Current Affairs May 2025

Daily Current Affairs Quiz
1 May, 2025

International Affairs

1. Shenzhou-19 Crew Returns After Record Mission

Context:

Three Chinese astronauts Cai Xuzhe, Song Lingdong, and Wang Haoze returned to Earth on April 30, 2025, after a six-month mission aboard the Tiangong space station. The landing occurred in Inner Mongolia, and state media confirmed all crew members were in “good health”. The return was delayed by a day due to bad weather at the Dongfeng landing site.

Mission Achievements

• The Shenzhou-19 astronauts set a new national record for the longest-ever spacewalk by a Chinese crew.
• They conducted various scientific experiments and supported station maintenance tasks during their stay since October 2024.

Shenzhou-20 Mission Takes Over

• The Shenzhou-20 mission began last week with a ceremonial send-off at the Jiuquan Satellite Launch Center in Gansu province.
• Aboard the Long March-2F rocket, the new crew includes:
  • Chen Dong (46) – veteran commander and first Chinese astronaut with over 200 cumulative days in orbit.
  • Chen Zhongrui (40) – former air force pilot, first spaceflight.
  • Wang Jie (35) – former space tech engineer, first spaceflight.

Objectives of Shenzhou-20

• Conduct life sciences and physics experiments.
• Install space debris protection equipment on the station.
• Study planarians — regenerative aquatic flatworms — for the first time aboard Tiangong.

China’s Expanding Space Ambitions:

• Under President Xi Jinping’s “space dream”, China is investing billions to become a major celestial power.
• Goals include:
  • Crewed lunar mission by the end of the decade.
  • Establishing a lunar base.
  • Continued robotic exploration of Mars and the moon.

TH

National Affairs

1. Union Cabinet Approves Caste Census

Context:

Union Minister Ashwini Vaishnaw announced that caste enumeration will be part of the next Census. This marks a significant shift in India’s demographic data collection approach.

Historical Context

• The last full caste-based Census was conducted in 1931 during British rule.
• Post-independence Censuses have only enumerated Scheduled Castes (SCs) and Scheduled Tribes (STs).
• The 2011 Socio-Economic Caste Census (SECC) was conducted separately and lacked legal mandate or comprehensive caste disclosure.

Legal and Operational Framework

• Caste data will be gathered during the second and final phase of the upcoming decennial Census, giving it statutory authority.
• The upcoming Census will be conducted digitally for the first time.
• A dropdown caste code directory is being integrated into the Census mobile app to facilitate accurate data entry.

Emerging Political Dynamics

• Caste enumeration could reshape political alignments by activating marginalized voices, leading to new party formations and power-sharing arrangements.
• Ashwani Kumar, another political scientist, remarked that the move offers a “golden opportunity” for deeper democracy and harmonious power sharing, not fragmentation.

Challenges and Sensitivities

• The Karnataka caste survey experience shows that dominant communities (e.g., Lingayats, Vokkaligas) may oppose the findings if perceived as unfavourable.
• Managing post-enumeration demands for reservations, welfare, and political representation will require deft governance.

Census Timeline

• The 2021 Census, initially delayed due to the COVID-19 pandemic, has not yet been officially rescheduled.

TH

2. India Suspends Indus Waters Treaty

Context:

In response to a terrorist attack in Jammu & Kashmir (Pahalgam), India’s Cabinet Committee on Security announced the suspension of the 1960 Indus Waters Treaty (IWT) with Pakistan. India demands Pakistan “credibly and irrevocably abjure cross-border terrorism” for the treaty to be reinstated. Legally, the IWT has no exit clause, it can only be terminated through mutual agreement, as per Article XII(4).

Legal and Diplomatic Complexity

• India may seek justification under Articles 60 and 62 of the Vienna Convention on the Law of Treaties (VCLT), though it is not a signatory, and Pakistan has not ratified it.
• Pakistan is exploring legal avenues through the World Bank, the Permanent Court of Arbitration, or the International Court of Justice (ICJ).
• The move risks internationalising the water-sharing issue, potentially inviting global scrutiny.

Operational Levers India Can Use

• Suspension allows India to:
  • Stop sharing river flow data with Pakistan.
  • Release or hold water at will, affecting flood and drought cycles.
  • Avoid treaty-based scrutiny of hydro projects on western rivers (Indus, Jhelum, Chenab).
• Potential for agricultural and hydroelectric disruption in Pakistan, especially amid internal provincial disputes (e.g., Punjab vs. Sindh over canal projects).

Infrastructure Constraints

• Despite being allowed to store 3.6 MAF of water and irrigate 1.34 million acres, India currently stores only ~1 MAF and irrigates ~0.642 million acres in J&K and Ladakh.
• Major hydro projects on western rivers (Kishanganga, Ratle, Baglihar, etc.) are run-of-the-river, with limited storage.
• Long-term water maximisation plans face delays due to terrain, red tape, and underdeveloped infrastructure.

Broader Geopolitical Risks

• India’s move may:
  • Influence China to withhold hydro data or cooperation on Sutlej and Brahmaputra rivers.
  • Impact the renewal of the Ganga Water Treaty with Bangladesh (expiring 2026).
  • Strain water-sharing relations with Nepal and affect Sri Lanka’s willingness to sign future treaties with India.
  • Harm India’s regional image as a responsible upper riparian nation.

TH

3. Vembanad Lake

Context:

Vembanad Lake, India’s longest and Kerala’s largest lake, is under serious ecological stress. Spanning 96.5 km and draining six major rivers, it supports agriculture, biodiversity, and livelihoods across Alappuzha, Kottayam, and Ernakulam. The lake is part of the Vembanad-Kol wetland system, a Ramsar site, but has shrunk drastically due to human encroachment, pollution, and weed infestation.

Key Environmental Challenges

Shrinking Surface and Depth

• Surface area reduced by 27% between 1917 and 1990 (cited by multiple studies).
• Encroachment, land reclamation, sedimentation cited as major contributors.
• Lower floodwater retention and impaired ecosystem functions such as water purification and biodiversity support.

Pollution and Biodiversity Loss

• High levels of plastic waste, silt, and chemical pollutants found in recent studies.
• Water hyacinth proliferation contributes to elevated Biological Oxygen Demand (BOD) and Chemical Oxygen Demand (COD).
• Fish catch down by 66% over three decades due to eutrophication and habitat degradation.

Unregulated Human Activities

• Houseboats identified as key pollutants.
• Unauthorised vessels and encroachments remain largely unchecked despite regulatory attempts.

Vembanad Lake Rejuvenation Project

Administrative Framework

• Spearheaded by Alappuzha District Collector Alex Varghese, inspired by Namami Gange.
• Backed by ₹188.25 crore five-year plan, submitted to CM Pinarayi Vijayan.
• Guided by 8 subcommittees covering agriculture, fisheries, sanitation, biodiversity, climate change, and more.

Short-Term Objectives

• Removal of plastic waste and water hyacinth.
• Construction of 31 bio-bunds (1 km each) across grama panchayats.
• Fish ranching and bio-shield installation to protect farmland.

Long-Term Targets

• Dredging lake bed to improve water-holding capacity.
• Promotion of organic farming to reduce pesticide runoff.
• Establishment of sewage and faecal sludge treatment plants in flood-prone Kuttanad.
• Utilisation of water hyacinth for value-added products.
• Boosting sustainable tourism and fisheries.

Progress So Far

• 28.72 tonnes of plastic waste removed, along with large volumes of weeds in district-led cleanup drives.

Challenges Ahead

• Political will required to reclaim encroached land.
• Enforcement needed against illegal houseboat operations.
• Integration with broader Kuttanad region revival essential due to ecological interdependence.
• Need for inter-governmental collaboration and local community engagement for sustainable outcomes.

TH

4. Supreme Court Declares Digital Access a Fundamental Right

Context:

The Supreme Court of India has ruled that access to digital services is a part of the fundamental right to equality, life, and dignity. The ruling reinforces the need for inclusive digital governance, especially for persons with disabilities (PwDs) and marginalized groups.

Access To Digital Services

Access to digital services refers to the ability of individuals and communities to access and effectively use digital technologies and resources. This includes having the necessary hardware, software, internet connectivity, and digital literacy skills to participate fully in the digital world. Essentially, it’s about ensuring everyone can utilize digital tools and platforms for various aspects of life, from education and healthcare to employment and social connections. 

Origin of the Case

• The judgment was delivered in response to petitions filed by acid attack survivors led by Pragya Prasun, and Amar Jain, a visually challenged petitioner.
• They highlighted the barriers faced in completing digital KYC processes, which rely heavily on visual input and are inaccessible to PwDs.

Critique of Current KYC Processes

• The court noted that the current digital KYC regime is exclusionary and violates the rights of disabled and marginalized individuals.
• It observed that the “unfriendly digital atmosphere” further isolates rather than empowers these citizens.

Substantive Equality Principle Upheld

• The SC invoked the principle of substantive equality, emphasizing that mere formal access is not sufficient.
• True digital inclusion means removing practical barriers in access and ensuring equity in outcomes.

Broader Issues Identified

• PwDs face obstacles due to inaccessible websites, non-adaptive apps, and lack of assistive technology.
• Rural Indians suffer from poor connectivity and lack of digital content in local languages, hindering their participation in welfare and governance schemes.

20 Directions Issued to Government

• The Bench directed the government to reform KYC processes to make them more accessible and inclusive.
• Though specifics weren’t detailed in the summary, directions are likely aimed at enhancing accessibility features, language options, and technological adaptability.

Implications for Policy and Governance

• The ruling strengthens the legal foundation for digital accessibility mandates.
• Government departments and financial institutions will now need to redesign digital platforms with universal accessibility standards.
• The verdict may also impact upcoming Digital India, fintech, and welfare delivery policies.

TH

5. Centre Considers Revising EV Charging Infrastructure Costs Under PM E-Drive Scheme

Context:

The Government of India has initiated inter-ministerial consultations to revise the benchmark costs for EV public charging infrastructure, a move driven by changing technology and cost structures since the last revision in 2022. This update falls under the ₹10,900-crore PM E-Drive Scheme, with ₹2,000 crore earmarked specifically for charging infrastructure subsidies.

Key Points

Cost Revision Underway

• Current benchmark costs:
  • ₹1.5 lakh for two- and three-wheeler chargers
  • ₹6 lakh for car chargers
  • ₹24 lakh for bus and truck chargers
• The Power and Heavy Industries Ministries and Bureau of Energy Efficiency (BEE) are jointly evaluating the updated cost norms.

Drivers of Cost Change

• Small/home chargers have become more affordable due to:
  • Mass production
  • Domestic manufacturing
  • Government incentives
• Large fast chargers, used in public and highway locations, have become costlier due to:
  • Rising raw material costs (e.g., copper)
  • Increased import costs (e.g., battery management systems)

Subsidy Structure & Infrastructure Targets

• Subsidy covers up to 80% of upstream costs, which include:
  • Distribution transformers
  • Cables
  • Circuit breakers
  • Civil works
• Upstream costs constitute around 60% of total infrastructure expenditure.
• Public charging stations planned under the scheme:
  • 48,400 for two- and three-wheelers
  • 22,100 for electric cars
  • 1,800 for electric buses and trucks

Strategic Rollout Plans

• Highway corridors have been prioritized for EV truck and bus charging to reduce logistics emissions and support intercity travel.
• Location-based planning is key:
  • Urban areas need multi-vehicle stations.
  • Highways focus on high-capacity, long-duration chargers.

Policy Implications

• The revised cost structure will better align with market realities and ensure efficient allocation of subsidies.
• It supports India’s broader goals of:
  • Reducing emissions
  • Scaling EV adoption
  • Strengthening last-mile and freight electrification

Mint

6. PM Modi to Inaugurate WAVES 2025 Summit

Context:

Prime Minister Narendra Modi will inaugurate WAVES 2025 (World Audio Visual and Entertainment Summit) at the Jio World Centre, Mumbai, , May 1 2025. This four-day summit is the first of its kind organized by the Government of India, highlighting India’s ambition to be a global media and entertainment powerhouse

Major Participants

• Over 100 leading exhibitors will participate, including global giants:
  • Netflix, Amazon, Google, Meta, Sony, Reliance, Adobe
  • Indian players: Tata, Balaji Telefilms, Dharma Productions, Saregama, Yash Raj Films
  • Innovators like JetSynthesys, Digital Radio Mondiale (DRM), Free Stream Technologies, Neural Garage, and Fractal Picture

Special Initiatives and Cultural Events

• Cultural performances and the “Create in India Challenge” will feature prominently
• The challenge aims to empower Indian content creators and boost indigenous storytelling and innovation

Government Vision

• WAVES 2025 is positioned as a strategic platform for global collaboration, creativity, and innovation in the entertainment sector
• It marks a pivotal effort to integrate India deeper into global M&E value chains

The Indian Express

Science & Tech

1. Natural Hydrogen

Context:

Natural hydrogen, also known as geologic hydrogen, is gaining global attention as a clean, low-cost, and abundant alternative to fossil fuels and industrially produced hydrogen. With vast reserves potentially lying beneath the Earth’s surface including in India this fuel could play a transformative role in the global energy transition.

What is Natural Hydrogen?

• Naturally occurring hydrogen gas is formed underground through geological processes, not manufactured.
• It is a clean energy source that emits no carbon dioxide when used.
• Key production processes:
  • Serpentinisation (reaction between water and iron-rich rocks)
  • Radiolysis (splitting of water by radioactive rocks)
  • Decomposition of organic matter at geological depths

Historical Discovery

• In 1987, a flame erupted unexpectedly from a borehole in Bourakébougou, Mali, revealing a rich source of hydrogen.
• By 2012, analysis showed the gas was 98% pure hydrogen — a turning point for understanding its geologic potential.
• Once considered a curiosity, natural hydrogen is now recognized as a legitimate, large-scale energy resource.

Current Reserves and Potential

• Recent discoveries in France (Moselle and Lorraine) indicate massive deposits — 92 million tonnes, worth ~$92 billion.
• USGS estimates suggest tens of trillions of tonnes may exist globally.
  • If just 2% is recoverable, it could meet global hydrogen demand for 200 years.
• Countries with active seeps or exploration: Australia, U.S., France, Spain, Albania, South Korea, Colombia, Canada.

India’s Geological Potential: India is geologically suited for natural hydrogen generation due to:

• Ultramafic and basaltic rock formations
• Ophiolite complexes in Andaman and Himalayas
• Greenstone belts in Dharwar and Singhbhum cratons
• Sedimentary basins (Vindhyan, Cuddapah, Gondwana, Chhattisgarh)
• Fractured basement rocks and hydrothermal systems (e.g., hot springs)

Despite the high potential, exploration in India remains nascent. A structured roadmap for surveying and testing is needed.

Advantages of Natural Hydrogen

• Low cost of extraction (as low as $1/kg or less)
• Zero emissions at point of use
• Doesn’t require electrolysis or fossil fuel reforming
• Energy-dense and potentially more scalable than green hydrogen

Challenges

• Economic viability depends on deposit concentration and accessibility
• Exploration technology and data still evolving
• Scattered distribution could increase costs
• Environmental impact of drilling must be evaluated

TH

2. Cosmologists Confront ‘S8 Tension’ as Clumpiness of Universe Challenges Standard Model

Context:

Recent findings in cosmology suggest that the next major breakthrough in understanding the universe may lie in resolving how “clumpy” matter really is — a property quantified by the Sigma 8 (S8) parameter. This ongoing mystery challenges the standard Lambda Cold Dark Matter (ΛCDM) model and offers new perspectives on dark matter, dark energy, and the future of the cosmos.

The Big Bang and Cosmic Clumpiness:

• The universe originated from the Big Bang ~13.8 billion years ago.
• The Cosmic Microwave Background (CMB) radiation shows an almost perfectly uniform early universe, with slight density fluctuations (1 in 100,000).
• Today, the universe is “lumpy” with galaxies, clusters, and filaments, largely shaped by gravitational forces and dark matter dynamics.

What is Sigma 8 (S8)?

• S8 measures matter clustering over large cosmic scales (~26 million light-years).
• A higher S8 value indicates greater matter clumping; a lower value suggests a smoother distribution.
• The ΛCDM model predicts a specific value based on CMB data, but newer observations yield lower values — creating the “S8 tension.”

New Findings from the Subaru Telescope

• Researchers using Hyper Suprime-Cam (HSC) on the Subaru Telescope in Hawaii reported an S8 value of 0.747, aligning with earlier surveys.
• The data was gathered through cosmic shear (gravitational lensing of starlight by massive structures).
• Surhud S. More (IUCAA) explained that baryonic matter (like gas) movements cannot explain the discrepancy — suggesting that dark matter and dark energy are central to the mystery.

CDM Model vs. Observations

• CMB-based predictions give higher S8 values than shear surveys.
• This mismatch challenges the validity or completeness of the ΛCDM model, though the model still broadly holds.
• A key uncertainty: redshift measurements of faint galaxies, which limit the precision of deep field surveys like HSC.

Emerging Theories and Instruments

• Data from the Dark Energy Spectroscopic Instrument (DESI) suggests dark energy might be weakening, hinting at a possible decelerating universe and future “big crunch” scenario.
• Upcoming project: Rubin Legacy Survey of Space and Time (LSST) from Vera C. Rubin Observatory (Chile) aims to offer unprecedented, wide-field cosmic observations.

While the standard cosmological model still holds explanatory power, persistent S8 tension, unknown systematics, and new observations may signal the dawn of a new era in cosmology — possibly requiring a revision or extension of our current understanding of dark matter, dark energy, and the universe’s fate.

TH

Banking/Finance

1. NSO Survey on Private Sector Capex FY25

Context:

The NSO conducted a survey between November 2024 and January 2025 to assess capital expenditure (capex) trends for the private corporate sector over the past three years (FY22-FY24) and its intentions for FY25 and FY26. The survey covered 5,380 firms, with a response rate of 58.3% (2,172 enterprises providing data). The focus was on enterprises with ₹400 crore or more turnover in manufacturing, ₹300 crore for trade, and ₹100 crore for other sectors.

Capex Allocation for Green Technologies and Diversification

• Less than 5% of private companies in FY25 planned to allocate their capex to diversification and green technologies:
  • Energy transition/conservation: 1.38%
  • Diversification: 2.75%
• 10 out of 17 sectors allocated zero capex to energy transition/conservation, reflecting a lack of focus on green and future technologies in India’s private sector.

Sector-Specific Allocation

• Energy Transition/Conservation:
  • The highest capex allocation was in the manufacturing sector (4.36%).
  • Other sectors with allocation included water supply, sewerage, waste management (0.96%) and electricity, gas, steam (0.76%).
• Diversification:
  • The highest capex for diversification was seen in agriculture, forestry, and fishing (17.31%).
  • Other sectors included administrative and support service activities (14.11%) and education (5.3%).

Primary Capex Objectives in FY24-25

• Income generation: 49.6% of enterprises prioritized capex for income generation.
• Upgrade: 30.1% allocated capex for upgrades.
• Others: 16.2% of firms had unspecified or varied objectives for their investments.

Private Sector’s Capex Trends:

• The total private sector capex for FY24-25 is expected to reach ₹6.56 trillion, a post-pandemic high.
• However, there is a forecasted 25% reduction in capex outlays for FY25-26, bringing the total to ₹4.9 trillion. This decrease reflects cautious planning after strong investment levels in FY24-25.

BS

2. IndusInd Bank’s Executive Changes and Regulatory Actions

Context:

The Reserve Bank of India (RBI) has approved IndusInd Bank’s request to form an executive committee to oversee the duties of the Chief Executive Officer (CEO) until a new CEO is appointed, or for a maximum of three months. The Oversight Committee of the bank’s Board, chaired by Sunil Mehta, will guide the executive committee. This committee includes senior members from various oversight divisions, including Audit, Risk Management, and Compensation & Nomination.

Resignation of MD & CEO Sumant Kathpalia:

• Sumant Kathpalia, the MD & CEO of IndusInd Bank, resigned on April 29, 2025, citing moral responsibility for the accounting lapses that led to a loss of ₹2,000 crore.
• His resignation follows the Deputy CEO Arun Khurana’s resignation on April 28, 2025, in connection with the same accounting issues.
• Arun Khurana had also taken over as CFO after the resignation of Gobind Jain in January 2025.

Impact on Board Composition

• The bank is now without a whole-time director, which is a requirement for private sector banks under RBI norms.
• IndusInd Bank is working to fill the CEO position, with the RBI asking for a list of potential candidates for approval as soon as possible.

Regulatory Oversight and Audit

• The bank is cooperating with external audits and investigations related to the accounting lapses:
  • PricewaterhouseCoopers (PwC) estimated a ₹1,979 crore negative impact from derivative issues, with a 2.27% post-tax impact on the bank’s net worth as of December 2024.
  • EY is assisting in reviewing concerns in the microfinance business.

Market Impact:

• Shares of IndusInd Bank saw a marginal increase of ₹838.45 on Wednesday, signaling some stability after the executive changes.
• Analysts suggest that appointing a private sector banker as the new MD & CEO is crucial for re-rating the bank, given its unique portfolio of vehicle finance, microfinance, and gems & jewelry loans, which comprise 37% of its loan book.

BS

3. SEBI Defers Common Contract Note for FPIs to July 1

Context:

The Securities and Exchange Board of India (SEBI) has postponed the implementation of the Common Contract Note (CCN) for Foreign Portfolio Investors (FPIs) to 1 July 2025, extending the deadline by two months due to operational challenges raised by market participants.

Common Contract Note (CCN)

The CCN seeks to consolidate trade details across exchanges into a single document to boost transparency, streamline processes, and lower costs, bringing FPIs on par with retail investors who already receive unified notes. In the current system, FPIs receive separate notes for trades executed on BSE and the National Stock Exchange.  

Key Objectives of CCN

• Unification: Combines trade data across BSE and NSE into a single document.
• Transparency: Enhances auditability and reduces data fragmentation.
• Cost Efficiency: Streamlines processes, mirroring the unified contract note system already available to retail investors.

Current System vs Proposed Reform

Feature	Current Regime	Common Contract Note Regime
Exchanges	Separate notes for NSE and BSE	Single consolidated note
Reconciliation	Per-exchange	Cross-exchange, single note
Settlement Chain	FPI → Global Custodian → Local Custodian → Clearing Corp	Same chain, but reconciled across exchanges in one step
Penalty Risk	Exists on misclassification (e.g., hand delivery)	Could increase with small mismatches

Why the Deferral?

• Global custodians and FPI reps flagged several issues:
  • Reconciliation mismatches could classify trades as hand delivery, which incurs penalties.
  • System incompatibility and parallel flows between brokers and custodians complicate real-time matching.
  • Clearing risks if mismatches arise under the unified format due to the multi-intermediary nature of FPI settlements.

Industry Impact

• FPIs hold nearly 17% of India’s listed equities (as of Dec 2024).
• India has over 11,000 registered FPIs.
• Any friction in their trade processing or compliance could:
  • Affect market liquidity
  • Erode investor confidence
  • Potentially disrupt settlement cycles

Broader Context

• SEBI had initially planned CCN rollout in August 2024, then advanced it to April 30, now deferred to July 1.
• While institutional support for CCN remains strong, execution challenges remain.
• Unlike retail trades, FPI transactions involve complex multi-party coordination, increasing error probability.

Mint

4. Sebi’s Advisory on Opinion Trading

Context:

On 29 April, the Securities and Exchange Board of India (Sebi) clarified that opinion trading platforms do not fall under its regulatory jurisdiction. These platforms allow users to bet on real-world outcomes (e.g., “Will it rain tomorrow?”) via binary choices like “yes” or “no.”

• Sebi stated that since no security is being traded, no investor protection provisions under securities law apply.
• It also warned users that these apps use misleading terminology like “trading,” “profits,” or “stop-loss”, which may mimic securities market activities.

Platforms Affected

• Major platforms in India include:
  • Probo (backed by Peak XV, Elevation Capital, Fundamentum)
  • MPL Opinio
  • Tradex
  • Trago
• These platforms had hoped for a CFTC-style framework (like in the U.S. for event contracts), but India currently lacks such regulation.

Legal Grey Area

• Sebi stated that if any opinion contract qualifies as a security, such trading would be illegal and actionable.
• However, legal ambiguity persists:
  • These platforms don’t offer equity, debt, or derivatives linked to companies.
  • They don’t promise financial returns akin to traditional investments.
  • Hence, they may not meet the definition of a “security” under Indian securities laws.

Current Regulation

• Platforms claim to be governed under MeitY (Ministry of Electronics and IT) guidelines, not financial laws.
• This leaves them unregulated in terms of financial conduct, creating user risk exposure due to lack of redress mechanisms.

Implications

Stakeholder	Impact
Users	No regulatory protection; high risk of loss and misuse
Platforms	Must avoid securities-like offerings or risk Sebi enforcement
Investors/VCs	Increased regulatory risk could limit future funding or expansion
Regulators	A need for clearer cross-sector frameworks between MeitY and Sebi

Mint

5. Curie Money’s UPI-Mutual Fund Integration

Context:

Curie Money is pioneering a model where UPI payments are debited directly from liquid mutual fund holdings, merging the benefits of instant liquidity, better returns, and payment convenience. This financial innovation may reshape how Indians manage short-term idle cash especially in a low-interest environment.

Key Features of Curie’s Model

Instant UPI Payments via Mutual Funds

• Curie links UPI to liquid mutual fund units, allowing users to make real-time payments by auto-redeeming units in the background.
• The process is seamless: scan a QR code → approve payment → mutual fund units are redeemed instantly, with notifications sent by the AMC.

Built on Sebi’s Instant Redemption Rules

• Sebi allows instant redemptions of up to ₹50,000 or 90% of units, but hasn’t explicitly permitted or disallowed UPI-linked use.
• Regulatory grey zone: Curie’s model is technically compliant but lacks explicit regulatory recognition.

Integration and Coverage

• Works best with Yes Bank, though compatible with others.
• Supports only regular mutual fund plans, allowing the platform to earn commissions.
• Current AMC support is limited—needs expansion for broader appeal.

Advantages for Consumers

Higher Returns on Idle Cash

• Savings account yield: 2.7–2.75%
• Liquid fund return: 5–6% (annualized)
  → More efficient cash management without sacrificing liquidity

Better Tax Treatment

• No TDS on mutual fund redemptions
• Taxed only on capital gains, not full amount
• Loss set-offs and carry forward allowed, unlike FDs

UPI Convenience + Investment Yield

• Ease of daily payments (groceries, services, transport)
• Earns return even while idle
• Use cases mirror UPI apps like PhonePe or GPay—but smarter with funds

Challenges & Limitations

Category	Challenge
Regulatory	Sebi hasn’t formally recognized UPI-linked use of mutual fund redemptions
Psychological	Mutual funds still seen as long-term tools, not spendable instruments
Operational	Delay in transactions, SMS/email for each redemption may feel intrusive
Ecosystem	Limited AMC integrations, dependency on partner banks
Product Limitation	Regular plans only; UPI Lite doesn’t earn returns

Future Outlook

Opportunities

• Tap into India’s massive UPI ecosystem
• Position liquid funds as FD-alternatives with daily usability
• Educate users on low-risk, high-liquidity mutual fund options

What’s Needed for Scale

• Clear Sebi/MeitY guidance
• Wider AMC and bank tie-ups
• UX improvements to reduce redemption alerts and processing delays
• User education to shift mindset around mutual fund liquidity

Curie’s UPI-mutual fund integration could revolutionize short-term money management, offering higher returns and better tax treatment than savings accounts, without losing the everyday usability of UPI. But it will require regulatory clarity, ecosystem support, and mass awareness to fully unlock its disruptive potential.

Mint

6. SEBI’s Proposal: Increased Mutual Fund Limits in REITs and InvITs

Context:

SEBI has proposed raising mutual fund investment limits in REITs and InvITs from 10% to 20%.

• Objective: Channel more long-term capital into real estate and infrastructure sectors
• Intended to enhance fund manager flexibility and attract broader investor participation

Current Market Realities

• Mutual fund exposure in REITs and InvITs is currently <0.3% of total AUM
• India has only four listed REITs and 18 InvITs, of which just 8 InvITs are actively traded
• Daily trading volumes are low; for example, Embassy REIT trades around ₹41 crore per day
• Many InvITs have micro-cap-like free float, reducing market liquidity

Liquidity and Valuation Challenges

• Increasing investment limits prematurely could lead to liquidity traps
• Thinly traded instruments risk NAV distortion and exit challenges for mutual funds
• During market stress, bulk sell-offs may trigger price crashes due to lack of buyers
• NAVs may become inaccurate due to stale or delayed disclosures by REITs/InvITs

Hybrid Nature and Classification Issues

• REITs/InvITs are neither true equity nor fixed income instruments
• Mandated to distribute 90% of income, limiting growth via reinvestment
• Sensitive to macroeconomic and interest rate changes, like bonds, but perpetual in nature
• Investor expectations and suitability need clearer positioning

Strategic Recommendation

• Rather than raising caps immediately, SEBI and stakeholders should focus on:
  • Deepening market liquidity and transparency
  • Promoting market-making and improving price discovery
  • Increasing retail and HNI participation
  • Enhancing awareness of risk-return profiles of REITs and InvITs
• Limit hikes should be considered only after significant utilization of current limits

Mint

7. Income Tax Department Uses Benami Law to Probe UPI Transactions via Payment Gateways

Context:

The Income Tax Department has issued notices to at least two payment gateway firms under Section 23 of the Benami Transactions (Prohibition) Act, 1988

• The notices demand disclosure of individuals linked to suspicious UPI IDs, recipients of payments, transaction dates, bank account details, and the actual flow of money
• Objective: To trace whether shell merchants are being used to route money for tax evasion or benami arrangements

What Is a Payment Gateway?

A payment gateway is a technology used by merchants to accept debit or credit card purchases from customers. The term includes not only the physical card-reading devices found in brick-and-mortar retail stores but also the payment processing portals found in online stores.

Brick-and-mortar payment gateways also have begun accepting phone-based payments using QR codes or Near Field Communication (NFC) technology.

Suspicious Transaction Patterns

• Certain PG-registered merchants may be fronts or proxies helping remitters book fake expenses
• Money is received via UPI, then returned in cash, making it hard to trace and opening the door to benami ownership and tax evasion
• Shell companies acting as merchants may also hold funds on behalf of undisclosed beneficiaries

Legal and Regulatory Basis

• Section 23 of the Benami Act empowers tax authorities to gather information even in the absence of an active investigation, with approval from an Additional or Joint Commissioner
• This differs from the I-T Act, where information collection is usually tied to an ongoing assessment
• Authorities may verify if recipient entities report the income in their tax returns; if not, it suggests a benami setup

Role of Payment Gateways and KYC Compliance

• PGs, regulated by the Reserve Bank of India (RBI), must carry out KYC before onboarding merchants
• Any KYC gaps or informal arrangements could increase regulatory scrutiny
• PGs may be asked to clarify if real operators differ from those named in official KYC records

Implications for Fintech and Compliance

• The probe signals rising scrutiny of digital payments infrastructure for money laundering and benami risk
• Firms may need to strengthen transaction monitoring systems and tighten merchant onboarding processes
• Ensuring clear documentation and transparent reporting will be critical to avoid legal exposure

TET

8. Sebi Proposes Mandatory Dematerialisation of Key Shareholders’ Holdings Before IPO

Context:

The Securities and Exchange Board of India (Sebi) has proposed a new rule mandating dematerialisation of shares held by key pre-IPO stakeholders before the filing of the offer document. This move will apply to promoters, directors, senior management, qualified institutional buyers (QIBs), and other regulated entities such as stock brokers and NBFCs holding securities.

Dematerialization of Shares

Dematerialization of shares is the process of converting physical share certificates into an electronic format, allowing investors to hold their shares in a Demat account. This process eliminates the need for physical certificates and simplifies trading, transfer, and storage of shares, while also reducing costs and enhancing security. 

• What it is: Dematerialization is the conversion of physical securities, like share certificates, into electronic form. 
• How it works: Investors need a Demat account with a Depository Participant (DP) to hold their dematerialized shares. They submit their physical share certificates to the DP, who then electronically transfers the shares to the Demat account. 

Current Regulatory Gap

• Sebi noted a significant volume of physical shareholding continues to exist even among critical shareholders in companies approaching IPO
• This leaves a regulatory loophole, allowing physical shares to remain in the listed ecosystem, which can hamper transparency and settlement efficiency

Objective and Market Impact

• The aim is to tighten governance, enhance market transparency, and reduce risks associated with physical shareholding post-listing
• Sebi will amend existing rules to enforce demat compliance among the specified shareholder categories

TET

Facts To Remember

1. Satya Chandrasekharendra Saraswathi anointed the 71st seer to head Kanchi Kamakoti Peetam

Amid the chanting of Vedic hymns and reverberating to the sounds of ‘Hara Hara Sankara, Jaya Jaya Sankara’ by devotees, Sri Satya Chandrasekharendra Saraswathi was anointed the 71st seer of the Kanchi Kamakoti Peetam at a grand ceremony held in Kancheepuram.

3. Govt Procures 256 Lakh MT Wheat; Eyes 312 Lakh MT Target

Department of Food and Public Distribution (DFPD) Secretary Sanjeev Chopra today said that the government has done a total procurement of 256 lakh metric tonnes of new season wheat this year.

4. WAVES is not just an acronym, it’s a wave of culture, creativity, universal connect: PM Modi

Prime Minister Narendra Modi said, this is the perfect moment for India to lead global creativity. Mr. Modi inaugurated the first World Audio Visual Entertainment Summit (WAVES) 2025 at Jio World Convention Centre in Mumbai today.

5. International Labour Day being celebrated globally

International Labour Day is being celebrated across the globe today. The day is observed to honour the contributions of the working class and promote their rights. It pays tribute to the sacrifices of workers in securing economic and social rights around the world. The day is also known as Global Workers Day or May Day.

6. WAVES Summit 2025 to create new economic opportunities: I&B Minister Ashwini Vaishnaw

Information and Broadcasting Minister Ashwini Vaishnaw has said the WAVES summit will create new economic opportunities. Addressing the inaugural session of the first World Audio Visual Entertainment Summit (WAVES) 2025 at Jio World Convention Centre in Mumbai today, Mr Vaishnaw said, this Summit will provide a global platform to creators and provide them with exposure to new technology.

Daily Current Affairs Quiz
2 May, 2025

International Affairs

1. U.S.-Ukraine Finalize Rare Earth Minerals Agreement

Context:

The U.S. and Ukraine signed a strategic agreement called the United States-Ukraine Reinvestment Fund. The deal grants the U.S. access to Ukraine’s rare earth mineral resources. Seen as a move to secure long-term military and economic cooperation between Washington and Kyiv

Strategic Importance of the Deal

• Ukraine possesses vast deposits of critical minerals, including rare earths essential for defense, electronics, and clean energy technologies
• The agreement could bolster U.S. supply chains while offering Ukraine economic stability and sustained military backing
• The deal follows months of negotiations and geopolitical recalibration around the Russia-Ukraine conflict

Message to Russia and Global Observers

• U.S. Treasury Secretary Scott Bessent: “This agreement signals clearly to Russia that the Trump administration is committed to a peace process centered on a free, sovereign, and prosperous Ukraine”
• Framed as a geopolitical signal amid concerns over a possible shift in U.S. policy under President Donald Trump

Implications for Global Markets and Defense

• May reshape the global rare earth supply chain, reducing U.S. dependence on China
• Could anchor U.S. presence in Eastern Europe, reinforcing its strategic interest in countering Russian influence
• Enhances Ukraine’s economic leverage as it continues to face military pressure from Russia

TH

2. India’s Diplomatic Efforts Amidst the Pahalgam Terror Attack

Context:

The Pahalgam terror attack shocked India, with fears of an escalation in military tensions and a diplomatic fallout with Pakistan. However, India has strategically used this moment to bolster its diplomatic ties with three of Pakistan’s closest allies: Saudi Arabia, the UAE, and the Taliban regime in Afghanistan.

Strengthening Ties with Saudi Arabia

• Prime Minister Modi’s visit to Jeddah coincided with the attack, where he discussed the incident with Saudi Crown Prince Mohammed bin Salman.
• The joint statement from Saudi Arabia and India condemned the attack strongly, marking the strongest language used in such condemnations. This is seen as a culmination of the strategic partnership between India and Saudi Arabia that began with:
  • The 2006 India-KSA Delhi Declaration.
  • The 2010 Strategic Partnership agreement which shifted Saudi Arabia’s stance on terrorism.
• Saudi Arabia’s cooperation has been key in the past, such as their role in securing the arrest of Sayed Zabiuddin Ansari (Abu Jundal), an LeT co-conspirator involved in the 26/11 attacks.
• Today, the relationship has moved beyond counterterrorism to technological cooperation and promises of $100 billion investment from Saudi Arabia.

Partnership with the UAE

• India’s relationship with the UAE has witnessed significant transformation, especially since the Strategic Partnership signed in 2017.
• Key moments include Prime Minister Modi’s multiple visits to the UAE, and most recently, the visit of Sheikh Hamdan bin Mohammed bin Rashid Al Maktoum in April, reinforcing strategic ties.
• This marks a dramatic shift from the 1990s when India struggled to secure extradition requests, such as for Dawood Ibrahim, and faced limited support in events like the 1999 IC-814 hijacking.

Engagement with the Taliban

• India’s recent engagement with the Taliban regime in Afghanistan represents another important shift in diplomatic strategy.
  • A surprise visit by India’s point-person for Pakistan-Afghanistan-India relations in Kabul resulted in a meeting with Taliban foreign minister Muttaqi.
  • The Taliban issued a categorical condemnation of the Pahalgam killings, a marked departure from their previous hostile stance toward India and their historical collaboration with Pakistani agencies and terror groups.

Implications of these Diplomatic Moves

• Saudi Arabia, the UAE, and the Taliban represent countries that have historically been seen as close allies of Pakistan, often limiting India’s diplomatic maneuvering.
• Well-timed diplomacy by India has successfully shifted the dynamic, pressuring Pakistan through these allies’ support against terrorism.
• This diplomatic success also highlights how India’s relations with these countries, once difficult or antagonistic, have evolved into constructive partnerships, underlining the power of long-term relationship-building.

TH

National Affairs

1. PM Modi Dedicates Vizhinjam International Seaport

Context:

Vizhinjam International Seaport officially commissioned by PM Narendra Modi in Thiruvananthapuram, Kerala. Billed as India’s first all-weather deepwater transshipment port. Designed to reduce India’s reliance on foreign ports and boost maritime trade competitiveness.

Strategic Importance

• 75% of India’s transshipment cargo is currently handled by foreign ports, leading to annual revenue losses of $200–220 million
• Vizhinjam aims to bring this volume back to Indian shores, reducing costs, delays, and congestion
• Geostrategic location with natural draft and minimal littoral drift makes it ideal for large container vessels

Technology and Innovation

• Equipped with:
  • AI-powered control room
  • Vessel Traffic Management System (VTMS) developed by IIT-Madras and Maritime Technology Pvt Ltd
  • Real-time radar and sensor tracking for ship movement optimization
• Will serve as a model for next-gen port infrastructure in South Asia

Challenges Faced

• Local protests led by fisherfolk and supported by church-backed groups over breakwater construction
• Despite opposition, the government pushed ahead citing long-term economic and strategic advantages

Expected Impact

• Will significantly boost India’s global maritime logistics profile
• Reduce dependency on Colombo, Singapore, and Dubai for transshipment
• Attract global shipping lines and increase cargo throughput efficiency

The Indian Express

2. Private Member’s Bills in India

Context:

Private Member’s Bills (PMBs) are proposed by Members of Parliament (MPs) who are not part of the government. Most legislation in India is introduced by the government, but PMBs allow MPs to propose laws based on personal convictions or constituency needs. Fridays in Parliament sessions are typically reserved for PMB discussions, providing MPs an opportunity for independent thought and legislative contribution.

Declining Relevance of PMBs

• Over time, the effectiveness of PMBs has significantly diminished.
  • Frequent disruptions and pre-emptive adjournments have limited the time for discussion.
  • Government business priorities have increasingly overshadowed PMB discussions, relegating them to symbolic gestures.
• The 17th Lok Sabha (2019-24) saw 729 PMBs introduced in the Lok Sabha and 705 in the Rajya Sabha, but very few were discussed.
• 18th Lok Sabha (2024) witnessed a drastic decline, with only 20 MPs introducing PMBs, none of which were discussed in the Budget or inaugural sessions.

Significant Private Member’s Bills

• PMBs offer a platform for MPs to address societal issues and reflect public needs:
  • Supriya Sule’s ‘Right to Disconnect’ Bill (2019): Proposed the legal right for employees to disengage from work after hours. Though it did not proceed, it sparked important conversations on work-life balance and mental health.
  • Tiruchi Siva’s ‘Rights of Transgender Persons Bill’ (2014): Became the first PMB in four decades to pass the Rajya Sabha and laid the foundation for the Transgender Persons (Protection of Rights) Act, 2019.
  • Gopal Chinayya Shetty’s Bill (BJP): Suggested free medical and healthcare facilities for senior citizens in government and private hospitals, showcasing MPs’ ability to act on constituency concerns.

Challenges to the PMB Process

• Institutional Changes:
  • The Anti-Defection Law (Tenth Schedule), introduced to ensure political stability, limits MPs’ independence, especially those in the ruling party.
  • The shift towards party-driven priorities has restricted MPs’ ability to introduce independent legislation.
• Electoral Influence: Voters often choose MPs based not only on party affiliation but also their individual integrity and constituency service, thus highlighting the importance of MP-driven legislation.

Reforms Needed for PMBs

• Protected Time for PMBs:
  • PMB time should be safeguarded by amending the Rules of Procedure and Conduct of Business to prevent it from being overridden except in national emergencies.
  • This would enable meaningful discussions and the introduction of significant bills.
• Creation of a Review Committee:
  • A dedicated committee should be set up to screen PMBs for quality, relevance, and constitutionality, providing priority lists for discussion.
  • A fast-track mechanism for high-impact PMBs could expedite their consideration.
• Extension of Parliamentary Hours:
  • Extending the working hours of Parliament by a few hours could help ensure that PMBs receive sufficient time without hampering government business.
• Adopting International Practices:
  • Introducing a Ten-Minute Rule, as practiced in the UK Parliament, could facilitate more PMBs being heard and recorded without requiring extensive time slots.

Potential Impact and the Value of PMBs

• Strengthening Democracy: The Vice President of India, Jagdeep Dhankhar, has emphasized that PMBs serve as a “gold mine” for India’s legislative landscape, offering forward-looking solutions to contemporary issues.
• Nurturing Innovation: When adequately supported, PMBs can introduce significant policy reforms and create legislative momentum on pressing social matters.

TH

3. India’s Suspension of the Indus Waters Treaty (IWT)

Background: The Indus Waters Treaty (IWT)

• The 1960 IWT allocates control over the waters of the six rivers of the Indus River System:
  • India’s rights: Unrestricted access to the eastern rivers — Ravi, Beas, and Sutlej.
  • Pakistan’s rights: Exclusive control over the western rivers — Indus, Jhelum, and Chenab, with limited access for India for non-consumptive uses.
• Following the Pahalgam terror attack on April 22, India declared the IWT to be “held in abeyance”, meaning a suspension of its operation, citing the need to reassess obligations under the treaty.

Is Unilateral Suspension of the IWT Permissible?

• Article XII of the IWT: This article clearly states that the treaty can only be terminated through a duly ratified treaty, which requires the mutual agreement of both India and Pakistan. Therefore, unilateral suspension is not permissible under the treaty’s provisions.
• “Abeyance” vs. Suspension: India’s use of the term “abeyance” is not recognized in international law and does not align with standard terminology found in treaties. According to Dr. Prabhash Ranjan, the correct legal term would be “suspension”, which refers to temporarily halting the operation of a treaty or parts of it, without terminating it.
• Vienna Convention on the Law of Treaties (VCLT): Though India is not a party to the VCLT, Pakistan’s signature means it is bound by many of its provisions, including those related to treaty suspension. The ICJ has affirmed that Article 62 of the VCLT (which allows for suspension in case of a “fundamental change of circumstances”) reflects customary international law.
• Fundamental Change of Circumstances: India claims the “fundamental changes in circumstances” as justification for suspension. However, the International Court of Justice (ICJ) has set a high bar for such claims. In the Gabcíkovo-Nagymaros Project dispute (1997), Hungary’s argument for treaty termination due to political and economic changes was rejected by the ICJ, as the changes were not directly linked to the treaty’s primary objective.

Potential Impacts on Pakistan

• Pakistan’s Dependence on Water:
  • Over 80% of Pakistan’s agriculture and about a third of its hydropower generation depend on the waters of the Indus Basin. Any disruption in water flow from the western rivers could have severe consequences.
• India’s Infrastructure Limitations:
  • India lacks the massive storage infrastructure and extensive canal systems that would allow it to withhold large quantities of water from the western rivers. India primarily has run-of-the-river hydropower plants, which do not have the capacity for large-scale water storage.
• Uncertainty and Potential Disruptions:
  • While India’s existing infrastructure might not allow for large-scale withholding of water, uncertainty over water flow could severely impact Pakistan’s economy, particularly its agricultural sector, which is highly dependent on a consistent flow of water.
  • Dr. Happymon Jacob from JNU highlighted that regulating the flow using India’s infrastructure could still cause disruptions, even without the capacity for full-scale withholding.
• Potential for Strategic Actions by India:
  • India could explore measures that it has never previously considered, including:
    • Redesigning hydroelectric projects to enhance water storage capacity.
    • Deploying ‘drawdown flushing’ techniques from its reservoirs, which involve the abrupt release of water, potentially causing damage downstream in Pakistan.
  • Impact of Abrupt Water Release: If India were to suddenly release large volumes of water, it could cause significant flooding and damage in Pakistan, leading to humanitarian and economic distress.

TH

Banking/Finance

1. GST Collections Reach Record ₹2.09 Trillion in April 2025

Context:

India’s net goods and services tax (GST) receipts grew 9.1 per cent in April to hit a fresh monthly record of over ₹2.09 trillion, making a significant improvement over the mild 7.3 per cent uptick in revenues this March, despite a 40 per cent sequential surge in refunds.

Key Highlights

• Net GST revenue rose 9.1% YoY to ₹2.09 trillion in April 2025
• Gross GST collection surged 12.6% YoY to ₹2.37 trillion
• Domestic GST revenue increased 10.7%; import-related GST grew 20.8%
• Refunds surged 40% month-on-month, with export-related refunds up 86.1%
• Net economic activity-based GST for FY25 stood at ₹19.73 trillion vs ₹18.26 trillion in FY24

Drivers Behind the Growth

• March-end compliance and inventory liquidation by businesses boosted filings
• Exporters accelerated transactions ahead of expected US ‘Liberation Day’ tariff hikes
• Consistent high collections across all major producing and consuming states (11%–16% growth range)

Automobile Sector Performance

Passenger Vehicle Sales

• Domestic PV wholesales rose 4.4% YoY to ~3.53 lakh units in April
• SUV sales and rural demand remain the primary growth drivers

Digital Payments Trend

UPI Transactions

• UPI transaction value dipped 3% MoM to ₹23.9 trillion in April
• Decline likely due to seasonal post-fiscal slowdown in retail payments

BS

2. UPI Transactions: Temporary Dip

• Sequential Decline: The 2% drop in volume and 3% drop in value in April is seasonal, following a March high driven by fiscal year-end business settlements and consumer purchases. The drop is not structural.
• Sustained YoY Growth: A 34% YoY rise in volume and 22% in value shows UPI remains firmly entrenched as India’s primary digital payment method.
• Stability in Daily Usage: Nearly constant daily transaction volume (596M vs 590M) suggests strong baseline activity, indicating that UPI usage is habitual, not event-driven.

IMPS: Losing Ground to UPI

• Month-on-Month Decline: A 3% fall in transaction volume and 7% drop in value.
• Structural Trend: IMPS continues to cede ground to UPI, especially with UPI’s expanding use cases (e.g., credit cards on UPI, UPI for MSMEs).
• IMPS is becoming more niche and institutional, while UPI handles the bulk of retail digital flows. Expect further relegation of IMPS unless it innovates or finds distinct utility.

AePS: Volatile and Region-Dependent

• Sharp MoM Drop: 16% fall in transactions, 13% drop in value.
• YoY Resilience: Despite the MoM fall, AePS saw 2% volume and 6% value growth YoY.
• Rural Dependency: AePS remains rural-focused, and transaction volumes often vary with MNREGA cycles, subsidy disbursement, or agricultural seasons.
• AePS is cyclical and policy-sensitive. Its drop may reflect lower government disbursements or reduced cash withdrawal needs in April.

BS

3. Policy Direction and Strategic Vision

Context:

The Finance Minister reinforced the government’s commitment to simplifying regulations and enhancing ease of doing business. This aligns with India’s larger ambition of becoming a global economic powerhouse. The emphasis on building domestic efficiencies highlights a strategy of internal consolidation amidst global uncertainties.

Trust in the Private Sector

• Declaring the private sector a “trusted partner” in development marks a shift from regulatory oversight to a more collaborative governance model.
• The policy tone indicates a balance between formalisation and innovation, suggesting room for startups and MSMEs to grow within a stable framework.

Institutional Strengthening and Service Delivery

• The launch of Corporate Bhawan as a one-stop regulatory hub is a major step toward institutional efficiency.
• Co-locating MCA entities including NCLT, IBBI, and SFIO indicates an effort to streamline regulatory coordination and minimise procedural delays.
• A facilitative compliance approach was underlined, possibly hinting at reduced red tape and faster company incorporations.

Skill Development and Internships

• Integration of the PM Internship Scheme’s facilitation centre signals intent to bridge regulatory frameworks with career development.
• It aligns with the broader agenda of youth skilling and employment through formal corporate exposure.

BS

4. Jana Small Finance Bank Set to Seek Universal Banking Licence in May 2025

Context:

Jana Small Finance Bank (SFB) plans to apply to the Reserve Bank of India (RBI) for a universal banking licence in May 2025, according to MD & CEO Ajay Kanwal.

Eligibility Criteria Met

The bank qualifies under RBI norms, having achieved:

• Gross NPA: 2.5% in FY25 (below 3% threshold)
• Net NPA: 0.9% in FY25 (below 1% threshold)
• Profitability: Maintained consistent profitability for the last two years
• Other Requirements: Listed status, net worth over ₹1,000 crore, and scheduled bank status

Strategic Objectives

• Lower Cost of Deposits: Licence will help reduce the bank’s deposit cost
• Improved CASA Ratio: Expected to enhance current and savings account growth
• Secured Loan Expansion: Targeting 80:20 secured-to-unsecured loan mix (currently at 70:30)

What Is Universal Banking?

Universal banking is a system in which banks provide a wide variety of comprehensive financial services, including those tailored to retail, commercial, and investment services.

RBI’s Licensing Guidelines Universal Banking Licences in India (2016)

The Reserve Bank of India introduced the ‘On Tap’ Licensing Policy in August 2016 for private sector universal banks. This policy allows eligible applicants to seek a banking licence at any time, enhancing dynamism and competition in the Indian banking sector.

Eligibility Criteria

• Individuals/Professionals:
  • Must be Indian residents
  • Minimum 10 years of senior-level experience in banking and finance
• Private Entities/Groups:
  • Resident-owned and controlled
  • Minimum 10 years of successful operational track record
  • Large industrial houses excluded but may hold up to 10% stake
• NBFCs:
  • Resident-controlled with a 10-year track record
  • Must meet additional criteria prescribed by RBI
• Small Finance Banks (Conversion Eligibility):
  • Net worth ≥ ₹1,000 crore
  • Scheduled bank status
  • 5-year satisfactory operational record
  • Gross NPA ≤ 3% and Net NPA ≤ 1% for past two years
  • Mandatory listing on stock exchanges

2. Corporate Structure

• NOFHC Requirement:
  • Not mandatory for standalone individual promoters
  • Mandatory for promoters with group entities
  • Promoter group must hold at least 51% of NOFHC’s equity

3. Capital Requirements

• Minimum ₹5 billion paid-up voting equity capital
• Promoters must initially hold ≥40%, locked-in for 5 years
• Shareholding to reduce to 15% within 15 years

4. Foreign Shareholding

• Allowed up to 74% as per current FDI policy
• Subject to minimum domestic promoter shareholding norms

5. Corporate Governance Norms

• Board must consist of a majority of independent directors
• Compliance with Banking Regulation Act, 1949 and prudential norms

6. Financial Inclusion Mandate

• Must submit a viable business plan for inclusion
• 25% of branches must be in unbanked rural centers

7. Listing Obligation

• Bank must be listed on stock exchanges within 6 years of launch

BS

5. NABFID Plans to Raise ₹70,000 Crore in FY26

Context:

NABFID aims to raise up to ₹70,000 crore in FY26, significantly higher than the ₹23,000 crore raised in FY25.

• Sources of Funds: The funds will be sourced from both domestic and international markets, marking a shift towards external commercial borrowings (ECBs) and overseas bond offerings, depending on market conditions.

Outstanding Debt and Borrowing Growth

• Debt Securities: Outstanding debt securities rose to ₹37,190 crore in March 2025, up from ₹19,668 crore in March 2024.
• Lender Borrowings: Borrowings from lenders more than doubled to ₹11,934 crore in FY25, compared to ₹5,550 crore the previous year.

Asset Growth Projections

• Asset Doubling: NABFID expects its total assets, comprising loans and investments in instruments like debentures, to nearly double from ₹59,000 crore in March 2025 to ₹1.15 trillion by March 2026.

This strategy reflects NABFID’s ambition to expand its financial capacity to support infrastructure development across India.

BS

6. Large Cap, Mid Cap, And Small Cap Funds

Context:

After a period of underperformance, largecap funds are seeing a resurgence. They have outperformed smallcap funds in the two-year Systematic Investment Plan (SIP) returns chart. SIP investments in largecap funds have generated an average annualized return of 11.3% over the past two years. In comparison, smallcap funds have provided 7.2% annualized returns.

Midcap Funds

• Midcap Funds’ Position: Midcap funds continue to outperform largecap funds with a 12.6% annualized return over the two-year period.

What Is The Difference Between Large Cap, Mid Cap, And Small Cap Funds?

Mutual funds are among the most effective investment options for wealth creation, especially for beginners. One of the key ways mutual funds are classified is based on market capitalization—the total market value of a company’s outstanding shares.

What is Market Capitalization?

Market capitalization (or market cap) is the total value of a company’s outstanding shares, calculated as:
Market Cap = Current Market Price per Share × Total Number of Outstanding Shares
Based on this value, SEBI categorizes companies into three main types:

Large-cap Companies

• Definition: Top 100 companies by market cap
• Market Cap Range: ₹20,000 crore and above
• Mutual Fund Type: Large-cap funds
• Characteristics:
  • Stable returns
  • Lower risk
  • High liquidity
  • Typically includes blue-chip stocks (e.g., Nifty 50 companies)

Mid-cap Companies

• Definition: Ranked 101st to 250th by market cap
• Market Cap Range: ₹5,000 crore to ₹20,000 crore
• Mutual Fund Type: Mid-cap funds
• Characteristics:
  • Moderate risk and volatility
  • Potential for higher returns than large-caps
  • Medium liquidity
  • Suitable for medium-term investment goals

Small-cap Companies

• Definition: Ranked 251st and beyond
• Market Cap Range: Below ₹5,000 crore
• Mutual Fund Type: Small-cap funds
• Characteristics:
  • Highest risk due to limited track record
  • High volatility
  • Low liquidity
  • Strong growth potential for long-term investors

Large-cap vs Mid-cap vs Small-cap Funds

Factor	Large-cap Funds	Mid-cap Funds	Small-cap Funds
Risk Profile	Low	Moderate	High
Volatility	Low	Medium	High
Liquidity	High	Medium	Low
Average 5-Year Return	~7%	~10.28%	~14.74%
Investment Horizon	Short to medium-term	Medium to long-term	Long-term only
Ideal For	Conservative investors	Balanced investors	Aggressive investors with high-risk tolerance

7. BSE Seeks Approval for Monthly Derivative Contracts on New Indices

Context:

The Bombay Stock Exchange (BSE) has sought approval from the Securities and Exchange Board of India (Sebi) to offer monthly derivative contracts for two to three additional indices, including several thematic indices.

• Market Share Ambitions: This move is aimed at expanding the BSE’s share in the Futures and Options (F&O) segment, a key growth area for the exchange.

Regulatory Process and Timeline

• Approval Challenges: While the proposal is in the works, it may take time for Sebi to grant approval. This delay is partly due to ongoing regulatory changes and proposals surrounding F&O, including adjustments in delta calculation and the potential limitation of expiry days to two.
• Sebi’s Criteria for Approval: To qualify for monthly derivative contracts, an index must meet several conditions set by Sebi, such as ensuring that the stocks contributing to 80% of the index’s weight are eligible for derivative trading. Additionally, any stock ineligible for F&O must not have a weighting of more than 5% in the index.

Recent Developments and Index Launches

• New Indices Launched: Since September 2024, BSE has introduced 20 new indices based on market capitalisation, sector classification, and other criteria. These include BSE 1000, BSE Focused Midcap, BSE 250 Microcap, BSE PSU Bank, and BSE Focused IT.
• Use of Indices: These indices can be used for various financial products like mutual funds, portfolio management services (PMS), exchange-traded funds (ETFs), and index funds.

Current Market Offerings and Performance

• Existing Monthly Contracts: Currently, the BSE offers monthly derivative contracts for three indices: Sensex, Bankex, and Sensex50.
• Market Share Growth: BSE’s market share in index options has increased from 16.4% in December 2024 to around 22.1% in February 2025, boosted by regulatory changes that have helped increase premium turnover.

Future Prospects

• Potential for Further Expansions: The BSE plans to continue engaging with market participants and regulators to develop new products and services that meet the evolving market demand.
• Ongoing Consultation: The BSE spokesperson emphasized that the process of regulatory engagement is continuous, involving adjustments to align with the dynamic nature of the capital market.

BS

8. SEBI Proposes Enhanced Role for Credit Rating Agencies in Equity Market

Context:

The Securities and Exchange Board of India (SEBI) has proposed that credit rating agencies (CRAs) take a more active role in scrutinising companies raising money in the equity market. The regulator aims to ensure that questionable companies do not access capital markets, which could lead to investor protection issues.

Key Aspects of the Proposal

• Closer Scrutiny of Fund Utilisation: SEBI has suggested that rating agencies should closely monitor how companies utilize the funds they raise in the equity markets. This would help in preventing misuse of capital raised from public investors.
• Evaluation of Fund Necessity: The regulator has proposed that CRAs assess whether a company’s decision to raise funds through the equity market is justified. This includes evaluating whether the amount being raised is appropriate for the company’s business needs and financial track record.

What are Credit Rating Agencies?

CRAs theoretically provide investors with an independent evaluation and assessment of debt securities’ creditworthiness. However, in recent decades the paying customers of CRAs have primarily not been buyers of securities but their issuers, raising the issue of conflict of interest (see below).

TET

9. Opportunities and Challenges in the Gold Loan Sector Amid RBI’s Regulatory Overhaul

Context:

The Reserve Bank of India (RBI) issued draft guidelines on April 9, 2025, to harmonize the regulatory framework for gold loans, aiming to strengthen governance in the sector and address observed regulatory concerns. The new rules are expected to bring more stability and clarity to the gold loan market, which could help attract further investments and partnerships, particularly for fintech firms.

Rising Interest from Fintech Firms

• New fintech players are seeing a significant opportunity in the gold loan sector due to these regulatory changes. Many fintechs that have traditionally focused on unsecured consumer lending are now exploring co-lending partnerships with banks and non-banking financial companies (NBFCs) to offer secured gold loans.
• Co-lending is seen as a way to expand credit offerings and mitigate risks, offering a lucrative growth avenue for fintech firms in an otherwise competitive space.

New Market Entrants

• Several new players are entering the gold loan market, including L&T Finance and Poonawala Fincorp, signaling further growth potential.
• Established fintech companies like Rupeek, Oro Money, Indiagold, and Manipal Fintech are already active in the space, with the latter recently appointing Puja Abhishek Singh as CEO, who previously led business operations at Paytm.

Partnerships and Expansion

• Startups like Moneyview, which achieved a $1 billion valuation in 2024, are now looking to enter the gold loan market, further indicating the sector’s growth potential.
• Digital payments firm PhonePe has started acquiring gold loan customers for Muthoot Finance and Muthoot Fincorp through its app, marking a strategic expansion into the lending sector.
• BankBazaar, traditionally an unsecured loan sourcing platform, has also entered the gold loan market by partnering with Muthoot Fincorp to source gold loan customers via digital channels. Muthoot Fincorp has even invested ₹15 crore to acquire a stake in BankBazaar.

Market Potential and Consumer Demand

• India is home to approximately 25,000 tonnes of gold across households, making borrowing against gold jewellery a popular means of financial protection, especially during times of economic uncertainty.
• A large portion of India’s gold loan market remains underserved, with an estimated 65% of the market being informally served. The introduction of clearer regulations is expected to help formalize and expand access to this under-served segment.

TET

10. India Post & SBI Mutual Fund Join Hands to Offer Doorstep KYC Services

Context:

India Post and SBI Funds Management have signed an MoU to simplify mutual fund KYC onboarding through India’s vast postal network, boosting financial inclusion and investor access.

Key Highlights

• Objective: Enable secure, accessible, doorstep KYC collection, especially in rural and underserved areas.
• Reach: Leverages India Post’s 1.64 lakh+ post offices across the country.
• Execution: Trained postal staff will visit investors’ homes to collect KYC documents.
• Beneficiaries: Senior citizens, rural investors, and those with mobility issues.
• Alignment: Supports Jan Nivesh, Digital India, and overall financial literacy and participation goals.

Impact

• Empowers wider participation in mutual funds.
• Bridges the accessibility gap in capital market onboarding.
• Reinforces India Post’s growing role in digital financial services.

This initiative marks a milestone in democratizing mutual fund investments, combining trusted postal infrastructure with financial innovation for inclusive economic growth.

11. Bajaj Allianz Launches ‘ClimateSafe’

Context:

Bajaj Allianz General Insurance has introduced ‘ClimateSafe’, a first-of-its-kind parametric insurance product in India, offering swift financial relief against climate-induced risks using predefined weather triggers.

Key Highlights

• Target Customers: Retail workers, gig economy workers, drivers, shop owners, residents, and event attendees.
• Covered Risks: Extreme heat, cold waves, and excessive rainfall.
• Claims Process: Automatic settlement within 7 days, no customer intimation needed.
• Flexibility:
  • Risk location and duration (1–30 days) selectable by customer
  • Dynamic premiums based on real-time weather data
  • Multiple purchases allowed in a year

Impact

• Addresses income disruptions and expenses due to climate volatility
• Enhances financial resilience for vulnerable and informal sector workers
• Promotes tech-led climate risk insurance adoption in India

‘ClimateSafe’ redefines insurance accessibility in a warming world—offering affordable, tech-enabled climate resilience to India’s most exposed populations.

12. SBI Partners with LPAI to Boost Banking Services at India’s Border Land Ports

Context:

State Bank of India (SBI) has signed an MoU with the Land Ports Authority of India (LPAI) to enhance banking and trade-related financial services across 26 land ports on India’s borders, aligning with the Viksit Bharat 2047 vision.

Key Highlights

• LPAI Network: Operates 15 land ports across 8 states; 11 more approved in border regions like UP, Bihar, Mizoram, and West Bengal
• Trade & Passenger Volume (FY24): ₹70,952 crore in trade; 30.46 lakh passengers; forex trade valued at ₹71,000 crore
• Growth Trends: Trade and passenger movements surged by 15x and 18x over the last decade
• SBI’s Role:
  • Provide forex services, bulk cargo insurance, and digital banking
  • Offer corporate salary packages with benefits for LPAI employees
  • Support trade expansion goals from ₹80,000 crore to ₹2 lakh crore by 2030

Strategic Impact

• Facilitates cross-border commerce with neighboring countries (Nepal, Bangladesh, Bhutan, Myanmar)
• Enhances financial infrastructure at crucial land trade gateways
• Boosts India’s economic integration and regional connectivity

About SBI

• Founded: 1 July 1955
• HQ: Mumbai
• Chairman: Challa Sreenivasulu Setty

About LPAI

• Established: March 1, 2012, under LPAI Act, 2010
• HQ: New Delhi
• Chairman: Aditya Mishra
• Parent Ministry: Ministry of Home Affairs

13. SBI Partners with LPAI to Boost Banking Services at India’s Border Land Ports

Context:

State Bank of India (SBI) has entered into a strategic partnership with the Land Ports Authority of India (LPAI) to enhance trade-linked financial and digital banking services across India’s land ports. This aligns with the government’s Viksit Bharat 2047 vision to modernize infrastructure and facilitate regional commerce.

Key Highlights

• LPAI Footprint: Currently operates 15 land ports across 8 states; 11 more are in the pipeline, including sites in Uttar Pradesh, Bihar, Mizoram, and West Bengal
• FY24 Trade Metrics:
  • Cross-border trade: ₹70,952 crore
  • Passenger footfall: 30.46 lakh
  • Forex trade value: ₹71,000 crore
• Growth Milestones:
  • Trade volume has grown 15x
  • Passenger movement increased 18x over the last decade
• SBI’s Contribution:
  • Provide end-to-end forex services, digital banking, and trade facilitation
  • Offer bulk cargo insurance and corporate salary packages for LPAI staff
  • Support government’s goal to boost trade volume to ₹2 lakh crore by 2030

Strategic Relevance

• Strengthens India’s trade logistics with key neighbors: Nepal, Bangladesh, Bhutan, and Myanmar
• Upgrades banking infrastructure at high-traffic land trade corridors
• Reinforces India’s role in regional economic connectivity and supply chain resilience

About SBI

• Founded: July 1, 1955
• Headquarters: Mumbai
• Chairman: Challa Sreenivasulu Setty

About LPAI

• Established: March 1, 2012 (under the LPAI Act, 2010)
• Headquarters: New Delhi
• Chairman: Aditya Mishra
• Parent Ministry: Ministry of Home Affairs

14. RBI Adds 57.5 Tonnes to Gold Reserves in FY25 Amid Global Volatility

Context:

In FY25, the Reserve Bank of India (RBI) purchased 57.5 tonnes of gold, its second-highest annual acquisition since 2017, driven by global uncertainties and a surge in gold prices.

Key Highlights

• Total Gold Holdings: Reached 879.6 tonnes as of March 2025, up from 822.1 tonnes in FY24
• Year-wise Purchases:
  • FY22: 66 tonnes (highest)
  • FY23: 35 tonnes
  • FY24: 27 tonnes
• Gold Price Surge: Global prices rose 30%, enhancing gold’s appeal as a safe-haven asset
• Trump Re-election Effect: Dollar volatility post-Nov 2024 election spurred RBI’s gold buy
• India’s Global Rank: Now 7th in global gold reserves, up from 10th in 2015
• Gold in Forex Reserves: Rose from 6.86% (2021) to 11.35% (2024)

Forex Reserves Context

• Definition: Assets held by RBI in foreign currencies, bonds, T-bills, etc.
• Main Components:
  • Foreign Currency Assets (FCA) – largest
  • Gold Reserves – second largest
  • Special Drawing Rights (SDR) – IMF-backed asset based on five major currencies
  • Reserve Tranche Position (RTP) – IMF quota-based emergency borrowing facility

RBI’s gold purchases align with a strategy to hedge against currency volatility, diversify reserves, and enhance financial security amid global economic risks.

15. Razorpay Launches India’s First AI-Integrated Model Context Protocol (MCP) Server

Context:

Razorpay has launched India’s first Model Context Protocol (MCP) server for payment gateways, enabling AI tools like chatbots to execute payment operations autonomously, bypassing traditional APIs or dashboards.

Key Highlights

• MCP Capabilities:
  • AI assistants can now:
    • Create payment links
    • Initiate refunds
    • Manage transactions via simple text commands
  • Example: “Send ₹500 to Neha on WhatsApp”
• Real-time Automation: Enhances speed, accuracy, and efficiency of business payments
• Seamless Integration: AI systems can directly plug into Razorpay’s backend for end-to-end payment management

UPI Infrastructure Partnership

• Partner: Airtel Payments Bank
• Service: Razorpay’s UPI Switch
• Performance:
  • 10,000 transactions/sec capacity
  • <100 ms latency
  • 24-hour issue resolution (7x faster than industry average)
  • 4–5% improvement in transaction success rate

This innovation marks a leap in AI-led financial automation in India, strengthening Razorpay’s backend capabilities and expanding its presence in UPI infrastructure services.

Economy

1. MGNREGA Work Demand Declines in April 2025

Work Demand Overview

• Demand Decrease: In April 2025, households demanding work under the Mahatma Gandhi National Rural Employment Guarantee Act (MGNREGA) stood at 20.1 million, reflecting a 6.6% decrease compared to April 2024.
• Historical Comparison: This figure is the lowest for April since 2020-21. However, it is still higher than pre-Covid levels, although the gap between current demand and pre-Covid demand is narrowing.

Year-on-Year and Sequential Trends

• Year-on-Year Drop: The demand for work in April 2025 showed a decline compared to the same month in the previous year.
• Sequential Growth: Despite the year-on-year decline, the demand in April 2025 was higher than in March 2025, indicating a sequential increase in work demand.

Financial Allocation and Labour Budget

• Union Budget Allocation: The Union Budget for FY26 allocated ₹86,000 crore for MGNREGA, maintaining the same amount as the Revised and Budget Estimates for the previous year.
• Approved Labour Budget: The approved labour budget for FY26 is around 199 crore person-days, which is 18.44% lower than the actual labour budget for FY25.

This reflects the ongoing trend of fluctuating demand for work under the scheme, despite consistent financial support from the government.

BS

Facts To Remember

1. PM Modi to relaunch Amaravati project today

Preparations for Prime Minister Narendra Modi’s visit to Amaravati to relaunch the capital city construction works have been completed.

2. Caravaggio’s ‘Mary Magdalene in Ecstasy’ Unveiled at KNMA, Delhi

Kiran Nadar Museum of Art (KNMA), Saket, is exhibiting Mary Magdalene in Ecstasy by Michelangelo Merisi da Caravaggio. The painting, long considered lost, was rediscovered in 2014 and authenticated by leading historians. First time the original Baroque masterpiece is being displayed in India

3. Army, Air Force see major changes at the top as new leaders take over

In a series of major changes in the top brass of the Army and Indian Air Force (IAF), Lt. Gen. Pratik Sharma took over as the Northern Army Commander, and Air Marshal Ashutosh Dixit took charge as the Chief of Integrated Defence Staff. Air Marshal Narmdeshwar Tiwari is set to take over as the Vice-Chief of the Indian Air Force (IAF).

4. Trump removes Mike Waltz from the post of National Security Adviser

U.S. President Donald Trump ousted his national security adviser Mike Waltz and named Secretary of State Marco Rubio as his interim replacement in the first major shakeup of Mr. Trump’s inner circle since he took office in January.

5. Arvind Shrivastava takes charge as Revenue Secy

Arvind Shrivastava,a 1994 batch Indian Administrative Services (IAS) officer of the Karnataka cadre, took charge as secretary, department of revenue, Union Ministry of Finance.

6. India’s Forex Reserves Rise by $1.98 Billion to $688.13 Billion

India’s foreign exchange reserves rose by 1.98 billion dollars, reaching 688.13 billion dollars in the week ending April 25. According to the Weekly Statistical Supplement released by the Reserve Bank of India, during the last week, foreign currency assets, a major component of the reserves, were up by 2.17 billion dollars to around 580.6 billion dollars.

7. I&B Ministry to Unveil Media and Entertainment Sector Handbook at WAVES 2025

The Information and Broadcasting Ministry will release the Statistical Handbook on the Media and Entertainment Sector 2024-25 at WAVES 2025 in Mumbai tomorrow.

8. India & EU reaffirm commitment to conclude free trade agreement by 2025

Minister of Commerce and Industry Piyush Goyal and European Commissioner for Trade and Economic Security Maroš Šefčovič have reaffirmed their shared resolve to conclude the India-European Union Free Trade Agreement (FTA) by the end of 2025. 

Daily Current Affairs Quiz
3 May, 2025

International Affairs

1. India-UK FTA Talks Resume

Context:

Union Commerce Minister Piyush Goyal met UK Trade Secretary Jonathan Reynolds in an unscheduled resumption of Free Trade Agreement (FTA) talks in London. Goyal’s return follows an earlier two-day visit this week that ended without a final deal. Negotiations began in January 2022, post-Brexit, but faced delays due to frequent changes in British leadership. The new Labour government has accelerated the process.

Status of Negotiations

• Few Issues Remain: Businesses close to the matter say only a few sticking points are left.
• Finalized Areas: Tariff reductions on whisky and automobiles have reportedly been agreed upon.
• Constructive Dialogue: Both governments described the latest discussions as “constructive”, indicating substantial progress.

Parallel Negotiations

• Bilateral Pacts: India and the UK are also negotiating separate treaties on investment protection and social security alongside the FTA.
• Investment Treaty Clause: Expected to include investor-state dispute settlement (ISDS) provisions, enabling companies to sue governments over policy changes impacting investments.
• US Tariff Concerns: Both India and the UK are seeking separate trade negotiations with the US to resolve tariff-related issues.

Implications

• A successful FTA would boost bilateral trade, provide duty benefits, and offer legal protection for investors.
• The deal may serve as a model for future post-Brexit UK trade pacts with emerging economies.

BS

National Affairs

1. Vizhinjam Port

Context:

PM Narendra Modi inaugurated the ₹8,800-crore Vizhinjam International Deepwater Multipurpose Seaport in Thiruvananthapuram, Kerala. This is India’s first dedicated container transshipment port, strategically located near major global shipping routes. The port is developed by Adani Ports and SEZ Ltd under a public-private partnership (PPP) with the Kerala government.

Prime Minister’s Remarks

• Economic Vision: Modi emphasized that port cities and coastal States will be pivotal to India’s growth and transformation into a developed economy.
• Policy Blueprint: The Centre’s focus is on infrastructure development and ease of doing business, which has shaped the port and waterways strategy over the past decade.
• Private Sector Role: Highlighted massive PPP investments as critical in upgrading ports to global standards and making India’s maritime sector future-ready.

Port Features & Benefits

• Natural Depth: Nearly 20-metre deep draft makes it ideal for handling large container ships.
• Reduced Dependence: The port will minimize India’s reliance on foreign ports for transshipment, boosting efficiency and lowering logistics costs.
• Global Trade Integration: Enhances India’s presence in international maritime trade, aligning with long-term export and logistics goals.

TH

2. PM Modi Launches ₹58,000-Crore Projects in Andhra Pradesh

Context:

PM Narendra Modi laid the foundation stone and inaugurated infrastructure works worth ₹58,000 crore in Andhra Pradesh. Ceremony held near the Secretariat in Guntur district, with virtual participation for select projects.

Amaravati Capital Development

• Amaravati Revived: Modi restarted the stalled capital city works at Amaravati, originally launched by him in 2015 under the TDP regime.
• Past Delays: Development halted due to the three-capital policy of the YSR Congress Party government.
• Renewed Commitment: Modi assured full Central support and declared that all obstacles are now cleared for Amaravati’s development.
• Future Vision: Projected Amaravati as a hub for IT, AI, green energy, education, healthcare, and clean industries.
• Cultural Sentiment: Quoting in Telugu, Modi said, “Amaravati oka nagaram kaadu, oka Shakti” (Amaravati is not a city, it’s a force).

Infrastructure Projects Highlights

• National Highways & Railways: Over ₹9,000 crore allocated to railway projects, with broad emphasis on inter-state connectivity.
• Defence Sector: Foundation laid for a Missile Testing Range at Nagayalanka (Krishna district) to bolster the national defence ecosystem.
• River Linking Support: Backing extended for Polavaram project, aimed at harnessing Godavari and Krishna rivers for irrigation and water supply.

Socio-Economic Initiatives

• Inclusive Development Focus: Emphasis on empowering farmers, youth, women, and the poor, with targeted welfare schemes.
• Central-State Collaboration: PM reaffirmed that joint efforts with CM Chandrababu Naidu and Deputy CM Pawan Kalyan would fulfill the dream of “Viksit Andhra” envisioned by N.T. Rama Rao.

TOI

3. Global Media Dialogue 2025

Overview

• Event: Global Media Dialogue 2025
• Platform: Government-to-government initiative, held during the World Audio Visual Entertainment Summit (WAVES)
• Hosted by: India; attended by delegates from 60+ countries

Key Objectives

• Foster technology-driven pluralism and a democratised international system
• Promote cultural diversity, local storytelling, and cross-border media collaboration
• Reimagine global discourse beyond colonial-era structures and great power dominance

WAVES Declaration Highlights

• Adopted by all member states
• Core Commitments:
  • Promote cultural diversity and responsible AI use
  • Enhance global cooperation in the media and entertainment sector
  • Reduce digital and cultural divides
  • Ensure fair and ethical media practices
  • Combat misinformation and disinformation through responsible journalism

Strategic Outcomes:

• Global consensus on:
  • Enabling creative innovation and cultural preservation
  • Strengthening media integrity and fact-based reporting
  • Supporting inclusive, ethically governed digital media ecosystems

Significance:

• Positions India as a thought leader in shaping a more inclusive, multipolar media order
• Lays groundwork for a collaborative global media framework, anchored in shared cultural values and equitable digital access

PIB

Banking/Finance

1. RBI Working Group Recommends Longer Call Money Market Hours to Enhance Liquidity Flexibility

Key Recommendations by RBI Working Group (Chaired by Radha Shyam Ratho):

• Extended Trading Hours for Call Money Market:
  • Proposed trading window to be extended till 7:00 PM (from the current 5:00 PM).
  • Aims to offer greater flexibility for banks in overnight fund management and balance sheet optimization.
• Changes to Market Repo & Tri-Party Repo (TREP):
  • Synchronize and extend trading hours for both market repo and TREP to 4:00 PM.
  • Unify TREP trading hours for participants settling via Designated Settlement Banks and RBI.
• Revised LAF Auction Timings:
  • Prepone the Liquidity Adjustment Facility (LAF) auction to 9:30–10:00 AM, from the current 10:00–10:30 AM.
  • This change is aimed at improving liquidity planning during the trading day.
• Government Securities Market:
  • No change to current onshore trading hours.
  • However, offshore trading with non-residents may be allowed between 5:00 PM and 11:30 PM, subject to:
    • T+1 trade reporting on NDS-OM before onshore hours.
    • T+2 settlement cycle.
• No Changes Proposed For:
  • Interest Rate Derivatives
  • Foreign Exchange Markets

Rationale Behind the Recommendations

• Post-5 PM, many banks face settlement uncertainties, impacting overnight fund usage.
• Greater alignment with global best practices and rising market volumes demand flexible frameworks.
• Feedback from market participants revealed a strong preference for operational flexibility.

Market Trends and Data Highlights (2014–2025)

• Overnight Money Market Annual Turnover:
  • Grew from ₹281.37 trillion (2014–15) to ₹1,324.05 trillion (2024–25).
• Daily Average Turnover:
  • Increased from ₹1.17 trillion to ₹5.52 trillion in the same period.
• TREP Segment Dominance:
  • Accounts for 69% of daily average volume, followed by market repo (29%).
  • Call Money share fell from 13% to 2%.

The RBI’s working group has proposed a pragmatic set of market reforms to reflect the evolving structure of India’s financial ecosystem. These changes aim to improve liquidity management, ensure operational continuity, and enhance market efficiency.

BS

2. RBI Seeks Government Nod to Remove Cap on Vostro Account Investment in Short-Term Sovereign Debt

Context:

In 2022, the Reserve Bank of India (RBI) introduced Special Rupee Vostro Accounts (SRVAs) to facilitate rupee-based trade settlements, aiming to promote the internationalisation of the rupee. These SRVAs allow foreign banks to hold rupee balances in India through domestic banks for trade settlement without registering as Foreign Portfolio Investors (FPIs).

Current Restriction

• As per existing norms, only 30% of SRVA balances can be invested in short-term sovereign debt instruments (residual maturity less than one year), including treasury bills.
• This restriction was designed to:
  • Encourage long-term capital inflows.
  • Support financial stability by avoiding excess short-term speculative flows.

RBI’s Proposal to Finance Ministry

• The RBI has written to the Finance Ministry, seeking removal of the 30% cap on short-term investments by SRVA holders.
• The central bank argues this limit is discouraging usage of SRVAs and restricting short-term liquidity management for foreign banks.
• Feedback from SRVA participants indicated the cap was a major barrier to operational efficiency.

Objective Behind the Move

• Boost rupee-denominated investments and trade settlement through SRVAs.
• Enhance global acceptance of the rupee for international trade.
• Provide greater flexibility to overseas banks using SRVAs for managing trade-linked liquidity.

Significance

• If approved, the measure could:
  • Increase foreign interest in rupee assets.
  • Enhance demand for short-term Indian sovereign debt.
  • Further India’s goal of establishing the rupee as a global trade currency.

BS

3. Poonam Gupta Appointed Deputy Governor of RBI

Context:

Economist Poonam Gupta took charge as a Deputy Governor of the Reserve Bank of India (RBI) on Friday, becoming the fourth woman to hold this position. She succeeds Michael Patra, whose term ended in January 2025.

Departments Under Her Oversight:

Poonam Gupta will oversee several critical RBI departments, including:

• Monetary Policy Department
• Financial Markets Operations Department
• Department of Economic and Policy Research
• Financial Stability Department
• International Department
• Department of Statistics and Information Management
• Corporate Strategy and Budget Department
• Department of Communication

Role in Monetary Policy:

• Gupta will be part of the six-member Monetary Policy Committee (MPC), responsible for setting interest rates.
• The MPC has cut the policy repo rate by 25 basis points each in its last two meetings (April and February).
• The next MPC meeting is scheduled for June 2025.

BS

4. SEBI Alleges Insider Trading Violation by Pranav Adani

Context:

Pranav Adani, a key director in Adani Group companies and nephew of founder Gautam Adani, is facing insider trading allegations from the Securities and Exchange Board of India (SEBI). According to a SEBI notice reviewed by Reuters, Pranav Adani allegedly shared unpublished price-sensitive information (UPSI) regarding Adani Green Energy’s 2021 acquisition of SB Energy Holdings, backed by SoftBank.

What Is Illegal Insider Trading?

Definition

Illegal insider trading involves buying or selling securities while in possession of material, nonpublic information in violation of a fiduciary duty or a relationship of trust and confidence. It also includes tipping such information to others who then trade based on it.

Key Violations Include

• Trading by corporate insiders (officers, directors, employees) who have access to confidential information
• Trading by tippees (friends, family, or associates) who receive insider information from company insiders
• Employees of law firms, banks, brokerages, or printing firms who misuse corporate information
• Government employees who trade on confidential information acquired through their official roles
• Political intelligence consultants who tip or trade on nonpublic government information
• Others who misappropriate confidential information from any trusted source (e.g., employers, friends)

Examples of Insider Trading Cases Brought by the SEC

• Company executives trading on confidential merger or earnings information
• Friends or family trading stocks after receiving a tip from an insider
• Legal or financial professionals using client information to trade securities
• Government insiders or consultants leveraging political intelligence for financial gain

Why It Matters

Illegal insider trading erodes public trust in the financial markets by giving unfair advantages to a select few. To maintain market integrity, the U.S. Securities and Exchange Commission (SEC) prioritizes detecting, investigating, and prosecuting such violations.

Nature of Allegation

• The regulator claims Adani shared deal-related information with his brother-in-law before the acquisition was publicly disclosed.
• The incident potentially violates India’s Prohibition of Insider Trading Regulations, which aim to curb unfair advantages in securities trading.

Background:

• The Adani Green–SB Energy deal was a major transaction valued at $3.5 billion, marking one of the largest M&A deals in India’s renewable energy sector in 2021.
• This is the first time such allegations have surfaced publicly against Pranav Adani, a long-time executive and public face of the group.

Implications:

• The case could test SEBI’s enforcement powers in high-profile insider trading matters.
• A settlement without admission may help Adani avoid protracted litigation but still leaves reputational questions open.

BS

5. NSE Launches Nifty Waves Index for Media, Entertainment, and Gaming Sectors

Key Highlights:

The National Stock Exchange (NSE) launched a new thematic index — the Nifty NSE Waves Index at the World Audio Visual & Entertainment Summit (WAVES) in Mumbai. The index is designed to track the performance of companies in the media, entertainment, and gaming sectors, reflecting growing investor interest in these industries.

Index Composition

• The Nifty Waves Index includes 43 listed companies, such as:
  • Nazara Technologies
  • PVR Inox
  • Zee Entertainment
  • Saregama India
  • Network18 Media & Investments
• Weight cap: Each stock’s weight in the index is capped at 5%, ensuring diversified exposure.

Objective and Relevance

• The index aims to provide a benchmark for tracking performance in India’s rapidly evolving digital entertainment economy.
• It also aligns with the broader market shift toward thematic investing in niche and high-growth sectors like gaming, OTT, music, and media.

TH

6. SEBI Proposes Framework Relaxations for InvITs and REITs to Ease Business Environment

Context:

The Securities and Exchange Board of India (SEBI) released a discussion paper on Friday outlining proposed relaxations in the regulatory framework for Infrastructure Investment Trusts (InvITs) and Real Estate Investment Trusts (REITs). The move is part of SEBI’s broader agenda to promote ease of doing business and enhance the attractiveness of these instruments for both issuers and investors.

Major Proposals Include

• Redefinition of ‘Public’ Unitholders:
  • SEBI proposes changes to the definition of ‘public’ for the purpose of calculating minimum public unitholding requirements.
  • This could help trusts meet public holding norms more flexibly, especially during fundraising or restructuring events.
• Additional Relaxations (Under Consideration):
  • Easing of listing obligations and disclosure norms.
  • Simplification of capital raising procedures for InvITs and REITs.
  • Enhanced flexibility in leverage limits and investment conditions.

Objective and Impact

• These proposals are aimed at streamlining regulatory compliance, reducing friction in capital markets, and encouraging greater participation in long-term infrastructure and real estate investments.
• If adopted, the new rules could spur growth in REIT and InvIT listings, attract global capital, and boost retail and institutional investor confidence.

BS

7. SEBI Proposes Simplified Disclosure Norms for QIP Placement Documents

Context:

The Securities and Exchange Board of India (SEBI) on Friday proposed amendments to the ‘placement document’ required for Qualified Institutions Placement (QIP). The changes aim to streamline disclosure requirements by focusing only on information relevant to the issuer, eliminating redundant details.

Key Highlights:

• QIP’s Importance: In FY24, QIPs accounted for 35% of total equity-based fund mobilization, making them a crucial fundraising tool for listed companies.
• Rationale for the Proposal:
  • SEBI noted that listed entities already adhere to continuous disclosure obligations.
  • The current QIP format mandates extensive disclosures that are duplicative and time-consuming.

Proposed Changes

• Amend the QIP placement document format to focus exclusively on:
  • Material information specific to the issuer
  • Recent developments impacting the company
  • Risk factors and key financials already disclosed via regulatory filings

Expected Impact

• Reduced compliance burden and faster fundraising process for companies.
• Enhanced efficiency and transparency in capital raising via QIPs.
• Likely to encourage more frequent usage of the QIP route by listed firms.

TET

8. RBI Panel Proposes Extension of Call Money Market Hours till 7 PM

Context:

A Reserve Bank of India (RBI) working group has recommended extending the call money market trading hours by two hours, from 5:00 PM to 7:00 PM, to align with the 24×7 availability of payment systems and support better liquidity management among banks.

Key Recommendations

• Call Money Market: Extend trading hours till 7:00 PM to enhance reliance on this regulated interbank platform.
• Market Repo & TREPS: Unify and extend trading hours for both segments to 4:00 PM from the current 3:00 PM.
• Government Securities (Post-Market): Permit post-onshore trading with non-residents from 5:00 PM to 11:30 PM, with reporting on T+1 and settlement on T+2 via NDS-OM.
• No change proposed for trading hours in the bond and foreign exchange markets.

Rationale & Industry Viewpoint

• 24×7 RTGS has made it challenging to manage end-of-day fund flows, leading to increased reliance on RBI’s Standing Deposit Facility (SDF) or Marginal Standing Facility (MSF).
• Banks lose potential earnings when surplus funds are parked in SDF rather than the interbank market.
• Call money’s share in the overnight money market has declined from 13% (2014-15) to ~2%, but it remains critical as the call rate serves as the RBI’s operational target under its current monetary policy framework.
• TREPS holds 69% market share, followed by market repo at 29%.

Next Steps

• The RBI is accepting public comments until May 30, after which it will take a final decision on the recommendations.

TET

9. RBI Imposes Penalties on ICICI Bank, Axis Bank, and 3 Others for Regulatory Non-Compliance

Context:

On Friday, the Reserve Bank of India (RBI) imposed monetary penalties on five major banks ICICI Bank, Axis Bank, Bank of Maharashtra, Bank of Baroda, and IDBI Bank for violations across multiple regulatory frameworks, including KYC norms, cyber security, and customer service standards.

Bank-wise Penalties and Reasons

1. ICICI Bank
   • Penalty: ₹97.8 lakh
   • Violations:
     • Delayed reporting of a cybersecurity incident
     • Weak alert systems for account monitoring
     • Failure to send credit card statements, while levying late payment fees
2. Axis Bank
   • Penalty: ₹29.6 lakh
   • Violation:
     • Unauthorized use of internal/office accounts
3. Bank of Maharashtra
   • Penalty: ₹31.8 lakh
   • Violation:
     • Non-compliance with Know Your Customer (KYC) regulations
4. Bank of Baroda
   • Penalty: ₹61.4 lakh
   • Violations:
     • Lapses in financial services compliance
     • Deficiencies in customer service and deposit interest rate disclosures
5. IDBI Bank
   • Penalty: ₹31.8 lakh
   • Violation:
     • Non-compliance with the interest subvention scheme related to Kisan Credit Card (KCC) loans for agriculture

Regulatory Context

These penalties are administrative actions under RBI’s supervisory powers and are not meant to question the validity of any transaction or agreement with customers.

Implications

This development underscores RBI’s emphasis on cybersecurity preparedness, customer service integrity, and accurate implementation of government subsidy schemes, particularly in agriculture finance.

TET

10. SEBI Rules Out Aptitude Test for Retail F&O Traders, Emphasizes Investor Autonomy

Context:

Securities and Exchange Board of India (SEBI) Chairperson Tuhin Kanta Pandey has dismissed the idea of introducing an aptitude test for retail traders in the Futures and Options (F&O) segment, citing concerns over feasibility and regulatory overreach.

Key Highlights:

1. No Aptitude Test for F&O Participation

• SEBI will not introduce a mandatory screening or aptitude test for retail investors to trade in derivatives.
• The move is aimed at maintaining a balance between investor protection and personal financial autonomy.

2. Regulatory Perspective on Derivative Trading

• In November 2023, SEBI introduced curbs on excessive speculation in derivatives to reduce financial risk.
• A SEBI internal study revealed that 90% of retail investors incur losses in F&O trading.

3. Focus on Certification for Key Market Participants

• SEBI currently mandates NISM certifications for certain roles such as investment advisors and registered intermediaries, but not for individual retail traders.

4. Emphasis on Individual Autonomy

• SEBI asserts that individuals should have the freedom to manage their investments.
• The regulator encourages informed decision-making rather than imposing restrictions on access to markets.

5. Leverage and Risk Controls

• SEBI discourages the use of leverage for trading due to the high risk involved.
• Leverage-based trading is not permitted in Alternative Investment Funds (AIFs).

6. Systemic Checks and Market Surveillance

• SEBI believes the current market infrastructure has adequate checks and balances.
• Stock exchanges act as frontline regulators, ensuring transparency through disclosures and audits.

7. Strong Enforcement Against Insider Trading

• SEBI maintains a zero-tolerance policy on insider trading.
• Enforcement actions focus on building legally robust cases to withstand judicial scrutiny.

Implications

This policy stance reflects SEBI’s broader vision of empowering retail investors without creating entry barriers, while strengthening systemic safeguards against misuse and financial fraud.

11. Bank of India Signs MoU with Sa-Dhan to Boost Financing for Women-Led and Micro Enterprises

Context:

Bank of India (BOI) has entered into a Memorandum of Understanding (MoU) with Sa-Dhan, a self-regulatory organisation appointed by the RBI, to expand financial access for small, micro, and women-led enterprises. The partnership aligns with India’s National Financial Inclusion Strategy and Sustainable Development Goals (SDGs).

Key Objectives of the MoU

• Expand credit access to Self-Help Groups (SHGs) and non-SHG entrepreneurs
• Promote climate-resilient technologies and green financing
• Support WASH financing (Water, Sanitation and Hygiene)
• Enable co-lending with Microfinance Institutions (MFIs)
• Drive digital transformation and technology adoption
• Enhance financial literacy and awareness of government schemes

Strategic Focus

• Promote affordable, flexible financing for underserved communities
• Prioritize women entrepreneurship, rural enterprises, and semi-urban development
• Facilitate loan disbursement and monitoring via digital platforms
• Build awareness around social security and financial inclusion programmes

Impact

This non-commercial MoU underscores a joint commitment to:

• Empowering rural entrepreneurs
• Strengthening women-led businesses
• Scaling sustainable finance solutions

Economy

1. Rupee Hits 7-Month High of 83.76/USD Before RBI Steps In

Key Highlights:

• Intraday Movement: The Indian rupee appreciated to 83.76 per dollar in early Friday trade — its strongest level since September 30, 2024 (when it touched 83.71).
• Psychological Level Breached: This marked the first time since October 17, 2024, that the rupee moved below the 84/USD mark, triggering stop-loss orders and foreign inflows.
• Closing Rate: The rupee ended the day at 84.55, slightly weaker than Thursday’s close of 84.49.

RBI Intervention:

• Estimated Size: The Reserve Bank of India intervened with an estimated \$3 billion purchase of US dollars.
• Purpose: Aimed at containing rupee volatility and preserving export competitiveness.
• Market Reaction: Dealers cited heavy dollar buying by RBI as the key reason for the rupee’s retracement from its peak.

Bond Market Update

• New 10-Year G-Sec: The coupon for the freshly issued 10-year government bond was set at 6.33%, aligning with market expectations.
• Liquidity: It has quickly become the second most liquid on-the-run government security.

Forex Reserves

• India’s foreign exchange reserves are also at a 7-month high, reflecting robust external stability and capital inflows.

BS

2. S&P Lowers India’s FY26 GDP Growth Forecast to 6.3%

Key Highlights:

Revised Growth Estimates:

• FY26 GDP forecast lowered to 6.3% from 6.5% by S&P Global Ratings.
• FY27 GDP forecast also cut by 30 basis points to 6.5%.

Reason for Downgrade:

• A “seismic and uncertain shift” in U.S. trade policy is causing market volatility and affecting global confidence.
• Increased U.S. tariffs, anticipated retaliatory actions by trade partners, and market turbulence are cited as major downside risks.

Impact on Indian Markets

• Foreign Portfolio Investors (FPIs) have offloaded record volumes of Indian government bonds, driven by:
  • Narrowing yield spread between Indian and U.S. bonds.
  • Increased global risk aversion amid uncertainty in trade and policy.

Implications

• Lower growth may impact fiscal and monetary policy assumptions for FY26–FY27.
• Bond market outflows suggest weaker investor sentiment, especially if yield differentials continue to shrink.
• The situation underscores India’s vulnerability to global macroeconomic shocks, despite domestic growth momentum.

BS

3. NITI Aayog Recommends Overhaul of CGTMSE Scheme to Boost MSME Competitiveness

Key Recommendations from NITI Aayog’s Report:
Title: “Enhancing Competitiveness of MSMEs in India”

• Reform of CGTMSE:
  • Greater transparency and oversight: The Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE) should be brought under a formal regulatory authority to improve governance and accountability.
  • Reduced premium rates: Lowering guarantee premiums to make the scheme more attractive and accessible for micro and small enterprises.
  • Enhanced coverage for women-led units: 100% credit guarantee coverage should be extended to women-led enterprises to encourage female entrepreneurship.
• Addressing Governance Gaps:
  • Currently, the Trust lacks regulatory oversight and clear governance structures.
  • Recommendations call for balancing fund availability with financial discipline, particularly for low-end entrepreneurial activities.
• Credit Utilization Focus:
  • Emphasis not just on access to credit, but on effective credit utilization.
  • Advocates better resource allocation at the enterprise, government, and institutional levels.
  • Calls for building a system that supports sound financial decision-making and risk mitigation beyond just formalised MSMEs.
• Technological & Fiscal Interventions:
  • Push for MSMEs to adopt emerging technologies such as Artificial Intelligence, supported through both financial and infrastructural assistance.
  • Cites findings from a NASSCOM–Meta study highlighting technology’s role in MSME competitiveness.

Background

• CGTMSE, launched in 2000, is a key government initiative to provide collateral-free credit to India’s micro and small enterprises.
• It is jointly managed by the Ministry of MSME and SIDBI.

Implications

• A reformed CGTMSE can enhance formal credit outreach, particularly to underserved segments like women entrepreneurs.
• Technological integration and risk-aware lending practices can broaden the impact of government schemes across India’s vast MSME landscape.

BS

Agriculture

1. Centre Hikes Sugarcane FRP to ₹355/Quintal for 2025-26 Season

Context:

In a significant move to support India’s agrarian economy, the Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has approved an increase in the Fair and Remunerative Price (FRP) of sugarcane to ₹355 per quintal for the 2025-26 sugar season. This decision benefits around 5 crore farmers and 5 lakh sugar mill workers nationwide.

Key Highlights:

New FRP Rate Announced

• ₹355 per quintal for sugarcane with a basic recovery rate of 10.25%, up from ₹340 in 2024-25.
• 4.41% higher than the current season’s FRP.
• FRP is 105.2% higher than the cost of production, estimated at ₹173 per quintal.

Incentives Based on Sugar Recovery Rates

• Premium of ₹3.46/quintal for every 0.1% rise in recovery above 10.25%.
• Deduction of ₹3.46/quintal for each 0.1% fall below 10.25%.
• No deduction for recovery below 9.5%; such farmers will still receive ₹329.05/quintal.

Basis for Decision

• Recommendations from the Commission for Agricultural Costs and Prices (CACP).
• Consultations held with State Governments and stakeholders.

Payment Performance

• 2023-24 Season: ₹1,11,703 crore (99.92%) of the ₹1,11,782 crore dues paid.
• 2024-25 Season (ongoing): ₹85,094 crore (87%) of the ₹97,270 crore dues cleared by April 28, 2025.

Economic & Employment Impact

• Sugarcane farming and processing support millions of livelihoods across farming, factory work, transport, and rural labour sectors.

Implications

This FRP hike reinforces the Centre’s commitment to doubling farmer incomes, ensuring timely cane payments, and strengthening rural economic stability through targeted policy support.

What is Fair and Remunerative Price (FRP)?

Definition:

The Fair and Remunerative Price (FRP) is the minimum price set by the Government of India that sugar mills must legally pay to sugarcane farmers for their produce. It is designed to ensure that farmers receive a fair return on their crop.

Legal Framework

• Governed by the Sugarcane (Control) Order, 1966, under the Essential Commodities Act (ECA), 1955.
• FRP must be paid within 14 days of cane delivery.
• Delayed payments attract interest up to 15% per annum.
• Sugar commissioners can recover unpaid FRP dues through revenue recovery processes, including property attachment of defaulting mills.

Payment Terms

• Mills may enter agreements with farmers to pay FRP in installments.
• FRP is binding, irrespective of market prices for sugar.

Who Recommends and Approves FRP?

• Recommended by the Commission for Agricultural Costs and Prices (CACP), an advisory body under the Ministry of Agriculture and Farmers Welfare.
• Final FRP is approved by the Cabinet Committee on Economic Affairs (CCEA), which is chaired by the Prime Minister of India.
• The policy is based on suggestions from the Rangarajan Committee on sugarcane industry reform.

Key Factors Considered for FRP Determination

1. Cost of production of sugarcane
2. Returns from alternative crops and general price trends of agricultural commodities
3. Fair price for consumers of sugar
4. Selling price of sugar by producers
5. Sugar recovery rate from cane (efficiency)
6. Realization from by-products such as molasses, bagasse, and press mud
7. Reasonable margin for farmers covering risk and profit

TH

Daily Current Affairs Quiz
4 & 5 May, 2025

International Affairs

1. EU Willing to Reengage with India on WTO ICT Tariff Dispute

Context:

The European Union (EU) has expressed willingness to reinitiate negotiations with India over a WTO dispute concerning import tariffs imposed by New Delhi on information and communication technology (ICT) products. A senior EU official confirmed the bloc’s readiness to explore an “amicable settlement,” provided India is open to such talks.

Background of the Dispute

• Nature of Dispute: India imposed customs duties on ICT goods including mobile phones, components, and handsets — gradually implemented since 2014.
• EU’s Position: These tariffs violate WTO rules, particularly under the Information Technology Agreement (ITA), which mandates zero duty on covered products.
• WTO Ruling (April 2023): WTO’s Dispute Settlement Body ruled in favor of the EU, asking India to remove these duties.
• India’s Response: India appealed the ruling to the WTO Appellate Body, which is currently non-functional, rendering it an “appeal into the void.”

Current Developments

• EU Readiness for Talks: The EU remains open to discussions if India seeks an amicable bilateral resolution.
• Public Consultation by EU:
  • In November, the EU launched a public consultation under its Enforcement Regulation to assess the impact of India’s tariffs on EU interests.
  • This is a preliminary step to evaluate potential retaliatory measures, though it doesn’t predetermine any future decision.
• MPIA Rejection by India:
  • The EU suggested resolving the issue via the Multi-Party Interim Appeal Arbitration Arrangement (MPIA).
  • India declined, arguing for a restoration of the WTO Appellate Body and maintaining that the tariffs are on non-ITA products.

Key Issues at Stake

• Trade Impact: Tariffs affect EU exporters of ICT goods, including electronics and telecom equipment manufacturers.
• Legal Complexity: WTO appeals remain unresolved due to the dysfunctional appellate mechanism, complicating final settlement.
• Enforcement Regulation: Gives the EU legal grounds to retaliate if the dispute remains unresolved under WTO channels.

India’s Stand

• India claims the products in question do not fall under the ITA-1 agreement.
• The government asserts its sovereign right to impose tariffs and continues bilateral engagement with the EU.

BS

National Affairs

1. India Imposes Comprehensive Ban on Imports, Postal Links, and Port Access for Pakistan

Context:

In a significant escalation of bilateral tensions, the Government of India has imposed a complete ban on trade, shipping, and postal links with Pakistan. The decision follows a deadly terror attack in Jammu & Kashmir and coincides with Pakistan’s latest missile test.

Key Developments:

Trade Ban Enforced

• The Directorate General of Foreign Trade (DGFT) announced a ban on the “direct or indirect import or transit of all goods originating in or exported from Pakistan.”
• The restriction applies regardless of the goods’ import status (freely importable or otherwise).
• The ban is effective immediately and will remain in place until further orders.
• The DGFT cited national security and public policy as the basis for the decision.

Port and Shipping Restrictions

• The Ministry of Ports, Shipping and Waterways issued an order to:
  • Prohibit docking of Pakistani-flagged ships at Indian ports.
  • Bar Indian ships from visiting ports in Pakistan.
• These measures are effective immediately, with exemptions considered on a case-by-case basis.

Suspension of Postal Links

• The Department of Communications confirmed the complete suspension of all categories of inbound mail and parcels from Pakistan.
• The suspension affects both air and surface routes and is already in force.

Comprehensive Visa Revocation by India

• India has implemented a severe visa crackdown on Pakistani nationals in phases since April 23, culminating in near-total suspension of non-official travel.

Context & Background

• The restrictions come in the aftermath of the April 22 terror attack in Pahalgam, Jammu & Kashmir, which claimed 26 lives.
• Pakistan’s test-firing of a nuclear-capable missile on the same day further heightened tensions.
• Earlier this week, India had implemented a stricter visa regime for Pakistani nationals.

Policy Implications

• These measures represent India’s most stringent non-military response to Pakistan in recent years.
• Analysts believe the move is aimed at exerting economic and diplomatic pressure while reinforcing India’s national security posture.

TH

2. India-France Rafale-M Deal

Context:

India has formally concluded a ₹64,000 crore deal with France for 26 Rafale-Marine (Rafale-M) fighter jets, enhancing the Indian Navy’s combat capabilities and preparing both INS Vikramaditya and INS Vikrant for full fighter jet deployment by 2030. Minor modifications to aircraft and carriers will be required to ensure seamless operations.

Key Highlights:

Deal Finalisation and Delivery Timeline

• Inter-Governmental Agreement (IGA) signed on April 28, 2025 between India and France.
• Procurement includes:
  • 22 single-seater Rafale-Ms
  • 4 twin-seater trainer versions
• Delivery schedule:
  • Begins: Q2 2028
  • Completed: End of 2030
• Package includes training, simulators, weapons, associated equipment, and 5-year performance-based logistics (PBL).
• Deal value: ~₹64,000 crore (includes support equipment for existing IAF Rafales).

Significance for Indian Navy

• Once inducted, Rafale-M will complete the fighter complement for both Indian aircraft carriers.
• Will significantly enhance India’s maritime power projection, especially in the Indian Ocean Region (IOR).
• Offers improved interoperability with Western naval forces, bolstering India’s naval diplomacy and multilateral operations.

The Rafale-M acquisition marks a strategic leap for Indian naval aviation, ensuring full fighter capacity on both carriers by 2030. Backed by intelligent budgeting and intergovernmental collaboration, this deal underscores India’s focus on blue water capabilities, indigenous carrier readiness, and modern air power integration.

TH

3. Global Vaccine Coverage Decline Raises Alarms as Preventable Diseases Re-emerge

Why Vaccine-Preventable Diseases Are Rising Again

Global health agencies — WHO, UNICEF, and Gavi — have issued a joint warning that diseases such as measles, meningitis, and yellow fever are making a comeback due to:

• Massive drops in immunisation coverage
• Reduced donor funding and disrupted supply chains
• Misinformation, humanitarian crises, and population growth

Key Alarming Findings

• WHO’s survey of 108 countries (mainly low/lower-middle income) found:
  • Nearly 50% face moderate to severe disruptions in immunisation campaigns
  • Over half have weakened disease surveillance systems
• In 2023, 14.5 million children missed all routine vaccines, up from 13.9 million in 2022 and 12.9 million in 2019
• Over half of unvaccinated children live in fragile/conflict-hit regions
• Measles outbreak in the U.S.: 935 cases reported as of May 1, 2025 — triple 2024 figures

Vaccination: A Proven High-Return Investment

• WHO: Immunisation offers a $54 return for every $1 spent
• 154 million lives saved in 50 years — six lives a minute
• Accounts for 40% improvement in infant survival rates
• Measles vaccine alone saved 60% of those lives
• Vaccines annually prevent 4.2 million deaths from 14 major diseases

India’s Progress Through Immunisation

• Universal Immunization Programme (UIP) targets:
  • 26 million newborns and 34 million pregnant women annually
  • 13 million immunisation sessions held each year
• Major milestones:
  • Polio-free (2014) and tetanus eliminated (2015)
  • National rollout of Measles-Rubella, PCV, and Rotavirus vaccines
• As per NFHS-5 (2019–21), India’s full immunisation coverage is 76.1% — meaning 1 in 4 children still miss essential vaccines

Urgent Actions Needed

• Governments must prioritise immunisation as a critical public health and economic investment
• Strengthen the ‘Big Catch-Up’ initiative and commit to the Immunisation Agenda 2030
• Gavi’s June 25, 2025 pledging summit seeks to raise $9 billion to:
  • Protect 500 million children
  • Save at least 8 million lives between 2026–2030

TH

4. Discovery of Prehistoric Workshop in Haryana’s Mangar Bani

Context:

The discovery was made in Mangar Bani, situated between Manesar and Faridabad, Haryana Hidden within the Aravalli hills, the site contains evidence of early human civilization dating back 500,000 years

Archaeological Findings

• The site is possibly the oldest workshop in North India, associated with the Acheulean culture — an early stage of human tool-making
• The Lower Palaeolithic artefacts discovered at the site offer insights into the tools and lifestyle of our ancient ancestors
• Former ASI Joint Director-General S B Ota, who confirmed the discovery, described the site as more than just a prehistoric settlement but a complete workshop where early humans not only crafted tools but also lived and thrived

Cultural and Historical Context

• The Acheulean culture is known for distinctive hand axes and cleavers, marking a crucial period in human evolution
• The findings shed light on how early humans interacted with their environment and developed complex tool-making techniques during the Lower Palaeolithic period

Impact on Prehistoric Studies

• Mangar Bani adds an important piece to the puzzle of human evolution, offering a glimpse into the lifestyles and technologies of early hominins
• This discovery could influence future archaeological surveys and deepen our understanding of ancient human activity in the Indian subcontinent

TOI

Science & Tech

1. Microgravity Increases Core Body Temperature: IIST Model

Context:

A new study from the Indian Institute of Space Science and Technology (IIST), Thiruvananthapuram, offers critical insights into how microgravity affects human thermoregulation—a key determinant of astronaut well-being during long-duration space missions such as future voyages matching Voyager 1’s trajectory.

What is Microgravity?

Microgravity is the condition in which people or objects appear to be weightless. The effects of microgravity can be seen when astronauts and objects float in space. Microgravity can be experienced in other ways, as well. “Micro-” means “very small,” so microgravity refers to the condition where gravity seems to be very small. In microgravity, astronauts can float in their spacecraft – or outside, on a spacewalk. Heavy objects move around easily. For example, astronauts can move equipment weighing hundreds of pounds with their fingertips. Microgravity is sometimes called “zero gravity,” but this is misleading.

Key Findings:

• Core Body Temperature in Space:
  • Microgravity consistently raises astronauts’ core body temperature. Over 2.5 months in space, body temperature may increase from 36.3°C to 37.8°C, and up to 40°C with exercise due to reduced sweating and increased metabolism.
• Body Heat Redistribution:
  • In near-zero gravity, blood shifts from the lower limbs to the upper body, making the head, abdomen, and core warmer, while hands and feet become cooler.
• Advanced 3D Computational Model:
  • IIST researchers developed a 3D thermoregulation model simulating:
    • Blood redistribution
    • Reduced blood volume
    • Bone and muscle atrophy
    • Metabolic changes
    • Environmental heat transfer (e.g., via clothing, vital organs)
• Verification and Application:
  • The model’s predictions match official reports from Mir Space Station and the International Space Station (ISS).
    Beyond space, such models are used in medicine (surgical planning), architecture (thermal comfort), and apparel design (climate-adaptive clothing).

Lead Researchers:

• Prof. Shine S.R., Department of Aerospace Engineering
• Chithramol M.K., PhD researcher and first author

Publication:

The findings were published in Life Sciences in Space Research on March 29, 2025.

Significance:

This research strengthens the knowledge base for designing safer human spaceflights, aiding agencies like ISRO and NASA to prepare for extended missions beyond Earth orbit.

TH

Banking/Finance

1. Crypto Scam Epidemic in India

Context:

Since 2015, a surge of fraudulent cryptocurrency platforms in India has led to widespread investor losses running into tens of thousands of crores. Lured by promises of high monthly returns and buoyed by Bitcoin’s meteoric rise, investors—many unfamiliar with the technology—were misled into Ponzi-style schemes. Enforcement agencies have ramped up investigations, but legal ambiguity and delayed reporting have hindered recovery efforts.

Key Highlights:

Rise of Dubious Crypto Firms (2015–2017)

• Fraudulent companies like BTC Fund and Gain Bitcoin capitalized on crypto’s early popularity and regulatory vacuum.
• These firms promised 10–40% monthly returns, leveraging seminars, social media, and influencer endorsements to attract unsuspecting investors.

Enforcement Action

• The Enforcement Directorate (ED) has taken up 122 cryptocurrency-related cases since 2017–18.
• Assets worth:
  • ₹4.56 crore have been attached in the BTC Fund case.
  • Over ₹180 crore seized in the Gain Bitcoin investigation, including properties in Dubai.
• The 2015 amendment to the PMLA (Section 8[8]) allows courts to restore attached properties to victims.

Fraud Mechanisms & Challenges

• Ponzi schemes masked as legitimate Bitcoin exchanges.
• Dark Web channels and crypto wallets used to obscure fund trails.
• Funds are swiftly diverted to mule accounts and withdrawn overseas, complicating recovery.
• According to Haryana Cyber Police, 70–80% of funds could be recovered if reported within 5–6 hours of a scam.

Global Rankings and Legal Ambiguity

• Per FBI data (2023):
  • India ranks 5th globally in crypto scam complaints.
  • 6th in overall crypto fraud losses.
• Cryptocurrency’s legal status remains unclear:
  • RBI ban (2018) lifted by Supreme Court (2020).
  • No formal regulatory ban, yet crypto incomes are taxed, implying tacit approval.
  • Crypto platforms often violate FEMA provisions.

India’s cryptocurrency sector is trapped in a regulatory grey zone. While enforcement agencies have intensified action, victims remain in financial distress due to delayed justice, lack of investor awareness, and weak early intervention systems. Stronger oversight, legal clarity, and rapid response mechanisms are critical to curbing the ongoing crypto scam epidemic.

TH

2. ICAI to Prepare Research Paper to Assist SEBI in Tackling Financial Frauds

Context:

The Institute of Chartered Accountants of India (ICAI) has announced that it will develop a comprehensive research paper to assist SEBI (Securities and Exchange Board of India) in addressing financial frauds in the Indian capital markets.

Key Highlights:

• Objective: To support SEBI in enhancing regulatory oversight and preventing financial irregularities through structured academic input.
• Working Group Formation: ICAI will establish a dedicated working group comprising experts to identify fraud indicators and best practices in forensic auditing.
• Collaboration with SEBI: The institute will hold consultative discussions with SEBI to define the scope and focus areas of the research.
• Deliverable: The working group will submit a detailed research paper outlining strategies to detect, investigate, and deter financial frauds.

BS

3. Public Sector Bank Pullback Slows Bancassurance Growth for Life Insurers in FY25

Context:

The bancassurance (banca) channel for life insurance witnessed diverging growth trends in FY25. Public sector banks (PSBs) scaled back insurance sales amid misselling concerns and regulatory scrutiny, while private sector bank–backed insurers continued to see robust growth through the same channel.

Key Growth Trends in FY25

• PSB-backed life insurers:
• Growth slowed from 7% in FY24 to 6% in FY25
• Growth dropped to 2% in March FY25
• Private bank–backed life insurers:
• Recorded 15% growth in FY25
• March growth moderated to 7%, compared to 8% in FY24

Reasons Behind PSB Slowdown

• Changes in Incentive Structures:
• Several PSBs eliminated incentive schemes for staff involved in insurance sales.
• Previously, some PSBs offered commissions or rewards; these have been completely withdrawn.
• Regulatory Pushback:
• The Reserve Bank of India (RBI) advised banks to focus on core banking and treat insurance as a customer service, not a primary business.
• At the SBI Conclave (Nov 2024), Finance Minister Nirmala Sitharaman and former IRDAI Chairman Debashish Panda flagged serious concerns around misselling and forced selling.
• IRDAI formed a task force to review and possibly restructure the banca framework.

Performance by Key PSBs

• Low Single-Digit Growth: Punjab National Bank, Canara Bank, Union Bank of India
• Double-Digit Growth: State Bank of India, Bank of Baroda, Bank of India

Emerging Challenges

• Customer Preferences Shift:
• Footfalls at bank branches are declining as customers prefer buying insurance online.
• Compliance Measures Introduced:
• Banks are adopting PIVC (Pre-Insurance Verification Calls) and other checks to curb misselling.

Strategic Realignment in Banca Distribution

The bancassurance model, once a dominant life insurance distribution channel, is undergoing a major reset, especially in the public sector. As banks realign to regulatory expectations and digital transformation accelerates, insurers will need to adapt quickly by diversifying channels, enhancing transparency, and leveraging digital innovations to sustain growth.

BS

4. Bank Lending to NBFCs and MFIs Remains Subdued

Context:

Despite the Reserve Bank of India (RBI) reverting to lower risk weights on loans to non-banking financial companies (NBFCs) and microfinance institutions (MFIs) from April 1, 2025, banks remain cautious in extending fresh credit to the sector. Top-rated NBFCs continue to get funding access, while mid-sized and lower-rated firms struggle.

Key Trends and Data

• Bank credit to NBFCs grew only 5.7% YoY to ₹16.36 trillion as of March 21, 2025 (vs 15.3% growth in the same period last year).
• Microfinance loan portfolio declined 4% YoY to ₹3.91 trillion (as of December 2024).
• Credit to the services sector, which includes NBFCs, slowed to 13.4%, down from 28% last year.

Sectoral Insights

• Top-rated NBFCs:
  • Continue to have stable access to bank funding.
  • Are the primary beneficiaries of the RBI’s rollback of higher risk weights.
• Mid and small NBFCs/MFIs:
  • Face limited benefit due to banks’ conservative stance.
  • Have been impacted by tightened lending norms, especially in high-risk segments.

Why Are Banks Still Cautious?

• Microlending stress: Rising delinquencies have made microfinance a high-risk segment.
• Cautious credit approach: Banks prefer a wait-and-watch strategy for 1–2 more quarters.
• Unchanged loan pricing: Despite regulatory support, loan rates are not expected to decline.
• MFIN restrictions: The Microfinance Industry Network has imposed new norms (from early 2025), limiting borrower exposure to no more than three lenders.

Caution Over Optimism

Even with RBI’s support, risk aversion persists among banks, especially toward smaller NBFCs and MFIs. Sustained improvement in credit quality, adherence to new borrower protection norms, and stronger sectoral performance will be key to reviving lending momentum over the coming quarters.

BS

5. PMMY: Fueling India’s Micro Enterprise Growth and Financial Inclusion

Context:

Launched on April 8, 2015, the Pradhan Mantri Mudra Yojana (PMMY) has emerged as a key pillar of India’s inclusive financial ecosystem. Designed to offer collateral-free loans to micro and small enterprises (MSEs), PMMY has empowered millions of first-time entrepreneurs with access to formal institutional credit.

Loan Categories Under PMMY

PMMY operates through four loan categories:

• Shishu: Loans up to ₹50,000 (early-stage enterprises)
• Kishor: Loans between ₹50,001 to ₹5 lakh (growth-stage enterprises)
• Tarun: Loans between ₹5 lakh to ₹10 lakh (established businesses)
• Tarun Plus (new in FY25): Loans up to ₹20 lakh to support business expansion for existing borrowers

Key Achievements (2015–2025)

• 520+ million loans sanctioned
• Total loan amount sanctioned: ₹32.61 trillion
• 68% of Mudra loans availed by women borrowers
• 50% of accounts belong to SC, ST, and OBC entrepreneurs
• MSMEs’ share in total bank credit rose from 15.8% to 20% in 10 years

Impact on Financial Inclusion & Entrepreneurship

• PMMY has reduced dependence on informal lending by offering credit linked to cash flows and asset life.
• Encouraged first-time business owners, especially women and marginalized communities.
• Strengthened the foundation of inclusive entrepreneurship and self-reliance (Atmanirbhar Bharat).

Role of Lending Institutions

• Banks, NBFCs, RRBs, and MFIs are central to the scheme’s delivery.
• These institutions have:
  • Expanded credit access through rural and semi-urban branches
  • Improved awareness, reduced turnaround time, and simplified procedures
  • Actively resolved field-level implementation challenges

Sectoral Expansion and Reforms

• Inclusion of allied agriculture and rural manufacturing has had transformational impact.
• Extension to homestays (Union Budget 2025) aims to unlock rural tourism potential.
• Tech-enabled credit risk models planned for the next phase to enhance reach and precision.

Future Outlook

With a strong base of digitally assessed, collateral-free loans, PMMY is poised to support India’s goal of becoming a $5 trillion economy by:

• Scaling small businesses
• Encouraging formalization
• Deepening credit penetration in underserved areas

BS

6. Governance Crisis in Indian Banking

Context:

• On April 28, 2025, the Deputy CEO of IndusInd Bank resigned.
• A day later, the MD & CEO also stepped down, citing moral responsibility for lapses in derivative accounting.
• Earlier in January, the Chief Financial Officer (CFO) had also resigned.

Triggering Events

• Discrepancies in the accounting of derivative transactions within the bank’s global markets division raised red flags.
• Investigations are ongoing to determine the balance sheet impact.
• The top-level resignations followed systemic failures across internal control, audit, and risk management functions.

Parallel Cases of Financial Misconduct

• New India Cooperative Bank Fraud (₹122 crore siphoned off):
  • In February, RBI uncovered cash misappropriation by a former GM.
  • The individual admitted to stealing cash from the vaults over several years.
• Aviom India Housing Finance Fraud:
  • National Housing Bank detected inflated cash balances through mutual fund accounting irregularities.
  • A forensic audit confirmed a serious accounting fraud.

Key Issues Raised

• Failures in internal control mechanisms, board supervision, and governance oversight.
• Questionable audit quality and weak RBI vigilance in early detection.
• Nomination and appointment of CEOs, often influenced more by compliance than competence.
• Regulatory blind spots, as RBI relies on board-approved shortlists for key appointments.

Governance Structure & Regulatory Framework

• CEO accountability under Section 10B of the Banking Regulation Act.
• RBI’s powers under Section 36ACA allow board supersession for up to 1 year in public interest.
• Private bank boards must comprise at least 50% independent directors with specialized domain expertise.

Systemic Challenges

• Current governance mechanisms are inadequate to detect or prevent large-scale fraud.
• Board-level dysfunction often limits a CEO’s accountability, especially when the chairman plays an outsized role.
• Inspection ≠ Audit: RBI’s inspections can miss deeper governance and compliance issues.

Recommendations & Future Outlook

• Focus of RBI inspections should shift from asset quality to board-level governance and compliance culture.
• Appointment of dedicated governance officers, separate from ethics officers or company secretaries.
• Strengthening laws for financial crimes, including clearer consequences and faster judicial outcomes.
• Avoid symbolic resignations; instead, enforce individual accountability and structural reform.

BS

7. Supreme Court Ruling on JSW-Bhushan Power Deal

Context:

The Supreme Court declared JSW Steel’s acquisition of Bhushan Power and Steel illegal, spotlighting serious procedural gaps in India’s Insolvency and Bankruptcy Code (IBC)

• The ruling reflects growing concerns about delays, inefficiencies, and legal loopholes in the insolvency resolution process

Core Issues in the IBC Framework

• Delays in timely resolution, contradicting IBC’s original objective of time-bound recovery
• Limited institutional capacity to handle increasing caseloads
• Bottlenecks include:
• Inadequate information flow between creditors and debtors
• Strategic legal challenges used to delay proceedings

Structural Flaws and Incentive Misalignment

• Current framework gives creditors dominant control, incentivizing debtors to obstruct or delay
• A balanced approach is needed to ensure fair outcomes for both sides
• Letting debtors retain operational control post-resolution can reduce resistance and fast-track settlements

Suggested Reforms for Improved Efficiency

• Evolve the IBC process to:
• Raise the deterrence value of entering insolvency proceedings
• Use the threat of losing corporate control to push quicker settlements
• Encourage pre-insolvency arbitration and out-of-court negotiations
• Emphasize equal accountability for lenders and borrowers in managing credit risks

Long-Term Vision

• A reformed IBC should:
• Prevent moral hazard by enforcing responsible risk management
• Enable faster, fairer resolutions
• Reduce the system’s vulnerability to legal and procedural abuse
• Legal interventions should focus on systemic design rather than case-by-case fixes, which are costly and time-consuming

TET

8. Foreign Investors Face Regulatory Roadblocks in Buying Small Stakes in Indian Listed Companies

Context:

Offshore investors seeking to buy less than 10% equity in listed Indian companies through off-market transactions (like preferential allotments or secondary deals) are facing rejections from banks. Banks insist such investments require the investor to be Sebi-registered Foreign Portfolio Investors (FPIs), even for sub-10% holdings.

Market Trades and Off-market Transactions

• Market Trades- Trades placed through the stock exchange. They are executed through a broker/exchange (NSE/BSE), cleared by the depositories (NSDL/CDSL), and settled through a Clearing Corporation (CC). 

• Off-Market Trades- Trade settlement between two parties, the transferor (entity which transfers the share) and transferee (entity that receives the shares) without the involvement of an exchange or a CC. It is a way of transferring ownership of securities. Here, the transferor submits a signed Delivery Instruction Slip (DIS) to their Depository Participant (DP) requesting a transfer of the mentioned securities to the transferee.

Regulatory Confusion: FDI vs. FPI

• As per NDI (Non-Debt Instruments) Rules,
  • ≥10% holding = FDI (governed by RBI)
  • <10% = Foreign Portfolio Investment (FPI, governed by Sebi)
• However, the term “foreign portfolio investment” in Rule 2(t) applies broadly to any non-resident—not just registered FPIs
• This has led to divergent interpretations:
  • Conservative banks reject sub-10% investment unless investor is an FPI
  • Liberal banks allow non-FPI foreign investors to buy <10% without FDI documentation like FC-GPR

Implications for Foreign Investment in India

• Single-digit stake buyers reluctant to seek FPI registration due to cost and complexity
• Inconsistent bank interpretations create hurdles for foreign inflows
• Sebi’s upcoming proposal to allow direct stock purchases by foreigners (similar to NRIs) may address part of the problem

FDI-FPI Classification Rigidity

• If an FPI exceeds 10% stake, entire holding reclassified as FDI
• Even after reducing the stake below 10%, it’s still considered FDI
• This rigidity reflects jurisdictional turf issues between RBI (FDI) and Sebi (FPI), limiting investor flexibility

TET

9. IIFL Finance Sues ACRE Over ₹1,000 Crore Loan Recovery Dispute

Context:

IIFL Finance, a Mumbai-based NBFC, has filed a petition in the Bombay High Court against Assets Care and Reconstruction Enterprise (ACRE), backed by Ares Management. The legal battle centers around alleged mismanagement of ₹1,085 crore in distressed assets under a 2021–22 servicer agreement

Key Allegations by IIFL Finance

• Arbitrary suspension and termination of recovery efforts by ACRE, hampering progress on asset resolution
• Unjustified charging of management fees after RBI’s October 2022 circular prohibiting such payments from non-recovery funds
• Violation of RBI guidelines by not refunding excess fees already paid
• Misuse of trust funds to cover ACRE’s legal expenses in arbitration, in breach of contract terms
• ACRE allegedly prioritized its own interests after recovering capital, compromising its fiduciary responsibility

Servicer Agreement Details

• Agreement covered:
  • ₹1,085 crore in bad loans from 7 stressed developers and over 22,000 retail borrowers
• ACRE was entitled to:
  • 4% annual management fee (~₹40 crore)
  • Additional performance incentives based on recovery outcomes

Regulatory Trigger

• In October 2022, the RBI issued a circular requiring that management fees for ARCs be paid only from actual recoveries
• IIFL stopped fee payments post-circular and demanded refund of any excess payments made in violation of this directive

ACRE’s Response

• Refused to comment citing sub judice status of the case
• Rejected the accusations as baseless and misconceived
• Reiterated commitment to RBI compliance and stakeholder interest

Implications for the ARC Sector

• Case may set precedent for how servicer agreements are enforced post-RBI guidelines
• May lead to tighter fiduciary accountability standards for Asset Reconstruction Companies (ARCs)
• Could impact ARC fee structures, recovery timelines, and trust-based fund usage in future asset resolution deals

TET

10. India Post Payments Bank (IPPB) Celebrates Labour Day with Key Welfare Initiatives

• Commitment to Labour Welfare:
  • On Labour Day (May 1), India Post Payments Bank (IPPB) reaffirmed its commitment to the welfare of Shramiks (labourers) by focusing on providing essential services and benefits for the unorganised sector workforce.
• Launch of Antyodaya Shramik Suraksha Yojana (ASSY):
  • The Antyodaya Shramik Suraksha Yojana (ASSY), an affordable insurance scheme, was introduced to offer comprehensive protection to unorganised sector workers.
  • Launched by the Hon’ble Chief Minister of Gujarat on 8th July 2023 at Kheda, Gujarat, this scheme provides workers with a safety net and financial support in times of need.
• Scheme Impact:
  • 6,97,531 policies have been issued to Shramiks under the scheme since its launch.
  • 355 claims have been successfully settled, amounting to a total claim payout of ₹5,41,17,754.
• IPPB’s Role and Partners:
  • The scheme is facilitated through IPPB with the support of six insurance partners:
    • New India Assurance
    • Bajaj Allianz General Insurance
    • TATA AIG General Insurance
    • Niva Bupa Health Insurance
    • Aditya Birla Health Insurance
    • Start Health
• IPPB’s Infrastructure:
  • India Post Payments Bank aims to bridge the gap for unbanked and underbanked populations, ensuring that essential services reach the last mile through its extensive postal network.
  • The network includes approximately 1,65,000 Post Offices (with 140,000 in rural areas) and 3,00,000 Postal employees.
• Leadership:
  • Mr. R. Viswesvaran serves as the MD & CEO of India Post Payments Bank (IPPB).

IPPB’s efforts reflect a strong commitment to improving the financial and social well-being of India’s labour force, especially in the unorganised sector.

11. India Post Collaborates with SBI Mutual Fund to Simplify KYC Verification Process

• Partnership Overview:
  • India Post has partnered with SBI Funds Management Limited (SBIFM) to streamline the KYC (Know Your Customer) verification process for mutual fund investors across India.
  • The collaboration is formalized through a Memorandum of Understanding (MoU), aimed at utilizing India Post’s extensive network to offer doorstep KYC verification services to investors of SBI Mutual Fund.
• Key Benefits of the Collaboration:
  • The partnership ensures easy access for investors nationwide to complete their KYC process from any location, leveraging India Post’s vast infrastructure.
  • This initiative supports the Government of India’s Jan Nivesh program, which aims to increase financial inclusion and encourage participation in India’s capital markets.
• India Post’s Proven Expertise in KYC:
  • India Post has previously successfully facilitated KYC verifications for other mutual fund companies, including UTI Mutual Fund and SUUTI (Securities and Exchange Board of India’s public fund).
  • India Post has handled over 5 lakh KYC verifications efficiently, demonstrating its ability to manage high-volume operations with precision, security, and efficiency.
• About SBI Mutual Fund:
  • Founded: 29 June 1987
  • Headquarters: Mumbai, Maharashtra
  • MD & CEO: Mr. Nand Kishore
  • Ownership: SBI Mutual Fund is a joint venture between State Bank of India (SBI) and Amundi, a leading European asset management company.

This collaboration is expected to further simplify the mutual fund investment process, offering greater accessibility and convenience for investors, while contributing to India’s financial inclusion goals.

Economy

1. India’s April GST Collection Hits Record ₹2.37 Lakh Crore

Record GST Collections and Compliance Trends

• India’s GST collections for April 2025 hit a historic high of ₹2.37 lakh crore, up 12.6% YoY.
• Net GST revenue after refunds: ₹2.09 lakh crore, marking a 9.1% annual increase.
• Rise attributed to:
  • Year-end tax filings by businesses
  • Increased compliance across MSMEs
  • Mass adoption of fintech solutions (87% fintech adoption rate, above global average)
  • Faster refunds supporting liquidity, especially for small businesses

April’s GST Growth Reflects Broader Economic Momentum

• Since GST rollout in 2017, April collections have more than doubled from ₹1.03 lakh crore to ₹2.37 lakh crore in 2025.
• A significant 86% rise in GST refunds—mainly to exporters—reflects export demand strength.
• GST from imports surged 20.8%, aligning with trade and supply chain shifts.

Manufacturing Sector Gets a Boost from Export Surge

• HSBC India Manufacturing PMI touched a 10-month high at 58.2 in April, from 58.1 in March.
• The PMI indicates:
  • Strong growth in new orders
  • Highest foreign demand in over 14 years
  • Export demand led by Africa, Asia, Europe, West Asia, and the Americas

Global Trade Realignment Benefiting India

• Surge in April export orders partly driven by the approaching July 9 deadline for the end of a 90-day U.S. tariff pause.
• U.S. tariffs on Chinese goods appear more stringent, prompting supply chain diversification.
• India gains from:
  • Lower risk of punitive U.S. tariffs
  • Reshoring and near-shoring trends
  • Corporate sourcing shift—Apple to manufacture most iPhones for U.S. in India

From Temporary Gains to Sustainable Growth

• While this surge reflects short-term export-led momentum, India’s manufacturing sector grew at only 4% in FY25—a four-year low.
• Long-term growth requires:
  • Boosting domestic demand
  • Favourable terms in ongoing Free Trade Agreements (FTAs)
  • Policy incentives to deepen manufacturing and value-addition capacity

India’s record April GST collections highlight robust export activity, a compliance-friendly fintech ecosystem, and shifting global trade dynamics. However, to sustain this momentum, domestic consumption and trade negotiations must play a larger role in driving manufacturing and tax revenue.

TH

Agriculture

1. India Unveils First-Ever Genome-Edited Rice Varieties

Context:

Union Agriculture Minister Shivraj Singh Chouhan announced the successful development of two genome-edited rice varieties.

• The innovation, led by the Indian Council of Agricultural Research (ICAR), is positioned as a catalyst for India’s second Green Revolution.
• Speaking at an ICAR event, the Minister praised the scientists for achieving a breakthrough that blends productivity with sustainability.

Major Agricultural Milestone

• India becomes the first country globally to release genome-edited rice varieties
• Two new variants: ‘Kamala (DRR Dhan 100)’ and ‘Pusa DST Rice 1’
• Developed using SDN1 and SDN2 genome editing methods, with no foreign genes inserted
• Promises 30% higher yield and 15–20 days earlier maturation compared to traditional varieties

Key Benefits of the Genome-Edited Rice

• Water Efficiency: The new rice varieties require less irrigation, helping conserve water resources.
• Environmental Impact: Reduced greenhouse gas emissions, especially methane, which is typically associated with rice cultivation.
• Higher Yield Potential: Aimed at boosting crop productivity while being resilient to climate stress.

Benefits to Farmers and Environment

• Reduced water consumption during cultivation
• Lower greenhouse gas emissions, supporting climate-resilient farming
• Enhanced tolerance to stress factors like drought, pests, and salinity
• Initial distribution through state-run seed firms, later expanded to wider markets

Regulatory and Legal Landscape

• India exempted SDN1 and SDN2 genome-edited crops from GEAC oversight under EPA Rules, 1989
• These varieties fall outside the scope of genetically modified (GM) crop regulation
• Intellectual Property Rights (IPR) applications to be filed soon for new rice lines

Government Investment and Future Outlook

• ₹500 crore allocated in the 2023–24 Union Budget for genome editing in agriculture
• Apart from rice, 24 food crops and 15 horticultural crops are under gene editing development
• Deployment to farmers may take 4–5 years due to seed production cycles
• Efforts underway to fast-track seed availability

‘Lab-to-Land’ Mission to Reach Farmers

• ICAR scientists and Krishi Vigyan Kendras to conduct twice-a-year outreach
• Each program includes 15 days of interaction with farmers per season
• At least three farmer meetings per day, aiming for full national coverage in 3–4 years
• Initiative aims to accelerate adoption of agri-scientific innovations at the grassroots

Strategic Context and Government Vision

• The development aligns with Prime Minister Narendra Modi’s call during Azadi Ka Amrit Mahotsav to adopt modern agricultural technologies.
• Genome editing is part of India’s push for sustainable agri-innovation, especially under conditions of climate uncertainty and resource scarcity.

TH & BS

2. Agrivoltaics in India

What Are Agriphotovoltaics (APVs)?

• Agriphotovoltaics (APVs) refer to the dual use of land for solar energy generation and crop cultivation.
• Originally conceptualized by German scientists Adolf Goetzberger and Armin Zastrow in 1981, APVs involve elevated solar panels (typically 2 m high) that allow crops to grow beneath or between solar arrays.
• APVs promote land-use efficiency, enable climate resilience, and create additional income streams for farmers.

Current Status and Pilot Projects in India

• APVs are at a nascent stage in India, mostly limited to pilot projects by research bodies or private developers.
• A case study in Najafgarh, Delhi, showed a more than sixfold income boost when a farmer leased land for APV use while also growing shade-tolerant, high-value crops.
• APVs also foster favorable microclimates, reducing water loss and heat stress on crops.

Economic and Structural Barriers

• High upfront cost is a major hurdle: APV systems cost 11% more than traditional ground-mounted solar systems (~₹2.7 crore per MW).
• Feed-in tariffs (FiTs) are crucial for viability:
  • Current FiT (₹3.04/unit) yields a 15-year payback.
  • A FiT aligned with thermal average power purchase cost (₹4.52/unit) would cut it to just 4 years.

Need for Regulatory Framework

• India lacks national standards for APVs, unlike:
  • Japan: Requires temporary APV structures, 2m panel height, <20% crop yield loss.
  • Germany: Mandates 66% reference yield and restricts solar footprint to 15% of arable land (DIN SPEC 91434).
• India must define clear APV norms to ensure agricultural priority isn’t compromised for energy returns.

Smallholder Integration and Institutional Support

• Most Indian farmers are smallholders (<2 ha) with limited capital.
• FPOs and cooperatives like Sahyadri (which runs a 250-kW APV with high-value crops) can aggregate land and investments.
• Policy instruments like:
  • NABARD credit guarantees
  • Grants for APV infrastructure
  • Capacity-building programs
    can scale adoption among small farmers.

Expand PM-KUSUM

• PM-KUSUM, India’s flagship agri-solar scheme, currently lacks APV-specific provisions.
• By modifying its grid-connected components to accommodate dual-use infrastructure, the government can:
  • Leverage existing policy
  • Promote land-neutral solar growth
  • Incentivize rural energy entrepreneurship

Two Pillars for APV Success in India

1. Robust Farmer-Centric Policy: Guidelines on panel design, crop yield protection, and land-use criteria.
2. Strong Economic Incentives: Fair feed-in tariffs, financial support, and institutional innovation.

With the right policy vision, India can scale APVs to enhance rural incomes, support clean energy, and ensure food security — all on the same piece of land.

TH

Facts To Remember

1. Australia’s Albanese wins a second 3-year term

Anthony Albanese claimed victory as the first Australian Prime Minister to clinch a second consecutive three-year term in 21 years and suggested his government had increased its majority in the next Parliament by not modelling itself on U.S. President Donald Trump’s administration.

2. Indian Bank Q4 net soars 32%, to pay dividend

State-owned Indian Bank reported a 32% jump in net profit to ₹2,956 crore for the March quarter of 2024-25, helped by a decline in bad loans and a rise in core income.

3. Kotak Bank Q4 net slips 14%, to pay ₹2.5 dividend

Kotak Mahindra Bank reported a 14% year-on-year drop in Q4 standalone net profit to ₹3,552 crore against ₹ 4,133 crore in the year-earlier period.

4. City Union Bank Q4 profit after tax rises 13% to ₹288 cr.

Private sector lender City Union Bank profit after tax (PAT) for the fourth quarter ended March 31 rose 13% year-on-year to ₹288 crore. Net interest income (NII) rose 10% to ₹601 crore. 

5. Rise of sporting culture will boost India’s soft power: PM

Modi inaugurates 7th Khelo India Youth Games, says the government has always given top priority to sports in its policies; he underlines the efforts to bring the Olympics to the country in 2036

Daily Current Affairs Quiz
6 May, 2025

National Affairs

1. Escalating Geopolitical Tensions Pose Risks for Pakistan’s Economy, Moody’s Analysis

Context:

Moody’s Ratings warns that escalating tensions between India and Pakistan will severely impact Pakistan’s economy and hinder its access to external financing. In contrast, India’s economic outlook remains relatively stable, despite the geopolitical risks.

Impact on Pakistan’s Economic Outlook

Economic Struggles and Financial Vulnerability

• Pakistan’s foreign exchange reserves have fallen to $15.25 billion, insufficient to meet external debt payments in the coming years.
• Pakistan’s IMF bailout of $7 billion secured in September 2024 is under strain due to ongoing economic challenges.
• Escalating tensions are expected to weigh on Pakistan’s growth, delay its fiscal consolidation, and hinder progress toward macroeconomic stability.

Geopolitical Risks for Pakistan

• Sustained escalation in tensions with India could impair Pakistan’s economic stability and deter international investments.
• Pakistan’s growth prospects may be further compromised as the country grapples with the economic repercussions of military tensions.

India’s Economic Outlook Amid Geopolitical Risks

Limited Impact from Tensions

• India’s economic growth remains stable, with moderating growth rates amid strong public investment and healthy private consumption.
• Tensions with Pakistan are unlikely to disrupt India’s economic activity significantly, although higher defense spending could affect India’s fiscal strength and slow fiscal consolidation.

Defense and Fiscal Strength

• The geopolitical situation may lead to higher defense expenditures in India, impacting its fiscal policies and budget deficit management.

Geopolitical Developments Post-Attacks

• India suspended the Indus Waters Treaty of 1960 following a terror attack in Pahalgam in April 2025.
• Pakistan responded by suspending the 1972 Simla peace treaty.
• Moody’s predicts periodic flare-ups between India and Pakistan but expects them to avoid broad-based military conflict.

Growth Projections and Future Outlook

India’s Economic Growth

• Moody’s projects India’s GDP growth in the range of 5.5% to 6.5% for 2025.
• India is likely to maintain stability, benefiting from strong domestic consumption and public investment.

Pakistan’s Fiscal Struggles

• Pakistan’s fiscal consolidation may be set back by ongoing geopolitical tensions, further limiting its growth and macroeconomic stability.

BS

2. Indigenous Rights and Conservation

Exclusionary Conservation: The Global and Indian Context

• Conservation policies are increasingly excluding Indigenous Peoples and Local Communities (IPLCs), treating them as encroachers rather than custodians.
• The fortress conservation model, rooted in colonial frameworks, displaces communities by enforcing state-controlled protected areas.
• Globally, 10–20 million people have been displaced; India has seen at least 6 lakh people affected by similar approaches.

IPLCs: Biodiversity Custodians

• Communities such as the Masai, Ogiek, Batwa, Ashaninka, and India’s Adivasis have sustainably managed biodiversity-rich landscapes for generations.
• Research shows IPLC-managed lands often outperform state-managed protected areas in terms of conservation outcomes.
• Tenure rights and traditional governance systems strengthen conservation efforts when legally recognised.

International Legal Frameworks: CBD and KMGBF

• The Convention on Biological Diversity (CBD), signed by 196 countries including India, aims to conserve biodiversity and ensure equitable sharing of benefits.
• In 2022, the Kunming-Montreal Global Biodiversity Framework (KMGBF) was adopted with 23 global targets, including the ‘30 by 30’ goal.
• A permanent IPLC subsidiary body was created during CBD COP-16 (2025), making the CBD the first UN convention with such a platform.

India’s Legal and Constitutional Landscape

• India enacted the Biological Diversity Act (BDA) 2002 in line with CBD, but its approach remains top-down and bureaucratic.
• The Wildlife Protection Act (1972) and Project Tiger (1973) adopted the exclusionary protected-area model.
• In contrast, The Forest Rights Act (FRA) 2006 offers a decentralised, democratic model by empowering gram sabhas to manage community forest resources.
• The PESA Act (1996) and Articles 244 and 244A of the Constitution also support tribal autonomy and resource governance.

FRA: A Legal Tool for Inclusive Conservation

• FRA recognises 13 categories of rights, especially:
  • Right to access biodiversity and traditional knowledge
  • Right to conserve and manage community forest resources
• FRA acknowledges historical injustice to forest dwellers and seeks to reverse displacement.

India’s 2025 Biodiversity Strategy

• India updated its National Biodiversity Strategy and Action Plan (NBSAP) with 23 targets for 2030.
• Though it supports bottom-up governance, it still leans heavily on State forest departments, neglecting the full potential of gram sabha-led management.
• Biodiversity Management Committees (BMCs) under the BDA are still not fully functional, limiting community participation.

Moving Beyond Protected Areas: OECMs

• Other Effective Area-Based Conservation Measures (OECMs) offer a way to include IPLCs in conservation beyond formal protected areas.
• India plans to notify OECM guidelines, which must:
  • Not duplicate protected areas
  • Involve community-led or IPLC governance
  • Sustain ecosystem and cultural values
• Experts warn OECMs could become tools for resource exploitation unless rights are secured under FRA.

TH

3. Finance Minister to Attend ADB Annual Meeting in Milan

Context:

Union Finance Minister Nirmala Sitharaman is leading the Indian delegation to the 58th Annual Meeting of the ADB Board of Governors in Milan, Italy.

About ADB (Asian Development Bank):

• Headquarters: Mandaluyong, Metro Manila, Philippines
• Founded: 1966
• President: Masato Kandaassa
• Mission: Supports inclusive, resilient, and sustainable growth across Asia and the Pacific

About Ministry of Finance:

• Cabinet Minister: Smt. Nirmala Sitharaman
• Ministers of State: Shri Pankaj Chaudhary, Dr. Bhagwat Kishanrao Karad

Banking/Finance

1. What is Digital Rupee (e₹)?

• The Digital Rupee (e₹) is India’s Central Bank Digital Currency (CBDC), issued by the Reserve Bank of India (RBI).
• It is a legal tender in digital form, mirroring the value of physical ₹ and backed by the RBI.
• e₹ offers cash-like features such as instant settlement, offline usability (in pilot), and secure storage in digital wallets.

Key Features of Digital Rupee

• Storage: Stored in a digital wallet on mobile phones, similar to a physical wallet.
• Availability: Usable 24×7, even outside banking hours.
• No Interest: Like cash, no interest is paid on e₹ balances.
• Free to Use: No charges or fees for usage or wallet maintenance.
• Denominations: Available in the same denominations as physical ₹, with built-in functionality to manage change.

e₹ Wallet

• Offered by 15 pilot banks and select non-banks.
• Available on Android and iOS platforms.
• Can be used for person-to-person (P2P) and person-to-merchant (P2M) transactions via CBDC or UPI QR codes.
• Safe and secure, with wallet recovery possible even if the device is lost.

How to Use

• Download the respective bank’s e₹ app.
• Link to savings account (KYC simplified).
• Use for payments, transfers, and offline transactions (in select cases).

Participating Banks (Retail CBDC)

Some of the major banks include:

• SBI – eRupee by SBI
• ICICI Bank, HDFC Bank, YES Bank, Axis Bank
• Union Bank, Bank of Baroda, PNB, Indian Bank, etc.
  (All apps available on Google Play Store and Apple App Store.)

Difference Between e₹ and UPI

Feature	e₹	UPI
Nature	Digital form of ₹ (currency)	Payment interface
Settlement	Direct between wallets	Routed through bank accounts
Store of Value	Yes	No

Advanced Features

• Offline Payments: Enables transactions in low/no internet areas (under testing).
• Programmability: Funds can be restricted for specific uses (e.g., subsidies, allowances).

Wholesale CBDC (e₹-W)

• Meant for interbank settlements and large-value transactions.
• Currently used for:
  • G-Sec market settlements
  • Inter-bank call money transactions
• Offers programmability, smart contracts, and reduces settlement risk and cost.

Participants in e₹-W

• Includes 14 institutions (banks and non-banks) participating in the wholesale CBDC pilot.

The Digital Rupee (e₹) represents a significant step in India’s financial digitalization, aimed at enhancing payment efficiency, financial inclusion, and monetary innovation. With pilots in place for both retail and wholesale use, RBI is testing its scalability, security, and usability across diverse segments.

2. SC Orders Liquidation of Bhushan Power & Steel

Context:

The Supreme Court of India declared the 2021 resolution plan for Bhushan Power and Steel Ltd (BPSL) illegal. The court cited serious lapses by Resolution Professional (RP) Mahender Kumar Khandelwal, including failure to:

• Submit Form H (compliance certificate under CIRP norms)
• Verify eligibility of the successful bidder, JSW Steel, under Section 29A of the Insolvency and Bankruptcy Code (IBC)
• Disclose a joint venture between JSW Steel and an entity linked to BPSL’s former promoters

Legal Basis for Liquidation

• Section 25 of IBC: Obligates RPs to ensure due diligence and verify applicant eligibility.
• Section 29A: Disqualifies resolution applicants connected to the corporate debtor’s former promoters or other ineligible parties.
• The CoC was not given verified assurance on JSW’s eligibility post-initial discussions.

Material Lapses Identified

• Non-disclosure of critical facts by JSW and the RP misled both the Committee of Creditors (CoC) and the National Company Law Tribunal (NCLT).
• The SC termed the omissions “not procedural but material”, directly undermining the legality of the plan.

Implications for IBC Framework

• The ruling underscores greater accountability for resolution professionals.
• Legal experts say the verdict will:
  • Raise the bar for due diligence in insolvency cases
  • Encourage process transparency and compliance
  • Empower IBBI to initiate disciplinary action against erring professionals

Background

• BPSL was admitted to insolvency in 2017 after defaulting on ₹47,200 crore of debt.
• JSW Steel’s plan had been approved in 2021, but the current order invalidates that resolution path.

BS

3. RBI Winds Down Short Dollar Positions While Managing Liquidity Through OMOs

Context:

The Reserve Bank of India (RBI) has begun unwinding its short dollar forward positions after a seven-month pause, while infusing rupee liquidity through open market operations (OMOs) to neutralize the liquidity drain. This strategic move coincides with a weakening dollar and stable rupee, allowing the central bank to simultaneously build foreign exchange reserves and maintain surplus banking liquidity.

Key Developments

Short Dollar Forward Position Decline

• Net short dollar forward book (up to 1 year):
  ↓ to $64.2 billion in March 2025 from $88.75 billion in February.
• Including long-term swaps:
  ↓ to $84.3 billion from $88.75 billion.
• Positions are largely in short-term tenors, indicating natural maturity rather than rollovers.

Sterilization via OMOs

• RBI is infusing rupee liquidity through OMOs to offset the drain caused by maturing short dollar positions.
• Despite surplus liquidity, the RBI has conducted OMO purchases worth ₹2.5 trillion in 2025 so far.
• Strategy aligns with RBI’s accommodative stance to ensure banking system liquidity remains ample.

Foreign Exchange Reserve Management

RBI Builds Reserves Amid Dollar Weakness

• RBI is buying dollars in the spot market instead of rolling forward positions.
• This helps manage short positions and replenish forex reserves.
• Total forex reserves stood at $688 billion as of April 25, down from the $705 billion peak in September 2024.

Rupee Performance and Market Trends

Rupee Strengthens Against the Dollar

• Rupee appreciated by 4.38% since its all-time low of ₹87.95/$ on Feb 10, 2025.
• Current exchange rate: ₹84.26/$ (May 5), appreciating 29 paise from the previous session.
• YTD appreciation:
• 1.61% in calendar year 2025
• 1.44% in financial year 2025–26

Favorable External Factors

• Falling crude oil prices and weakening dollar index support rupee appreciation.
• Strengthening of Asian emerging market currencies adds to positive sentiment.

The RBI’s current strategy reflects a dynamic and proactive approach to managing foreign exchange exposure and banking system liquidity. By allowing short positions to mature, purchasing spot dollars, and sterilizing liquidity through OMOs, the central bank is reinforcing its accommodative stance while bolstering forex reserves amid a stable external environment.

BS

4. SBI Research Forecasts Up to 125 bps Rate Cuts by RBI

Context:

SBI Research predicts that the Reserve Bank of India (RBI) may cut policy rates by up to 125 basis points in FY26, following a multi-year low inflation reading of 3.34% in March. This forecast is based on expectations of continued benign inflation and the need for accommodative monetary policy.

Key Forecasts and Rationale

Policy Rate Cut Expectations

• Total projected rate cuts in FY26: 125 bps
  • 75 bps in H1FY26 (June and August policy reviews)
  • 50 bps in H2FY26
• Current repo rate: 6.25% (after a cumulative 50 bps cut in February and April 2025)
• Possibility of the repo rate falling below the neutral rate by March 2026
• Larger 50 bps cuts are expected to be more effective than smaller 25 bps cuts spread over time

Inflation Outlook

• March CPI inflation: 3.34%, marking a multi-year low
• Domestic inflation is expected to converge toward the RBI’s 4% target, supporting the likelihood of further rate cuts

Liquidity Management and Open Market Operations (OMOs)

• RBI is expected to conduct ₹1.25 trillion in OMOs in May 2025
• Goal: Maintain a system liquidity surplus of ₹2 trillion, as per the RBI Governor’s guidance
• OMOs are intended to offset:
  • Maturing short-dollar forward positions
  • Volatility from FII outflows
  • Exchange rate pressures faced earlier in 2025

Macroeconomic Implications

• Easing rates could stimulate:
  • Private investment
  • Durable growth
  • Credit offtake, particularly in interest-sensitive sectors
• The RBI’s current strategy aims to:
  • Anchor growth while absorbing external shocks
  • Maintain stability in financial markets

BS

5. Stricter SEBI Rules Slow SME to Mainboard Migration in 2024–25

Sharp Drop in Migrations

• Only 1 SME has migrated to the mainboard in 2025 (as of May 5)
• 12 firms migrated in 2024, down from an average of ~50 annually (2020–2022)

Key Regulatory Changes

• SEBI revised migration norms in its December 2024 board meeting
• New framework notified in March 2025
• NSE introduced stricter eligibility norms in April 2025

Revised Eligibility Criteria

• Minimum revenue of ₹100 crore in the previous financial year
• Positive operating profit in at least 2 of the past 3 years
• Promoters must retain at least 50% of their initial stake post-listing
• Firms must meet enhanced corporate governance standards including no regulatory violations or defaults

Widened Transition Timelines

• Average migration time now ~5 years in 2024 versus under 2 years in 2019
• Rule now mandates a minimum 3-year gap between SME listing and mainboard migration

Impact on SMEs

• Many SMEs disqualified despite being high-growth or well-run
• Elevated thresholds and compliance burden cited by legal experts as key obstacles
• Some analysts believe regulatory clarity may encourage better-prepared firms to pursue migration

BS

6. RBI Slows Gold Repatriation Amid Rising Share in Forex Reserves

Minimal Gold Repatriation in H2 FY25

• RBI brought back only 1.53 tonnes of gold from overseas vaults between September 2024 and March 2025
• In contrast, 102.1 tonnes were repatriated in the first half of FY25
• The slowdown marks a strategic shift in gold repatriation pace

Current Composition of RBI’s Gold Holdings

• Total gold reserves as of March-end 2025: 879.6 metric tonnes
  • 512 tonnes held domestically
  • 348.6 tonnes held with Bank of England and BIS
  • 18.9 tonnes in the form of gold deposits
• Share of gold in total forex reserves rose to 11.70% from 9.32% over the second half of FY25

Gold as a Hedge and Diversification Tool

• Gold acts as a hedge against inflation, currency volatility, and geopolitical risks
• RBI, like other central banks, has increased gold holdings post-Russia-Ukraine war and Covid disruptions
• Repatriation of gold had picked up after February 2022 to enhance physical custody and security

Breakup of Foreign Currency Assets (as of March-end 2025)

• Total forex assets: $567.56 billion
  • $485.53 billion in securities
  • $45.68 billion with other central banks and BIS
  • $36.34 billion with overseas commercial banks
• RBI is also employing external asset managers for a small portion of reserves to diversify investments

TET

7. SEBI Probes Mahadev Betting App Firms for FPI Violations and Stock Manipulation

Context:

SEBI has initiated a formal investigation into firms linked to the Mahadev Betting App case.

• Allegations include:
  • Stock price manipulation
  • Routing of illegal betting proceeds into Indian stock markets via FPIs
• Funds were reportedly routed from overseas, specifically via FPIs based in Dubai and Mauritius.

Link with Ongoing Enforcement Directorate (ED) Investigation

• The ED is probing money laundering by Mahadev Online Book promoters who allegedly:
  • Operated benami bank accounts offshore
  • Laundered betting proceeds and reinvested them into Indian markets
• ED has frozen assets and cash worth over ₹573 crore, and seized ₹3.29 crore in cash.
• These proceeds were invested in the promoters’ own companies through:
  • Preferential share issues
  • Promoter-controlled share sales
  • Issuance of share warrants

Market Manipulation Allegations

• Evidence suggests a collusion between company promoters and accused individuals.
• They allegedly inflated company valuations using “tainted money” and manipulated stock prices with the help of agents and intermediaries.

Scale of Action Taken So Far

• Over 170 searches conducted by ED
• Assets worth ₹3,002.47 crore attached
• 13 arrests made and 74 entities named in five prosecution complaints

Next Steps and Regulatory Implications

• If SEBI’s probe confirms breach of FPI regulations, strict enforcement actions are expected against:
  • Involved companies
  • Promoters and directors
  • FPI intermediaries aiding the routing of illicit funds

BL

8. ₹600 Crore Discrepancy in IndusInd Bank’s Microfinance Accounting Triggers Audit Probe

Context:

Statutory auditors flagged a ₹600 crore discrepancy after reviewing IndusInd Bank’s microfinance income.

• Auditors discovered:
  • Interest income was grouped together for multiple loans.
  • Entries lacked borrower-level detail, despite varying interest rates.
  • This method contradicts standard accounting practices where each borrower’s account must be individually recorded.

Regulatory Scrutiny and RBI Involvement

• The Reserve Bank of India (RBI) has reportedly asked the bank to resolve the irregularities.
• RBI had previously flagged issues in another matter—a ₹1,959 crore derivatives misstatement, leading to top-level exits.

Leadership Crisis at IndusInd Bank

• The bank is undergoing a leadership transition:
• Deputy CEO Arun Khurana resigned after a Grant Thornton report on the derivatives issue.
• CEO Sumant Kathpalia also stepped down shortly after.
• The misreporting has shaken confidence in the bank’s internal controls and audit oversight.

Background on Microfinance Exposure

• Microfinance constitutes 9% of IndusInd Bank’s loan book.
• Portfolio size: ₹32,564 crore as of 31 December 2024
• Average loan per borrower in Q3 FY25: ₹42,274
• The bank acquired Bharat Financial Inclusion Ltd (formerly SKS Microfinance) in 2019, now a wholly owned subsidiary.

Audit Concerns and Industry Implications

• Experts from ICAI and banking sectors have raised concerns:
• Lapses in borrower-level income recognition should have triggered red flags much earlier.
• Bunching interest income contradicts norms where each loan is tracked individually for repayment, NPA classification, and interest accounting.
• There are growing calls for:
• Stricter auditing standards
• Increased oversight by regulators like RBI and ICAI

Mint

9. MSEI’s Revival Faces Hurdle as SEBI Plans to Cap Derivative Expiries to Two Days

Background

• Metropolitan Stock Exchange of India (MSEI), formerly MCX-SX, had planned a comeback in the Indian capital markets by launching derivatives on its flagship SX40 index.
• The exchange raised ₹238 crore in December 2024 from key fintech investors like Groww’s parent (Billionbrains), Zerodha’s Rainmatter, Share India Securities, and Securocorp Securities.
• MSEI’s strategy hinged on having a Friday expiry for its SX40 derivatives to differentiate from NSE (Thursday) and BSE (Tuesday).

SEBI’s Proposed Derivatives Cap

• On 27 March 2025, SEBI released a consultation paper proposing:
  • All index derivative expiries must be limited to Tuesdays or Thursdays.
  • Aim: To ensure optimal spacing and reduce concentration risk.
• This move undermines MSEI’s revival strategy, as its Friday expiry may no longer be permitted.
• Without a distinct expiry day, MSEI’s derivative offerings lose competitive value.

Market Impact and Liquidity Challenge

• As of 5 May:
  • MSEI’s daily trading volume was just 30,950, compared to NSE’s ₹293.72 crore and BSE’s ₹58.59 crore in cash market volumes.
  • SX40 futures contracts registered zero trading volume, while Nifty 50 futures on NSE recorded 76,211 contracts.
• Experts warn traders will migrate to exchanges with higher liquidity and better price discovery, further marginalizing MSEI.

Institutional Support & Governance Efforts

• Latika Kundu, MD & CEO of MSEI, emphasized:
  • Reviving MSEI supports capital market competition vital for India’s goal of becoming a developed nation.
  • A duopoly or monopoly could emerge without exclusive expiry days for emerging exchanges.
• MSEI has begun upgrading its technology and infrastructure to support seamless derivative trading.

Operational and Licensing Hurdles

• Limited broker participation is stalling volume growth:
  • Many brokers do not yet offer MSEI’s contracts due to licensing or technical issues.
  • Customer engagement—including placing trades, paying premiums, and settling contracts—remains low.

Mint

10. Aditya Birla Capital Digital Launches Digital Gold SIP

Product Overview:

• Company: Aditya Birla Capital Digital Ltd (ABCDL)
• Product: Digital Gold Systematic Investment Plan (SIP)
• App: Available on ABCD Mobile App
• Investment Options:
• ₹50 for weekly SIPs
• ₹100 for monthly SIPs

Key Features:

• Automated & Regular Investments: Helps users invest consistently and leverage rupee-cost averaging and compounding.
• 24-Karat Gold-Backed: Gold is stored in insured, secure vaults managed by MMTC-PAMP (JV between Swiss brand PAMP & MMTC, GoI undertaking).
• Integrated Gifting + SIP Options: Enables planning, saving, and gifting gold through one platform.
• No Physical Storage Hassles: Eliminates risks of loss, theft, and making charges linked with physical gold.

Additional Offering – Digital Silver:

• Also backed by 24-Karat physical silver.
• Flexible features: Buy, hold, redeem anytime.
• Silver as a future-ready asset: Growing demand in EVs, solar energy, and technology sectors.

Key Executive:

• Pankaj Gadgil, MD & CEO, Aditya Birla Housing Finance Ltd

11. RBI Grants Online Payment Aggregator License to Zaakpay (MobiKwik)

Context:

Zaakpay, the business payments arm of MobiKwik, has received final RBI approval to operate as a licensed Online Payment Aggregator in India. This approval allows Zaakpay to legally process digital payments for businesses under Indian law.

Why This Approval Matters

Regulatory Significance:

• The RBI license certifies strong compliance, data security, and operational transparency.
• Comes amid RBI’s crackdown on unlicensed payment aggregators who were barred from onboarding new merchants.

Strategic Impact for MobiKwik

• Enables Zaakpay to scale legally and securely, targeting more partnerships and expanding digital services.
• Boosts market credibility and merchant confidence in MobiKwik’s B2B payment ecosystem.

What Zaakpay Offers

Payment Services:

• Supports over 100 payment methods:
  • UPI, credit/debit cards, net banking, wallets, EMI
• Features:
  • Fast checkout, QR payments, instant daily settlements

Key Partnerships:

• Meta (WhatsApp-based payments) in healthcare and transport (2024)
• Offers credit/debit EMI for greater payment flexibility

Market Reaction & Share Performance

Share Movement:

• MobiKwik shares fell 0.99% to ₹249.95 on May 2, 2025 (previous close: ₹252.60)
• Drop attributed to broader market correction, not the license news

Future Growth Plans for Zaakpay

Business Expansion Focus:

• SaaS, healthcare, logistics, Tier-2/3 cities
• Invests in AI-led fraud checks, real-time settlements, and custom checkout solutions

Long-Term Outlook:

• Poised to become a core growth engine for MobiKwik’s enterprise vertical
• Improved services and compliance may restore investor confidence

Agriculture

1. Coalition for GM-Free India Opposes Genome-Edited Paddy Varieties

Context:

Coalition for GM-free India demands withdrawal of two genome-edited rice varieties announced by the Centre. The group is currently fighting a Supreme Court case against genetically modified (GM) crops

Health and Environmental Concerns

• Coalition warns that genome-edited seeds may harm human health and cause irreversible environmental damage
• Cites an “enormous body of scientific literature” questioning the safety of gene editing techniques

Criticism of Government and Research Bodies

• Venugopal Badaravada, ICAR governing body member, criticizes focus on “science for headlines” over practical farm solutions
• Accuses the Centre of acting “under corporate lobby pressure” and bypassing scientific safety norms

Regulatory Allegations

• The coalition calls the announcement illegal, citing deregulation of SDN-1 and SDN-2 gene editing techniques without safety tests
• Claims varieties are being promoted using unscientific claims of higher yield and drought resistance without valid testing

Details of Released Varieties

• Kamala (DRR Dhan 100) developed by Indian Institute of Rice Research, Hyderabad
• Pusa DST Rice 1 developed by Indian Agricultural Research Institute, Delhi

TH

Facts To Remember

1. Namo Bharat Stations Integrated with Electric City Buses for Last-Mile Connectivity

 To enhance last-mile connectivity and provide smoother travel for Namo Bharat commuters, the National Capital Region Transport Corporation (NCRTC) has collaborated with the Delhi Transport Corporation (DTC) to integrate air-conditioned electric city buses with the Namo Bharat stations.

2. India well-positioned to meet global talent demand: EAM Jaishankar

External Affairs Minister Dr S Jaishankar has said that there is a strong global demand for talent and India is well-positioned to meet it.

3. Maldives to build $8.8 billion Financial Freezone in Malé to become Indian Ocean business hub by 2030

The Maldives has announced plans to build an $8.8 billion Maldives International Financial Centre (MIFC) in Malé, in partnership with Qatari-owned MBS Global Investments. 

4. India to explore both space & deep sea in 2026 says Union Minister Dr. Jiterandra Singh

Minister of State for Space and Atomic Energy Dr. Jitendra Singh said that the Naval Forces and Naval Guards will play a vital role in ensuring the success of the Gaganyaan mission. 

5. World Asthma Day being observed to raise awareness, promote accessible inhaled treatments

World Asthma Day is being observed today. Organised by the Global Initiative for Asthma, it is globally observed on the first Tuesday of May. The theme for this year is “Make Inhaled Treatments Accessible for ALL”.The day aims to raise awareness about asthma and the importance of properly managing this chronic respiratory condition. It also emphasises educating the general public about the disease and its impact on daily life.

6. Archery World Cup 2025: Jyothi Surekha Vennam eyes encore; Deepika Kumari in fray

Top-ranked Indian women archers, Jyothi Surekha Vennam and Deepika Kumari, will lead the country’s challenge at the Archery World Cup 2025 Stage 2 in Shanghai, China, starting today.

Daily Current Affairs Quiz
7 May, 2025

International Affairs

1. India-UK Sign Historic Free Trade Agreement (FTA)

Context:

Prime Ministers Narendra Modi and Keir Starmer jointly announced the successful conclusion of a landmark India-UK Free Trade Agreement (FTA). The deal includes a Double Contribution Convention, aimed at boosting bilateral investment and economic cooperation.

Key Trade Benefits for Both Nations

• For India:
  • Zero-duty access for 99% of Indian exports to the UK.
  • Enhanced competitiveness for sectors including textiles, toys, leather, gems & jewellery, marine products, and footwear.
  • Tariffs on whisky and gin will fall from 150% → 75%, then to 40% in 10 years.
  • Auto tariffs reduced from 100%+ to 10% under a quota system.
  • Sensitive items like dairy, apples, and cheese are excluded from concessions to protect Indian farmers.
• For the UK:
  • Cheaper exports to India in whisky, gin, automobiles, medical devices, electrical machinery, cosmetics, soft drinks, chocolates, and lamb.
  • Increased access to India’s fast-growing consumer market.

Landmark Social Security Pact (Double Contribution Convention)

• Indian professionals working in the UK will get a 3-year exemption from social security payments.
• Expected to benefit over 60,000 IT sector employees.
• Could lead to 20% savings on employee salaries, a longstanding Indian demand.

Key Beneficiary Sectors

• Textiles and Apparel
• Leather and Footwear
• Gems and Jewellery
• Pharmaceuticals
• Agriculture and Processed Foods
• Fast-Moving Consumer Goods (FMCG)
• Healthcare and Innovation-driven enterprises

Projected Economic Impact

• Bilateral trade to rise by £25.5 billion.
• Positive implications for job creation, investment inflows, and supply chain integration.
• Enhanced prospects for Indian industries like engineering goods, marine exports, and apparel.

TH

National Affairs

1. Operation Sindoor

Context:

The Indian government confirmed that ‘Operation Sindoor’ was carried out in response to the terrorist attack in Pahalgam, J&K, where 26 civilians were killed. The operation, aimed to hold accountable those responsible for the attack.

Operation Highlights

• According to the official statement:
  • The strikes targeted terrorist infrastructure located in Pakistan and Pakistan-Occupied Kashmir (POK).
  • Indian forces maintained a measured and non-escalatory approach, avoiding Pakistani military installations.
  • The operation showcased India’s strategic restraint in both target selection and execution methods.

TOI

2. India’s HDI Ranking 2025

Context:

India ranks 130th out of 193 countries and territories in the 2025 Human Development Index (HDI) released by the United Nations Development Programme (UNDP)

• HDI score improved from 0.676 (2022) to 0.685 (2023).
• India remains in the ‘medium human development’ category but is now closer to the high development threshold (≥0.700).

Long-Term Gains and Recovery

• India’s HDI value has grown by over 53% since 1990, outpacing global and South Asian averages.
• Key drivers of improvement:
  • Rising national income per capita
  • Increase in mean years of schooling
  • Life expectancy at its highest since the HDI began
• UNDP India attributes this progress to post-pandemic recovery and long-term investments in well-being.

Criteria

The Human Development Index (HDI) uses three main criteria to assess a country’s progress in human development: life expectancy, education, and standard of living. These criteria are then quantified into a single index value between 0 and 1, with higher values indicating greater development. 

Elaboration:

• Life Expectancy: This criterion assesses a country’s average lifespan at birth, reflecting the health and longevity of its population. 
• Education: The HDI considers two aspects of education:
  • Mean years of schooling: The average number of years of schooling completed by the adult population. 
  • Expected years of schooling: The number of years of schooling that a child of school-entering age can expect to receive. 
• Standard of Living: This criterion is measured by Gross National Income (GNI) per capita. GNI per capita reflects the average income of a country’s citizens and is used to assess their economic well-being. 

Challenges and Inequality Concerns

• Inequality remains a major setback, reducing India’s HDI by 30.7%, one of the highest losses in South Asia.
• While inequality in health and education has lessened, income and gender disparities remain pronounced.
• Female labour force participation and political representation are still low.
• Recent steps, such as the constitutional amendment reserving one-third seats for women in legislatures, offer hope for inclusive growth.

Regional Comparison: India vs. Neighbours

Country	HDI Rank (2025)	HDI Value
China	75	Not specified
Sri Lanka	78	Not specified
Bhutan	127	Not specified
India	130	0.685
Bangladesh	130 (tied)	Not specified
Nepal	145	Not specified
Myanmar	149	Not specified
Pakistan	168	Not specified

Global HDI Leaders (2023)

Rank	Country	HDI Value
1	Iceland	0.972
2	Norway	0.970
2	Switzerland	0.970
4	Denmark	0.962
5	Germany	0.959
5	Sweden	0.959
7	Australia	0.958
8	Hong Kong (China SAR)	0.955
8	Netherlands	0.955
17	United States	0.938

3. Satluj Yamuna Link (SYL) Canal Dispute

Context:

The Supreme Court criticized Punjab’s decision to denotify land acquired for the Sutlej-Yamuna Link (SYL) canal project, calling it an act of “high-handedness”. The project stems from the 1981 water-sharing agreement among Punjab, Haryana, and Rajasthan, aiming to reallocate Ravi-Beas river waters in the national interest.

Satluj Yamuna Link (SYL) Canal Dispute: Historical Overview and Current Status

Overview of the SYL Canal Project

• Length: 214 kilometers (133 miles)
• Purpose: To connect the Sutlej and Yamuna rivers for sharing river waters
• States Involved: Punjab and Haryana
• Legal Status: Referred to the Supreme Court of India

Historical Context

• 1955 Agreement:
  • Involved states: Punjab, PEPSU, Rajasthan, Jammu & Kashmir
  • Division of 19.55 billion m³ of eastern Indus rivers (Ravi, Beas, Sutlej)
    • Punjab: 7.3 billion m³
    • PEPSU: 1.6 billion m³
    • Rajasthan: 9.9 billion m³
    • Jammu & Kashmir: 0.80 billion m³
  • Post-merger (1956), Punjab’s total: 8.9 billion m³
• 1960: Indus Water Treaty with Pakistan enabled India’s full use of eastern rivers

Legal and Tribunal Proceedings

• 1986: Ravi-Beas Waters Tribunal (Eradi Tribunal) formed
• 1987: Tribunal upheld prior agreements and revised allocations:
  • Punjab: 6.2 billion m³
  • Haryana: 4.72 billion m³
• Tribunal noted:
  • Haryana’s section was completed
  • Punjab’s portion remained incomplete
  • Urged speedy completion

Supreme Court Clarification and Warning

• The Bench clarified that the status quo applies only to land needed for constructing the main SYL canal, not Punjab’s internal water distribution network.
• Next hearing scheduled for August 13, if no resolution is found between the States and the Centre.
• The court urged both Punjab and Haryana to work with the Centre to reach an amicable solution.

TH

4. India Tightens Satellite Internet Rules

Context:

Starlink, owned by Elon Musk’s SpaceX, is still awaiting operational clearances in India. These include a unified licence (UL) and a GMPCS (Global Mobile Personal Communications by Satellite) authorisation, both necessary for providing satellite-based internet services.

New DoT Amendments

• The Department of Telecommunications (DoT) issued fresh amendments this week in response to heightened national security concerns, especially after the Pahalgam terror attack in Kashmir.
• These amendments mirror existing telecom surveillance mandates but extend them specifically to satellite service providers, including:
  • User traffic monitoring and interception
  • Location-based restrictions (geofencing)

Key New Requirements for Satellite Internet Providers

• Cross-border Usage Restrictions:
  • Satellite terminals purchased abroad must be disabled within India.
  • Indian-purchased terminals must be disabled outside Indian territory — a clause likely to impact the mobility appeal of Starlink.
• Local Manufacturing Mandate:
  • Satellite terminal devices must be manufactured in India within five years, aligning with the Make in India initiative.
• Enhanced Geofencing Requirements:
  • Aimed at preventing signal spillover in border regions.
  • Enables monitoring and lawful interception to address national security risks.

Implications

• The new rules reflect India’s focus on:
  • Digital sovereignty
  • National security
  • Technological self-reliance
• Starlink and similar players must adapt to a tighter regulatory and surveillance regime, even as demand for rural and remote internet access grows.

5. India to Launch ‘Sustainable Transport Mission’ Under National Action Plan for Climate Change (NAPCC)

Context:

The Government of India will soon introduce a new mission for “sustainable transport” under the National Action Plan for Climate Change (NAPCC). This marks the first new mission addition in over a decade and aims to tackle emissions from one of India’s most polluting sectors.

Key Focus Area

• The road transport sector will be central to this mission, as it:
  • Accounts for 12% of India’s energy-related CO₂ emissions.
  • Is the largest contributor to urban air pollution.
  • Will likely be the slowest transport mode to achieve carbon neutrality.
• Policy interventions will focus on:
  • Upgraded emission standards (e.g., introduction of BS-VII norms).
  • Greater adoption of electric vehicles (EVs) and alternative fuels.

Objective

• The mission is designed to decarbonise India’s transport sector and align with the country’s net-zero emission goals.
• It will bring India in line with global efforts by the European Union, select developed countries, and African nations pursuing similar sustainability missions.

Scope and Structure

• The mission will encompass multiple transport sub-sectors:
  • Road Transport
  • Railways
  • Ports
  • Shipping
  • Civil Aviation
• The Ministry of Road Transport and Highways (MoRTH) will act as the nodal agency for developing the policy framework.

Current Status and Planning

• MoRTH has been working on the mission for two years.
• The document is currently being updated with latest emissions data for 2030 and beyond.
• The apex climate committee will determine sectoral carbon reduction contributions.

TH & BS

6. ISRO Targets Early 2027 for Crewed Gaganyaan Launch

Why in News?

• ISRO Chairman V. Narayanan announced that the first Indian crewed space mission under Gaganyaan is now scheduled for Q1 2027.
• The original target was 2022, but the launch has faced multiple postponements.
• The crewed mission will be preceded by:
  • Three test flights: Two uncrewed missions and one robotic flight with Vyommitra.
  • A total of eight Gaganyaan missions (crewed and uncrewed) will take place until 2028.

Vyommitra and Uncrewed Mission

• The first uncrewed mission, with humanoid robot Vyommitra, is expected later in 2025.
• Nearly 90% of infrastructure and tests are complete.
• All propulsion systems for the human-rated GSLV Mk III launch vehicle are ready.

Axiom-4

Axiom Mission 4 (Ax‑4):

• Mission Type: Private spaceflight to the International Space Station (ISS)
• Operators: Axiom Space in collaboration with SpaceX and NASA

Launch Details:

• Launch Site: Launch Complex 39A, Kennedy Space Center, Florida
• Launch Vehicle: SpaceX Falcon 9 Block 5

Spacecraft Information:

• Spacecraft: Crew Dragon C213
• Orbital Destination: Low Earth Orbit (LEO)
• Mission Duration: Approximately 2 to 3 weeks
• Notable Fact: This will be the maiden flight of Crew Dragon C213, which is the fifth and possibly final Crew Dragon spacecraft to be built.

India & Axiom-4

• Indian astronaut Shubhanshu Shukla to fly aboard the Axiom-4 mission to the International Space Station (ISS).
• Launch expected in early June 2025 (Axiom reports May 29).
• India paid ₹550 crore to Axiom Space for this mission.
• Shukla’s mission will include scientific tasks and help build astronaut experience critical for Gaganyaan.

Strategic Importance

• Gaganyaan marks India’s entry into human spaceflight and builds indigenous capabilities.
• Missions like Axiom-4 provide global exposure and data for ISRO’s human spaceflight program.
• Vyommitra’s flight will serve as a key systems validation milestone.

TH

7. Sacred Buddhist Relics from Piprahwa

Context:

The Indian Ministry of Culture has issued a legal notice to Sotheby’s Hong Kong demanding the immediate halt of the planned auction of sacred Buddhist relics scheduled. Ivy Wong, Associate General Counsel at Sotheby’s, responded stating that the matter is receiving full attention from the auction house.

Piprahwa

Piprahwa is a village near Siddharthnagar city in Siddharthnagar district of the Indian state of Uttar Pradesh. Kalanamak rice, a scented and spicy variety of rice is grown in this area. It lies in the heart of the historical Buddha’s homeland and is 9 miles from the world heritage site of Lumbini that is believed to be the place of Gautama Buddha’s birth.

Historical and Spiritual Significance

• The relics were excavated in 1898 from Piprahwa Stupa, believed to be part of ancient Kapilavastu, the birthplace of Lord Buddha.
• Items include:
  • Bone fragments attributed to the Buddha
  • Soapstone and crystal caskets
  • A sandstone coffer
  • Gold ornaments and gemstones used as offerings
• An inscription in Brahmi script identifies the relics as belonging to the Buddha, deposited by the Sakya clan.

Legal and Cultural Claims

• The majority of relics were handed over to the Indian Museum in Kolkata in 1899 and are designated as Category ‘AA’ antiquities under Indian law, prohibiting sale or export.
• A portion of the relics was gifted to the King of Siam, while some were retained by Peppé’s descendants, a selection of which has now appeared in the Sotheby’s auction list.

TOI

8. Russian-Made SA-24 Igla-S Air Defense Systems

Overview of SA-24 Igla-S

• The SA-24 Igla-S is a third-generation, Russian-made MANPADS (Man-Portable Air Defense System).
• Key features:
  • Infrared-guided shoulder-fired missile
  • Maximum range: 6 km; altitude coverage: up to 3.5 km
  • Equipped with advanced seeker and proximity fuze
  • Resistant to jamming, highly mobile, and suitable for rugged terrain

Strategic Deployment in Northern India

• Indian Army units in Jammu & Kashmir have begun deploying the Igla-S to counter:
  • Low-flying UAVs
  • Helicopters and surveillance aircraft
  • Cross-border aerial threats
• The system’s portability makes it ideal for mountain warfare and rapid response scenarios

Strengthening India-Russia Defense Ties

• The Igla-S induction highlights continued Indo-Russian defense cooperation, despite:
  • Western pressure to limit military imports from Russia
  • Ongoing geopolitical tensions
• Russia supplies over 50% of India’s military imports, including tanks, fighter jets, and air defense systems

9. India’s First AI-Based Data Centre Park to Rise in Nava Raipur, Chhattisgarh

Project Overview

• Location: 14-acre site in Nava Raipur, Chhattisgarh’s new capital
• Developer: RackBank Datacenters Private Limited
• Key Milestone: Foundation laid by Chief Minister Vishnu Deo Sai on Saturday
• Significance: India’s first AI-integrated data centre park, poised to be a cornerstone of the country’s digital infrastructure

Infrastructure and Investment

• Includes 2.7 hectares under Special Economic Zone (SEZ)
• Phase 1 capacity: 5 megawatts; expandable up to 150 megawatts
• Estimated total investment: ₹2,000 crore
• Incorporates GPU-based high-end computing, live data streaming, and global-standard AI processing facilities

Technological and Sectoral Impact

• Supports key sectors:
  • Health tech
  • FinTech
  • Defence
  • Agritech and smart farming
  • Data analytics
• Designed as a green, energy-efficient and environmentally sustainable facility

Digital Inclusion and Social Impact

• Will enhance remote access to digital services including:
  • Education and healthcare in tribal and rural regions
  • Smart governance and faster public service delivery
• Supports farmers with:
  • AI-driven crop management
  • Precision weather forecasting
  • Improved agricultural yields

Broader Vision and Complementary Initiatives

• CM Sai termed it the “digital backbone for a new era of growth”
• Part of a broader tech ecosystem in the region:
  • State allotted 10 acres for NIELIT to promote technical education and digital literacy
• Aims to position Chhattisgarh as the “heartbeat of Digital India”

The Indian Express

Banking/Finance

1. RBI May Extend Call Money Market Hours to 7 PM

Context:

The Reserve Bank of India (RBI) proposes to extend call money market trading hours from 5 PM to 7 PM. The goal is to enhance interbank liquidity to meet the demands of 24×7 real-time payment systems.

What is the Call Money Market?

• A short-term interbank borrowing market where financial institutions lend to each other without collateral.
• Currently contributes just 2% of overnight market volumes, down from 13% in 2014–15.

• Definition: Call money refers to short-term loans—usually overnight or up to 14 days—offered in the inter-bank market.

• Types:
  • Call Money: Loans repayable within one day.
  • Notice Money: Loans with a maturity period of 2 to 14 days.

Purpose and Participants

• Primarily used by commercial banks to meet temporary liquidity requirements.
• Helps maintain the Cash Reserve Ratio (CRR) mandated by the Reserve Bank of India (RBI).
• Participants include commercial banks, cooperative banks, and in some cases, financial institutions.

Call Rate

• The interest rate charged on call money transactions.
• It is highly volatile, often changing daily or hourly, depending on market liquidity.
• Acts as an indicator of liquidity in the banking system.

Relationship with Other Money Market Instruments

• Call money rates have an inverse relationship with instruments like:
  • Certificates of Deposit (CDs)
  • Commercial Paper (CP)
• Higher call rates make CDs and CPs more attractive for banks seeking short-term funds.

Importance in Financial Markets

• Provides a flexible funding option for banks to manage short-term mismatches.
• Plays a crucial role in monetary transmission and liquidity management by the RBI.

Problem Statement: Liquidity Mismatch

• Banks borrow from RBI’s Liquidity Adjustment Facility (LAF) but park excess funds in the Standing Deposit Facility (SDF) due to mismatches.
• Despite overall systemic liquidity deficit, SDF balances remain high — a paradox in monetary operations.

Broader Implications

• Enhancing the call money market could:
  • Revive uncollateralised interbank lending
  • Reduce dependence on RBI liquidity windows (SDF/MSF)
  • Support real-time payment settlements after traditional banking hours

BS

3. India’s Digital Public Infrastructure

Digital Foundations: Aadhaar and UPI

• India leads globally in building digital public infrastructure (DPI) for governance.
• Platforms like Aadhaar and Unified Payments Interface (UPI) serve as horizontal digital rails enabling a range of services.
• Built on Aadhaar:
  • eKYC
  • eSign
  • DigiLocker
  • These services streamline banking, telecom, tax filing, and document storage.

PMWANI (Public WiFi Access)

• Conceptualized: 2015–16 by TRAI
• Cabinet approval: December 2020 after PMO intervention
• Still under-implemented despite surging demand for video-based education
• Could bridge the digital divide for students in low-income households

eRUPI: Targeted Digital Vouchers

• Launched: August 2, 2021
• Ensures benefit-specific fund usage (e.g., school bicycles, corporate incentives)
• Integrated into UPI; slow uptake limits its transformative potential

Ayushman Bharat Digital Mission (ABDM)

• Launched: September 2021
• Vision: Digital health records, diagnostic reports, affordable care
• Challenges:
  • Private sector resistance to data sharing
  • Implementation inertia
• Vast potential still underutilized

Key Issues Behind Delays

• Bureaucratic inertia
• Regulatory hesitation
• Institutional resistance to change
• Lack of urgency in policy execution

BS

4. RBI’s OMO Bond Purchase Draws Strong Demand

Context:

• The Reserve Bank of India (RBI) conducted open market operations (OMO) on Tuesday, inviting bond purchases worth ₹50,000 crore.
• Total bids received: ₹1.32 lakh crore, more than 2.6x oversubscription, indicating robust market demand.

Key Highlights

• Most bonds were priced at a premium over market rates, except the 2031-maturing paper, which traded at a discount.
• Bonds maturing between 3 to 14 years were included; ultra-long tenured bonds were excluded.
• The 7.10% GS 2034 bond saw maximum demand, as investors are offloading it to accommodate the new 10-year benchmark bond issued on May 2.

What Are OMOs?

• OMOs are a tool used by the Reserve Bank of India (RBI) to manage liquidity in the economy by buying and selling government securities (G-Secs) in the open market.
• These operations help the RBI achieve its monetary policy objectives such as controlling inflation, promoting economic growth, and stabilizing bond yields.

How OMOs Work?

• Selling G-Secs
  • When there is excess liquidity in the economy, the RBI sells G-Secs to absorb the excess cash, reducing the money supply.
• Buying G-Secs
  • When there is a liquidity shortage, the RBI buys G-Secs from the market, thereby injecting liquidity and increasing the money supply.

Why Are OMOs Important?

• Liquidity Management
  • OMOs help the RBI control the amount of liquidity in the financial system.
• Government Borrowing Costs
  • By keeping bond yields low, OMOs help reduce the government’s borrowing costs.
• Inflation Control
  • OMOs enable the RBI to regulate inflation by influencing the money supply in the economy.
• Smoothing Liquidity Conditions
  • OMOs help maintain stable liquidity conditions throughout the year, facilitating smoother functioning of the financial markets.

Overall, OMOs are crucial for the RBI to manage the economy’s liquidity effectively, ensuring stability in the financial system and helping achieve broader economic goals.

BS

5. Fino Payments Bank Prepares to Transition into a Small Finance Bank (SFB)

Context:

Fino Payments Bank is actively preparing to upgrade to a Small Finance Bank (SFB), having already applied for the licence with the Reserve Bank of India (RBI) in November 2024.

• The move is aimed at enhancing earnings potential, expanding into lending, and deepening ties with merchant partners and account holders.
• Payments banks, unlike SFBs, cannot lend and must park 75% of deposits in government securities, severely limiting income avenues.

Small Finance Banks (SFBs) in India: Role, Features, and Impact on Financial Inclusion

What Are Small Finance Banks?

• Small Finance Banks (SFBs) are RBI-regulated niche banks focused on financial inclusion.
• Aim to provide basic banking services to the unbanked and underserved segments, especially in rural and semi-urban India.

Background and Evolution

• Introduced in the 2014-15 Union Budget.
• RBI issued operational guidelines in November 2014.
• First 10 SFB licenses were granted in November 2015, including AU Small Finance Bank, Equitas, and Ujjivan.

Objectives of SFBs

• Promote financial inclusion by extending banking services to:
  • Small business units
  • Micro and small industries
  • Marginal farmers
  • Informal and unorganised sector workers
• Expand credit access in Tier-3 to Tier-6 towns and rural areas.

Key Features

• Regulated under the Banking Regulation Act, 1949 and RBI Act, 1934.
• Offer standard banking services: Savings/Current Accounts, Fixed Deposits (FDs), Recurring Deposits (RDs), and loans.
• Scheduled Bank Status upon fulfilling RBI criteria.
• 75% of Adjusted Net Bank Credit (ANBC) must be lent to priority sectors (agriculture, MSMEs, etc.).
• Minimum capital requirement: ₹200 crore.
• No subsidiaries allowed for non-banking financial activities.

Operations and Offerings

• Deposit Mobilization: Accept deposits from residents and NRIs.
• Credit Services: Offer loans for micro-enterprises, affordable housing, vehicle loans, and farm-related credit.
• Third-Party Distribution (with RBI nod): Insurance, mutual funds, pension products, forex services.
• Rural Penetration: At least 25% of branches must be in unbanked rural centres.

BS

6. Small Finance Banks vs Payments Banks

Both Small Finance Banks and Payments Banks are licensed and regulated by the Reserve Bank of India (RBI). They operate under specific RBI guidelines and are monitored for compliance with financial regulations.

Purpose

• Small Finance Banks (SFBs): Aim to provide full-fledged banking services to unserved and underserved populations, especially in rural and semi-urban areas.
• Payments Banks (PBs): Designed to offer low-risk, technology-driven banking solutions like savings accounts and remittances to low-income households and migrant workers.

Feature/Aspect	Small Finance Banks (SFBs)	Payments Banks (PBs)
Definition	Niche banks that serve underserved, unbanked populations with full banking services.	A new banking model offering limited banking services without credit risk.
Objective	Provide credit and deposit services to small business units, farmers, and unorganised sectors.	Provide small savings accounts and remittance/payment services to low-income groups and migrants.
Introduced By	RBI – 2015	RBI – Conceptualised in 2014; operational from 2016.
Capital Requirement	₹100 crore minimum paid-up capital	₹100 crore minimum paid-up capital
Credit Facilities	Can issue loans and credit facilities to target sectors	Cannot provide loans or issue credit cards
Time Deposits (FDs/RDs)	Allowed to accept Fixed and Recurring Deposits	Not allowed to accept time deposits
Operational Restrictions	No area restrictions on operations	Cannot set up subsidiaries for non-banking services
Services Offered	Full banking services including loans, deposits, remittances, debit cards	Savings accounts, mobile banking, debit cards, UPI, NEFT, IMPS, etc.
Priority Sector Lending (PSL)	Must allocate 75% of ANBC to PSL	No PSL requirement
First Bank Example	Capital Small Finance Bank – First SFB launched in 2016	Airtel Payments Bank – First PB licensed by RBI in 2016
FDI Policy	Foreign shareholding as per FDI norms for private sector banks	Same FDI rules apply
No. of Banks (as of Dec 2021)	11 Small Finance Banks	6 Payments Banks

List of 11 Small Finance Banks (SFBs):

• AU Small Finance Bank
• Capital SFB
• Fincare SFB
• Equitas SFB
• ESAF SFB
• Suryoday SFB
• Ujjivan SFB
• Utkarsh SFB
• North East SFB
• Jana SFB
• Shivalik SFB

List of 6 Payments Banks:

• Airtel Payments Bank
• India Post Payments Bank
• FINO Payments Bank
• Paytm Payments Bank
• Jio Payments Bank
• NSDL Payments Bank

7. Goldsikka Unveils AI-Powered Gold-Melting ATM in Hyderabad

Overview and Innovation

• Company: Hyderabad-based Goldsikka Ltd
• Innovation: India’s first AI-powered Gold-Melting ATM
• Functions:
  • Buy and sell gold
  • Deposit and melt gold jewellery
  • Test purity and value of deposited gold
  • Transfer gold’s value directly to customer’s bank account
  • Augmented Reality (AR) feature for virtual jewellery try-ons

Key Features

• Fully automated process — zero human interference
• Gold melting and purity testing integrated within ATM
• Real-time value calculation of pure gold
• KYC and verification:
  • Aadhaar and ID proof authentication
  • Photograph of depositor taken by ATM
• Security feature: Machine auto-reports to police if gold is linked to criminal activity

Transaction Timeline and Mechanism

• Entire process (deposit to fund transfer) takes approx. 30 minutes
• Customer receives real-time valuation and can approve or reject it
• On approval, money is transferred directly to customer’s bank account

Expansion and Market Presence

• Current Deployment:
  • 14 operational Gold ATMs across India
  • 3 installed in international markets
• Expansion Plan:
  • 100 Gold-Melting ATMs to be installed in India
  • Another 100 overseas, within a year
• Awaiting regulatory approval before full-scale launch of melting-enabled machines

Impact and Consumer Benefits

• Revolutionises gold transactions by merging AI, automation, and fintech
• Encourages transparency and trust in gold trading
• Provides a secure, real-time, and self-service option for gold monetisation
• AR feature adds a retail and e-commerce layer to physical gold ATMs

BL

8. India Lists First Mortgage-Backed Pass-Through Certificates (PTCs) on NSE

Context:

On 5th May 2025, Shri M. Nagaraju, Secretary, Department of Financial Services, Ministry of Finance, listed India’s first Mortgage-Backed PTCs on the National Stock Exchange (NSE). This marks a significant step in integrating India’s housing finance and debt capital markets.

What is a Pass-Through Certificate (PTC)?

• A Pass-Through Certificate (PTC) is a securitized debt instrument where investors receive cash flows (principal and interest) from a pool of underlying loans.
• Common in asset-backed securitization, PTCs improve liquidity and risk transfer.

Key Highlights of the Listed PTC Issue

• Structured by: RMBS Development Company Limited
• Total Issue Size: ₹1,000 crore
• No. of Certificates: 1,00,000 PTCs
• Face Value per PTC: ₹1,00,000
• Backing: Housing loans originated by LIC Housing Finance Limited
• Coupon Rate: 7.26% per annum
• Maturity: Approximately 20 years

Ratings, Format, and Trading

• Credit Ratings: Rated AAA(SO) by CRISIL and CARE Ratings
• Format: Issued in demat form
• Tradability: Listed and tradable on NSE, enabling secondary market transactions
• Coupon Discovery: Done via Electronic Book Provider (EBP) platform of NSE

Significance for Financial Markets

• Shri Nagaraju emphasized that Residential Mortgage-Backed Securities (RMBS) can:
  • Catalyze housing finance growth
  • Strengthen capital market participation in real estate finance
  • Promote long-term investment-grade debt instruments

Economy

1. India’s GDP Forecast for 2025 Cut to 6.3% by Moody’s

Moody’s Revised India Forecast (2025)

• India’s GDP growth forecast for 2025 has been lowered to 6.3% from 6.6% by Moody’s Ratings.
• Key reasons cited:
  • Policy uncertainty
  • Global trade tensions, particularly between the US and China
  • Geopolitical risks, including India-Pakistan tensions

Other Global Agencies Lower India’s Growth Outlook

• IMF revised India’s FY26 forecast to 6.2% (earlier: 6.5%)
• World Bank lowered India’s growth estimate to 6.3% (earlier: 6.7%)
• Moody’s forecasts India’s 2026 growth at 6.5%

Trade Tensions and Tariff Impact

• On April 2, the US imposed reciprocal tariffs, including a 26% duty on Indian imports
• A 90-day pause (till July 9) has been granted, but a 10% baseline tariff is already active
• Ongoing India-US trade talks:
  • US Treasury Secretary Scott Bessent stated the countries are “very close” to a trade deal
  • Negotiations have reportedly been relatively smooth

Global Growth Forecasts by Moody’s

Country	2025 Growth Forecast	Earlier Forecast
India	6.3%	6.6%
China	3.8%	4.5%
US	1.0%	2.0%

Broader Economic Implications

• Global trade and investment flows in G-20 nations are expected to slow down
• India’s growth outlook, while still among the highest globally, remains sensitive to external shocks and trade frictions
• A successful India-US trade agreement could mitigate some risks, restoring investor confidence and aiding exports

TET

Facts To Remember

1. Nationwide Civil Defence Drill Initiated Amid Heightened Security Concerns

Triggered by the April 22 terror attack in Pahalgam that killed 26 civilians, the drill aims to assess emergency response capabilities across the country. A nationwide civil defence preparedness drill is scheduled to begin on Wednesday, mandated by the Union Home Ministry.

2. IMF projects India to become fourth largest economy in ’25

The International Monetary Fund (IMF)’s April Outlook held that India would surpass Japan to become the fourth largest economy.

3. ‘Union Bank probing lapses in book procurement’

Union Bank of India has informed the stock exchanges that it is probing certain lapses in procurement of books by the bank for the purpose of gifting and supplying to its various branches.

4. Merz wins second vote to become German Chancellor

Friedrich Merz succeeded in his bid to become the next German Chancellor during a second vote in parliament, hours after he suffered a historic defeat in the first round. The conservative leader had been expected to smoothly win the vote to become Germany’s 10th Chancellor since the Second World War.

5. China’s Zhao scripts history at the Crucible Theatre

Zhao Xintong became the first Chinese player to win the World snooker championship as the qualifier completed his stunning march to the title with an 18-12 victory against Mark Williams in the final.

6. Sebi Gives Approval to Five IPOs

Laxmi India Finance, Jajoo Rashmi Refractories, Ajay Poly, Regal Resources and Veritas Finance — have received the Securities and Exchange Board of India’s approval to proceed with their initial public offerings (IPOs).

7. Farmers protest U.K. trade deal saying it’s a threat to agriculture and MSMEs

Farmers’ organisations have protested against the signing of the Free Trade Agreement between India and the United Kingdom, pointing out that the treaty was signed despite opposition from farmers, fish workers and cattle farmers.

Daily Current Affairs Quiz
8 May, 2025

International Affairs

1. India-UK FTA

Context:

The recently finalised India-UK Free Trade Agreement (FTA) could become a template for India’s ongoing FTA negotiations with major partners like the EU and the US. The deal signals a major policy shift as India agrees to slash automobile import tariffs from 100% to 10%, albeit with quotas to limit volume.

Read more>>

2. IMO’s Draft Net-Zero Framework

Context:

The International Maritime Organization (IMO) has approved a draft Net-Zero Framework aimed at reducing greenhouse gas (GHG) emissions from the shipping sector, with a goal of achieving net-zero emissions by 2050.

Key Features of the Framework

• Legal Basis:
  • New Chapter 5 of MARPOL Annex VI (Prevention of Air Pollution from Ships).
• Global Fuel Standard (GFI):
  • Requires ships to reduce GHG fuel intensity per energy unit used, based on a well-to-wake model.
• Carbon Pricing:
  • Ships exceeding GFI limits must purchase remedial units, while low-GHG ships can earn surplus credits.
• IMO Net-Zero Fund:
  • Redistributes carbon revenues to:
    • Reward zero-emission ships.
    • Fund R&D, capacity building, and climate resilience in Small Island Developing States (SIDS) and Least Developed Countries (LDCs).
• Coverage:
  • Targets ships over 5,000 GT (gross tonnage), which are responsible for 85% of maritime CO₂ emissions.

Significance of the Framework

• First Global Sector-Wide Regulation:
  • Unifies global emissions caps and carbon pricing across international waters.
• Drives Low-Carbon Innovation:
  • Encourages adoption of green fuels, onboard CCS, and hybrid technologies.
• Climate Alignment:
  • Supports the Paris Agreement goals and the 2023 IMO Strategy.
• Equity Focused:
  • Provides support to vulnerable nations through climate financing and technology transfer.
• Energy Transition Catalyst:
  • Encourages investment in alternative fuels such as ammonia, methanol, and hydrogen.

3. The Lancet Report on Sexual Violence Against Children

Context:

A global meta-analysis published in The Lancet (1990–2023) led by the Institute for Health Metrics and Evaluation (IHME), University of Washington, provides the first age-standardized estimates of child sexual abuse globally using consistent metrics.

Key Findings

• India:
  • 30.8% of girls and 13% of boys experienced sexual abuse before the age of 18.
  • This marks the highest prevalence for girls in South Asia.
• Global Average (2023):
  • 18.9% of females and 14.8% of males worldwide have experienced childhood sexual abuse.
• Timing of Abuse:
  • 70% of victims were first abused before they turned 18.

POCSO Act

The Protection of Children from Sexual Offences (POCSO) Act came into effect on 14th November 2012. It was enacted in response to India’s ratification of the UN Convention on the Rights of the Child in 1992. The aim of the Act is to address sexual exploitation and abuse of children, which were either not specifically defined or inadequately penalized in existing laws.

Key Features of the POCSO Act

• Definition of a Child:
  • The Act defines a child as any person below the age of 18 years.
• Punishments:
  • The Act prescribes punishments based on the gravity of the offence. It was amended in 2019 to include stricter penalties, including the death penalty for committing sexual crimes on children, aiming to deter perpetrators.
• POCSO Rules, 2020:
  • The Government of India notified the POCSO Rules, 2020, to provide a detailed framework for the implementation of the Act.
• Gender-Neutral Nature:
  • The Act recognizes that both girls and boys can be victims of sexual abuse, ensuring that such abuse is penalized regardless of the victim’s gender.

• Ease in Reporting Cases:
  • The Act encourages greater awareness and ease of reporting cases of child sexual exploitation, both by individuals and institutions.
• Explicit Definition of Terms:
  • The Act explicitly defines sexual assault, with increased minimum punishments, offering clarity compared to the more abstract term “outraging modesty” in the Indian Penal Code.
  • Storage of child pornography has been defined as a new offence under the Act.

National Affairs

1. Human Development Index (HDI) Report 2025

Title of Report

A Matter of Choice: People and Possibilities in the Age of Artificial Intelligence (UNDP)

Why in News?

India has been ranked 130th out of 193 countries in the United Nations Human Development Report (HDR) 2025, titled “A Matter of Choice: People and Possibilities in the Age of AI” by United Nations Development Programme (UNDP). The report highlights steady progress in human development indicators for India but flags persistent inequality and gender gaps as critical areas of concern.

Key Highlights of Human Development Report 2025

Global Insights:

• HDI Stagnation: Global human development progress has slowed to the weakest pace since 1990 (excluding the pandemic years).
• Global Rankings:
  • Top: Iceland (HDI: 0.972)
  • Bottom: South Sudan (HDI: 0.388)
• Inequality Rising: The gap between high and low-HDI countries continues to widen, stalling convergence.
• AI and Human Development:
  • 1 in 5 people globally use AI tools.
  • 60% believe AI will create opportunities; ~50% fear job displacement.
  • Call for inclusive AI policies that prioritize equity and mitigate automation-related job losses.

India’s Performance

• HDI Score: Improved from 0.676 (2022) to 0.685 (2023)
• Ranking: Rose from 133rd to 130th
• Category: Medium Human Development (close to “high” threshold of 0.700)
• Regional Standings:
  • Above: China (78), Sri Lanka (89), Bhutan (125)
  • Equal: Bangladesh (130)
  • Below: Nepal (145), Myanmar (150), Pakistan (168)
• Gender and Inequality Adjustments:
  • Inequality-Adjusted HDI (IHDI): Drops to 0.475, showing a 30.66% decline
  • Gender Development Index (GDI): 0.874 (Male: 0.722, Female: 0.631)
  • Gender Inequality Index (GII): India ranks 102nd, score: 0.403
• India Among Regional and BRICS Peers:
  • BRICS Rankings: Brazil (89), Russia (59), China (75), South Africa (110), India (130)
  • South Asia Region: Sri Lanka leads, India ahead of Nepal, Myanmar, and Pakistan

Progress in Key Areas

• Health:
  • Life expectancy rose from 58.6 years (1990) to 72 years (2023)
  • Driven by programs like Ayushman Bharat, NHM, Janani Suraksha Yojana, and Poshan Abhiyaan
• Education:
  • Expected years of schooling: Increased to 13 years (from 8.2 in 1990)
  • Supported by RTE Act, NEP 2020, Samagra Shiksha Abhiyan
• Income:
  • GNI per capita (PPP): Rose from $2,167 (1990) to $9,046 (2023)
  • 135 million Indians exited multidimensional poverty (2015-2021)
• AI Skills Leadership:
  • Highest global self-reported AI skill penetration
  • 20% of Indian AI researchers now remain in India (vs. 0% in 2019)

Regional Comparison: India vs. Neighbours

Country	HDI Rank (2025)	HDI Value
China	75
Sri Lanka	78
Bhutan	127
India	130	0.685
Bangladesh	130 (tied)
Nepal	145
Myanmar	149
Pakistan	168

Global HDI Leaders (2023)

Rank	Country	HDI Value
1	Iceland	0.972
2	Norway	0.970
2	Switzerland	0.970
4	Denmark	0.962
5	Germany	0.959
5	Sweden	0.959
7	Australia	0.958
8	Hong Kong (China SAR)	0.955
8	Netherlands	0.955
17	United States	0.938

How Can Artificial Intelligence Contribute to Human Development?

• Boosting Economic Productivity:
  • AI is expected to contribute ₹33.8 lakh crore to India’s GDP by 2030 (Google estimate)
  • Enhances innovation across manufacturing, agriculture, and services
• Transforming Healthcare:
  • AI in diagnostics (radiology, oncology), telemedicine, and remote monitoring
  • Personalized treatment, VR-based medical training, and improved access in rural areas
• Improving Education Outcomes:
  • Adaptive learning platforms, AI tutors, and chatbot-based support
  • Real-time monitoring to identify learning gaps
• Enabling Smart Governance:
  • Public service delivery tools like MuleHunter.AI (RBI fraud detection)
  • Projects like Bhashini enhance multilingual accessibility
• Promoting Inclusion:
  • AI can detect delivery gaps and aid marginalized groups if guided by ethical, human-centered design

Challenges

• Inequality Impact:
  • Inequality-adjusted HDI loss: 30.7%, among the highest in the region
• Gender Inequality:
  • Female labor force participation: 41.7%
  • Political representation and decision-making remain low
  • Promise shown by the 106th Constitutional Amendment for one-third legislative reservation

Policy Recommendations: How Can India Address Human Development Challenges?

• Promote Gender Equality:
  • Ensure effective implementation of legislative reservation
  • Expand access to PM Mudra Yojana, Stand-Up India, and digital skilling platforms
  • Support women via flexible work, childcare (crèches), and STEM programs like Vigyan Jyoti
  • Enforce laws against child marriage and workplace harassment
  • Strengthen Nirbhaya Fund and One Stop Centres
• Address Income Inequality:
  • Scale inclusive programs: MGNREGA, PMEGP, Jan Dhan Yojana
  • Focus on land reforms, quality healthcare, and accessible education
  • Promote SDG 10 for reduced inequalities
  • Leverage CSR for equitable development projects
• Improve Health and Education:
  • Prioritize universal healthcare access and nutrition (Poshan Abhiyaan)
  • Reform teacher training and curricula under NEP 2020
  • Expand use of EdTech and AI-based learning tools
• Leverage AI for Inclusion and Innovation:
  • Ensure ethical, inclusive AI governance
  • Expand AI-based solutions in farming, health, and education
  • Promote green jobs, manufacturing, and skilling in emerging sectors
  • Enhance financial/digital inclusion via UPI, Jan Dhan, and digital literacy drives

India’s HDI improvement in 2025 reflects tangible progress in health, education, and income. However, sustained attention to inequality, gender gaps, and inclusive AI adoption will be critical to unlocking high human development status and achieving Sustainable Development Goals (SDGs) by 2030.

2. Cabinet Approves ₹60,000 Cr. Scheme for Industrial Training Institute (ITI) Upgradation Scheme

Context:

The Union Cabinet has approved a new ₹60,000 crore Industrial Training Institute (ITI) upgradation scheme aimed at improving skilling infrastructure across the country. The initiative will focus on 1,000 government ITIs, using a hub-and-spoke model in partnership with industry players.

Scheme Duration and Budget Allocation

• Announced in the Union Budget 2024–25, the scheme will run for five years.
• Funding structure:
  • ₹30,000 crore from the Central Government
  • ₹20,000 crore from State Governments
  • ₹10,000 crore from Industry
• Co-financing: 50% of the central share will be jointly funded by the Asian Development Bank (ADB) and the World Bank.

Objectives

• Past financial support was inadequate for full ITI upgrades, especially in infrastructure and emerging trade requirements.
• This scheme introduces a need-based investment model, allowing flexible fund allocation tailored to each institution’s requirements.

National Centres of Excellence for Skilling

• Five new National Centres of Excellence will be set up in existing National Skill Training Institutes (NSTIs) at:
  • Bhubaneswar
  • Chennai
  • Hyderabad
  • Kanpur
  • Ludhiana
• These will enhance trainer development and advance vocational training standards.

BS

3. State Performance Ranking Report by Care Edge Ratings

Context:

The 2025 State Performance Ranking Report by Care Edge Ratings (a Care Ratings subsidiary) has received wide media attention. Although prepared by a private entity, it gained semi-official stature through a foreword by the CEO of NITI Aayog.

• The report evaluates states based on seven pillars: economic, fiscal, financial, infrastructure, social, governance, and environment.

Methodology

• Utilizes 50 indicators, weighted and normalized based on expert judgment.
• States are grouped into:
  • Group A: Large states
  • Group B: Northeastern, hilly, and smaller states
• Each pillar has a designated weight:
  • Economic (25%), Fiscal (20%), Financial & Infrastructure (15% each), Social & Governance (10% each), Environment (5%)

2025 Rankings

• Top Performers:
  • Group A: Maharashtra, Gujarat, Karnataka
  • Group B: Goa, Sikkim, Himachal Pradesh
• Lowest Performers:
  • Group A: Madhya Pradesh, Jharkhand, Bihar
  • Group B: Arunachal Pradesh, Manipur, Nagaland

Limitations of Utility

• Unlike credit ratings, these rankings do not affect borrowing costs since state bonds are sovereign-backed.
• While intended to promote competitive federalism, there’s no binding incentive or accountability mechanism to encourage actual policy reforms by state governments.

Policy Recommendations

• Redesign indicators to reflect real outcomes (e.g., actual service quality in education/health).
• Incorporate institutional strength and governance quality into the framework.
• Ensure transparency in assigning weights and consider broader stakeholder consultations.

BS

4. Revised SHAKTI Policy for Coal Linkages

Context:

The Cabinet Committee on Economic Affairs (CCEA) has accorded its approval for the Revised SHAKTI (Scheme for Harnessing and Allocating Koyala Transparently in India) Policy for Coal Allocation to Power Sector.

Key Features of the Revised SHAKTI Policy

• Window-I:
  • Coal at Notified Price
  • Continuation of existing coal linkage mechanisms for Central Sector Thermal Power Projects and State-linked IPPs
  • Coal earmarked for State Generating Companies (Gencos) can also be utilized by IPPs through Tariff-Based Competitive Bidding (TBCB) or for new expansion units with Power Purchase Agreements (PPAs)
• Window-II:
  • Coal at Premium Price
  • Available to domestic and imported coal-based power producers
  • Flexible tenure from 12 months to 25 years
  • No PPA required for power generation from coal secured under this window, allowing plants flexibility in selling electricity
• Objective of the Revised SHAKTI Policy
  • Grant fresh coal linkages to thermal power plants (TPPs) in the Central Sector, State Sector, and Independent Power Producers (IPPs)
  • Streamline the coal allocation process, offering flexibility in coal procurement and meeting dynamic power sector needs

Implications

• Employment Generation
• Flexibility for Fuel Supply Agreement (FSA) Holders
• Optimal Use of Power Plants

PIB

5. INS Kiltan Arrives in Singapore for IMDEX Asia 2025

Context:

INS Kiltan, part of the Indian Navy, has arrived in Singapore to participate in IMDEX Asia 2025 at the Changi Exhibition Centre. The visit is a key element of India’s ongoing operational deployment, reinforcing the growing maritime cooperation between India and Singapore.

INS Kiltan (P30)

• Overview
  • INS Kiltan (P30) is an anti-submarine warfare (ASW) corvette of the Indian Navy, developed under Project 28.
  • It is the third of four Kamorta-class corvettes, designed for stealth and specialized ASW operations.
• Construction and Commissioning
  • Built by Garden Reach Shipbuilders & Engineers (GRSE) in Kolkata.
  • Launched: 26 March 2013
  • Commissioned: 16 October 2017

IMDEX Asia

IMDEX Asia is recognized as Asia’s leading naval and maritime defence exhibition, showcasing the world’s naval elite and cutting-edge maritime innovations. Since its launch in 1997, the event has become a key platform for debuting new vessels, systems, and technologies across the global maritime industry.

PIB

6. SVAMITVA (Survey of Villages and Mapping with Improvised Technology in Village Areas) Scheme

Context:

India is poised to play a crucial role at the 2025 World Bank Land Conference, set to take place from May 5th to 8th at the World Bank Headquarters in Washington, D.C. A high-level Indian delegation, led by Shri Vivek Bharadwaj, Secretary, Ministry of Panchayati Raj (MoPR), will present India’s transformative SVAMITVA Scheme, alongside the Gram Manchitra platform.

SVAMITVA (Survey of Villages and Mapping with Improvised Technology in Village Areas) Scheme

SVAMITVA (Survey of Villages and Mapping with Improvised Technology in Village Areas) scheme is a collaborative effort of the Ministry of Panchayati Raj, State Panchayati Raj Departments, State Revenue Departments and Survey of India.

• The Scheme was launched on April 24th of the year 2020. It is meant to register a Record of Rights for rural property owners in the Abadi areas (inhabited regions) using innovative drone and GIS technology.
  • It follows the Whole-of-Government approach with various departments and stakeholders for improving financial inclusion.
  • SVAMITVA Through property ownership validation, it ensures better credit access and socio-economic stability.
• Goal
  • Integrate a rural land property validation system
• Features
  • This scheme involves mapping parcels of lands, through a utilization of the power of drones technology along with the use of Continuously Operating Reference Station or CORS.
  • The mapping will be done all over the country on a phase by phase basis, over a time period of four years, i.e. between 2020-2024.

Status

• India has surveyed 68,000 square kilometers of rural land under SVAMITVA, unlocking assets worth $1.16 trillion.

7. Indo-Pacific Logistics Network (IPLN)

Context:

IPLN (Indo-Pacific Logistics Network) is a multilateral initiative aimed at developing a shared logistics framework to enable efficient and coordinated civilian disaster response across the Indo-Pacific region. It facilitates faster deployment of humanitarian aid through enhanced logistical infrastructure and interoperability between participating countries.

Key Features

• Objective: To improve disaster response coordination and enhance the efficiency of humanitarian aid deployment in the Indo-Pacific region.
• Shared Logistics Infrastructure: IPLN works on creating interoperability between the logistics systems of participating countries, making aid delivery more rapid and organized.

Participating Countries

• India
• United States
• Japan
• Australia

Launch and Initiatives

• Simulated via Tabletop Exercise (TTX): The initiative was first simulated through a Tabletop Exercise (TTX) hosted at the Asia-Pacific Centre for Security Studies in Honolulu, Hawaii.
• Complementary Initiatives: IPLN is aligned with broader regional efforts like the Indo-Pacific Partnership for Maritime Domain Awareness (IPMDA) and the Quad Pandemic Preparedness Workshop, supporting collaborative efforts in maritime security and disaster management.

Banking/Finance

1. Exim Bank Withdraws ₹2,500 Crore 10-Year Bond Issue

Context:

Exim Bank withdrew its planned ₹2,500 crore 10-year bond issuance after investors demanded higher-than-expected yields, according to multiple market sources.

Bonds in Corporate Financing

Bonds serve as a form of loan between an investor and a corporation. When a company issues bonds, it borrows a specific amount of money from investors, agreeing to pay back the principal amount along with periodic interest payments until the bond matures. Once the bond matures, the company repays the principal, concluding the bond agreement.

Bonds vs. Other Methods of Raising Capital

Bonds vs. Bank Loans

• Interest Rates: Companies typically pay lower interest rates on bonds compared to bank loans, which is advantageous for firms aiming to minimize their borrowing costs.
• Operational Freedom: Unlike bank loans, which often come with restrictive conditions (such as prohibiting further debt issuance or acquisitions), bonds offer greater operational freedom without such strings attached.

Key Features of Bonds

• Types of Bonds:
  • Collateralized Bonds: These bonds are backed by a company’s assets (e.g., real estate or equipment). If the company defaults, the bondholders can claim these assets.
  • Unsecured Bonds: These are not backed by any assets, and therefore carry higher risk and typically higher interest rates.
  • Convertible Bonds: These bonds can be converted into a specified number of shares, allowing bondholders to benefit from rising stock prices.
  • Callable Bonds: These bonds can be redeemed by the issuing company before the maturity date, especially if interest rates decrease, allowing the company to refinance at a lower rate.
• Interest Rates: A bond’s interest rate is influenced by factors like the company’s credit quality and the duration of the bond. Healthier companies or those issuing shorter-term bonds typically offer lower interest rates.

Why Companies Issue Callable Bonds

• Interest Rate Flexibility: Callable bonds allow companies to redeem and reissue debt at a lower interest rate if market rates drop. This lowers the cost of capital for the company, similar to refinancing a mortgage at a lower rate.

Corporate Bonds vs. Government Bonds

• Issuer: Corporate bonds are issued by companies to fund business activities, while government bonds are issued by governments to finance public expenditures.
• Risk and Return: Corporate bonds are generally riskier than government bonds, as corporations are more likely to default. However, this increased risk often results in higher returns for corporate bondholders.

2. Bank Bonds

Context:

Bank bonds are a type of debt security issued by banks and financial institutions to raise funds, manage risk, and offer investment opportunities to individuals and institutions. They offer structured returns and are considered relatively safe financial instruments.

What Are Bank Bonds?

• Definition: Debt securities issued by banks to raise capital.
• Purpose:
  • To strengthen weak balance sheets.
  • To fund expansions or regulatory capital requirements.
  • To hedge market risks (e.g., interest rate or currency exposure).

Typical Features of Bank Bonds

• Issuer: Banks, some insurance companies, and other financial entities.
• Maturity: Issued for a specific term.
• Interest: Fixed-rate or floating-rate interest payments.
• Security: Often backed by loans, mortgages, or other bank assets.
• Types:
  • Treasury securities (T-bills).
  • Agency securities (AIGs).
  • Mortgage-backed securities (MBSs).
  • Asset-backed commercial paper (ABCP).

Bank Bonds vs. Other Instruments

• Higher Yields: Compared to central bank-issued government bonds.
• Market Accessibility: Can be traded in the open market, often without permits or licenses.
• Institutional Buyers: Pension funds, insurance firms, and other banks frequently invest.

For Consumers

• Utility:
  • Used for saving, debt repayment, or emergency funds.
  • No need for a pre-existing bank account to purchase.
• Purchase Requirements:
  • Valid identity and payment method (credit/debit).
  • Sometimes requires documentation if no prior credit history exists.
• Ease of Access:
  • Same-day account setup often available.
  • Online purchases possible through most banks.

Investment Value and Benefits

• Safer Than Stocks: Less volatile due to backing by bank assets.
• Stable Returns: Less impacted by inflation or market fluctuation.
• Quality Assurance: Issued by regulated institutions, providing reliability.
• Indirect Equity Link:
  • Banks use bond proceeds to invest in growth (e.g., branches, tech upgrades).
  • As banks grow, their financial stability boosts the bond’s perceived value.

Key Difference: Bank Bonds vs. Stocks

Feature	Bank Bonds	Stocks
Ownership	No ownership rights	Ownership stake in a company
Risk	Lower, fixed return	Higher, variable return
Return	Interest payments	Dividends + potential capital gains
Maturity	Fixed-term	No maturity; held as long as desired
Control/Influence	No voting rights	Shareholders may vote on corporate matters

Bank bonds offer a secure, income-generating option for both conservative investors and institutions. They provide banks with critical funding while giving investors a predictable and relatively low-risk return— making them an essential part of the modern financial ecosystem.

3. Electricity Derivatives

Context:

The National Stock Exchange (NSE) has received in-principle approval from the Securities and Exchange Board of India (SEBI) to launch electricity derivatives. The announcement was made during the NSE’s fourth-quarter earnings analyst call.

Key Features of Electricity Markets and Derivatives

This chapter outlines the unique characteristics of electricity, the structure of electricity markets, and introduces market-specific derivatives, focusing on features that directly affect pricing and trading.

Key Properties of Electricity Affecting Markets

• Non-Storability
  • Electricity cannot be stored economically at scale.
  • This makes real-time balancing of supply and demand crucial.
  • Strongly influences market volatility and price formation.
• Transport Constraints
  • Electricity is location-specific due to transmission limitations.
  • There is no truly global or regional electricity market.
  • Markets are fragmented: each country (or even sub-region) has its own localized market.

Electricity Market Microstructure

• Fragmentation
  • Unlike gas or oil markets, electricity markets lack international homogeneity.
  • Every country has a distinct market design, regulatory framework, and pricing mechanism.
• Common Structural Features
  • Despite fragmentation, most electricity markets share:
    • A day-ahead market (based on forecasts)
    • Intraday and real-time balancing markets
    • Use of merit-order dispatch and marginal pricing

Electricity Derivatives

• Purpose and Use
  • Used for hedging price risk due to high volatility.
  • Commonly used by:
    • Utilities (both generators and retailers)
    • Large consumers (e.g., manufacturers)
• Types of Derivatives
  • Futures and forwards: Lock in prices for future delivery
  • Options: Offer flexibility with the right but not the obligation to trade
  • Contracts for difference (CfDs): Common in regulated markets for stabilizing revenue
  • Spread contracts: Hedge price differentials between locations or time periods
• Market Participants
  • Varying strategies depending on:
    • Size of the utility (large vs. small)
    • Nature of business (generation vs. retail)
    • Risk tolerance and access to capital markets

How Derivatives Exchanges Work

• Market Mechanism: Continuous auction where prices are set via supply-demand bids.
• Benefits:
  • Price transparency.
  • Predictability for producers and consumers.
• Participants: Mostly large corporations, banks, and trading firms.
• Barriers to Entry:
  • High capital requirements.
  • Daily financial reporting and transaction capabilities.

Trading Electricity vs. Financial Markets

Understanding the electricity wholesale market requires recognizing how electricity trading differs from traditional financial asset trading.

Key Differences Between Electricity and Financial Market Trading

• Instant Production and Consumption
  • Electricity must be produced and consumed in real-time.
  • Unlike commodities (e.g., oil) or financial assets (e.g., stocks, bonds), electricity cannot be stored efficiently at the wholesale level.
• Real-Time Market Balance
  • Continuous balancing of supply and demand is essential to maintain grid stability.
  • Market design is based on immediate delivery, not future settlements.
• Market Design
  • Electricity markets operate on a day-ahead or intraday basis, requiring precision forecasting.
  • Pricing reflects real-time constraints such as demand spikes, generation failures, or weather variability.

BS

4. RBI Introduces New Framework for Regulation Formulation and Public Consultation

Context:

The Reserve Bank of India (RBI) has introduced a new framework aimed at standardizing the process of regulation-making to ensure greater transparency, accountability, and stakeholder participation. The framework will involve publishing draft regulations on the RBI’s website along with a statement of particulars, inviting public comments before finalizing any new regulations.

Key Highlights of the Framework

Scope of Regulations

• Applies to all regulatory instruments issued by the RBI:
  • Directions
  • Guidelines
  • Notifications
  • Orders
  • Policies
  • Specifications and Standards

Draft Publication Requirements

• RBI must publish draft regulations on its official website: www.rbi.org.in
• A Statement of Particulars must accompany the draft, including:
  • Objectives of the regulation
  • Impact analysis, to the extent feasible
  • Reference to international standards and global best practices

Objective

To create a consistent, participatory, and evidence-based regulatory process, improving the quality and legitimacy of RBI’s regulatory instruments.

BS

5. Weighted Average Lending Rate (WALR)

Context:

The overall spread between the weighted average lending rate (WALR) and weighted average domestic term deposit rate fell to 2.71% in March 2025, a 10-year low, down 5 bps month-on-month (M-o-M). Spread on fresh loans fell sharply by 22 bps to 2.7% during the same period.

Weighted Average Lending Rate (WALR)

The Weighted Average Lending Rate (WALR) is a key financial metric that reflects the average interest rate at which a bank lends to its borrowers, adjusted for the size of each loan.

Key Features of WALR

Definition and Purpose

• Represents the average interest rate on all outstanding loans.
• Weighed by loan size, making it more accurate than a simple average.
• Larger loans influence the WALR more than smaller ones.

Calculation

• Involves aggregating all loans by size and interest rate.
• Formula: WALR= (∑ Loan Amount * Interest Rate) / ∑ Loan Amount. 

Characteristics

• Dynamic metric: Changes as loans are added, repaid, or modified.
• Reflects loan portfolio composition and prevailing interest rate trends.
• Includes all types of loans – retail, corporate, etc.

Applications

• Used to:
  • Compare lending rates across banks.
  • Assess competitiveness in the lending market.
  • Gauge transmission of monetary policy by central banks.
  • Monitor sector-specific trends (e.g., retail or SME lending).

Regulatory Relevance

• Used by regulators to assess:
  • Effectiveness of policy rate changes.
  • Credit market dynamics.
  • Cost of borrowing across the economy.

Implications

• A lower WALR indicates:
  • Cheaper credit availability
  • Higher competition among banks
• Changes in WALR directly impact:
  • Borrowing costs for consumers and businesses
  • Bank profitability

The weighted average domestic term deposit rate (WADTDR)

The weighted average domestic term deposit rate (WADTDR) is a metric that reflects the average interest rate paid on term deposits by commercial banks, adjusted for the size of the deposits. It essentially provides a weighted average of the interest rates on different deposit maturities and amounts, considering the relative importance of each deposit in the bank’s overall deposit portfolio. 

BS

6. RBI Surplus Transfer

Context:

The Reserve Bank of India (RBI) is likely to transfer a record ₹3 lakh crore surplus to the central government for FY25. This is 50% higher than FY24’s ₹2.1 lakh crore transfer and well above the budget estimate of ₹2.3 lakh crore.

What is RBI Surplus?

• Surplus = RBI’s income – expenditure
• RBI generates surplus primarily from:
  • Interest on Rupee Securities (RS)
  • Earnings from Liquidity Adjustment Facility (LAF) and Marginal Standing Facility (MSF)
  • Interest on loans to central/state governments and banks
  • Interest from Foreign Currency Assets (FCA)

Key Expenditure Items of RBI

• Risk Provisions:
  • Contingency Fund (CF): For absorbing market and operational risks.
  • Asset Development Fund (ADF): For internal capital expenditure and investments in subsidiaries.
• Other Expenditures:
  • Printing of currency
  • Commission to banks, dealers
  • Employee costs

Provisions & Legal Basis

• Section 47, RBI Act, 1934: RBI must transfer surplus to the Central Government after risk provisions.
• Section 48: RBI is exempt from income and super tax.
• Committees that guided surplus transfers:
  • V Subrahmanyam (1997)
  • Usha Thorat (2004)
  • Y.H. Malegam (2013)
  • Bimal Jalan Committee (2018) → Finalized the Revised Economic Capital Framework (ECF)

Economic Capital Framework (ECF) – Key Metrics

• Realized Equity (CF):
  • Range: 5.5–6.5% of RBI’s balance sheet.
  • RBI Board decided to maintain it at 5.5%.
• Economic Capital (includes CGRA):
  • Range: 20.8–25.4% of balance sheet.
  • Excess above upper limit is transferrable.
  • CGRA = Unrealized valuation gains from forex, gold, interest rate movements.

Why Was the Surplus So High?

• Higher earnings from foreign exchange reserves
• Lower provisioning requirement under revised risk thresholds
• Strong returns on domestic and global investments

Historical RBI Surplus Payouts (₹ Cr)

Fiscal Year	Surplus Transferred
FY16	65,876
FY17	30,659
FY18	50,000
FY19	1,75,987
FY20	57,128
FY21	99,122
FY22	30,307
FY23	87,416
FY24	2,10,874

Benefits to the Government

• Reduce Fiscal Deficit: Supports achieving FY25 target of 5.1%.
• Enhances Non-Tax Revenue: Provides fiscal space for welfare and growth expenditures.
• Lower Government Borrowing:
  • May cut FY25 borrowing by ₹1 trillion.
  • Reduces pressure on bond markets and yields.
• Keeps Interest Rates Low:
  • Lower G-Sec yields → lower corporate borrowing costs → boosts investment.

TET

7. RBI’s Co-lending Framework

Context:

The Reserve Bank of India (RBI) has proposed a new co-lending model requiring simultaneous loan disbursal by both banks and non-bank financial companies (NBFCs). The existing model, which allows NBFCs to originate and assign loans to banks, may be phased out. The Finance Industry Development Council (FIDC) is preparing to represent NBFC concerns formally to the RBI.

RBI to Expand Co-Lending Framework Beyond NBFCs and PSL

The Reserve Bank of India (RBI) is set to roll out a new, more inclusive co-lending framework, expanding the scope beyond existing arrangements between banks and NBFCs and beyond Priority Sector Lending (PSL).

Current Co-Lending Framework (Status Quo)

• Applicable Parties: Banks and Non-Banking Financial Companies (NBFCs) only
• Scope: Restricted to Priority Sector Lending (PSL) categories
• Risk Sharing: Typically, NBFCs initiate and service the loan, while banks share the risk and funding
• Objective: Leverage NBFC reach with bank liquidity to serve underserved segments

Why Change is Needed

• Increased Complexity: Co-lending models have diversified, sometimes involving fintechs and multilayered structures
• Elevated Interest Rates: Some arrangements led to higher borrower costs, drawing regulatory concern
• Inconsistent Risk Sharing: Varying practices created regulatory grey areas
• Consumer Protection Risks: Need for better transparency, grievance redressal, and fair lending practices

Related Developments

• RBI sees lower inflation in FY26: Forecast cut to 4%
• Repo Rate Cut: 25 bps reduction; stance now ‘accommodative’
• NPCI Empowered on UPI Limits: Can revise P2M transaction limits after consultation with banks
• Securitisation of Stressed Assets: RBI plans to enable market-based resolution

Implications of Expanded Co-Lending Framework

• For Borrowers: Potential for wider access to affordable credit with improved transparency
• For Banks & NBFCs: Clearer rules may reduce compliance uncertainty and risk exposure
• For Fintechs: Opportunity to be part of regulated co-lending partnerships
• For Economy: Supports financial inclusion and MSME growth with diversified credit models

The RBI’s Co-lending Framework

The RBI’s Co-lending Framework allows two financial institutions, like a bank and a non-banking financial company (NBFC), to jointly fund a loan portfolio in a pre-agreed proportion, with both sharing revenue and risk. This framework aims to improve credit flow to underserved sectors by combining the low-cost funding of banks with the reach of NBFCs and other financial entities. 

Key Aspects:

• Joint Funding: Co-lending involves two or more financial institutions jointly disbursing loans to borrowers. 
• Pre-agreed Proportion: The lending partners agree on the proportion of the loan each will fund. 
• Risk and Revenue Sharing: Both partners share the risks and rewards associated with the loan portfolio. 
• Sourcing and Management: Co-lending arrangements can include provisions for one partner to handle loan sourcing, credit appraisal, and management, while the other provides funding. 
• Expansion Beyond Priority Sector: The RBI has expanded the framework to include all regulated entities and loan types, not just priority sector lending. 
• Escrow Accounts: Escrow accounts are used to ensure transparency and compliance with regulations in co-lending partnerships. 

Benefits of the Co-lending Framework

• Improved Credit Access: It allows financial institutions to reach a wider range of borrowers, including those in underserved areas. 
• Risk Diversification: Sharing risks and rewards allows institutions to manage their lending portfolios more effectively. 
• Credit Cost Optimization: The blending of low-cost bank funding with higher-cost NBFC funding can lead to more competitive lending rates. 
• Enhanced Credit Delivery: NBFCs’ and other lenders’ strong distribution networks help reach borrowers that might be difficult for banks to access. 

RBI’s Role:

• Regulatory Framework: The RBI provides the regulatory framework for co-lending, ensuring transparency, compliance, and consumer protection. 
• Expanding Access: The RBI’s recent expansion of the framework aims to make it more accessible to all regulated entities and loan types, further promoting credit flow to underserved sectors. 
• Customer Grievance Redressal: The RBI’s guidelines emphasize the importance of customer grievance redressal mechanisms within the co-lending framework. 

TET

8. SEBI Tightens Disclosure Norms for REITs and InvITs

Overview of SEBI’s New Disclosure Norms

• On May 8, SEBI issued revised disclosure guidelines for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs).
• The changes aim to enhance transparency, improve investor protection, and align disclosures with global best practices.
• Issued via two circulars, the revised norms are based on the recommendations of a Working Group under HySAC (Hybrid Securities and Advisory Committee).

Key Changes in Offer Document Disclosures

• Audited Financial Statements: REITs and InvITs must disclose:
  • Audited financials for the past 3 financial years
  • Stub period financials, if the latest audited figures are older than 6 months
• Entity Age Clause: In follow-on offers, if the REIT/InvIT has not existed for 3 years:
  • Financials must be provided for the actual period of existence + stub period
• Initial Offers: Must include audited combined financials in the offer document or placement memorandum
• Additional Audited Disclosures:
  • Project-wise operating cash flows
  • Contingent liabilities and commitments
  • All to be audited by peer-reviewed auditors approved under REIT/InvIT regulations

TET

9. SEBI Introduces Regulations for Securitised Debt Instruments (SDIs)

Context:

The Securities and Exchange Board of India (SEBI) has introduced a new set of regulations for securitised debt instruments (SDIs), focusing on enhancing transparency, risk management, and investor confidence. The regulations, announced through a gazette notification, mandate key changes in the issuance, transfer, and management of SDIs.

What are SDIs?

• Securitised Debt Instruments (SDIs) are created by pooling various debt assets (e.g., loans, mortgages, receivables).
• These pooled assets are sold as securities to investors, enabling originators (like banks) to convert illiquid assets into tradable instruments.
• Investors earn returns based on the performance of the underlying debt pool, with risk diversification across multiple assets.

Key Highlights of SEBI’s New Rules on Securitisation

Minimum Investment Threshold (Ticket Size)

• Primary Issuance:
  • ₹1 crore minimum investment size for all investors in SDIs.
• Subsequent Transfers:
  • ₹1 crore for originators not regulated by the RBI.
  • For SDIs backed by listed securities: Minimum ticket size equals the highest face value among underlying securities.

Issue Process and Form

• Public Offer Duration:
  • Minimum: 3 days
  • Maximum: 10 days
• Dematerialised Form (Demat):
  • All SDIs must be issued and transferred in demat form only.

Originator Eligibility & Track Record

• Operating History:
  • Minimum of 3 years of operational track record required for originators.

Risk Retention and Holding Period

• Minimum Risk Retention:
  • 10% of securitised pool
  • 5% if underlying receivables mature within 24 months
• Minimum Holding Period (MHP):
  • 3 months for loans with tenure ≤ 2 years
  • 6 months for loans with tenure > 2 years

Asset Eligibility & Definitions

• Permissible Underlying Assets:
  • Listed debt securities
  • Accepted trade receivables
  • Rental incomes
  • Equipment leases
• Prohibited Assets:
  • Re-securitisation (i.e., securitising existing securitised assets)
  • Synthetic securitisation (derivative-based exposure)

10. Sa-Dhan and Bank of India Collaborate to Boost Financial Inclusion for Small, Micro, and Women-Led Businesses

Memorandum of Understanding (MoU) Signed

• Sa-Dhan, a self-regulatory organization for microfinance institutions (MFIs), has entered into a Memorandum of Understanding (MoU) with the Bank of India (BoI) to enhance financial access for small, micro, and women-led enterprises in India.
• The collaboration aims to address key barriers to financial inclusion and foster sustainable economic growth.

Focus on National Financial Inclusion and SDGs

• The partnership is aligned with India’s National Financial Inclusion goals and the Sustainable Development Goals (SDGs), particularly in areas such as:
  • Poverty alleviation
  • Gender equality
  • Economic empowerment of underserved communities.

Key Areas of Collaboration

The MoU outlines the following key areas of collaboration:

• Enterprise finance for self-help groups (SHGs) and non-SHG members.
• Climate-resilient technologies and green financing, enabling businesses to adapt to climate change.
• WASH (Water, Sanitation, and Hygiene) financing to improve infrastructure and living conditions.
• Co-lending to Microfinance Institutions (MFIs) to provide credit to underserved businesses.
• Financial literacy and awareness programs, including guidance on government schemes to improve access to financial services.

Agriculture

1. Luminis Partners with Forvis Mazars to Scale Microbiome Solutions in India

Context:

Luminis, a leader in microbiome intelligence and precision agri-tech, has entered a strategic alliance with Forvis Mazars in India, a global advisory, audit and tax firm. Nalanda Capital Partners facilitated the deal, providing strategic advisory and capital-raising support

Partnership Objectives

• Deepen impact in aquaculture through Luminis’ Omni Biome AI platform and genomics capabilities
• Expand into soil microbiome for agriculture, addressing soil degradation, yield variability, disease pressures and climate resilience
• Eliminate antibiotics in food production by harnessing next-gen bioproducts and microbiome-based solutions

Expected Impact on India’s Agri-Food Systems

• Enhanced soil health and carbon resilience through targeted microbial applications
• Stabilised crop yields and reduced disease incidence via data-driven biocontrol solutions
• Sustainable aquaculture growth by optimising microbial communities in water and feed

Microbiome

The microbiome refers to the community of microorganisms, including bacteria, fungi, viruses, and archaea, that live in a specific environment, such as the human body or the soil. It encompasses not only the microbes themselves but also their genomes and the interactions they have with their surroundings. 

Composition

• The microbiome includes a wide variety of microbes, including bacteria, archaea, fungi, protists, viruses, and other microorganisms. 
• It’s a dynamic and interactive community, with microbes constantly changing and interacting with each other and their environment. 

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Facts To Remember

1. The Hindu Made of Chennai wins laurels at WAN-IFRA World Media Awards 2025

The Hindu has been honoured with the “World Winner” award under the “Best in Digital Advertising Product or Initiative” category at the WAN-IFRA World Media Awards, 2025, recently held in Krakow, Poland.