Daily Current Affairs (DCA) 14&15 June, 2026

Daily Current Affairs Quiz
14&15 June, 2026

National Affair

1. Varya: India’s First Indigenous Distilled Video Story-Generating AI Model

Source: PIB

Context:

The Ministry of Electronics and Information Technology (MeitY) has officially unveiled Varya, India’s first indigenous, distilled video story-generating AI model. Varya is a generative text-to-video and image-to-video platform developed by Avataar, an AI-native transformation company. The model is designed to democratise high-end generative AI across India by removing the steep barriers of computation cost, language, and hardware requirements. It uses machine learning distillation to compress a large AI model into a lightweight version, generating high-quality videos in just 4 steps instead of 50, at a cost of about ₹0.48 per second of video.

The Model

• Name: Varya.
• Type: Generative text-to-video and image-to-video AI model.
• Status: India’s first indigenous, distilled video story-generating AI model.
• Developed by: Avataar, an AI-native transformation company.
• Unveiled by: Ministry of Electronics and Information Technology (MeitY).

Key Features

• Distilled Video Generation: Compresses a large AI model into a lightweight version, generating videos in 4 steps instead of 50, vastly improving speed and efficiency.
• Cost-Efficiency: About ₹0.48 per second of video, drastically lowering content-creation costs.
• Cultural Context Awareness: Trained on Indian contexts for accurate representation of regional festivals, attire, food habits, languages, and everyday life.
• “Idea → Video → Story” Workflow: Users can generate videos from text or images and extend them with additional prompts to create seamless long-form narratives.

Practice MCQs

Q1. With reference to the Varya AI model, consider the following statements:

1. Varya is India’s first indigenous, distilled video story-generating AI model.
2. It is developed by Avataar, an AI-native transformation company.
3. Varya was unveiled by the Ministry of Electronics and Information Technology (MeitY).
4. Varya is a foreign-developed AI model adopted by India for free.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; Varya is an indigenous AI model, NOT a foreign-developed one.)

Q2. With reference to the technical features of Varya, consider the following statements:

1. Varya generates videos in 4 steps instead of 50, using model distillation.
2. The cost of video generation is about ₹0.48 per second.
3. Varya supports both text-to-video and image-to-video generation.
4. Varya is trained primarily on Western contexts, with no awareness of Indian cultural elements.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; Varya is trained on Indian contexts, with awareness of regional festivals, attire, food, languages, and everyday life.)

Q3. With reference to the IndiaAI Mission, consider the following statements:

1. The IndiaAI Mission was approved by the Cabinet in March 2024 with a budget of ₹10,372 crore.
2. The mission has components like Compute Capacity, Innovation Centre, Datasets Platform, Application Development, FutureSkills, Startup Financing, and Safe and Trusted AI.
3. AIRAWAT is India’s National AI Supercomputer.
4. The IndiaAI Mission is implemented by the Ministry of External Affairs.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; the IndiaAI Mission is implemented by MeitY, NOT the Ministry of External Affairs.)

Q4. With reference to Bhashini, consider the following statements:

1. Bhashini is the National Language Translation Mission (NLTM) under MeitY.
2. It is a Digital Public Infrastructure (DPI) for Indian languages.
3. It aims to develop AI-based language translation and speech recognition for 22 scheduled Indian languages.
4. Bhashini was launched in 2022.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

Q5. With reference to model distillation in machine learning, consider the following statements:

1. Distillation involves training a smaller “student” model to mimic a larger “teacher” model.
2. Distilled models have faster inference, lower memory footprint, and lower compute cost.
3. Distilled models can be deployed on edge devices, mobile phones, or cheaper servers.
4. Distilled models are always larger and slower than the original “teacher” model.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; distilled models are smaller and faster, NOT larger and slower than the teacher model.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Varya is indigenous, not foreign-developed.
2. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because Varya is trained on Indian contexts.
3. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because the IndiaAI Mission is implemented by MeitY.
4. (d), All four statements are correct.
5. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because distilled models are smaller and faster.

2. Union Minister Ashwini Vaishnaw Inaugurates 20-kW FM Transmitter in Jaisalmer

Source: News on Air

Context:

In June 2026, Union Minister Ashwini Vaishnaw, Ministry of Electronics and Information Technology (MeitY), virtually inaugurated a 20 kilowatt (kW) Akashvani FM Transmitter at Ramgarh in Jaisalmer, during a programme held at Akashvani Jaipur in Rajasthan. With this addition, Rajasthan now has 39 FM transmitters. The new transmitter will provide radio coverage in an 80 km radius, covering nearly 20,000 sq km of Jaisalmer district, strengthening information dissemination and national integration in this border region. During his visit to Malaviya National Institute of Technology (MNIT), Jaipur, the Minister also announced an Advanced Quantum Lab, an Artificial Intelligence (AI) Lab, and a Makers Lab.

The FM Transmitter

• Capacity: 20 kW.
• Location: Ramgarh, Jaisalmer, Rajasthan.
• Inaugurated by: Union Minister Ashwini Vaishnaw, virtually.
• Programme venue: Akashvani Jaipur premises, Jaipur, Rajasthan.
• Total FM transmitters in Rajasthan (after this): 39.

About Akashvani (All India Radio)

• India’s national public service broadcaster for radio.
• Founded: 1936 (officially named All India Radio in 1956, and renamed Akashvani in 1957).
• Headquartered: New Delhi.
• Part of: Prasar Bharati.
• Functions:
  • News and current affairs broadcasting.
  • Educational and cultural content.
  • Public service announcements.
  • Regional and tribal content.
• Akashvani’s reach: One of the largest broadcasting organisations in the world by coverage.

About Prasar Bharati

• India’s public service broadcaster.
• Statutory body established under the Prasar Bharati (Broadcasting Corporation of India) Act, 1990.
• Operational since 23 November 1997.
• Comprises:
  • All India Radio (Akashvani).
  • Doordarshan.
• Headquartered in New Delhi.
• CEO: Currently Gaurav Dwivedi.

Why are Border-Area FM Transmitters Important?

• Strategic regions like Jaisalmer are close to international borders.
• Radio reach ensures:
  • Indian narratives reach border communities.
  • Counter to cross-border propaganda.
  • National integration through government information.
  • Educational content for remote villages.
  • Disaster warning and emergency communication.
• Border districts include Jaisalmer (Rajasthan), Kachchh (Gujarat), Jammu (J&K), Tawang (Arunachal Pradesh), Kanyakumari (Tamil Nadu) and others.

What is Quantum Key Distribution (QKD)?

• A method of secure communication based on quantum mechanics principles.
• Uses quantum properties of particles (like photons) to generate and share cryptographic keys that are theoretically impossible to intercept without detection.
• Critical for cybersecurity, defence communications, and financial transactions in the post-quantum era.

What is Quantum Computing?

• A next-generation computing paradigm that uses quantum bits (qubits) instead of classical bits.
• Qubits can exist in superposition (both 0 and 1 simultaneously) and entanglement (correlated states).
• Promises exponential speedup for certain problems like:
  • Factoring large numbers (breaking current encryption).
  • Drug discovery and materials science simulations.
  • Optimization problems.
  • AI and machine learning.
• Major players: IBM, Google, IonQ, Rigetti, D-Wave, China’s Origin Quantum.

What is Quantum Sensing?

• A branch of quantum technology that uses quantum effects to measure physical quantities (magnetic fields, gravity, time) with unprecedented precision.
• Applications: GPS-free navigation, medical imaging, mineral exploration, defence.

India’s National Quantum Mission

• Launched: April 2023.
• Budget: ₹6,003.65 crore over 2023-2031 (8 years).
• Vision: Make India a leading nation in quantum technologies.
• Four verticals:
  • Quantum Computing.
  • Quantum Communication (including QKD).
  • Quantum Sensing and Metrology.
  • Quantum Materials and Devices.
• 4 Thematic Hubs (T-Hubs) to be set up in top academic and R&D institutions.
• Implementing agency: Department of Science and Technology (DST).

Practice MCQs

Q1. With reference to the recent FM transmitter inauguration in Jaisalmer, consider the following statements:

1. Union Minister Ashwini Vaishnaw virtually inaugurated a 20-kW Akashvani FM Transmitter at Ramgarh in Jaisalmer.
2. The transmitter is expected to provide radio coverage within an 80 km radius, covering nearly 20,000 sq km.
3. With this addition, Rajasthan now has 39 FM transmitters.
4. Akashvani is a private radio broadcaster with no government involvement.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; Akashvani is India’s national public service broadcaster under Prasar Bharati, NOT a private entity.)

Q2. With reference to Akashvani and Prasar Bharati, consider the following statements:

1. Akashvani is India’s national public service radio broadcaster, founded in 1936.
2. Prasar Bharati is a statutory body established under the Prasar Bharati Act, 1990, and operational since 1997.
3. Prasar Bharati comprises both All India Radio (Akashvani) and Doordarshan.
4. Prasar Bharati is a private foundation with no link to the Government of India.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; Prasar Bharati is a statutory body under the Government of India, NOT a private foundation.)

Q3. With reference to MNIT Jaipur and the announcements there, consider the following statements:

1. MNIT Jaipur is one of the 31 NITs in India, an Institute of National Importance.
2. The Union Minister announced an Advanced Quantum Lab focused on QKD, quantum computing simulation, and quantum sensing.
3. An Artificial Intelligence (AI) Lab and Makers Lab were also announced.
4. MNIT Jaipur is a state university with no national status.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; MNIT Jaipur is an Institute of National Importance under the NIT Act, 2007.)

Q4. With reference to India’s National Quantum Mission, consider the following statements:

1. The National Quantum Mission was launched in April 2023.
2. The budget is ₹6,003.65 crore over 2023-2031.
3. The four verticals are Quantum Computing, Quantum Communication, Quantum Sensing, and Quantum Materials and Devices.
4. The mission is implemented by the Reserve Bank of India.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; the National Quantum Mission is implemented by the Department of Science and Technology (DST), NOT the RBI.)

Q5. With reference to quantum technologies, consider the following statements:

1. Quantum Key Distribution (QKD) is a method of secure communication based on quantum mechanics.
2. Quantum computing uses quantum bits (qubits) which can exist in superposition and entanglement.
3. Quantum sensing uses quantum effects to measure physical quantities with unprecedented precision.
4. Quantum technologies have no applications outside academic research.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; quantum technologies have wide applications in cybersecurity, defence, finance, healthcare, navigation, and drug discovery.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Akashvani is the national public service broadcaster.
2. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because Prasar Bharati is a statutory body.
3. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because MNIT Jaipur is an Institute of National Importance.
4. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because the National Quantum Mission is implemented by DST.
5. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because quantum technologies have wide applications.

3. Centre Announces 16 Winners of 29th National Awards for e-Governance (NAeG) 2026

Source: Indian Express

Context:

The Union government has named 16 projects of the Central, state, and local governments across India as winners of the 29th National Awards for e-Governance (NAeG) 2026. Of these, 10 will receive Gold Awards and 6 will receive Silver Awards at a ceremony on 2 July 2026. The awards are administered by the Ministry of Personnel, Public Grievances and Pensions through the Department of Administrative Reforms and Public Grievances (DARPG), recognising excellence in e-governance initiatives across seven categories, including the new “Gram Panchayats” category that recognises grassroots digitisation.

The Awards

• Edition: 29th National Awards for e-Governance (NAeG) 2026.
• Total winners: 16 projects.
• Gold Awards: 10.
• Silver Awards: 6.
• Ceremony date: 2 July 2026.
• Categories: Seven, including a new Gram Panchayats category for grassroots digitisation.

Notable Winners

• Agriculture Ministry’s Agri Stack: Provides finance-related data and early warning systems for disasters to farmers.
• Consumer Affairs Ministry’s e-Jagriti Portal: Allows consumers to file complaints regarding insurance, banking, housing, electricity, finance, medical care, automobiles, etc.
• Prayagraj Mela Authority’s conduct of Mahakumbh 2025: Recognising e-governance initiatives alongside physical infrastructure at the 2025 Mahakumbh.
• Kerala Development and Innovation Strategic Council: For a blood bag traceability and citizen interaction portal that eases blood donation.
• Union Ministry of Health and Family Welfare: For the AI-enabled clinical decision support system in eSanjeevani telemedicine.
• Kerala High Court: For its district court case management system.

What is Agri Stack?

• A digital public infrastructure (DPI) for Indian agriculture.
• Launched by the Ministry of Agriculture and Farmers Welfare as part of the Digital Agriculture Mission (DAM).
• Three core registries:
  • Farmers’ Registry: Digital ID for each farmer with land-link details.
  • Crop Sown Registry: Tracks what crops are being grown where.
  • Geo-referenced Village Maps: For land and crop mapping.
• Aims:
  • Better targeting of subsidies and schemes.
  • Early disaster warning.
  • Credit and insurance enablement.
  • Market linkage.

What is e-Jagriti?

• A consumer complaints portal by the Department of Consumer Affairs.
• Allows consumers to file complaints in consumer commissions at National, State, and District levels.
• Replaces/integrates earlier portals like CONFONET, edaakhil, and NCDRC web modules.
• Reduces paperwork and speeds up consumer dispute resolution.
• Won the Silver Award at the National e-Governance Awards 2026 (covered earlier in this segment).

What is the Mahakumbh 2025?

• Held in Prayagraj (Uttar Pradesh) from 13 January to 26 February 2025.
• One of the largest religious gatherings in the world.
• About 66 crore (660 million) people attended over 45 days.
• e-Governance initiatives included:
  • AI-based crowd management.
  • Digital lost-and-found.
  • Real-time monitoring through CCTV and drones.
  • App-based pilgrim services.
  • QR code-based ticketing and information.

What is eSanjeevani?

• India’s national telemedicine service.
• Launched by the Ministry of Health and Family Welfare in 2019-20.
• Has provided over 36+ crore teleconsultations as of recent data.
• Two formats:
  • eSanjeevani AB-HWC (provider-to-provider): Between Ayushman Bharat Health and Wellness Centres and doctors at hubs.
  • eSanjeevani OPD (provider-to-patient): Direct patient-to-doctor.
• The AI-enabled clinical decision support system assists doctors with diagnosis and treatment recommendations.

About the National e-Governance Awards (NAeG)

• Annual awards instituted by the DARPG.
• First awards: 1996-97.
• 29th edition: 2026.
• Categories (varied over the years):
  • Government Process Re-engineering for digital transformation.
  • Excellence in District-level initiatives.
  • Excellence in State or UT initiative.
  • Excellence in Central initiative.
  • Excellence in adopting emerging technologies (AI, blockchain).
  • Use of ICT for citizen-centric services.
  • Gram Panchayat-level initiative (new for some recent editions).
  • Niche initiatives in regional languages.
  • Public-Private partnerships.

Theme of NAeG 2026

• “Viksit Bharat 2047: AI-Enabled, Data-Driven and Secure Digital Governance”.

Practice MCQs

Q1. With reference to the 29th National Awards for e-Governance (NAeG) 2026, consider the following statements:

1. The Union government has named 16 projects as winners, with 10 Gold Awards and 6 Silver Awards.
2. The Ceremony will be held on 2 July 2026.
3. The Ministry of Personnel, Public Grievances and Pensions administers these awards.
4. The awards have been instituted in 2026 for the first time, with no earlier editions.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; NAeG has been an annual event since 1996-97, with the 2026 edition being the 29th.)

Q2. With reference to specific NAeG 2026 winners, consider the following statements:

1. The Agriculture Ministry’s Agri Stack is among the winners.
2. The Consumer Affairs Ministry’s e-Jagriti portal is among the winners.
3. The Prayagraj Mela Authority’s conduct of Mahakumbh 2025 is recognised for e-governance initiatives.
4. The Union Ministry of Defence’s missile testing platform is among the winners.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; the winners are e-governance projects, NOT defence missile testing platforms.)

Q3. With reference to Agri Stack, consider the following statements:

1. Agri Stack is a digital public infrastructure (DPI) for Indian agriculture.
2. It includes a Farmers’ Registry, a Crop Sown Registry, and Geo-referenced Village Maps.
3. It aims to enable better targeting of subsidies, early disaster warnings, and credit/insurance enablement.
4. Agri Stack is managed by the Ministry of Defence.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; Agri Stack is managed by the Ministry of Agriculture and Farmers Welfare, NOT the Ministry of Defence.)

Q4. With reference to eSanjeevani, consider the following statements:

1. eSanjeevani is India’s national telemedicine service, launched in 2019-20.
2. It has two formats: provider-to-provider (eSanjeevani AB-HWC) and provider-to-patient (eSanjeevani OPD).
3. It is administered by the Ministry of Health and Family Welfare.
4. eSanjeevani is a private telemedicine service with no government role.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; eSanjeevani is a Government of India telemedicine service under the MoHFW, NOT a private one.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the NAeG is an annual event since 1996-97.
2. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because the winners are e-governance projects.
3. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because Agri Stack is managed by the Ministry of Agriculture.
4. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because eSanjeevani is a government telemedicine service.

Exam Relevance

Exam	Relevance
UPSC Prelims	GS Paper II on Government Schemes (NAeG, Agri Stack, e-Jagriti, eSanjeevani); GS Paper III on Science and Technology
UPSC Mains	GS Paper II on Government policies, e-Governance; GS Paper III on Digital Public Infrastructure
BPSC and State PCS	Schemes, e-Governance, Current Affairs
Banking and NABARD	General Awareness on digital governance
RBI Grade B	Digital economy and governance
NABARD Grade A	Agri Stack, rural digital initiatives
SEBI Grade A and IRDAI Grade A	Digital governance awareness

4. US Attacks on Ships with Indian Crew in Gulf of Oman and Strait of Hormuz

Context:

India has strongly condemned a series of military strikes by the US Central Command (CENTCOM) on oil tankers manned by Indian seafarers in the Gulf of Oman and the Strait of Hormuz. The strikes were carried out as part of the US maritime blockade against Iranian energy exports. Three tankers, M/T Jalveer (Guinea-Bissau flagged), Settebello (Palau flagged), and MT Marivex, were targeted by US naval forces. Multiple Indian seafarers were killed, declared missing, or injured. The incidents raise complex legal issues under UNCLOS, complicate India-US relations, and have implications for maritime trade, war-risk insurance, and global energy security.

The Strikes

• Carried out by: US Central Command (CENTCOM).
• Locations: Gulf of Oman and Strait of Hormuz.
• Reason cited by US: Enforcement of a maritime blockade against Iranian petroleum exports.
• Action: US Central Command targeted, intercepted, and fired upon non-compliant commercial vessels attempting to transit regional waters with Iranian petroleum products.

The Maritime Law Framework

Freedom of Navigation (UNCLOS)

• The United Nations Convention on the Law of the Sea (UNCLOS, 1982) guarantees neutral commercial vessels the right of innocent passage through:
  • International waters.
  • Key international straits like the Strait of Hormuz.
• These provisions protect lawful maritime trade and civilian shipping from arbitrary interference.

Why is the Strait of Hormuz So Important?

• A strategic chokepoint between Iran (north) and Oman (south).
• Connects the Persian Gulf to the Gulf of Oman and the Arabian Sea.
• About 21 million barrels per day of crude oil and condensates pass through, representing about 20-25 per cent of global liquid petroleum trade.
• 80 per cent of crude transiting Hormuz goes to Asian markets (China, India, Japan, South Korea).
• Closure or disruption can cause global oil price spikes.

About UNCLOS

• United Nations Convention on the Law of the Sea (UNCLOS).
• Adopted: 10 December 1982 in Montego Bay, Jamaica.
• In force: 16 November 1994.
• Parties: 170 states + EU, including India.
• Often called the “Constitution of the Oceans”.
• Establishes:
  • Territorial Sea: Up to 12 nautical miles from baseline.
  • Contiguous Zone: Up to 24 nautical miles.
  • Exclusive Economic Zone (EEZ): Up to 200 nautical miles.
  • Continental Shelf: Up to 350 nautical miles in some cases.
  • High Seas: International waters beyond EEZ.
  • International Seabed Area: Beyond national jurisdiction.

India and UNCLOS

• India ratified UNCLOS in 1995.
• India has used UNCLOS in disputes like the Italian Marines case (Enrica Lexie, 2012) and the India-Bangladesh maritime boundary case.
• India does NOT recognise the US’s blanket right to operational sovereign-control-like actions in international waters without UN Security Council backing.

About US Central Command (CENTCOM)

• One of the 11 Unified Combatant Commands of the US Armed Forces.
• Area of Responsibility (AOR): 20 countries in the Middle East, Central Asia, and parts of South Asia (including Egypt, the Levant, Arabian Peninsula, Iran, Iraq, Afghanistan, Pakistan, and the Central Asian republics).
• Headquartered in Tampa, Florida, USA.
• Forward HQ: Al Udeid Air Base, Qatar.

Practice MCQs

Q1. With reference to the recent US strikes on ships with Indian crew, consider the following statements:

1. The strikes were carried out by the US Central Command (CENTCOM) as part of a maritime blockade against Iranian energy exports.
2. The Strait of Hormuz lies between Iran and Oman.
3. The Gulf of Oman connects the Strait of Hormuz to the Arabian Sea.
4. The strikes were carried out by the European Union Naval Force, not the US.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the strikes were carried out by the US Central Command (CENTCOM), NOT the EU Naval Force.)

Q2. With reference to UNCLOS, consider the following statements:

1. UNCLOS was adopted in 1982 and came into force in 1994.
2. UNCLOS is often called the “Constitution of the Oceans”.
3. India ratified UNCLOS in 1995.
4. UNCLOS establishes a 50 nautical mile Exclusive Economic Zone (EEZ).

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; UNCLOS establishes a 200 nautical mile EEZ, NOT 50.)

Q3. With reference to the Strait of Hormuz, consider the following statements:

1. The Strait of Hormuz lies between Iran and Oman.
2. About 20-25 per cent of global oil trade passes through this strait.
3. About 80 per cent of crude transiting the Strait of Hormuz goes to Asian markets.
4. The Strait of Hormuz connects the Mediterranean Sea to the Red Sea.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; the Strait of Hormuz connects the Persian Gulf to the Gulf of Oman, NOT the Mediterranean Sea to the Red Sea (which is the Suez Canal).)

Q4. With reference to India’s response to the strikes, consider the following statements:

1. India has strongly condemned the strikes through the Ministry of External Affairs (MEA).
2. A diplomatic demarche was issued, which is a formal diplomatic protest.
3. India has provided consular assistance to affected Indian families.
4. A demarche is the same as a formal declaration of war.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; a demarche is a formal diplomatic protest, NOT a declaration of war.)

Q5. With reference to India’s energy and maritime vulnerabilities, consider the following statements:

1. India imports more than 85 per cent of its crude oil.
2. A significant share of India’s crude oil imports passes through the Strait of Hormuz.
3. India’s largest crude oil supplier in recent years has been Russia.
4. India is fully insulated from any disruption in the Strait of Hormuz.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; India is NOT insulated from Strait of Hormuz disruption, given its heavy import dependence.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the strikes were carried out by CENTCOM.
2. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because UNCLOS establishes a 200 nautical mile EEZ.
3. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because the Strait of Hormuz connects the Persian Gulf to the Gulf of Oman.
4. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because a demarche is a formal protest, not a declaration of war.
5. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because India is not insulated from Strait of Hormuz disruption.

Banking/Finance

1. RBI’s OFCB Swap Facility to Cut Banks’ Funding Costs by 200-250 bps

Source: Business Standard

Context:

The Reserve Bank of India’s (RBI’s) concessional swap facility for Overseas Foreign Currency Borrowings (OFCBs) is expected to provide banks with a cheaper source of funding at a time of sluggish domestic deposit growth. The facility is available to all Authorised Dealer Category-I banks, including private-sector lenders, for OFCBs with a minimum maturity of 3 years. The swap is at a fixed rate of 1.5 per cent per annum, compounded semi-annually, until 31 December 2026. Banks save 200-250 bps compared to market hedging costs of 3.5-4 per cent, with OFCB funds 40-50 bps cheaper than domestic deposits of similar maturity. SBI estimates banks may raise USD 5-8 billion through the OFCB route in FY27. Banks can raise up to 100 per cent of their Tier 1 capital through this window.

What is OFCB?

• Overseas Foreign Currency Borrowing (OFCB) is a broader category of foreign currency borrowings by Indian banks from overseas markets.
• A subset of OFCB is External Commercial Borrowings (ECBs).
• Foreign currency borrowing is the superset that includes:
  • ECBs (governed by RBI’s ECB framework).
  • Other foreign currency borrowings by banks.

What is ECB (External Commercial Borrowing)?

• A foreign currency loan raised by Indian residents from foreign lenders.
• Governed by the RBI’s Master Directions on ECBs.
• Two routes:
  • Automatic Route: For most sectors, no prior RBI approval needed.
  • Approval Route: For specific sectors and borrowers, prior RBI approval required.
• Recognised lenders: Foreign banks, foreign capital markets, multilateral institutions, etc.
• End-use restrictions: Cannot be used for on-lending to others, working capital, real estate (with some exceptions).

What is a Currency Swap?

• A financial derivative where two parties exchange currencies for a specified period and swap them back at a pre-agreed exchange rate.
• Used by banks and corporations to hedge currency risk on foreign currency exposures.
• Cost of swap: Depends on interest rate differentials, forward premium, and counterparty risk.

Authorised Dealer Category-I (AD-I) Banks

• A classification under FEMA, 1999 for banks that can deal in foreign exchange.
• AD-I can undertake all current and capital account transactions.
• AD-II can undertake limited transactions.
• Most scheduled commercial banks are AD-I banks.

What is Tier 1 Capital?

• The highest quality of capital that a bank holds, comprising:
  • Common Equity Tier 1 (CET-1): Equity capital, retained earnings, reserves.
  • Additional Tier 1 (AT-1): Perpetual debt instruments.
• Used as the primary measure of a bank’s financial strength under Basel III norms.
• A higher Tier 1 capital means better capacity to absorb losses.

About Certificates of Deposit (CDs) and Commercial Papers (CPs)

• Certificate of Deposit (CD): A short-term, negotiable money market instrument issued by banks to raise wholesale funds, typically with maturity of 7 days to 1 year.
• Commercial Paper (CP): A short-term, unsecured promissory note issued by corporates, primary dealers, and all-India financial institutions, typically with maturity of 7 days to 1 year.
• Both are wholesale funding instruments that banks and corporates use when retail deposits are insufficient.

Practice MCQs

Q1. With reference to the RBI’s OFCB Swap Facility, consider the following statements:

1. The swap rate is fixed at 1.5 per cent per annum, compounded semi-annually.
2. The window is open till 31 December 2026.
3. All Authorised Dealer Category-I (AD-I) banks, including private-sector lenders, are eligible.
4. The minimum maturity of OFCBs covered under the facility is 1 month.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the minimum maturity is 3 years, NOT 1 month.)

Q2. With reference to the cost and benefit of the OFCB swap facility, consider the following statements:

1. The market hedging cost is about 3.5 to 4 per cent.
2. The RBI’s concessional swap rate of 1.5 per cent gives banks a saving of about 200-250 bps.
3. OFCB funds are estimated to be 40-50 bps cheaper than domestic deposits of similar maturity.
4. The facility allows banks to raise up to 100 per cent of their Tier 1 capital.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

Q3. With reference to the Indian banking system context (May-June 2026), consider the following statements:

1. Credit growth was 17.7 per cent year-on-year by 31 May 2026.
2. Deposit growth was 12.2 per cent year-on-year by 31 May 2026.
3. The deposit-credit growth gap widened to about 550 bps.
4. India’s banking system has had no funding pressure recently, with deposits exceeding loan growth comfortably.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; the banking system has been facing significant funding pressure, with credit growth outpacing deposit growth by about 550 bps.)

Q4. With reference to the broader RBI-government package for dollar inflows, consider the following statements:

1. The OFCB swap window aims to raise USD 5-8 billion in FY27, per SBI estimates.
2. The FCNR(B) special scheme has the RBI absorbing the hedging cost on fresh 3- to 5-year deposits.
3. The Fully Accessible Route (FAR) has been expanded to include new 15-, 30-, and 40-year G-secs.
4. The government has scrapped withholding tax and LTCG tax for foreign investors in G-secs.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the minimum maturity is 3 years.
2. (d), All four statements are correct.
3. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because the banking system has been facing funding pressure.
4. (d), All four statements are correct.

Exam Relevance

Banking (RBI Gr B, SBI PO, IBPS, NABARD)	Very high importance, OFCB, ECB, CD, CP, Tier 1 capital, AD-I banks
RBI Grade B	Core area on external sector and banking
SEBI Grade A and IRDAI Grade A	Capital markets and banking awareness

2. RBI’s Responsible Business Conduct Second Amendment Directions, 2026

Source: Business Standard

Context

The Reserve Bank of India (RBI) has tightened rules governing the sale of financial products by banks and other regulated entities. The final Responsible Business Conduct (Second Amendment) Directions, 2026 were released on 15 June 2026 and will come into effect from 1 January 2027. The amendments ban compulsory bundling of third-party products, mandate explicit customer consent, introduce a full refund mechanism for mis-selling, ban dark patterns in digital interfaces, expand the agent regulation scope to DSAs, DMAs, sub-agents, and TPPS representatives, and require upfront disclosure of fees, risks, lock-ins, and exit penalties. The framework also allows NBFCs to distribute insurance products without prior RBI approval, subject to IRDAI nod. This is a major shift to a prescriptive regulatory regime focused on customer protection.

Ban on Compulsory Bundling

• Banks shall NOT resort to compulsory bundling of any third-party product or service (TPPS) with their own products or services.
• Where a third-party product is required as a risk mitigation tool, customers must have the freedom to choose any TPPS provider.
• Common practice targeted: Banks insisting on home loan borrowers buying life insurance from a subsidiary or JV partner.
• Banks cannot fund the purchase of any product or service through a loan facility without explicit consent.

Explicit Consent Protocol

• Banks must obtain explicit customer consent for every product or service sold.
• Approved modes include:
  • Signed declarations (physical or electronic).
  • One-time password (OTP)-based approvals.
  • Digitally recorded confirmations.
  • Clearly demarcated agreement clauses.
• Multi-product forms: Customers must have the option to choose only the products they want.
• Interfaces must default to “No” or “I do not agree”, forcing conscious opt-in.
• Banks must retain consent records for 1 year after contract end.

Mis-Selling Definition and Compensation

• Mis-selling is defined as the sale of a product or service:
  • Without explicit consent.
  • Without correct or complete information.
  • By giving misleading information.
• Compensation mechanism:
  • Bank must refund the entire amount paid by the customer.
  • Bank must compensate for any loss arising due to mis-selling, as per its approved policy.
• Customers may file mis-selling complaints within RBI-set timelines or 30 days of receiving signed agreements.

No Employee Incentives From Third Parties

• Bank employees must not directly or indirectly receive any incentive from the third-party service provider.
• Closes the loophole of kickback-driven mis-selling.

Customer Feedback Mechanism

• Banks must establish mechanisms to seek customer feedback within 30 days of the sale of a financial product.
• To assess whether customers understood the features and associated risks.

Mandatory Upfront Disclosures

Banks must clearly inform customers about:

• Interest rates.
• Fees and charges.
• Risks.
• Lock-in conditions.
• Exit penalties.

These must be disclosed BEFORE obtaining consent.

Ban on Dark Patterns

• Dark patterns are defined as practices designed to mislead or trick users into doing something they did not intend.
• Banks and direct selling agents are banned from deploying such interfaces.
• Banks must periodically audit their digital platforms.

What is the Responsible Business Conduct Framework?

• A regulatory framework by the RBI for ethical conduct in financial product sales.
• Aligns with global standards like the G20/OECD High-Level Principles on Financial Consumer Protection (2011).
• First Master Directions issued earlier; this is the Second Amendment.

What is a Bundled Product?

• Multiple products or services sold together as a package.
• Examples in banking:
  • Home loan + life insurance.
  • Car loan + motor insurance.
  • Personal loan + critical illness cover.
• Compulsory bundling is anti-competitive and can lead to mis-selling.

What is a Third-Party Product or Service (TPPS)?

• A product or service that is not the bank’s primary offering but is distributed by the bank on behalf of another company.
• Common TPPS: Insurance, mutual funds, structured products, gold coins, government bonds.

What is Mis-Selling?

• The sale of a product or service:
  • Without explicit consent.
  • Without proper disclosure.
  • With misleading information.
• Often happens when incentive structures push agents to mis-represent products.
• Common in: ULIPs sold as investment products, endowment policies sold as fixed deposits, mutual funds with hidden risks.

What are Dark Patterns?

• Manipulative design interfaces that trick users into doing things they did not intend.
• CCPA (Central Consumer Protection Authority) had banned 13 specific dark patterns in November 2023 under the Consumer Protection Act, 2019.
• Now RBI has extended this to financial services.

India’s Financial Consumer Protection Architecture

• RBI Ombudsman Scheme: For banking-related complaints.
• SEBI’s SCORES (Complaints Redress System): For capital markets complaints.
• IRDAI’s Grievance Mechanism: For insurance complaints.
• CCPA (Central Consumer Protection Authority): For unfair trade practices and dark patterns under the Consumer Protection Act, 2019.
• NCDRC (National Consumer Disputes Redressal Commission): For consumer disputes.
• DICGC: For bank deposit insurance (up to ₹5 lakh per depositor per bank).

Allied Recent RBI Reforms

• Digital Lending Guidelines (2022): For regulating digital lenders and LSPs.
• Master Direction on KYC: Updated norms for customer identification.
• Master Direction on Outsourcing: For bank outsourcing of non-core activities.
• CIMS (Centralised Information Management System): For regulatory reporting.

Practice MCQs

Q1. With reference to the RBI’s Responsible Business Conduct (Second Amendment) Directions, 2026, consider the following statements:

1. The directions were released on 15 June 2026 and will take effect from 1 January 2027.
2. The directions ban compulsory bundling of third-party products with banks’ own offerings.
3. Banks must mandatorily obtain explicit customer consent before selling any product or service.
4. The directions allow banks to use dark patterns and manipulative digital interfaces.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the directions explicitly BAN dark patterns and manipulative interfaces.)

Q2. With reference to the mis-selling and compensation mechanism under the new RBI framework, consider the following statements:

1. Mis-selling is defined as the sale of a product or service without explicit consent, without correct information, or with misleading information.
2. Banks must refund the entire amount paid by the customer if mis-selling is established.
3. Banks must compensate the customer for any loss arising due to mis-selling, as per their approved policy.
4. Banks must seek customer feedback within 30 days of the sale to assess understanding of features and risks.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

Q3. With reference to the dark patterns banned by the RBI’s framework, consider the following statements:

1. Basket sneaking involves adding items to a customer’s basket without consent.
2. Subscription traps make it easy to subscribe but difficult to unsubscribe.
3. Drip pricing hides the full price until the final stages of purchase.
4. Confirm shaming uses emotionally manipulative language to make users feel guilty for opting out.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

Q4. With reference to the expanded agent scope under the new RBI framework, consider the following statements:

1. Banks must publicly disclose the Direct Selling Agents (DSAs) and Direct Marketing Agents (DMAs) engaged by them.
2. Sub-agents and TPPS representatives in bank premises must be distinguishable from bank employees through clear on-person identification.
3. Bank agents must not falsely present themselves as bank employees.
4. The agent regulation applies only to direct bank employees, not to BCs, LSPs, or sub-agents.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; the agent regulation has been WIDENED to cover BCs, LSPs, sub-agents, and TPPS representatives.)

Q5. With reference to NBFCs and insurance distribution under the new framework, consider the following statements:

1. NBFCs may distribute insurance products without prior RBI approval.
2. NBFCs still require IRDAI’s approval for insurance distribution.
3. Banks can continue to act as insurance brokers department-wise.
4. NBFCs are regulated by the Securities and Exchange Board of India (SEBI).

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; NBFCs are regulated by the RBI, NOT SEBI.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the directions explicitly ban dark patterns.
2. (d), All four statements are correct.
3. (d), All four statements are correct.
4. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because agent regulation has been widened to cover BCs, LSPs, and sub-agents.
5. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because NBFCs are regulated by the RBI.

Exam Relevance

Banking (RBI Gr B, SBI PO, IBPS, NABARD)	Very high importance, RBI norms, mis-selling, BC, LSP, DSA, dark patterns, bundling
RBI Grade B	Core area on banking regulation and consumer protection

3. RBI Issues Master Directions on Authorisation to Operate a Payment System

Context

The Reserve Bank of India (RBI) has issued the Master Directions on Authorisation to Operate a Payment System, consolidating existing guidelines on the authorisation of Payment System Operators (PSOs). The directions, which come into effect immediately, provide a unified framework covering eligibility criteria, authorisation, perpetual validity of licences, voluntary surrender, and cooling-off requirements. New PSO authorisations will be perpetually valid, while existing operators may receive perpetual validity at renewal subject to regulatory compliance. The framework retains FATF-based restrictions on investment from non-compliant jurisdictions, capping aggregate voting rights below 20 per cent for such investors. Authorisation remains on-tap, allowing entities to apply throughout the year.

The Framework

• Name: Master Directions on Authorisation to Operate a Payment System.
• Issued by: Reserve Bank of India (RBI).
• Aim: Consolidate existing guidelines on PSO authorisation.

Key Features

Perpetual Validity of Licences

• New PSOs: Authorisation perpetually valid.
• Existing PSOs: May receive perpetual validity at renewal, subject to:
  • Meeting regulatory requirements.
  • No supervisory concerns.
• Non-compliant operators: May receive 1-year renewals until deficiencies are addressed.

On-Tap Authorisation

• Entities can apply for payment system licences throughout the year.
• Applications to be submitted through the RBI’s portal.
• Must comply with capital and net-worth requirements prescribed for specific payment systems.

Fit and Proper Criteria

• Applicants must meet the RBI’s “fit and proper” criteria:
  • Integrity.
  • Financial soundness.
  • Governance standards.

FATF Restrictions

• Investments from FATF non-compliant jurisdictions are restricted.
• New investors from such jurisdictions cannot acquire significant influence.
• Aggregate voting rights capped below 20 per cent.

Voluntary Surrender of Authorisation

• Entities seeking to discontinue operations must:
  • Settle outstanding liabilities to customers, merchants, agents, and banks.
  • Obtain auditor-certified confirmation before surrendering licences.

Cooling-Off Period

• A 1-year cooling-off period may be imposed on entities whose:
  • Authorisation has been revoked.
  • Renewal has been rejected.
  • Authorisation has been voluntarily surrendered.
  • Application for authorisation has been rejected.
• During this period, such entities cannot apply for permission to operate any payment system.

What is a Payment System Operator (PSO)?

• An entity authorised by the RBI to operate a payment system under the Payment and Settlement Systems Act, 2007 (PSS Act).
• Examples of PSOs:
  • Card networks: Visa, Mastercard, RuPay, American Express.
  • Prepaid Payment Instruments (PPI): PhonePe, Paytm, Google Pay, Mobikwik, Amazon Pay.
  • UPI third-party app providers.
  • Cross-border payment players.
  • ATM networks.

What is the Payment and Settlement Systems Act, 2007 (PSS Act)?

• The legal framework for payment systems in India.
• Effective from: 12 August 2008.
• Empowers the RBI to regulate and supervise payment systems in India.
• Provides for authorisation of PSOs.

India’s Payment Systems Landscape

• UPI (Unified Payments Interface): Operated by NPCI, India’s flagship real-time payments platform.
• RTGS (Real Time Gross Settlement): For large-value transactions, above ₹2 lakh, 24×7.
• NEFT (National Electronic Funds Transfer): For smaller value transactions, 24×7.
• IMPS (Immediate Payment Service): Instant interbank transfers.
• Card networks: RuPay, Visa, Mastercard.
• Cheque Truncation System (CTS): For electronic cheque clearing.
• Bharat Bill Payment System (BBPS): For utility bill payments.
• AEPS (Aadhaar Enabled Payment System).
• FASTag: For electronic toll collection.

FATF-Based Restrictions in India’s Financial System

• Restrictions on FDI from FATF non-compliant jurisdictions in critical sectors.
• Enhanced due diligence for transactions involving these jurisdictions.
• Restrictions on PSO investments from such jurisdictions (as per the new RBI master directions).

What is NPCI?

• National Payments Corporation of India.
• A non-profit company under the Ministry of Finance.
• Founded: 2008.
• Promoted by: RBI and Indian Banks’ Association (IBA).
• Functions:
  • Operates UPI, RuPay, IMPS, BHIM, AEPS, BBPS, NETC (FASTag).
  • Sets standards for retail payment systems in India.
• NPCI International Payments Limited (NIPL): For global UPI expansion.

About RBI

• Reserve Bank of India, India’s central bank.
• Established under the RBI Act, 1934; began operations on 1 April 1935.
• Headquartered: Mumbai.
• Current Governor: Sanjay Malhotra (since 11 December 2024).
• Deputy Governor in charge of Payments: As per current allocations.

Why is This Important?

• Streamlines PSO authorisation with unified framework.
• Encourages innovation in digital payments.
• Strengthens financial integrity through FATF-based safeguards.
• Supports India’s leadership in digital payments globally.
• Provides business certainty to payment system operators.

Key Terms (Simple)

• Payment System Operator (PSO): An entity authorised by the RBI to operate a payment system under the PSS Act, 2007.
• Payment and Settlement Systems Act, 2007 (PSS Act): The legal framework for payment systems in India, empowering the RBI to regulate and supervise payment systems.
• Perpetual Validity: A licence that remains valid indefinitely subject to ongoing regulatory compliance, without periodic renewals.
• On-Tap Authorisation: An authorisation mechanism that allows entities to apply for licences throughout the year, instead of in specific windows.
• Fit and Proper Criteria: A regulatory test to assess the integrity, financial soundness, and governance of applicants for financial licences.
• FATF (Financial Action Task Force): An intergovernmental body founded in 1989, headquartered in Paris, that sets global standards for combating money laundering, terrorist financing, and proliferation financing.
• Grey List: A list of FATF jurisdictions under increased monitoring for AML/CFT deficiencies.
• Black List: A list of FATF high-risk jurisdictions with strategic AML/CFT deficiencies (currently North Korea, Iran, Myanmar).
• Cooling-Off Period: A mandatory waiting period before an entity can re-apply for an authorisation after revocation, non-renewal, voluntary surrender, or rejection.
• NPCI (National Payments Corporation of India): A non-profit company founded in 2008, promoted by RBI and IBA, that operates UPI, RuPay, IMPS, AEPS, BBPS, NETC.
• UPI (Unified Payments Interface): India’s flagship real-time payments platform, operated by NPCI, launched in 2016.
• CBDC (Central Bank Digital Currency): A digital form of fiat currency issued by a central bank, also called e-Rupee in India.
• AML/CFT: Anti-Money Laundering / Counter Financing of Terrorism, a global regulatory framework to prevent illicit financial flows.

Practice MCQs

Q1. With reference to the RBI’s Master Directions on Authorisation to Operate a Payment System (June 2026), consider the following statements:

1. New PSO authorisations will be perpetually valid.
2. Existing operators may receive perpetual validity at renewal, subject to regulatory compliance.
3. Authorisation will continue to be available on an on-tap basis throughout the year.
4. The directions take effect from 1 January 2027.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the directions take effect immediately, NOT from 1 January 2027.)

Q2. With reference to FATF-based restrictions under the new framework, consider the following statements:

1. Investments from FATF non-compliant jurisdictions are restricted.
2. New investors from such jurisdictions cannot acquire significant influence in PSOs.
3. Aggregate voting rights from such investors are capped below 20 per cent.
4. The directions allow unrestricted investment from FATF non-compliant jurisdictions.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; the directions RESTRICT investment from FATF non-compliant jurisdictions.)

Q3. With reference to the Payment and Settlement Systems Act, 2007 (PSS Act), consider the following statements:

1. The PSS Act, 2007 came into effect on 12 August 2008.
2. It provides the legal framework for payment systems in India.
3. It empowers the RBI to regulate and supervise payment systems.
4. It provides for the authorisation of Payment System Operators (PSOs).

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

Q4. With reference to the Financial Action Task Force (FATF), consider the following statements:

1. FATF is an intergovernmental body founded in 1989 by the G7 nations.
2. FATF is headquartered in Paris, France.
3. India became a full member of FATF in 2010.
4. FATF’s current black list includes the United States and the United Kingdom.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; FATF’s current black list includes North Korea, Iran, and Myanmar, NOT the US or UK.)

Q5. With reference to NPCI and India’s payment systems, consider the following statements:

1. NPCI is a non-profit company founded in 2008, promoted by the RBI and the Indian Banks’ Association (IBA).
2. NPCI operates UPI, RuPay, IMPS, BHIM, AEPS, BBPS, and NETC (FASTag).
3. UPI is India’s flagship real-time payments platform, launched in 2016.
4. NPCI is a private foundation with no link to the Government of India or RBI.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; NPCI is promoted by the RBI and IBA, NOT a private foundation.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the directions take effect immediately.
2. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because the directions restrict such investment.
3. (d), All four statements are correct.
4. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because the black list includes North Korea, Iran, and Myanmar.
5. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because NPCI is promoted by the RBI and IBA.

4. SEBI Eyes Five-Day FPI Onboarding Timeline

Source: Business Standard

Context

The Securities and Exchange Board of India (SEBI) is exploring measures to reduce the onboarding time for Foreign Portfolio Investors (FPIs) to as little as 5 days, from the current timeline of nearly a month. The regulator has asked custodians to focus on end-to-end digitisation, wider adoption of Indian digital signatures, and better coordination among intermediaries. SEBI has held at least two meetings with custodians in the past month to identify bottlenecks. A pilot model, developed with custodians, has reportedly achieved onboarding within 5 days. SEBI is also engaging with the RBI and Income Tax (I-T) Department to streamline approvals. The move comes amid FPI outflows that have fallen to ₹74.77 trillion in FPI assets by May 2026 (per NSDL data).

The Current Process

• FPI registration begins online through the National Securities Depository Ltd (NSDL) platform.
• Authorisation by a designated depository participant (DDP).
• Signed hard copies of the Common Application Form (CAF) still required to be sent to the DDP.
• This involves embassy attestations, physical paperwork, and tax-related formalities.

What SEBI is Pushing For

• End-to-end digitisation of all steps.
• Wider adoption of Indian digital signatures.
• Better coordination among intermediaries.
• Elimination of embassy attestations and physical paperwork wherever possible.
• Unified digital workflow that issues digital signature certificates and electronic signatures directly through the CAF.

What is a Foreign Portfolio Investor (FPI)?

• Foreign Portfolio Investor (FPI) is a non-resident entity that invests in Indian securities through stocks, bonds, mutual funds, and derivatives.
• The FPI category combines the earlier FII, QFI, and sub-account categories under a unified framework.
• Regulated by SEBI under the SEBI (Foreign Portfolio Investors) Regulations, 2019.
• Three categories of FPIs:
  • Category I: Government and government-related investors (sovereign wealth funds, central banks, international agencies).
  • Category II: Regulated entities like pension funds, banks, insurance, broad-based funds, university funds, and family offices.
  • Category III: Earlier existed; now merged with Category II under the 2019 amendments.

Designated Depository Participant (DDP)

• A SEBI-approved entity that registers FPIs and handles their KYC and compliance.
• Usually major banks like HDFC Bank, ICICI Bank, HSBC, Citibank, Deutsche Bank, and Standard Chartered.
• The DDP processes the CAF, conducts KYC, and interfaces with NSDL and SEBI.

National Securities Depository Limited (NSDL)

• India’s first and largest securities depository.
• Founded: November 1996.
• Headquartered in Mumbai.
• Functions:
  • Holds securities in dematerialised form.
  • Settles trades for the NSE and BSE.
  • Maintains FPI registry.
  • Processes corporate actions like dividends and bonus issues.
• Regulated by SEBI.
• Competitor: CDSL (Central Depository Services Limited).

Key Terms (Simple)

• FPI (Foreign Portfolio Investor): A non-resident entity that invests in Indian securities through stocks, bonds, mutual funds, and derivatives.
• FII (Foreign Institutional Investor): An older term for foreign investors; largely merged with FPI under the 2014 framework.
• Custodian Bank: A bank that holds securities and provides services like settlement, KYC, and compliance for FPIs.
• Designated Depository Participant (DDP): A SEBI-approved entity that registers FPIs and handles their KYC and compliance.
• Common Application Form (CAF): A single application form that synchronises SEBI, RBI, and tax-related formalities for FPI registration.
• NSDL (National Securities Depository Limited): India’s first and largest securities depository, established in November 1996, headquartered in Mumbai.
• CDSL (Central Depository Services Limited): India’s second securities depository, established in 1999, headquartered in Mumbai.
• Dematerialisation (Demat): The conversion of physical share certificates into electronic form held in a demat account.
• KYC (Know Your Customer): A due diligence process to verify the identity of a customer.
• Digital Signature: An electronic, encrypted authentication of a document that has legal validity under the IT Act, 2000.
• SEBI (FPI) Regulations, 2019: The regulatory framework for FPIs in India.
• FII Outflows / FPI Outflows: When foreign investors sell Indian securities and withdraw capital from India.

Practice MCQs

Q1. With reference to SEBI’s recent push to speed up FPI onboarding, consider the following statements:

1. SEBI is exploring measures to reduce the FPI onboarding time to as little as 5 days, from the current nearly month-long process.
2. A pilot model developed with custodians has reportedly achieved onboarding within 5 days.
3. SEBI is collaborating with the RBI and the Income Tax Department to streamline approvals.
4. SEBI’s only goal is to increase regulatory paperwork, not reduce onboarding time.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; SEBI’s goal is to reduce onboarding time and paperwork, NOT increase it.)

Q2. With reference to FPIs in India, consider the following statements:

1. FPIs are regulated by SEBI under the SEBI (Foreign Portfolio Investors) Regulations, 2019.
2. FPIs are classified into Category I (government and government-related) and Category II (regulated entities).
3. Designated Depository Participants (DDPs) are SEBI-approved entities that handle FPI registration and compliance.
4. FPIs are not subject to any KYC norms in India.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; FPIs are subject to KYC norms under SEBI regulations.)

Q3. With reference to NSDL and CDSL, consider the following statements:

1. NSDL was founded in November 1996 and is India’s first securities depository.
2. CDSL was founded in 1999 and is India’s second securities depository.
3. Both NSDL and CDSL are headquartered in Mumbai.
4. NSDL and CDSL are regulated by the RBI.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; NSDL and CDSL are regulated by SEBI, NOT the RBI.)

Q4. With reference to FPI outflow trends in India, consider the following statements:

1. FPI equity outflows in FY26 were about ₹1.80 trillion, an all-time high at the time.
2. FY27 (till early June 2026) has seen FPI equity outflows of about ₹1.45 trillion (USD 15 billion) in just over 2 months.
3. FPI assets in India fell to ₹74.77 trillion by May 2026, per NSDL data.
4. FPI flows into India have been consistently positive over the past 3 years.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; FPI flows have been net negative for 2 years in a row (FY25, FY26), with FY27 also seeing record outflows.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because SEBI’s goal is to reduce onboarding time.
2. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because FPIs are subject to KYC norms.
3. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because NSDL and CDSL are regulated by SEBI, not the RBI.
4. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because FPI flows have been net negative for 2+ years.

Exam Relevance

SEBI Grade A

Very high importance, FPI regulations, capital markets, custodians

Agriculture

1. Telangana Bans Paraquat Herbicide; Spotlight on Deadly Weed Killer

Source: The Hindu

Context

Telangana has officially issued a Government Order banning the sale, distribution, manufacture, and use of the highly toxic weedicide Paraquat to protect farmers and public health. Paraquat is a fast-acting, non-selective contact herbicide that destroys any green plant tissue on contact. It is banned in 74 countries due to severe toxicological risks, including no available antidote and lethal effects on humans even in small doses. Telangana’s move comes amid rising cases of Paraquat poisoning and accidental ingestion by farmers and rural households.

The Telangana Ban

• Government Order issued by Telangana.
• Bans the sale, distribution, manufacture, and use of Paraquat.
• Aim: Protect farmers and public health.
• Trigger: Multiple fatal poisoning cases linked to Paraquat.

What is Paraquat?

• A non-selective contact herbicide (weed killer).
• Destroys any green plant tissue it touches.
• Highly toxic to humans and animals.
• Colourless, odourless, and virtually tasteless in its pure state.
• Sold under the commercial brand name Gramoxone.

Toxicological Profile

Mechanism

• Functions by generating reactive oxygen species (superoxides) within plant cells during photosynthesis, disrupting cellular membranes and drying out weeds within hours.
• In humans, it causes immediate, irreversible cellular damage through similar oxidative stress.

No Antidote

• Unlike snakebites or organic phosphate pesticide poisonings, there is no medical antidote for Paraquat.
• Once inside a biological system, cellular damage is immediate and irreversible.

Symptoms and Outcomes

• Paraquat Mouth: Corrosive damage to mouth and throat even on a small sip.
• Bloodstream spread: Damages kidneys and liver.
• Accumulation in lungs: Causes irreversible pulmonary fibrosis (scarring).
• Putting a poisoned patient on a ventilator can accelerate oxidative damage, worsening multi-organ failure.
• Death rate from ingestion: Very high, often above 50 per cent even with prompt treatment.

Why is Paraquat Especially Dangerous?

• Tasteless and odourless, often mistaken for soft drinks when transferred to unlabelled containers.
• High suicide tool in rural areas with easy access.
• No antidote available.
• Lethal in very small doses (as little as a teaspoon).
• Children and animals can be accidentally exposed.

India’s Pesticide Regulation Framework

• Insecticides Act, 1968: India’s main law for regulating pesticides.
• Central Insecticides Board and Registration Committee (CIB&RC): The regulator for pesticide registration.
• Pesticides Management Bill, 2020: A proposed replacement for the Insecticides Act, still pending.
• Anupam Verma Committee Report (2015): Recommended review of 66 pesticides banned or restricted in other countries; 18 banned, 6 phased out by 2020.
• Paraquat has NOT been banned nationally, despite the Anupam Verma Committee flagging it for review.

Pesticides Banned in India (Recent)

• DDT (banned for agricultural use; allowed for public health).
• Endosulfan (banned in 2011 by Supreme Court).
• Tamil Nadu has imposed state-level bans on glyphosate and other pesticides.
• Kerala has imposed state-level bans on several highly toxic pesticides.
• Punjab has imposed bans on certain pesticides during basmati cultivation.

Other Highly Hazardous Pesticides

• Monocrotophos.
• Phorate.
• Methyl Parathion.
• Triazophos.
• Carbofuran.
• Many of these are on the WHO’s list of “highly hazardous pesticides”.

Why Are Some States Imposing Bans?

• Concurrent List subject: Agriculture is a State subject, while regulation of poisons and dangerous drugs is on the Concurrent List.
• States can impose temporary bans under Section 27 of the Insecticides Act, 1968, for up to 60 days, extendable to 90 days by the central government.
• Permanent bans require central government action.
• Telangana’s ban is a state-level intervention to protect public health.

Sustainable Alternatives

• Bio-herbicides: Microbial or plant-based herbicides, less toxic.
• Cultural practices: Crop rotation, intercropping, mulching, manual weeding.
• Mechanical weeding: Tractor-mounted or manual weeders.
• Integrated Weed Management (IWM): Combines chemical, biological, and cultural methods.
• Glyphosate (less toxic to humans but still controversial; restricted in some places).
• Natural farming and organic farming methods.

Practice MCQs

Q1. With reference to Paraquat, consider the following statements:

1. Paraquat is a non-selective contact herbicide.
2. It is sold under the commercial brand name Gramoxone.
3. It is banned in 74 countries worldwide due to severe toxicological risks.
4. Paraquat has a well-known medical antidote that can fully reverse poisoning.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; Paraquat has NO antidote; cellular damage is immediate and irreversible.)

Q2. With reference to Telangana’s recent action on Paraquat, consider the following statements:

1. Telangana has issued a Government Order banning the sale, distribution, manufacture, and use of Paraquat.
2. The ban aims to protect farmers and public health.
3. Paraquat is used on about 80 lakh acres of farmland in India.
4. India has implemented a nationwide ban on Paraquat.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; India has not implemented a nationwide ban on Paraquat; only some states have imposed state-level bans.)

Q3. With reference to India’s pesticide regulation framework, consider the following statements:

1. The Insecticides Act, 1968 is India’s main law for regulating pesticides.
2. The Central Insecticides Board and Registration Committee (CIB&RC) is the regulator for pesticide registration.
3. The Anupam Verma Committee (2015) reviewed 66 pesticides banned or restricted in other countries.
4. The Pesticides Management Bill, 2020 has been enacted into law.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; the Pesticides Management Bill, 2020 has NOT been enacted into law; it remains pending.)

Q4. With reference to the health effects of Paraquat, consider the following statements:

1. Paraquat causes “Paraquat Mouth”, a corrosive damage to the mouth and throat even on a small sip.
2. It spreads through the bloodstream, damaging the kidneys and liver.
3. It accumulates in the lungs, causing irreversible pulmonary fibrosis.
4. Paraquat has very low toxicity and is safe for accidental ingestion.

Which of the above are correct?

(a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

(Statement 4 is wrong; Paraquat is extremely toxic, with a high fatality rate even from small ingestion.)

Q5. With reference to herbicide classifications, consider the following statements:

1. A non-selective herbicide kills any green plant it touches, without distinguishing crops from weeds.
2. A contact herbicide kills only the parts of the plant that the chemical directly touches.
3. A systemic herbicide is absorbed by the plant and translocated throughout the plant’s tissues.
4. Glyphosate is an example of a non-selective systemic herbicide.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Paraquat has no antidote.
2. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because India has not implemented a nationwide ban.
3. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because the Pesticides Management Bill, 2020 has not been enacted.
4. (a), Statements 1, 2, 3 are correct; Statement 4 is wrong because Paraquat is extremely toxic.
5. (d), All four statements are correct.

Exam Relevance

NABARD Grade A

Very high importance, pesticide use, sustainable agriculture, rural health

Facts To Remember

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