Daily Current Affairs (DCA) 2 & 3 March, 2025

Daily Current Affairs Quiz
2 & 3 March, 2025

International Affairs

1. Trump-Zelensky Clash at White House

Context:

European leaders have rallied behind Volodymyr Zelensky after Donald Trump’s furious exchange with the Ukrainian president in the White House. The leaders of Germany, France, Spain, Poland and the Netherlands were among those who posted social media messages backing Ukraine – with Zelensky responding directly to each one to thank them for their support.

Culminations

• Cruel meeting with Trump and Vance
  • An abrupt aborting of his visit to the Oval Office by Ukrainian President Volodymyr Zelenskyy without signing a vital minerals deal. From reports, the indication is that he either left willingly or was asked to leave.
• European Solidarity
  • Ursula von der Leyen (EU Commission President): “You are never alone, dear President Zelenskyy.”
• Donald Tusk (Polish PM)
  • Addressed Ukrainians and Zelenskyy, affirming, “…You are not alone.”
• Other Leaders (Macron, Scholz)
  • Reiterated their support for Ukraine’s sovereignty.
• U.S. Europe
  • Recent verbal attacks and tariff threats of Trump against Europe have made relations strained.
  • The U.S. did not invite Ukraine or European nations to its February 18 talks with Russia, raising concerns in Europe.
• Frontiers of Future Alliances
  • Increasing uncertainty over military aid from the U.S. to Ukraine.
  • Europe is looking for other ways to increase support to Ukraine during its war with Russia.

The Meteoric Rise: A President Forged in War

• The famous TV actor Volodymyr Zelenskyy, running on the platform of fighting corruption and achieving peace for Ukraine in its conflict with Russia, became the President of Ukraine in the 2019 presidential election.
• On the Russian Invasion of 2022
  • Rather than flee, he stayed in Kyiv whilst giving hope to the Ukrainians and galvanizing the Western powers. His audacity displayed leadership reminiscent of that of Churchill.
• Western Parameters
  • Billions of dollars’ worth of military aid were sent from the U.S. and Europe for the defense of Ukraine.

Turning Points: A War That Has Stalled

• Military Stalemate & Failed Counteroffensive
  • Returning hopes for Ukrainian counteroffensive operations were dashed in 2023 with no recovery of land lost. After February, Russia assured the continued occupation of territory gained against Ukraine.
  • The war strategy for Moscow was hence turned into an unwise long attrition war plan that wears down Ukrainian resources and morale.
• Political Earthquake: Trump to Power(2025)
  • Trump will take place of Biden and will signal a sea change in U.S. priorities.
  • No more open ended support Trump pushes for a deal with Russia instead.
• Confronting at the White House(28 FEB 2025)
  • Zelensky was in Washington under the hope of continual display of solidarity.
  • Instead, Trump bundled him back to reality
    • “You are not in a very good position. You are not winning this…”
    • There was no ambiguity here: Should Ukraine not actually come on the negotiating table, it is by itself.

Where To From There?

• Ukraine’s Battlefield Position Weakens
  • Losing ground, short on weapons, politically side lined.
• NATO Membership Out of the Window
  • All the once zealously held commitments of the West have been sacrificed for the sake of pragmatism.
• Trump’s New Ukraine Policy
  • Wants peace talks over prolonged war, with a cut of Ukraine’s resources in return.
• Zelenskyy’s Dilemma
  • Enter negotiations and face a backlash at home?
  • Refuse negotiations and risk further international support?
• Final Judgement
  • The face of resistance, Zelenskyy now encounters a war he cannot win and allies unwilling to fight it for him. The hero of 2022 is now a leader running out of options.

Zelensky Tries to Fix Things After the Showdown at the White House

Fallout: When U.S. Ukraine Tensions Burst

• The Outrage
  • Rare public diplomacy when Trump shouted out at Zelenskyy for rejecting peace from Russia in their Oval Office conversation.
• It was an unfinished Meeting
  • The early departure of the Ukrainian leader from streams was without a minerals sharing agreement, which was considered a significant component in negotiation for settlement towards the United States.
• Europe’s Response
  • After the conflict, European leaders swooped in to reassure Kyiv of continued support.

Zelenskyy’s Response: Damage Controlling Starts

• He’s addressed on Fox News that is Trump’s preferred television for downplaying the quarrel bringing the evidence to bear that relations between the U.S. and Ukraine transcended personal differences.
• He acknowledged Ukraine’s dependence on Washington, stating:
  • “It will be difficult without help on your part.”
  • His tone signified an attempt to patch things up rather than encourage argument.

What’s Next?

• American Aid in Peril: The rift raises uncertainty on future U.S. military and financial support.
• Trump’s Push for Peace: The White House now prioritizes ending the war possibly on Russia’s terms.
• Balancing Act for Zelenskyy
  • Be stubborn? Runs risk of being deprived of U.S. support.
  • Think about a settlement? May stir backlash at home and with European allies.

2. Firefly Aerospace Blue Ghost Lunar Mission

Context:

On Sunday, March 3, 2024, Firefly Aerospace, a U.S. based company, successfully landed its Blue Ghost Mission 1 spacecraft on the moon. It made the second private mission to reach this goal. Unlike their first private mission in February, which crashed on its side, Blue Ghost made an upright landing. It is a huge technical achievement.

Details About the Landing

• Time
  • The spacecraft landed at 3:34 AM Eastern Time (02:04 IST).
• Location
  • The landing site was Mons Latreille, a volcanic formation located in Mare Crisium, a basin on the northeastern near side of the moon.
• Mission Control
  • The team was gathered in Austin, Texas, where they celebrated after confirmation that everything is fine with the spacecraft. Firefly CEO Jason Kim and NASA’s Nicky Fox confirmed the lander was in healthy condition.

Technical Aspects of the Mission

• Autonomous Landing
  • The spacecraft had to independently travel across the rocky, uneven terrain, slowing down from thousands of miles per hour to just 2 mph before touchdown.
• Size and Design
  • Blue Ghost is golden and is about the size of a hippopotamus.
• Launch Date
  • The lander was launched on January 15, 2024, with a SpaceX Falcon 9 rocket and travelled 2.8 million miles to arrive at the touchdown point.
• Launch
  • Rideshare Mission: It was carrying a Japanese lunar lander, set on attempting its own moon land in May 2024.

Scientific Objectives and Payloads

• Blue Ghost carries 10 scientific instruments, like
  • Lunar soil analyzer – Composition of the moon surface will be analyzed.
  • Radiation tolerant computer – Testing of how well a computer system can function in space radiation.
  • GPS like Navigation Experiment – To examine whether Earth’s global satellite navigation system is usable for positioning on the Moon.

Major Future Observations

• March 14, 2024 Blue Ghost will capture high definition imagery of a total eclipse, when the Earth blocks the Sun from the Moon’s horizon.
• As of March 16, 2024 The lander will record a lunar sunset, providing insights into how dust levitates above the moon’s surface due to solar radiation. This phenomenon was first observed by Apollo astronaut Eugene Cernan.

Mission Significance

• Part of NASA Artemis Programme
  • The mission falls under NASA’s strategic plans to partner with private businesses aimed at cutting costs and aiding the future human exploration of the moon under the Artemis program.
• Increased Private Space Exploration
  • Set to be the latest in growing trends of commercial missions to the moon, following other private and international efforts.

National Affairs

1. UGC Draft Regulations, 2025

Introduction of “Caste-Based Discrimination”

• This has reference to the discrimination that is exclusively targeted towards members of Scheduled Castes (SCs) and Scheduled Tribes (STs).
• A more general definition of “discrimination” would include unfair treatment, differential treatment or bias against one religion rather than another, on grounds of race, caste, sex or place of birth.

Broader Scope Than Under 2012 Regulations

• Definition of discrimination in 2012 was ‘distinction, exclusion, limitation or preference’ affecting equality of treatment, while this draft extends the extended protection to all “stakeholders” and not just students.

Regulatory framework & compliance

• Equity Committee
  • Complaints of discrimination would be addressed by the equal opportunity centres.
  • It would comprise civil society representatives, students, faculty and head of institution.
  • Also, UGC shall be empowered to derecognise institutions.
• Issues and Missing Links
  • “False Complaints” Clause: It would impose penalties and disciplinary action for false complaints but without defining the term false complaint.
• No Mention of Anti-Reservation Bias:
  • Activists and student groups talk of discrimination relating to exam ranks and reservation status, but that’s not an issue in the draft.

Next Steps

• Public consultation
  • The draft has been open for public feedback until March 28, 2025, by the UGC.
• Supreme Court oversight
  • Drafting of these regulations was an outcome of petitions challenging caste discrimination cases, and the said draft has been presented to the SC for review.

The draft regulations of 2025 broaden the meaning of discrimination and provide for stricter enforcement. They would still require clarity and coverage about anti-reservation bias in universities.

UGC Regulations, 2025

Source: The Hindu

2. Maple Syrup Urine Disease (MSUD)

Context:

Maple syrup urine disease (MSUD) is a rare genetic disorder that prevents the body from processing certain amino acids. This leads to a characteristic odor of maple syrup in the urine. Hope has been renewed for Maple Syrup Urine Disease (MSUD) with the introduction of a new gene therapy.

Key Findings

• Successful Gene Replacement Therapy for MSUD
  • Scientists developed gene therapy using an adeno associated viral vector to deliver functional copies of the BCKDHA and BCKDHB genes.
  • This prevented the recurrence of fatal neurological signs in animals that had received the therapy.
• Breakthroughs in the Animal Trials
  • Mice Trials: Therapy had action in knockout cells, was safe in wild type mice, and prevented death in genetically deficient mice.
• Cow Calf Experiment
  • A newborn calf with MSUD received the therapy and grew normally for two years. The animal was able to transition to a high protein diet, unlike untreated MSUD cases.

Meaning for the Human Patient

• Current Problems
  • Patients with MSUD either need strict low protein diets or liver transplantation to avoid life-threatening complications.
• Application for Humans
  • The therapy might provide a less invasive and sustainable treatment for MSUD patients harboring mutations in BCKDHA or BCKDHB.

Long-term Assessment: Assess how the therapy affects BCKDH levels in the brain.
Cognition and Behavior Assessment: Check for neurological and cognitive advantages for longer periods.

Source: The Hindu

3. Sources and Health Effects of PM2.5 Pollution in Northern India

What is PM 2.5?

PM2.5, or fine particulate matter, is a type of air pollution that can cause serious health problems. It’s made up of tiny solid particles and liquid droplets that are 2.5 micrometers or less in diameter. 

Main Highlights from Study Published in Nature Communications

• Sources of PM2.5 vary with sites
  • Delhi: Major sources include ammonium chloride and organic aerosols from vehicles, residential heating, and fossil fuel use.
  • Beyond Delhi, bulk contribution includes ammonium sulfate, ammonium nitrate, and biomass burning organic aerosols.

Oxidative Potential and Health Risks

• PM2.5 oxidative potential has much to do with health risk indicators mainly due to organic aerosols from inefficient biomass and fossil fuel burning.
• By the same measure, traffic emissions contribute only 40% to organic aerosols at urban roadside locations.
• Hitherto, the toxicity of PM2.5 was five times worse in India compared to that of Chinese and European cities.

Air Quality Variations from Season to Season

• Winter
  • Poor ambient air quality from burning cow dung for heating and cooking has increased cold season organic aerosols, especially at night.
  • This winter shows increases in concentration up to 10 fold in comparison with the warm months, mainly due to much more emissions and a shallower boundary layer.
• All of the year Wind Blend
  • Consistent seasonal characteristics: hydrocarbon like organic aerosols from vehicular emission.
  • Urban oxygenated organic aerosols resulted from both fossil (vehicles) and non fossil (cooking) sources.

Policy Recommendations and Implications

• It will significantly reduce exposure to PM2.5 by reducing primary emissions due to incomplete combustion.
• Spatially and specially target strategies for urban and rural areas to address vehicle emissions, residential heating, and industrial pollution.

The study revealed the necessity for local air pollution control in Northern India, especially in high traffic and biomass burning areas, to prevent the most severe health impacts.

Source: The Hindu

4. Advocates (Amendment) Bill, 2025

Context:

The Centre withdrew the Bill on February 22, declaring that it needed to have public consultation and present a new draft of the same for reintroduction. The Bar Council of India (BCI) opposed the Bill vehemently, asserting that it jeopardizes the bar’s autonomy and independence.

Key Provisions & Impasse

Strike & Boycott by Lawyers Banned

• Section 35 A
  • Forbade advocates and bar associations from striking or boycotting courts, making it such violations would constitute misconduct and cause disciplinary proceedings to ensue.
• Concerns
  • Opponents maintain that strikes are a legitimate instrument for objection, especially in situations of state abuse.

Government Control Over BCI Widened

• Three government nominees were proposed in the BCI other than the Attorney General and Solicitor General.
• Section 49B
  • Dictated that the Central Government could issue binding directions to the BCI.
• Concerns
  • This threatens to infringe upon judicial independence and decrease institutional autonomy of the legal fraternity.

BCI’s Powers Greatly Enhanced

• In Section 45B, the BCI was permitted to address disciplinary complaints at a national scale and was empowered to terminate the practice of lawyers at its mere discretion.
• Section 48B endowed the BCI with powers to abrogate the State bar councils when they are unable to perform their functions in a satisfactory manner.
• Concerns
  • Critics argue that this actually goes against the federal structure of legal regulations.

Recognition of Corporate Lawyers and Foreign Law Firms

• The extended definition of “legal practitioner” would include in house counsel and foreign lawyers.
• Gave the Centre the power to regulate the entry of foreign law firms into India.
• Concerns
  • Ambiguities concerning in house counsel having right of audience in courts and whether their advice would be covered by legal privilege.

Way Forward

• The withdrawal gives way to further consultations with bar associations, High Courts, and legal professionals.
• Any future amendments should strike a balance between reforming provisions and maintaining judicial independence and bar autonomy.

The Bill sought to create reforms for the legal profession and was heavily criticized for attempting to undermine bar autonomy, government overreach, and unclear provisions for corporate lawyers.

5. ERONET (Electoral Roll Management System)

Context:

Complaints were being made about voter ID numbers (EPICs being the same) for voters in different states. The Election Commission (EC) clarified that the voter’s right would be exercised solely at the polling station designated by him in the state of his enrollment in that electoral roll irrespective of the EPIC number.
Thus, the 10 digit EPIC number is a means of identification, and its exercise beyond the designated constituency would not be permitted.

Comments and Remedial Actions by EC

• It has been committed to removing duplication and ensuring that an EPIC number is issued to an individual voter only once.
• It also accepted that implications of past manual, decentralized systems led to some EPIC duplication across states.
• These discrepancies are expected to be systematically amended with the transition to the ERONET system.

What is ERONET?

• ERONET (Electoral Roll Management System) is an internet based platform made available to the election officials.
• ERONET is a web-based system for Electoral officials, in 14 languages and 11 scripts, to handle all processes pertaining to Form 6/6A/7/8/8A/001.
• It allows registration, migration, and deletion of the names of voters in order to help keep a cleaner and more transparent electoral roll.
• It is likely to rid itself of duplication from the past and represents an attempt to standardize voter data across states and Union Territories.

The Election Commission has further reassured voters that duplications will not come in the way of voting rights, and systematic correction processes are taking their course. However, this giving rise to political slanging matches over election integrity.

Credit: The Hindu

6. Gulf Coast Communities in Kerala Rebel Against Offshore Mining Plans

Context:

Coastal communities in Kerala have been agitating against the Centre’s offshore mining plans, fearing destruction to marine ecosystems and loss of livelihoods. The agitation gained momentum after the 2023 amendment to the Offshore Areas Mineral (Development and Regulation) Act, 2002, which opened offshore mining to private players.
The Kerala Fisheries Coordination Committee has been formed to lead the resistance, with a Parliament march planned for March 12.

Government Plans and Identified Mineral Reserves

• In particular, geological surveys have identified substantial mineral deposits within
  • 745 million tonnes of construction grade sand offshore of Kerala.
  • Lime mud, heavy mineral placers, and polymetallic nodules in excess of the other offshore regions.
• Tranche 1 of the auctions includes 13 offshore blocks
  • Three blocks of construction sand offshore of Kerala.
  • Three blocks of lime mud offshore of Gujarat.
  • Seven blocks of polymetallic nodules offshore of the Great Nicobar Island.
  • The mining zone in Kerala is Kollam Parappu (Quilon Bank), a key fishing hub and a marine biodiversity hotspot.

Fisheries and Scientific Concerns

• Destruction of Marine Ecosystems
  • Kollam Parappu supporting commercially valuable marine species, heavily frequented by traditional and mechanised fishers.
  • Mining is expected to damage fish habitats, lead to depletion of fish stocks, and neutralise biodiversity.
• Fishing conflict escalation
  • The end of fishing grounds will push vessels further to the nearshore waters and escalate conflict among traditional mechanised fisher folk.
• Environmental Risks
  • According to a study done by the University of Kerala, “sediment plumes emanating from mining will aggravate turbidity, thereby compromising water quality, food chains, and spawning grounds.”
  • Extraction drilling will entail a heavy toll on freshwater used to wash the sand, adding woes to environmental concerns.
• Unclear Long Term Impact
  • There are no defined boundaries for marine ecosystems, thus making it unpredictable for any mining initiated impacts.
  • The destruction of habitats could incur food insecurity and economic instability for coastal dwellers.

Call for a ‘Right to the Sea Act’

N.K. Premachandran, MP, who is leading the RSP’s protest march, demanded that the Centre introduce a ‘Right to the Sea Act’, similar to the Right to Forest Act, to protect the rights of India’s coastal communities.

He accused the Union government of pushing ahead with the project in a unilateral and opaque manner and raised several critical questions:

• Has the Centre conducted an environmental impact assessment (EIA)?
• Has a social impact study been undertaken?
• Has any effort been made to consult coastal communities and organizations?

After acquiring protection from truckers, the Kerala government and local fishing communities want the entire offshore mining process to stop until a thorough environmental impact study is conducted. With protests intensifying and ecological ruin reckoned as a possibility, the controversy is far from closure.

7. Einstein Ring

Contemporary research into the existence and properties of heat has remained a vital part of gravitational lensing. For over a century, one of the most powerful members of physics, Alfred Einstein, shared his brilliant ability by predicting that massive objects such as galaxies and galaxy clusters might bend light from distant objects through their gravitational influence. This effect, called gravitational lensing, can produce arc like distortions or, on rare occasions, a perfect Einstein ring, should their alignment be perfect.

What is an Einstein Ring?

A rare optical phenomenon where light from a distant object encircles a massive foreground object.
The stunning effect is produced with the help of strong gravitational lensing. By bending spacetime more than its delineation, it distorts and magnifies light.

Discovery of Altieri’s Ring

How was it found?

• The Euclid space mission, launched by European Space Agency (ESA), discovered the Einstein ring in the galaxy NGC 6505 in September 2023.
• This galaxy sits at a relatively close distance from Earth at 590 million light years.
• Bruno Altieri, an astronomer, first detected the ring in fuzzy pictures of the Euclid test.
• Confirmation came by sharp images, resulting in its being christened Altieri’s Ring in his honour.

What is its highlight?

• The lensed object being viewed through NGC 6505 is a galaxy that lies 4.5 billion light years away.
• Only five other gravitational lenses have been found at almost the same distance.
• Showcases how new telescopes can uncover hidden phenomena in familiar galaxies.

How Gravitational Lensing Works

How does it work?

• Therefore, according to Einstein’s General Theory of Relativity, large massive objects curve space time, or rather, like a heavy object twisting the surface of a trampoline.
• When light nears this great mass, it in turn actually takes on that curved path, thereby altering its route.

Why are Einstein Rings formed?

• When the conventionally distant object, lensing galaxy, and observer all become perfectly aligned, the light distorts symmetrically and creates a ring like structure.
• A common outcome will be numerous distorted images instead of a complete ring.

Why Einstein Rings Matter

• By means of bending light, they provide useful insights into the expansion of the universe.
• A means of testing purportedly Einsteinian notions, that is, it provides an insight into how gravitational forces stretch space time.
• Einstein rings act as a gigantic lens for far off galaxies to aid astronomers in their hunt for faint objects.
• Einstein rings support investigations of dark matter since lensing exhibits mass that is not otherwise observable.

How was the discovery confirmed?

• The Keck Cosmic Web Imager (KCWI) data (March 2024) confirmed the lensing effect.
• Data from the Canada France Hawaii Telescope and Dark Energy Spectroscopic Instrument were used to determine:
• The mass of NGC 6505.
• The lensed galaxy is an old, inactive galaxy no longer forming stars.

8. Cheetahs Vulnerability

Context:

Not more than two years after the introduction of cheetahs in India, prey shortage and the competition posed by leopards has been a major concern to authorities monitoring the survival of and well being of the big cats. They became extinct from India in 1952. Cheetahs have been reintroduced at Kuno National Park in Madhya Pradesh via the translocation of:

• Eight cheetahs from Namibia on September 17, 2022
• Twelve cheetahs from South Africa on February 18, 2023

Up until now, according to government sources, ten cheetahs have died, and the current number of cheetahs in the park is 26.

Concerns Over Prey Scarcity

• The Cheetah Project Steering Committee (CPSC) has raised concerns regarding the insufficient prey bounty available for cheetahs on various occasions. In its spur 10th meeting numbering August 23, 2024, the committee noted that:

• Prey density varies widely within Kuno’s distinctive sections as follows:
  • Within the 350 sq. km core sanctuary area, there exists a deer density of 17.5 per sq. km.
  • The surrounding area of 400 sq. km has a much lesser density of just 1.5 per sq. km.
• This faces no new issue
  • In fact, during the very first meeting of the CPSC convened on May 30, 2023, the very committee had concluded that prey augmentation must be a continuing effort.

• When asked about initiatives over the last six months on this issue, CPSC Chairman Rajesh Gopal said:
  • Increasing prey populations translocated to this area
  • In situ revival methods by which species like deer breed under conditions where their protectors are nourished and benefit from protection but don’t have threats immediately from predation
  • Monitoring cheetahs’ hunting behavior because ALL evidence points to the fact that they are making natural kills which indicates some improvement

Competition from Leopards: Another Challenge

• Deprivation of prey coupled with intense competition from about 26 leopards per 100 sq. km densifies the problem for cheetahs, further complicating their chance of survival after reintroduction.

The already low prey base, reduced further through predation from the leopards and other natural causes, threatens to be so minuscule that it will be incapable of natural recovery.

Project Cheetah

Source: BS

Banking/Finance

1. The Matched Plan of SEBI on Mutual Fund Insurance

Context:

The mutual fund insurance combo has again found itself in deep trouble with the industry. This is primarily due to worries regarding product complexity and operational tangle, leading generally to shelving the idea.

Industry Reservations & Challenges

• True to Label Investment Concern
  • SEBI’s MF advisory committee believes that MFs should remain pure investment products without additional insurance features.
• Operational Burden
  • The inclusion of insurance would complicate claim processing, increasing workload for fund houses and distributors.
• Past Experience
  • Earlier, many such combo products were available till June 2022, when SEBI banned them on account of structural concerns.

SEBI’s Intent & Market Expansion Goals

• Proposed by Former SEBI Chairperson Madhabi Puri Buch (January 2025) to make investments more affordable and accessible.
• MF Industry Growth & Challenges
  • Despite rapid expansion, mutual fund penetration remains concentrated in top cities.
• Investor Base Expansion Efforts
  • Such initiatives like reducing the minimum investment from ₹500 to ₹250 are meant to attract a large retail market.

Current Status & Future Outlook

• “Work in Progress”
  • SEBI had been evaluating recommendations from the Association of Mutual Funds in India (AMFI).
• Impact of Leadership Transition
  • With Tuhin Kanta Pandey replacing Buch as SEBI Chairperson, the possible fate, of the combo product, remains uncertain.
• Regulatory Landscape
  • Under Buch, fast track regulatory changes shaped the MF industry—her exit might slow down or alter policy directions.

The MF insurance combo product literally seems to have gone onto a candle shelf, failing to kindle support from the industry. Operational and regulatory challenges, though, count for more than pros that SEBI could throw behind broadening MF adoption. Therefore, it would be doubtful whether revival could take place with changed leadership.

Source: BS

2. SEBI to Appeal Against Court Order on Alleged Listing Permission Irregularities

Context:

The Securities and Exchange Board of India (SEBI) has expressed that it will now appeal an injunction of the Higher Court directing the police in the alleged listing irregularities regarding a company’s BSE listing in 1994.

Court Order & Allegations

• The Anti Corruption Bureau Court in Mumbai issued the order following an unrelated miscellaneous application.
• The institution’s focus is on former SEBI chairperson Madhabi Puri Buch, three current whole time members, and two BSE officials.
• The complaints levelled against the accused have to do mostly with irregularity in granting listing permission almost 30 years ago.

SEBI’s Response & Legal Stance

• No Due Process
  • SEBI claims that the court robed without notice to it and without giving an opportunity to be heard in the matter.
• Doubtful Applicant
  • SEBI calls the complainant a frivolous and habitual litigant; they are in the know that similar matters of previous applications being dismissed.
• Officials Not in Position at That Time
  • SEBI notes that the named officials were not in their current positions when the alleged battery of irregularities occurred.

Legal Route & Proceeding Forward

• SEBI would want to challenge the court injunction through legal proceedings.
• The matter shall see action at higher judicial fora for being dismissed, which SEBI views as without any merit whatsoever.

The dispute underscores concerns about regulatory oversight that has occurred in the bygones, but at the same time stands to show SEBI’s strong position against what it sees as a legally flawed decision. The implications of this ruling could also set precedents for the smattering of similar allegations in the financial regulatory environment in India.

Source: BS

3. RBI’s Harsh Accommodative Stance Under Governor Sanjay Malhotra

Context:

Since Sanjay Malhotra assumed charge as Governor of the RBI in December, the Reserve Bank of India has shifted a little more on the accommodative policy stance to hold support towards the banking and economy, which is facing a slowdown in growth itself.

Key Measures Taken by RBI

Interest Rate & Liquidity Measures

• First rate cut in five years
  • The Monetary Policy Committee (MPC) cut the repo rate by 25 basis points (bps) in February, which marks the beginning of a move towards a less restrictive monetary policy.
• Frequent liquidity injections
  • To ease the tightness within the banking system, RBI undertook:
  • Open Market Operations (OMO) auctions (for the first time in years)
  • USD/INR buy sell swap auctions
  • Daily Variable Rate Repo (VRR) auctions

Postponement of Regulatory Norms Implementation

• To provide relief to banks, RBI has delayed a number of key regulations, like:
  • Liquidity Coverage Ratio (LCR) norms
  • Expected Credit Loss (ECL) framework
  • Project finance regulations

Catalysts for Banking & NBFC Sector

• Relaxed risk weightings on loans to NBFCs & Microfinance Institutions (MFIs) from 125% to 100% → Injecting ₹40,000 crore into banking (~₹4 trillion in loanable funds).
• Removed regulatory restrictions on multiple financial entities, including:
  • Kotak Mahindra Bank
  • Arohan Financial Services
  • Asirvad Microfinance
  • DMI Finance

The “cease and desist” order still remains on Paytm Payments Bank.

Economic Context and Impact

• Addressing Growth Slowdown
  • India’s GDP growth fella at 5.4% (seven quarter low) in July September.
  • Global uncertainties & rupee depreciation, leading to RBI action intervention in forex markets which struck liquidity.
  • Liquidity deficit soared up to ₹3 trillion in January, highest since April 2010.

Market & Analyst Reactions

• Macquarie Research: The RBI action becomes balance of growth support & regulatory flexibility.
• Nomura Report: Coordinated policy approach finally adopted by India but more easing on the cards.
• Emkay Research: Recent policy measures seem credit positive for banks in the medium to long term.

Under Governor Sanjay Malhotra, RBI has adopted a policy growth oriented shift towards easing liquidity and delaying certain regulatory measures. Although analysts cheer the steps, they also seek the necessity for continued policy easing in order to maintain momentum in the economy.

Source: BS

4. Irdai’s Move toward Equity Derivatives

Context:

At Irdai’s direction, insurers could hedge their equity exposure on derivatives, providing a tool for better market volatility management and protection of policyholder returns. This step seems to enhance risk management, but experts suggest it is not going to drastically affect the insurers’ particular investment strategy.

Current Regulatory Setup

• Prior to this decision, Irdai permitted the insurers to hedge:
  • Interest rate derivatives in rupees, consisting of:
    • Forward Rate Agreements (FRAs)
    • Interest Rate Swaps
    • Exchange Traded Interest Rate Futures (IRFs)
    • Credit Default Swaps (CDS) for protection to buyers.

Due to the increasing investment in equities by insurers and market volatility, Irdai realized the need to allow the hedging of equity derivatives.

Impact on Life Insurers

• Life insurers generally assign 30-35% of their portfolio to equities, with the remaining portion in fixed income instruments. This is probably higher than general insurers and hence gives them more exposure to equity market risks.

Equity Exposure in Policy Types

• Unit linked policies could be fully equity based or a mix of equity and debt.
• Traditional Fund has fixed equity allocation or flexible equity allocation.
• The average equity to debt ratio is 35:65, with substantial variation across insurers.
• Equity market experts believe Irdai’s decisions will provide liquidity in single stock options.

Guidelines & Next Steps

• Key Features of Irdai’s New Guidelines
  • Permitted instruments for hedging:
    • Stock and index futures
    • Stock and index options
• Only for hedging
  • The equity derivatives can be used for risk management purposes. No speculation.

5. Financial Frankenstein

Context:

Banks have been aggressively selling mutual funds and insurance policies as substitutes for traditional deposits, primarily to boost fee income. These actions have led to the downfall of low cost deposits, which banks now feel sorry for as costs of borrowing rise.

Did bankers act as Frankenstein?

• Recently, a senior banker told that the financial industry has created many of these creatures.
• Drowning under constant for fee based income, banks persuaded heavily into mutual fund and insurance sales through their branches. By the time they realized their folly, it was all too late.
• Now that they want deposits to feed the loan book growth, they quarrel with their bad choice of these non banking financial products.

Banking Challenges Today

• Banks, even after lowering policy rates, cannot afford to do the same to deposit rates because the costs to the liabilities are high.
• Banks are having issues in attracting savings when competing with higher payoff avenues for investment.
• The CASA ratio has gone down among all major banks, resulting in them being pushed toward high rate Certificate of Deposits (CDs).

Strategies in Response

• Public Sector Banks (PSBs)
  • Continue to maintain low interest rates on savings accounts and depend on government backing.
• Private Banks
  • Offer higher interest rates (up to 8%) to lure depositors.
• Innovative Approaches
  • Banks are exploring giving incentives like insurance covers, discounts for retail loans, and premium banking benefits.

Future Outlook

• Banks must build deposit strategies in segments such as students, professionals, and retirees.
• Just good interest rates will not suffice, with perks and extra service being equally important.
• The industry must balance income from fees with interest based income to avoid the same mistakes from the past.

Deposit strategy reconsideration is needed in banks instead of playing into the hands of fee income.
Otherwise, sooner or later, they could face financial instability as experienced by Frankenstein’s uncontrolled creation.

Current and savings accounts (CASA)

• Current and savings accounts (CASA)
  • Term deposits
  • NRI deposits
  • Tapping into State and Central Governments

Current accounts do not accrue any interest, while savings yield meager returns largely in public sector banks (PSBs):

Importance of CASA Deposits

• The CASA Ratio of a bank determines its ability to keep its cost of funds low. A healthy CASA balance can ensure a bank gives a net interest margin (NIM) of around 4% without posing a threat to asset quality.
• The Decline in CASA Deposits
  • Most of the banks have recorded a fall in CASA deposits over the last year:

Credit: BS

Economy

1. EU-India FTA

Bilateralism Rises in Global Trade

• During Business Standard Manthan, held last week, Sitharaman, Union Finance Minister, mentioned how bilateral negotiations are becoming increasingly important as multilateralism is in decline.
• “Multilateralism is sort of out,” said Sitharaman, “and I think India should be looking more toward bilateral agreements in trade, investment and strategic relations.”
• This statement came at a time when the European Commission President was visiting India, leading to an expedited schedule for an EU-India Free Trade Agreement (FTA) in sync with India’s newly emerging trade policy.

The signing of such FTAs is indeed becoming critical for India in the arena of economic and strategic reorientation in the context of a changing global order.

Evidence for the Decline: Anti Multilateralism

Erosion of Global Institutions

• The WTO is weak
  • It has not been able to deal with China’s covert export subsidies and has failed to provide a level playing field.
• Crisis of credibility for the WHO
  • An increasing influence of major powers like China has raised concern over its credibility among others.

Retreat from Global Leadership by the U.S.

• Under Donald Trump, the U.S. left the Paris Climate Agreement and crippled the WTO’s appellate body, refusing to appoint new members.
• Tariff wars cargoed the global trade norms and coalesced country specific protectionist agonies.

All these changes, particularly chipping away at the national economy, as multilateralism, by its very design, had been offering protection to the weaker economies from the devours of the mightier cities. Since the status of multilateralism has veered toward a trajectory of fragmentation, bilateral agreements have become mainstream.

India’s Challenge: Strengthening Bilateral Enagements

Expand Bilateral & Plurilateral Engagements

• It ought to engage with plurilateral mechanisms, such as the Multi Party Interim Appeal Arbitration Arrangement (MPIA), at the WTO.
• Increased focus on engaging in regional and sectoral agreements would provide India leverage and better trade terms.

Strengthening the Capabilities for Negotiation

• The capacity and expertise of negotiators must be strengthened to work for India.
• Government ministries need to improve their interdepartmental cooperation in terms of streamlining the entire process of negotiation and implementation for trade.

Competitively Weighted Concessions

• India should actively work toward bilateral negotiations where it can offer strategically weighted concessions, rather than simple mechanisms that allow India to play veto politics with multilateral negotiations.
• Ultimate priority must be given here to wants put on market access.

Facts To Remember

1 . Madhya Pradesh farmers to get permanent electricity connection for ₹5

In Madhya Pradesh, farmers will now be provided a permanent electricity connection for 5 rupees. At a Kisan Aabhar Sammelan organized in Bhopal yesterday, Chief Minister Dr. Mohan Yadav said that this facility will be made available to farmers in the entire state in a phased manner. 

2. HM Amit Shah to inaugurate workshop on sustainability, circularity in dairy sector

Union Home and Cooperation Minister Amit Shah will inaugurate the workshop on sustainability and circularity in the dairy sector in New Delhi today. The workshop will focus on policies and initiatives of the Ministry of Cooperation and the Ministry of Animal Husbandry, Dairying and Fisheries aimed at promoting sustainable dairy farming while ensuring economic growth with environmental responsibility. 

3. PM Modi to chair NBWL meeting at Sasan Gir on World Wildlife Day

Prime Minister Narendra Modi will chair a meeting of the National Board for Wildlife (NBWL) at Sasan Gir in Junagadh district of Gujarat on the occasion of World Wildlife Day today. The NBWL has 47 members, including the Chief of Army Staff, members from different states, representatives from NGOs working in this field, chief wildlife wardens and secretaries from various states. 

4. Jaipur to host 12th Regional 3R & Circular Economy Forum from March 3-5

Pinkcity Jaipur is all set to host the 12th Regional 3R and Circular Economy Forum in Asia and the Pacific. This three-day Event kicks off today at the Rajasthan International Centre, Jaipur. The forum focuses on “Realizing Circular Societies Towards Achieving SDGs and Carbon Neutrality in Asia-Pacific.

5. PM Modi urges commitment to biodiversity conservation on World Wildlife Day

Prime Minister Narendra Modi has urged everyone to reaffirm their commitment to protect and preserve the incredible biodiversity of the planet. On the Occasion of World Wildlife Day today, Mr Modi emphasized that every species plays a vital role and highlighted the importance of safeguarding their future for generations to come. 

6. Sri Lanka gets fourth tranche of bailout package from IMF

The IMF has agreed to release the fourth tranche of $334 million from its $2.9 billion bailout package to Sri Lanka to strengthen the island nation’s recovery from its 2022 bankruptcy. 

7. Yuki and Popyrin win doubles title in Dubai

Yuki Bhambri and Alexei Popyrin of Australia beat second seeds Harri Heliovaara of Finland and Henry Patten of Britain 3-6, 7-6(12), [10-8] in the doubles final of the $3,415,700 ATP tennis tournament in Dubai.

8. NCLAT rejects petitions on admissibility of SFIO report

Appellate tribunal NCLAT has dismissed petitions by Deloitte Haskins and Sells and its two associates, challenging the admissibility of the second interim investigation report by the Serious Fraud Investigation Office (SFIO) on Infrastructure Leasing and Financial Services (IFIN).