Why NPAs are not just about bank governance
(GS – III: Indian Economy (Issues associated with the banking system in India))
Trends in NPA:
By the late 2000s, NPAs (as a percentage of gross advances) had decreased to less than 5 per cent.
The downward trend, however, did not continue as NPAs began to rise in 2011 and peaked at 18 per cent in the fiscal year that ended in 2018.
NPA has now reduced to about 6% (2022)
Reason behind the rise in NPA during the period of 2011 -16—
Poor management and governance issues stemming from government ownership of Public sector Banks.
Higher exposure to commodity-sensitive markets such as iron and steel and textiles.
Difference in the Business model: Public Sector banks (PSBs) have to cater to rural and poor segments as well.
Fall in international commodity price: The rise in NPAs from 2011 onwards coincides with the fall in international commodity prices, thereby reducing the revenue of many Indian firms.
Thus, a large proportion of NPAs arose because of exogenous shocks, which have nothing to do with management and governance issues in public sector banks only.
What are NPAs: A non-performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
Banks are required to classify NPAs further into Substandard, Doubtful and Loss assets.
Substandard assets: Assets which has remained NPA for a period less than or equal to 12 months.
Doubtful assets: An asset would be classified as doubtful if it has remained in the substandard category for a period of 12 months.
Loss assets: As per RBI, “Loss asset is considered uncollectible and of such little value that its continuance as a bankable asset is not warranted, although there may be some salvage or recovery value.”
Buddhist Conversion Day
Every year Dussehra is also celebrated as Ashoka Vijaya Dashami to commemorate Buddhist Conversion day.
Why Vijaya Dashami is celebrated on Buddhist Conversion day?
On October 14, 1956 (Dusshera), R. Ambedkar along with more than half a million followers embraced Buddhism in Nagpur, Maharashtra.
The 22 vows he delivered during the conversion ceremony initiated a radical escape for the convert from the Hindu caste and cultural folds.
What is Navayana Buddhism?
In the post-event deliberation, Ambedkar called his version of Buddhism Navayana (followers are called neo-Buddhists), differentiating it from the Mahayana and Vajrayana traditions of
What is the demographic status of neo-Buddhists in India today?
The Buddhist population is a mere 0.70%, of which 87% are neo-Buddhists. Further, a large majority of it (around 80%) resides in Maharashtra (5.8% of the total population).
There has been a decline in the growth rate of Buddhists in India in recent years.
The lingering monsoon
Recurring rains in October call for a change in monsoon definition.
Why call for a change in the monsoon definition?
Shifting patterns in monsoon activity: Incessant rain over Delhi and several other parts of North and Northwest India over the last few days.
Change in Monsoon month: The monsoon season, earlier confined neatly to the four-month June-September period, is clearly spilling over into October now.
The country as a whole received 67 per cent more rainfall from October 1-10.
Revision in withdrawal dates: Three years back the India Meteorological Department (IMD) revised the expected dates of onset and withdrawal of the monsoon for several regions of the country.
The rainfall happening after 30 September is counted as ‘post-monsoon rainfall’, even though the rainfall is mainly happening due to weather systems that form during the monsoon season.
This is happening for the third year in a rowe. 2020, 2021 and 2022.
Is it climate change?
Yes, climate change is responsible for the change in rain patterns and erratic rainfall.
Global warming: Due to global warming, oceans continue to remain warm even after the traditional monsoon season is over. As Warmer ocean currents help the formation of monsoon winds.
A warmer atmosphere has a greater capacity to hold water resulting in a heavier downpour than would be expected otherwise thus, increasing instances of extreme rainfall
What are its impacts?
Impact on Agriculture (sowing season and cropping pattern) and water availability (drinking and electricity generation).
Implications for dam management.
Principle of seniority and next CJI
Chief Justice of India (CJI) has written to the government recommending his successor in the post, as per the convention of seniority, Justice D Y Chandrachud will take over as the next CJI.
Justice D Y Chandrachud’s tenure:
Unusual collegium: instead of five members, it will have six.
What is a 5+1 collegium?
Apart from CJI, there are 4 senior-most judges in the collegium system. Normally, the next CJI is among these four judges. However, this time, since Justice Chandrachud’s tenure is for 2 years, the next potential CJI is not among the 4 senior-most judges. Therefore, to accommodate the next CJI in the collegium, the collegium is expanded to 5+1.
It is the system of appointment and transfer of judges that has evolved through judgments of the SC.
The SC collegium: It is headed by the CJI and comprises four other senior-most judges of the court.
HC Collegium: It is led by its Chief Justice and two other senior-most judges of that court.
Situational: If the situation is such that the successor Chief Justice is not one of the four senior-most puisne Judges, he must invariably be made part of the collegium.