Daily Current Affairs (DCA) 1 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.