29th December Current Affairs
December 29, 2020
31st December Current Affairs
December 31, 2020
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30th December Current Affairs

Government exploring setting up bad bank, all other options

In News:

The government is exploring all options, including setting up of a bad bank, to improve the health of the country’s banking sector, Economic Affairs Secretary Tarun Bajaj said recently.

Need for:

It is not just necessary but unavoidable in the present circumstances when NPAs are likely to balloon and much of the resolution will have to take place outside the IBC framework.

Concept of Bad Bank:

A bad bank is a bank set up to buy the bad loans and other illiquid holdings of another financial institution.

The entity holding significant nonperforming assets will sell these holdings to the bad bank at market price.

By transferring such assets to the bad bank, the original institution may clear its balance sheet—although it will still be forced to take write-downs.

Why be concerned about bad loans?

Indian banks’ pile of bad loans is a huge drag on the economy.

It’s a drain on banks’ profits. Because profits are eroded, public sector banks (PSBs), where the bulk of the bad loans reside, cannot raise enough capital to fund credit growth.

Lack of credit growth, in turn, comes in the way of the economy’s return to an 8% growth trajectory. Therefore, the bad loan problem requires effective resolution.

Benefits:

This helps banks or FIs clear-off their balance sheets by transferring the bad loans and focus on its core business lending activities.

Large debtors have many creditors. Hence bad bank could solve the coordination problem, since debts would be centralised in one agency.

It can effect speedier settlements with borrowers by cutting out individual banks.

It can drive a better bargain with borrowers and take more stringent enforcement action against them.

It can raise money from institutional investors rather than looking only to the Government.

What are the Concerns or demerits of such banks?

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.

India mulls E20 fuel to cut vehicular emissions

In News:

Ministry of Road Transport and Highways has published a draft notification and invited comments from the public for adoption of E20 fuel as an automobile fuel.

E20 fuel is a blend of 20% of ethanol and gasoline.

Present status:

The current permissible level of blending is 10% of ethanol though India reached only 5.6% of blending in 2019.

Benefits of E20 fuel in particular and ethanol blending in general:

To reduce vehicular emissions.

To reduce emissions of carbon dioxide, hydrocarbons, etc.

To reduce the oil import bill, thereby saving foreign exchange and boosting energy security.

Challenges ahead:

Compatibility of vehicles with the percentage of ethanol in the blend would have to be defined by the vehicle manufacturer.

What is ethanol?

Ethanol is a biofuel and a common by-product of biomass left by agricultural feedstock such as corn, sugarcane, hemp, potato, etc.

What has the Government done and is doing in this regard?

National Biofuel Coordination Committee (NBCC) has allowed Surplus rice available with the FCI to be converted to ethanol for utilization in making alcohol-based hand-sanitizers and for blending in petrol.

The Government of India launched the EBP programme in 2003 for undertaking the blending of ethanol in petrol to address the environmental concerns due to fossil fuel burning, provide remuneration to farmers, subsidize crude imports and achieve forex savings.

The National Policy on Biofuels, 2018 envisages that during an agriculture crop year when there is projected over supply of food grains as anticipated by the Ministry of Agriculture & Farmers’ Welfare, the policy will allow conversion of these surplus quantities of food grains to ethanol, based on the approval NBCC.

Intentional genomic alteration (IGA) and GalSafe pigs

In News:

The US Food and Drug Administration (FDA) approved a first-of-its-kind intentional genomic alteration (IGA) in a line of domestic pigs referred to as GalSafe pigs.

Details:

These pigs may be used for food and human therapeutics.

This will be the first time that the regulator has approved an animal biotechnology product for both food and biomedical purposes.

What is intentional genomic alteration?

Intentional genomic alteration in animal’s means making specific changes to the genome of the organism using modern molecular technologies that are popularly referred to as “genome editing” or “genetic engineering”.

Such changes in the DNA sequence of an animal may be carried out for research purposes, to produce healthier meat for human consumption and to study disease resistance in animals among other reasons.

Any exploitation of Sentinel Island will wipe out tribals

In News:

Anthropological Survey of India policy document warns of threat to endangered group from commercial activity.

Details:

The policy document comes almost two years after American national John Allen Chau was allegedly killed by the Sentinelese on the Island.

The Sentinelese, a most secluded, is a particularly vulnerable tribal group (PVTG) who reside in complete isolation on the island.

Key observations:

Any exploitation of the North Sentinel Island of the Andamans for commercial and strategic gain would spell the death knell for its occupants.

The “right of the people to the island is non-negotiable”.

Build a knowledge bank on the Sentinelese.

Since ‘on-the-spot study’ is not possible for the tribal community, anthropologists suggest the ‘study of a culture from distance’.

Who are sentinelese?

Sentinelese, with a population of about 50 to 100 on the North Sentinel Island, are not only among the most isolated of the 75 PVTGs across the country, but also among the five in the Andaman and Nicobar Islands which include Great Andamanese, Onge, Jarawa, and Shompens.

Steps taken to ensure the protection of Sentinelese:

The entire North Sentinel Island along with 5 km coastal sea from high water mark is notified as tribal reserve.

The Government respects their way of life style, therefore, has adopted an ‘eyes-on and hands-off’ practice to protect and safeguard the Sentinelese tribe.

A protocol of circumnavigation of the North Sentinel Island has been notified. The ships and aircrafts of Coast Guard and boats of Marine Police make sorties around North Sentinel to keep surveillance.

They have been protected under:

  • A &N Islands (PAT) Regulation 1956.
  • Scheduled Castes and the Scheduled Tribes (Prevention of Atrocities) Act, 1989.
  • Restrictions under Foreigner (Restricted Area) Orders, 1963.
  • Visa Manual Conditions/Passport Act 1920, Indian Forest Act, 1927 and Wildlife (Protection) Act, 1972.

Why are they said to be vulnerable?

It is said they have made little to no advancement in the over 60,000 years and still live very primitive lives, surviving mainly on fish and coconuts.

They are very vulnerable to germs since they have not had contact with the outside world. Even a common flu virus carried by a visitor could wipe out the entire tribe.

Since the 1960s, there have been a handful of efforts to reach out to the tribe but all have largely failed. They have repeatedly, aggressively made it clear that they want to be isolated.