Current Affairs 9 August 2024

Indian Army Conducts ‘Parvat Prahaar’ Exercise in Ladakh, Focusing on High-Altitude Warfare Operations

The Indian Army has carried out a significant military exercise named ‘Parvat Prahaar’ (Mountain Strike) in Ladakh. This exercise, which took place in the Union Territory of Ladakh, focused on high-altitude warfare and operations. It involved various military units and equipment to ensure readiness near the India-China border. The exercise aimed to validate new warfighting concepts and integrate technology. The Strike Corps, part of the Northern Command, is dedicated to developing high-altitude warfare capabilities.

Participants:

1. The exercise included major fighting elements such as artillery, armored, infantry troops, and supporting units.
2. It involved tanks, artillery guns, Unmanned Aerial Vehicles (UAVs), air defense systems, and aviation assets.
3. New weapons acquired over the past four years were deployed, including loitering munitions, swarm drones, counter-drone systems, and enhanced surveillance capabilities.
4. Significant armored units, including T90 and T72 main battle tanks, K9 Vajra self-propelled artillery guns, and Brahmos supersonic cruise missile systems, were deployed near the border.

About the Exercise:

1. Since 2020, over 500 tanks and 50,000 troops have been deployed near the Line of Actual Control (LAC) in Eastern Ladakh to test readiness.
2. Additional troops were posted at the frontlines to counter Chinese deployments.
3. New infrastructure, such as all-weather roads and communication networks, has been created along the LAC in Eastern Ladakh to support troops during harsh winters.

About the Indian Army:

• Established: 1895
• Chief of the Army Staff (COAS): Lieutenant General Upendra Dwivedi
• Headquarters: New Delhi, Delhi
• Theme of the Year 2024: Year of Technology Absorption

India Needs 75 Years to Reach Quarter of US Per Capita GDP: WDR 2024

The World Bank (WB) has released its report titled ‘World Development Report (WDR) 2024: The Middle Income Trap,’ which highlights the challenges faced by middle-income countries in achieving high-income status. According to the report, India would take nearly 75 years to reach one-quarter of the United States’ income per capita. In comparison, China would take more than 10 years, and Indonesia nearly 70 years.

Key Points:

1. The report identifies a ‘middle-income trap,’ where countries struggle to transition to high-income status.
2. Countries typically hit a ‘trap’ at about 10% of the USA’s GDP per person, equivalent to USD 8,000 today.
3. As of the end of 2023, there are 108 middle-income countries with annual GDP per capita between USD 1,136 and USD 13,845. These countries are responsible for 40% of the world’s total economic output, nearly two-thirds of global carbon emissions, and three-quarters of the global population.
4. Only 34 middle-income economies have transitioned to high-income status since 1990, with most being either European Union beneficiaries or having previously undiscovered oil.

Recommendations: The report proposes a “3i strategy” for countries to reach high-income status:

1. Investment Phase: Low-Income Countries (LIC) should focus on increasing investment.
2. Infusion Phase: Lower Middle-Income Countries (LMIC) should start adopting technologies from abroad and spreading them across the economy.
3. Innovation Phase: Upper Middle-Income Countries (UMIC) should push the frontier of technology rather than merely borrowing ideas.

Examples:

• South Korea implemented the 3i strategy successfully, with its Per Capita Income (PCI) rising from USD 1,200 in 1960 to USD 33,000 by the end of 2023.
• Poland and Chile are also implementing the 3i strategy.

DBS Bank India Launches ‘DBS Golden Circle’ Banking Program for Senior Citizens in India

DBS Bank India Limited (DBIL) has introduced the ‘DBS Golden Circle,’ a priority banking program for senior citizens. This program offers numerous exclusive benefits and services for resident Indian citizens aged 60 years and above, addressing income security. The initiative aligns with the bank’s 30th anniversary in India and aims to enhance customer experiences through its branches and digital services.

Key Features:

1. Senior citizens enrolled in this program can earn competitive interest rates of up to 7% per annum on savings account balances above Rs 4 lakhs and up to Rs 5 lakhs. An additional 0.50% per annum is offered on Fixed Deposits (FDs) with tenures from 376 days to 540 days.
2. The program offers cyber insurance coverage of up to Rs 1,00,000 to enhance security.
3. Flexible interest payout options (including monthly, quarterly, or cumulative payouts) and no penalties for premature withdrawals on FDs over one year.

Exclusive Benefits:

1. Special overdraft rates against FDs and loans on deposits.
2. Zero transaction fees for National Electronic Funds Transfer (NEFT), Real Time Gross Settlement (RTGS), and duplicate statements.
3. Unlimited and free domestic Automated Teller Machine (ATM) transactions, lifetime free debit cards, discounts on locker rentals, etc.
4. The program also features a selection of products from leading life insurance companies and ecosystem partners, including curated health and wellness benefits, comprehensive annual health check-ups, etc.

About DBS Bank India Limited (DBIL):

• Managing Director (MD) & Chief Executive Officer (CEO): Surojit Shome
• Headquarters: Mumbai, Maharashtra
• Founded: 1994

L&T Finance Receives RBI Certificate for NBFC-ICC Status

L&T Finance Limited, a subsidiary of Larsen & Toubro (L&T) Ltd, has received its Certificate of Registration (CoR) from the Reserve Bank of India (RBI) as a Non-Banking Financial Company (NBFC) Investment and Credit Company (NBFC-ICC). Previously, it was registered as an NBFC-Core Investment Company (CIC). This conversion follows the amalgamation of the wholly-owned subsidiaries of the company, L&T Finance Limited, L&T Infra Credit Limited, and L&T Mutual Fund Trustee Limited. This transition will not impact the company’s operations as compliance with the NBFC-ICC guidelines continues.

About NBFC-ICC:

1. NBFC-ICC is a category of Non-Banking Financial Companies (NBFCs) in India regulated by the RBI.
2. In 2019, the RBI consolidated three separate categories of NBFCs—Asset Finance Companies (AFC), Loan Companies (LCs), and Investment Companies (ICs)—into a single unified category known as NBFC-ICC.
3. NBFC-ICCs provide both secured and unsecured loans to various sectors, including retail, small businesses, and corporates.

Criteria:

1. NBFC-ICCs are regulated by the RBI under the Reserve Bank of India Act, 1934, and must comply with various norms related to capital requirements, asset classification, income recognition, and provisioning.
2. As per current regulations, NBFC-ICCs are required to have a minimum Net Owned Fund (NOF) of Rs 2 crore.
3. Unlike banks, NBFC-ICCs cannot accept demand deposits and are not part of the payment and settlement system.

About L&T Finance Limited:

• Managing Director (MD) & Chief Executive Officer (CEO): Sudipta Roy
• Headquarters: Mumbai, Maharashtra
• Founded: 1994

SWFI’s Top 100 Largest Central Bank Rankings by Total Assets 2024: RBI Ranked 12 Globally

According to the Sovereign Wealth Fund Institute’s (SWFI) Top 100 Largest Central Bank Rankings by Total Assets in the World in 2024, India’s Central Bank, the Reserve Bank of India (RBI), is ranked 12th globally with total assets of USD 839 billion. The RBI registered a balance sheet growth of 11.08% Year-on-Year (Y-o-Y) to Rs 70.47 trillion as of March 2024. The Federal Reserve System (FRS), the central bank of the United States, topped the list with assets worth USD 7.84 trillion. It is followed by China’s People’s Bank of China (PBC) in the 2nd place, with USD 6 trillion, and Japan’s Bank of Japan (BOJ) in the 3rd, with USD 5.54 trillion.

Key Indicators of Wealth:

1. Central Banks hold significant assets, including gold, foreign currencies, and government bonds.
2. The wealth of a central bank is often measured by its assets, reflecting the overall health of the country’s economy.
3. The total wealth of central banks is mainly assessed through their assets, with the balance sheet acting as a crucial indicator.
4. The assets of central banks are often measured by their foreign exchange reserves, including monetary gold, foreign exchange funds, Special Drawing Rights (SDRs), and reserve positions in the International Monetary Fund (IMF).

Top 10 Largest Central Bank Rankings by Total Assets:

1. Federal Reserve System (FRS) - USD 7.84 Trillion (USA)
2. People’s Bank of China (PBC) - USD 6 Trillion (China)
3. Bank of Japan (BOJ) - USD 5.54 Trillion (Japan)
4. Deutsche Bundesbank (DBB) - USD 2.77 Trillion (Germany)
5. Bank of France - USD 2.01 Trillion (France)
6. Norges Bank - USD 1.63 Trillion (Norway)
7. Bank of Italy (BOI) - USD 1.38 Trillion (Italy)
8. Bank of England (BoE) - USD 1.28 Trillion (UK)
9. Bank of Spain (BOS) - USD 1.04 Trillion (Spain)
10. Swiss National Bank (SNB) - USD 944 Billion (Switzerland)
11. Reserve Bank of India (RBI) - USD 839 Billion (India)

Global Distribution:

1. European central banks dominate the top 10 positions, holding a combined USD 11.09 trillion.
2. African central banks face challenges like inflation and weak monetary policies, affecting their rankings.
3. According to the IMF, African central banks can address reduced growth and higher inflation by conducting foreign exchange interventions, restricting capital flows, and addressing structural problems.

Role of Central Banks:

1. Central banks play a critical role in the global economy by managing a country’s money supply and interest rates.
2. They regulate and supervise other financial institutions within their jurisdiction.
3. Central banks work to ensure financial stability in the country, promoting sustained economic growth.

About the Sovereign Wealth Fund Institute (SWFI):

• Chairman: Lakshmi Narayanan
• Corporate Offices: Las Vegas, Nevada, USA
• Incorporated: 2008

RBI Extended MISS for Agriculture Loans through KCC for FY25

On 7th August 2024, the Reserve Bank of India (RBI) announced the extension of the Modified Interest Subvention Scheme (MISS) for short-term loans availed through the Kisan Credit Card (KCC) for agriculture and allied activities for the Financial Year 2024-25 (FY25). This announcement followed the approval of the Government of India (GoI) for the continuation of the interest subvention scheme for short-term loans of up to Rs 3 lakh.

Key Features:

1. Interest Subvention for Short-Term Loans: Farmers can access short-term crop loans for allied activities, including animal husbandry, dairy, fisheries, and beekeeping, at a concessional interest rate of 7% per annum. RBI will provide an interest subvention of 1.50% to lending institutions such as Public Sector Banks (PSBs), Private Sector Banks (for loans given by their rural and semi-urban branches only), Small Finance Banks (SFBs), and computerized Primary Agriculture Cooperative Societies (PACS) ceded with Scheduled Commercial Banks (SCBs).
2. Incentives for Timely Repayment: An additional interest subvention of 3% per annum will be provided to farmers who repay their loans on time, effectively reducing the interest rate to 4% per annum for prompt repayments within one year.
3. Loan Limit: The interest subvention and prompt repayment incentive are available for an overall limit of Rs 3 lakh per annum, with a maximum sub-limit of Rs 2 lakh for farmers exclusively engaged in allied activities.
4. Discourage Distress Sale: Small and marginal farmers who store their produce in warehouses accredited with the Warehousing Development Regulatory Authority (WDRA) can avail themselves of interest subvention for up to six months post-harvest against negotiable warehouse receipts.
5. Relief for Natural Calamities: In cases of natural calamities, the applicable interest subvention will be available for the first year on restructured loan amounts, with normal interest rates applying from the second year. The interest subvention will be extended to three years, with a maximum period of five years for severe natural calamities. A prompt repayment incentive of 3% will also be provided. The grant of such benefits in cases of severe natural calamities will be decided by a High-Level Committee (HLC) based on the recommendations of the Inter-Ministerial Central Team (IMCT) and Sub-Committee of the National Executive Committee (SC-NEC).
6. Compulsory Aadhar Linkage: Aadhar linkage will continue to be compulsory for availing the benefits of short-term loans in FY25, ensuring hassle-free benefits to farmers under the MISS.
7. Implementation and Reporting: RBI has directed banks to capture and report detailed data on individual farmer beneficiaries under the MISS through the Kisan Rin Portal (KRP) to settle audited claims for FY25. Computerized PACS claims ceded with SCBs are required to be uploaded separately by the respective banks, ensuring that claims for interest subventions and prompt repayment are for loans without National Bank for Agriculture and Rural Development (NABARD) refinance. Banks are required to take necessary actions to upload the claims, duly certified by their statutory auditors, on the KRP module for FY25 by 30th June 2025.

Recent Related News: The Reserve Bank of India (RBI) has moved 100 Metric Tonnes (MT) or 1 Lakh kg of gold stored in the United Kingdom (UK) to domestic vaults in FY24, marking a significant shift in gold storage. This is the first time since 1991 that India has moved such a heavy scale of gold.

About Reserve Bank of India (RBI):

• Governor: Shaktikanta Das (25th Governor of RBI)
• Headquarters: Mumbai, Maharashtra
• Established: 1 April 1935

Capital Small Finance Bank Limited Entered into Bancassurance Partnership with Edelweiss Life Insurance

On 6th August 2024, Capital Small Finance Bank Limited (CSFB), based in Jalandhar, Punjab, entered into a strategic bancassurance partnership with Edelweiss Life Insurance Company Limited. This partnership will enable CSFB customers to access a wide range of value-packed, customized life insurance products from Edelweiss Life Insurance, meeting their need for financial security.

Aim: To enhance the life insurance offerings of CSFB by enabling its customers to access Edelweiss Life’s digital platform and service touchpoints.

Note:

1. Bancassurance is a financial services model where insurance companies partner with banking institutions to offer a wide range of financial products and services to customers.
2. In 2022, the Insurance Regulatory and Development Authority of India (IRDAI) launched the bancassurance channel for insurers to increase insurance penetration in the country and achieve the long-term goal of “insurance for all” by 2024.

Pine Labs & Axis Bank Launches ‘UPISetu’ India’s First UPI-Focused Payments Platform

Pine Labs-owned Setu, an Application Programming Interface (API) infrastructure provider, has introduced UPI-Setu, India’s first Unified Payments Interface (UPI)-focused payments platform for businesses and developers in partnership with Axis Bank Limited, Mumbai, Maharashtra.

Key Features:

1. It facilitates a wide range of UPI products, such as Third-Party Validation (TPV) services, Equated Monthly Instalments (EMIs), UPI Autopay, and basic Quick Response (QR) code payments.
2. It offers enhanced dispute resolution, instant cashback and refunds, bank and brand offers, and instant cashback through APIs.
3. Merchants can create custom links or QR codes for one-time or multiple payments through this platform.

Note: In May 2024, Setu introduced Sesame, India’s first Large Language Model (LLM) designed for the Banking, Financial services, and Insurance (BFSI) sector.

ACC Approved Appointment of C.S. Setty as new SBI Chairman; Rana Ashutosh Kumar Singh as MD

On 6th August 2024, the Appointments Committee of the Cabinet (ACC) approved the appointment of Challa Sreenivasulu Setty (CS Setty) as the new Chairman of the State Bank of India (SBI) for a three-year term, effective from the date he assumes office on or after 28th August 2024. He will succeed the current chairman, Dinesh Khara, who is set to retire on 28th August 2024 upon reaching the age of 63.

About Challa Sreenivasulu Setty:

1. He started his career with SBI as a Probationary Officer (PO) in 1988.
2. In January 2020, C.S. Setty joined the Board of SBI as MD and managed departments like International Banking, Global Markets, and Technology.
3. He also served as the Deputy MD, Stressed Assets Resolution Group, Chief General Manager (CGM), and General Manager (GM) in the Corporate Accounts Group, and Deputy General Manager (DGM) in the Mid-Corporate Group.
4. He has also worked as Vice President (VP) and Head (Syndications) at SBI’s New York branch in the United States of America (USA).

Rana Ashutosh Kumar Appointed as MD of SBI: The ACC has also approved the appointment of Rana Ashutosh Kumar Singh as the MD of SBI. He is currently serving as the Deputy MD (Retail-Personal Banking and Real Estate) at SBI. The appointment follows the retirement of Alok Kumar Choudhary, who served as the MD of SBI from June 2022 to 30th July 2024.

About Rana Ashutosh Kumar Singh:

1. He is a certified Associate of the Indian Institute of Bankers (IIB) and joined SBI as a PO on 1st August 1991.
2. He has played pivotal roles in various sectors of banking, such as retail banking, credit, human resources, and international banking.
3. He has also served as the Chief Executive Officer (CEO) of the Frankfurt branch of SBI in Germany.

About State Bank of India (SBI):

• Chairman: Dinesh Kumar Khara
• Headquarters: Mumbai, Maharashtra
• Tagline: “The Banker to Every Indian”
• Founded: 1st July 1955

Tunisian President Appointed