWS

The National Dope Testing Laboratory (NDTL) has regained the World Anti-Doping Agency (WADA) accreditation.

ABOUT

• Premier analytical testing & research organization
• Established as autonomous body
• Under Ministry of Youth Affairs and Sports
• Only laboratory in the country responsible for human sports dope testing
• Accredited by National Accreditation Board for Testing & Calibration Laboratories, NABL and World Anti-Doping Agency (WADA) for testing of urine & blood samples from human sports.
• One of the 32 WADA accredited laboratories in the world
• One of the modern & state of art laboratory in the country equipped with latest analytical instrumentation.

NEWS

The DRDO has successfully flight-tested ABHYAS - the High-speed Expendable Aerial Target (HEAT) from the Integrated Test Range (ITR), Chandipur off the coast of the Bay of Bengal in Odisha. 

Purpose

The indigenous unmanned aerial vehicle will be used as a target for the evaluation of various missile systems. 

Features: 

• Powered by a gas turbine engine due to which, aircraft will sustain a long endurance flight at a subsonic speed. 
• Equipped with a MEMS-based Inertial Navigation System (INS) in order to navigate along with Flight Control Computer (FCC) for guidance and control. 
• Programmed for fully autonomous flight. The check-out of air vehicles is completed through a laptop-based Ground Control Station (GCS).

PERSONS IN NEWS

NEWS

President of India Unveils a Statue of Late Shri P.N. Panicker

ABOUT

Puthuvayil Narayana Panicker

• 1909-1995
• Known as the Father of the Library Movement of Kerala.
• His death anniversary, has been observed in Kerala as Vayanadinam (Reading Day) since 1996.
• In 2017, PM has declared June 19, Kerala’s Reading Day, as National Reading Day in India.
• The following month is also observed as National Reading Month in India
• Contributions
  • Led the formation of Thiruvithaamkoor Granthasala Sangham (Travancore Library Association) in 1945 with 47 rural libraries.
  • The slogan of the organization was ‘Read and Grow’.
  • Later on, with the formation of Kerala State in 1956, it became Kerala Granthasala Sangham (KGS).
  • He traveled to the villages of Kerala proclaiming the value of reading.
  • Grandhasala Sangham won the ‘Krupsakaya Award’ from UNESCO in 1975.
  • It became the Kerala State Library Council, with an in-built democratic structure and funding.

NEWS

Symbol of its freedom of Hong Kong Pillar of Shame, a memorial to the victims of the Tiananmen crackdown, dismantled

ABOUT THE PILLAR OF SHAME

• There is more than one Pillar of Shame
• Series of works by Danish sculptor Jens Galschioet
• All the same height and typically made of bronze, copper and concrete.
• Erected in Hong Kong, Mexico and Brazil
• Designed to remind people of events to ensure they don’t happen again.
• The one in Hong Kong, which marks the Tiananmen crackdown, depicts a mass of torn and twisted bodies in a tall pile.
• Was erected in Hong Kong in 1997 during an annual candlelight vigil to commemorate the event.
• Exhibited at several universities in the city before being placed at the University of Hong Kong on a long-term basis.

TIANANMEN 1989

• The Tiananmen massacre, in which hundreds and possibly thousands were killed, was a pivotal moment at which a divided Communist Party leadership decided to suppress the democracy movement rather than allow it to grow.
• In the ensuing years, the party experimented with allowing villagers to vote for their local representatives, but it has maintained its monopoly on power and only those who are loyal to it are allowed to hold office.
• Hong Kong was a British colony and not part of China in 1989.

• Centre has asked the Karnataka government to complete the construction of 2.02 crore houses under Pradhan Mantri Awaas Yojana- Gramin (PMAY-G), by August 15, 2022
• The Karnataka government announced a reduction of the tax levied on Aviation Turbine Fuel (ATF) from the existing 28% to 18%.
• Scientists have resumed tagging of Olive Ridley turtles at Rushikulya rookery along the Odisha coast, which would help them identify the migration path and places visited by the marine reptiles after congregation and nesting. Researchers of the Zoological Survey of India (ZSI) are carrying out tagging of the Olive Ridleys at three mass nesting sites — Gahirmatha, Devi River mouth and Rushikulya.
• The Maharashtra Assembly unanimously cleared the Shakti Criminal Laws (Amendment) Bill, 2020, on crimes against women and children.
• The Indian Army launched a contemporary messaging application named, ASIGMA (Army Secure IndiGeneous Messaging Application) which is a new generation, state of the art, web based application developed entirely in-house by team of officers of the Corps of Signals of the Army. The application is being deployed on the Army’s internal network as a replacement of Army Wide Area Network (AWAN) messaging application
• Joan Didion, a U.S. literary icon credited with ushering in New Journalism with her essays on Los Angeles life in the tumultuous 1960s, died