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12 October Current Affairs

Kamath panel report

In News:

The Supreme Court recently asked the Centre and the Reserve Bank of India about the steps taken to implement the K.V. Kamath Committee report on recommendations to bail out sectors affected by the COVID-19 pandemic.

Background:

Various writ petitions have been filed in the court highlighting the plight of borrowers, small and big, who were being charged compound interest, post the pandemic moratorium which expired on August 31.

When was the committee setup?

In August this year, RBI set up a committee headed by K.V. Kamath on restructuring of loans impacted by the Covid-19 pandemic.

The Committee was tasked to recommend parameters for one-time restructuring of corporate loans.

Recommendations made by the Committee:

Graded approach to restructuring of stressed accounts based on severity of the impact on the borrowers- Banks can classify the accounts into mild, moderate and severe as recommended by the committee.

Five financial parameters to gauge the health of sectors facing difficulties- total outside liabilities to adjusted tangible networth, total debt to earnings before interest, taxes, depreciation, and amortization (Ebitda), debt service coverage ratio (DSCR), current ratio and average debt service coverage ratio (ADSCR).

26 sectors have been identified including auto, aviation, construction, hospitality, power, real estate and tourism.

Applicability of these recommendations:

The committee was to scrutinise restructuring of loans above ₹1500 crore.

The resolution under this framework is applicable only to those borrowers who have been impacted on account of Covid.

Only those borrowers which were classified as standard and with arrears less than 30 days as at March 1, 2020 are eligible under the Framework.

Why these measures were necessary? How serious is the debt problem?

Corporate sector debt worth Rs 15.52 lakh crore has come under stress after Covid-19 hit India, while another Rs 22.20 lakh crore was already under stress before the pandemic.

This effectively means Rs 37.72 crore (72% of the banking sector debt to industry) remains under stress.

This is almost 37% of the total non-food bank credit.

Besides, 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.

2020 Nobel: Three scientists share Prize in Physiology or Medicine

In News:

Americans Harvey J Alter and Charles M Rice, and British scientist Michael Houghton have been awarded the Nobel Prize for Medicine or Physiology for the discovery of the hepatitis C virus.

Their Contributions:

The trio’s work helped explain a major source of blood-borne hepatitis that couldn’t be explained by the hepatitis A and B viruses.

Thanks to their discovery, highly sensitive blood tests for the virus are now available and these have essentially eliminated post-transfusion hepatitis in many parts of the world, greatly improving global health.

Their discovery also allowed the rapid development of antiviral drugs directed at hepatitis C.

Basics:

What is Hepatitis C?

It is a liver disease.

Caused by the hepatitis C virus (HCV): the virus can cause both acute and chronic hepatitis.

Hepatitis C is a major cause of liver cancer.

How is it caused? Spread?

The hepatitis C virus is a bloodborne virus: the most common modes of infection are through exposure to small quantities of blood.

Treatment:

Antiviral medicines can cure more than 95% of persons with hepatitis C infection, thereby reducing the risk of death from cirrhosis and liver cancer, but access to diagnosis and treatment is low.

There is currently no effective vaccine against hepatitis C; however, research in this area is ongoing.

Types of Hepatitis Viruses:

There are 5 main hepatitis viruses, referred to as types A, B, C, D and E.

Hepatitis A and E are typically caused by ingestion of contaminated food or water.

Hepatitis B, C and D usually occur as a result of parenteral contact with infected body fluids.

About Nobel Prize in Medicine:

Awarded by the Nobel Assembly at Karolinska Institutet, Stockholm, Sweden.

First awarded in 1901.

The award comes with a gold medal and prize money of 10 million Swedish kronor (over USD 1,118,000), courtesy of a bequest left 124 years ago by the prize’s creator, Swedish inventor Alfred Nobel.

40% of the Amazon Rainforest Is at Tipping Point To Becoming Savanna

In News:

A study was conducted on the state of Amazon Forests under Global Fire Emissions Database project run by NASA. The report has been released.

Key findings:

Fires in the Amazon region in 2019 were unprecedented in their destruction. Thousands of fires had burned more than 7,600 square kilometres by October that year. But, fires in the Amazon in 2020 surpassed those of 2019.

Despite the surge in fires, international attention has waned in 2020, likely due to the COVID-19 pandemic.

As of 2019, an estimated 17 per cent of the Amazon’s forest cover has been clear-cut or burned since the 1970s.

What are the concerns now?

As the rainforest bleeds biomass through deforestation, it loses its ability to capture carbon from the atmosphere and releases carbon through combustion.

If the annual fires burning the Amazon are not curtailed, one of the world’s largest carbon sinks will progressively devolve into a carbon faucet, releasing more carbon dioxide than it sequesters.

Forests to semi-arid Savannah:

Many researchers predict that deforestation is propelling the Amazon towards a tipping point, beyond which it will gradually transform into a semi-arid savanna.

If the deforestation of the rainforest continues past a threshold of 20-25 per cent total deforestation, multiple positive feedback loops will spark the desertification of the Amazon Basin.

Why Amazon is significant?

Amazon rainforest covers approximately eight million square kilometres — an area larger than Australia — and is home to an astounding amount of biodiversity.

It helps balance the global carbon budget by absorbing carbon dioxide from the atmosphere, and plays a key role in the global water cycle, stabilizing global climate and rainfall.

Spread of Amazon:

These are large tropical rainforest occupying the drainage basin of the Amazon River and its tributaries in northern South America and covering an area of 6,000,000 square km.

Comprising about 40% of Brazil’s total area, it is bounded by the Guiana Highlands to the north, the Andes Mountains to the west, the Brazilian central plateau to the south, and the Atlantic Ocean to the east.

The basin is shared by eight countries (Brazil, Bolivia, Peru, Ecuador, Colombia, Venezuela, Guyana and Suriname), as well as the overseas territory of French Guiana.