Daily Current Affairs (DCA) 2 May, 2025

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.