Daily Current Affairs (DCA) 21 March, 2025

Daily Current Affairs Quiz
21 March, 2025

International Affairs

1. India-U.S. Bilateral Trade Agreement (BTA)

Context:

A team of U.S. officials, led by Assistant Trade Representative Brendan Lynch, will visit New Delhi next week. The goal is to discuss and shape the proposed Bilateral Trade Agreement (BTA). Both sides aim to finalize the first tranche of the agreement by Fall 2025.

Key Highlights:

• The discussions are set to occur a week before reciprocal tariffs imposed by the U.S. take effect on April 2.
• India has submitted a “nonpaper” an informal discussion paper to convey New Delhi’s viewpoints and initial proposals.
• The U.S. is expected to respond to this nonpaper within this week.
• The nonpaper allows both sides to “test the waters” before official negotiations begin.

Discussion Points

• Tariff Reductions
  • India has indicated willingness to reduce tariffs on several products, particularly in labour-intensive sectors like textiles and leather.
• U.S. Demands
  • Pressure on India to reduce tariffs on cars and alcohol (current import tariffs on alcohol exceed 100%).
  • Agriculture tariffs are also a key U.S. concern.

Timeline and Recent Developments

• The team’s visit follows Commerce and Industry Minister Piyush Goyal’s meeting with top U.S. officials, including USTR Jamieson Greer and Secretary of Commerce Howard Lutnick (held during March 4–6).
• Commerce Secretary Sunil Barthwal recently confirmed progress in trade talks.

Next Steps

• Once both countries agree on the contours of the deal, formal BTA negotiations will commence.
• Both sides are working toward building a “mutually beneficial” trade agreement by late 2025.

2. Global Outstanding Bonds Cross $100 Trillion: OECD

Context:

Outstanding government and corporate bonds worldwide exceeded $100 trillion in 2024, according to the OECD‘s annual global debt report. Interest costs as a share of global output rose to their highest level in 20 years, reaching 3.3% of GDP among OECD member countries surpassing defence spending. The surge in borrowing costs poses challenges for governments and corporations, forcing them to prioritize productive, growth-oriented investments.

Debt and Interest Trends

Key Indicator	Data Point
Total outstanding sovereign & corporate bonds	Exceeded $100 trillion in 2024 (nearly 3x 2007 levels)
Government interest spending (OECD members)	3.3% of GDP — higher than defence spending
Sovereign & corporate debt maturing by 2027	40% of total debt
Share of low-income, high-risk countries’ debt maturing by 2027	50% within 3 years; 20% in 2024 alone
Dollar-denominated bond borrowing costs	Rose from 4% in 2020 to over 6% in 2024; 8%+ for junk-rated issuers

Factors Driving Debt Concerns

• High borrowing needs for:
  • Green transition
  • Ageing populations
  • Defence infrastructure (example: Germany’s new spending package)
• Central banks have started rate cuts, but interest rates remain well above pre-2022 levels.
• Large portions of low-rate debt are being replaced with more expensive debt.

Risks for Governments and Corporates

OECD cautions

“If borrowing adds expensive debt without boosting productivity, economies could face more difficult times.”

• Companies have increasingly used debt for shareholder payouts and refinancing rather than capital investments since 2008.
• Emerging markets, reliant on foreign-currency borrowing, face heightened refinancing risks and must develop local capital markets.

Climate Finance Challenge

• Emerging markets (excluding China) face a $10 trillion shortfall by 2050 to meet Paris climate goals.
• If governments finance this transition publicly, debt-to-GDP ratios could rise by 25 percentage points in advanced economies and 41 points in China by 2050.

Global Debt Growth Over Time

Year	Global Public Debt (USD trillion)
2010	51
2015	62
2020	84
2023	97
2024	Over 100

Sovereign and corporate bond borrowing in 2024 was nearly three times higher than in 2007.

The global debt surge, coupled with rising interest costs and refinancing risks, places immense pressure on governments and companies to align borrowing with long-term productivity. The challenge is particularly severe for emerging markets and low-income nations, highlighting the urgent need for capital market development and responsible fiscal management.

National Affairs

1. Swadesh Darshan Scheme

Background

• Swadesh Darshan Scheme
  • Launched in 2014-15 to develop theme-based tourist circuits.
  • 76 projects sanctioned across 31 States/UTs with an allocation of ₹5,292.57 crore (2014-15 to 2018-19).
  • Ministry: Ministry of Tourism

Key Findings from the CAG Audit

• Serious lapses identified
  • Lack of feasibility studies before launching projects.
  • Poor planning leading to budget overruns.
  • Approvals given without Detailed Project Reports (DPRs).
  • Absence of formal evaluation and approval mechanisms.
  • Failure to complete projects on time.

PAC Committee Concerns

• PAC Head: K.C. Venugopal (Congress senior leader).
• The Tourism Ministry claimed completion of 75 out of 76 projects.
• Committee refuted the claim, citing several incomplete or non-functional projects, including:
  • Kanwaria route in Bihar
  • Tribal circuit in Telangana
  • Sree Narayana Guru Ashram in Kerala
• Committee members accused the Ministry of:
  • Attempting to mislead rather than address deficiencies.
  • Lack of transparency and accountability.

Committee Directives

• Ordered field inspections of all sanctioned projects.
• Ministry asked to submit a detailed report within three weeks, including:
  • Actual project completion status.
  • Maintenance and operational condition.
  • Implementation and inter-agency coordination status.
  • Impact on employment generation and tourist footfall.

2. Eli Lilly Launches Mounjaro (Tirzepatide) in India for Diabetes and Obesity

Product Launch

• Company: Eli Lilly and Company (U.S.-based pharmaceutical major)
• Drug: Mounjaro (tirzepatide)
• Approval: Received marketing authorisation from the Central Drugs Standard Control Organisation (CDSCO) in India.
• Form: Single-dose vial

Medical Benefits

• Indications:
  • Obesity
  • Overweight
  • Type 2 diabetes
• Mechanism: Activates both GIP (glucose-dependent insulinotropic polypeptide) and GLP-1 (glucagon-like peptide-1) receptors.
• Clinical Trial Results:
  • Average weight loss over 72 weeks:
    • 21.8 kg at 15 mg dose
    • 15.4 kg at 5 mg dose

Pricing in India

• 2.5 mg vial: ₹3,500
• 5 mg vial: ₹4,375
• Monthly cost (weekly doses): ₹14,000 to ₹17,500 (dose-dependent)
• Price Comparison:
  • U.S. price: $1,000–$1,200 per month (₹86,000 to ₹1 lakh)
• Company statement: Pricing reflects Lilly’s commitment to affordable access in India.

Growing Market Landscape in India

• GLP-1 class drug demand:
  • Market worth hundreds of billions of dollars
  • Semaglutide, a key drug in this class, to go off-patent in March 2026.
• Key competitors preparing generics:
  • Mankind Pharma Ltd.
  • Alkem Labs Ltd.
  • Dr. Reddy’s Laboratories Ltd.
• Existing market leaders:
  • Novo Nordisk’s Rybelsus (oral semaglutide) launched in 2022; holds 65% market share.
  • Other weight-loss medications: dulaglutide, liraglutide.

Market Growth

• Anti-obesity drug market in India:
  • ₹137 crore in November 2020
  • Expanded to ₹535 crore by November 2024 (as per Pharmatrac).

Source: TH

3. AI-Based Cloud Solution ‘Vayu’

Product Launch

• Company: Tata Communications Limited
• Product: Vayu, an AI-based cloud solution for enterprises

Key Features of Vayu

• Unified architecture that addresses:
  • Rising cloud costs
  • Multi-cloud complexities
  • AI infrastructure demands
• Integrated ecosystem combining:
  • Infrastructure as a Service (IaaS)
  • Platform as a Service (PaaS)
  • AI platform
  • Security solutions
  • Cloud connectivity
  • Professional services

Business Benefits

• Designed for ease of use, control, and future scalability
• Cost savings of 15–25% compared to large cloud service providers
• No data egress charges or hidden fees

Strategic Vision

• The solution aims to help businesses seamlessly navigate the intelligent enterprise era
• Positioned as a cost-effective, integrated solution in a highly competitive cloud market

4. SBI Report on Labour Migration

Key Findings

• Labour migration from low-income to high-income southern states (like Kerala and Tamil Nadu) is contributing to higher inflation in these regions.
• Southern states exhibit higher retail price trends for key items such as vegetables, cereals, and most pulses.
• North-east and western regions show the lowest inflation trends, while southern and eastern regions display higher inflation.

Post-Pandemic Inflation Trends (FY21–FY25)

• Inflation decline:
  • North-east: 3.4%
  • South: only 2.6%

Key Contributing Factors

• Higher state taxes in the South on:
  • Petrol/diesel
  • Liquor
  • Automobile and flat registration
• Southern states account for 30% of total state sales tax collection, the highest among regions.

Purchasing Power and Inflation Link

• Higher income and purchasing power in southern states anchor higher food and retail inflation.
• High-income and middle-income states experience higher food inflation compared to low-income states.

State-wise Inflation Highlights (February data)

• Kerala: Highest inflation at 7.3%
• Chhattisgarh: 4.9%
• All-India CPI: Moderated to 3.6% (7-month low)

Rural vs. Urban Inflation

• Rural inflation: Higher than all-India average in 9 major states
• Urban inflation: Higher than the national average in 8 states

Forecast and Monetary Policy Outlook

• CPI inflation projections:
  • Q4 FY25: 3.9%
  • FY25 average: 4.7%
  • FY26 expected: 4.0%–4.2%, with core inflation at 4.2%–4.4%
• Policy forecast: SBI expects a cumulative rate cut of at least 75 basis points, with rate cuts likely in April and August 2025.

Source: TH

5. National Centres of Excellence (CoEs) for Skilling

Key Highlights

• Proposed Setup at Existing NSTIs
  • The Ministry of Skill Development and Entrepreneurship (MSDE) is considering establishing the recently announced five National Centres of Excellence (CoEs) at existing National Skill Training Institutes (NSTIs).
  • The strategy includes upgrading NSTIs with state-of-the-art infrastructure, advanced training equipment, and globally aligned curricula.
• Focus on Industry Collaboration
  • Emphasis on partnerships with industries for curriculum design and training frameworks.
  • Development of structured frameworks for instructor training, including continuous learning programs, certifications, and incentives to attract top talent.
• Manufacturing Sector Skilling Priority
  • Special focus on creating a skilled workforce for the manufacturing sector through upgraded and new courses.
  • Courses will feature multiple entry and exit options to enhance flexibility for students and professionals.
• Higher NSQF-Level Courses
  • The CoEs will operationalise higher-level NSQF courses (levels 5 to 8), currently underrepresented in the skill development ecosystem.
• Global Partnerships for Skilling
  • The government may collaborate with countries with advanced vocational training systems for technical expertise, certification design, and international mobility opportunities for skilled workers.
• Industry-Led Skilling and Reskilling
  • Industries may be given autonomy to design and implement skilling and reskilling programs for their workforce, promoting self-sustainability.
• Role of State Governments and Industry Stakeholders
  • Discussions are ongoing to define the role of state governments and private sector stakeholders in managing the CoEs.
  • Quality benchmarks and governance models are also under review.
• Existing NSTI Network
  • There are currently 33 NSTIs in India, primarily responsible for training trainers for ITIs and industries through specialized, hands-on skill transfer methods.
• Budget 2024 Announcement
  • Finance Minister Nirmala Sitharaman announced the establishment of these five CoEs, emphasizing global partnerships for ‘Make in India, Make for the World’ manufacturing goals.

The planned establishment of five National Centres of Excellence (CoEs) signals a significant boost to India’s skill development ecosystem. By upgrading NSTIs with global expertise, industry collaboration, and advanced curricula, the initiative aims to create a robust skilled workforce for the manufacturing sector and beyond. With a focus on higher NSQF-level courses and international partnerships, these CoEs are set to play a key role in making India a global hub for skilled talent.

6. World Happiness Report 2025

Key Highlights

• India’s happiness score improved from 4.054 (2021–23) to 4.389 (2022–24).
• India’s global rank rose from 126th out of 143 countries to 118th out of 147 countries.
• The World Happiness Report 2025, uses three-year averages (2022–2024) for its rankings.

How India and Its Neighbours Fared

Country	Happiness Score (2022–24)	Previous Score (2021–23)	Change in Rank	Change in Score (vs. 2006–10)
India	4.39	4.05	Improved from 126th to 118th	-0.58
Pakistan	4.77	4.66	Dropped from 108th to 109th	-0.37
Nepal	5.31	—	—	+0.71
Sri Lanka	3.89	—	—	-0.38
Bangladesh	3.85	—	—	-0.92

Despite economic challenges, Pakistan outscored India with a happiness score of 4.77 but saw its rank decline marginally.

BRICS Happiness Score Comparison

Country	2018–20	2019–21	2020–22	2021–23	2022–24
Brazil	6.33	6.29	6.13	6.27	6.49
Russia	5.48	5.46	5.66	5.78	5.95
India	3.82	3.77	4.04	4.05	4.39
China	5.34	5.58	5.82	5.97	5.92
South Africa	4.96	5.19	5.27	5.42	5.21

Factors Affecting Happiness Scores

The World Happiness Report bases scores on the Gallup World Poll, asking respondents to rank their current life on a scale from 0 to 10 (worst to best possible life).

Key indicators influencing happiness scores:

• GDP per capita
• Healthy life expectancy
• Social support
• Perceived freedom to make life choices
• Generosity
• Perception of corruption

India-Pakistan Economic & Health Comparison:

• India’s per capita income (2023): $2,480.8 (World Bank)
• Pakistan’s per capita income (2023): $1,365.3
• India’s healthy life expectancy (2021): 58.1 years
• Pakistan’s healthy life expectancy (2021): 56.9 years

While India’s happiness ranking has improved, it still lags behind Pakistan and several neighbouring countries, highlighting challenges in subjective well-being despite stronger economic metrics. The improvement signals progress but also calls for greater focus on social support, health, and perceived freedom to improve the nation’s happiness quotient.

Banking/Finance

1. SEBI May Raise FPI Disclosure Threshold to ₹50,000 Crore

Context:

The Securities and Exchange Board of India (SEBI) is likely to increase the investment threshold for granular ownership disclosures by foreign portfolio investors (FPIs) from ₹25,000 crore to ₹50,000 crore. This strategic move is designed to enhance FPI confidence and align disclosure requirements with India’s growing financial markets.

Key Highlights

• SEBI may also ease regulations for:
  • Research analysts and investment advisors regarding advance fee collections.
  • Alternative Investment Funds (AIFs), aiming to make the ecosystem more attractive.

Indian Stock Market Continues to Rally

• Domestic equity benchmarks surged for the fourth straight day, supported by positive investor sentiment following the US Federal Reserve’s projection of two rate cuts in 2025.

Foreign Portfolio Investment Inflows at 1-Year High

• FPI debt market inflows reached a 1-year high with ₹3,052 crore invested in a single day, according to NSDL data.

Possible Relief for Startups and Pre-IPO Founders

• SEBI is also considering ESOP regulation relaxations for startup founders ahead of IPOs, aimed at boosting India’s vibrant startup ecosystem.

SEBI’s proactive regulatory measures, including raising FPI disclosure thresholds and easing norms for startups and investment professionals, signal a strong commitment to fostering market growth, encouraging foreign investments, and supporting India’s dynamic financial and startup landscape. These developments are expected to have a positive long-term impact on investor confidence and market performance.

2. Payment Banks in India

Context:

Payments banks in India have approached the Union Finance Ministry, requesting an increase in their individual account deposit limit from the current ₹2 lakh to ₹5 lakh. This proposal was discussed in a meeting chaired by Department of Financial Services Secretary M. Nagaraju in New Delhi.

Payment Banks

Payment banks are specialized financial institutions, introduced by the Reserve Bank of India (RBI), that focus on providing basic banking services like deposits, withdrawals, and remittances, primarily through digital channels, to the unbanked and underbanked populations, but cannot issue loans or credit cards. 

Key Highlights

• The last revision in deposit limits happened in April 2021, when it was raised from ₹1 lakh to ₹2 lakh.
• Payments banks have also requested permission to lend to the microfinance sector with regulated loan caps, allowing them to diversify revenue streams.
• Currently, payments banks are only allowed to invest funds in government securities as per RBI regulations.

Small Finance Bank Conversion

• The meeting also covered the process for payments banks to convert into small finance banks (SFBs).
• As per RBI norms, payments banks can apply for conversion after five years of operations and meeting capital requirements, including a minimum paid-up equity capital of ₹200 crore.
• Fino Payments Bank has already applied for an SFB licence.

IPPB Recognized for Financial Inclusion

• India Post Payments Bank (IPPB) was appreciated by government officials for its efforts in financial inclusion and doorstep banking services.
• IPPB currently operates 650 branches and over 163,000 access points across India and offers a range of financial services, including savings accounts, virtual debit cards, bill payments, and insurance.

Current Players in the Payments Bank Sector

• Out of the 11 payments bank licences granted in 2015, only six remain active: Airtel Payments Bank, Paytm Payments Bank, India Post Payments Bank, Fino Payments Bank, NSDL Payments Bank, and Jio Payments Bank.
• Recently, the RBI halted Paytm Payments Bank’s operations, barring it from accepting deposits or onboarding new customers.

Payments banks are urging the government to increase deposit limits and allow lending to the microfinance sector to strengthen their financial sustainability and broaden income avenues. If approved, these changes could significantly enhance financial inclusion and make payments banks more competitive and resilient in India’s rapidly growing digital banking ecosystem.

3. UPI Incentive Cuts Raise Concerns in Fintech Sector

Key Highlights

• Government Incentive Reduction
  • Allocation for promoting low-value BHIM-UPI transactions cut to ₹1,500 crore for FY25.
  • Down from ₹3,268 crore allocated in FY24.
• Current Incentive Structure
  • 0.15% incentive on transactions up to ₹2,000 for small merchants only.
  • No incentives for large merchants or transactions exceeding ₹2,000.
• Industry Concerns
  • Fintech players are unclear if the incentive structure applies uniformly to both offline and online merchants.
  • High-ticket UPI peer-to-merchant (P2M) transactions — above ₹2,000 — are growing nearly twice as fast as peer-to-peer (P2P) transactions.
• Industry Response
  • The Payments Council of India (PCI) calls the ₹1,500 crore incentive allocation inadequate.
  • PCI warns that a lack of sustainable revenue models could force fintech firms to:
    • Scale back operations.
    • Slow down innovation.
    • Reassess market presence.
• Alternative Proposals from Industry
  • Introduction of a controlled Merchant Discount Rate (MDR) for large merchants with a turnover of over ₹40 lakh.
  • Expansion of the incentive outlay in the next financial year to support growth and financial viability.
• RBI Data Insights
  • UPI’s contribution to India’s digital payments ecosystem has surged from 34% in 2019 to 83% in 2024, highlighting its dominance.

The fintech industry is at a crossroads following the reduction of government incentives for low-value UPI transactions. Without a viable revenue model or support through expanded incentives or MDR for large merchants, fintech service providers risk financial instability and innovation slowdown. As UPI continues to play a pivotal role in India’s digital economy, it is crucial for policymakers to recalibrate support measures that sustain growth and encourage wider adoption across both small and large merchants.

4. IndusInd Bank Raises ₹14,750 Crore via CDs, PSBs Lead Contribution

Key Highlights

• IndusInd Bank’s Fundraising Amid Liquidity Crunch
  • IndusInd Bank raised a total of ₹14,750 crore through certificates of deposit (CDs) this week to address cash shortages caused by tight system liquidity.
  • On Thursday alone, the bank raised ₹1,000 crore via CDs at a rate of 7.9%.
• Major Participation by Public Sector Banks (PSBs)
  • According to market dealers, a large public sector bank contributed more than half of the funds raised by IndusInd.
  • Punjab National Bank (PNB) also raised ₹4,950 crore through various maturities at yields between 7.56% and 7.57%.
• Rising CD Rates Amid Liquidity Tightness
  • Smaller banks are facing even higher borrowing costs, with CSB Bank raising ₹100 crore through one-year CDs at 8.5%, and Utkarsh Small Finance Bank issuing three-month CDs at 8.05%.
• All-Time High CD Issuances
  • The banking sector has seen CD issuances reach an all-time high of ₹10.58 trillion in FY2024-25 (up to March 7), marking a 34% year-on-year increase, as per RBI data.
  • Banks are increasingly depending on CDs to meet their short-term funding needs due to liquidity shortages.
• RBI’s Liquidity Injection Efforts
  • The Reserve Bank of India (RBI) has injected approximately ₹5.5 trillion into the banking system this quarter through open market operations (OMOs), long-duration variable repo rate auctions, and forex swaps.
  • Despite liquidity stress, the RBI has assured depositors about IndusInd Bank’s financial stability, stating that the bank’s financial position remains sound and is under close monitoring.
• IndusInd Bank’s Derivative Losses and LCR
  • Last week, IndusInd reported internal discrepancies in its derivatives portfolio, with an expected net worth impact of 2.35% (around ₹2,000 crore).
  • The bank’s liquidity coverage ratio (LCR) dropped from 118% in December to 113% as of March 9, still comfortably above the regulatory requirement of 100%.

Fundraising Details (March 20, 2025)

Bank	Amount Raised (₹ crore)	Maturity	Yield (%)
Punjab National Bank (PNB)	4,950	3 & 12 months	7.56 – 7.57
IndusInd Bank	1,000	6 months	7.90
Jammu & Kashmir Bank	275	3 months	7.75
CSB Bank	100	12 months	8.50
Utkarsh Small Finance Bank	50	3 months	8.05

Total fund raised on March 20: ₹17,300 crore

The surge in CD issuances highlights the increasing liquidity stress within the Indian banking system, driving both large and small banks to raise funds at higher yields. IndusInd Bank’s massive ₹14,750 crore fundraise, led largely by public sector banks, underscores the sector’s reliance on short-term instruments to meet funding needs.

5. SEBI Board Meeting Agenda Under New Chairperson Tuhin Kanta Pandey

Key Highlights

First Board Meeting Under New Chairperson

• This will be the first SEBI board meeting after Tuhin Kanta Pandey assumed the role of SEBI Chairperson earlier this month.
• Significant regulatory changes and relaxations are on the agenda.

Major Proposed Changes

=FPI Disclosure Norms Relaxation

• Current rules (August 2023): FPIs with Assets Under Custody (AUC) over ₹25,000 crore or with 50%+ exposure to a single corporate group must provide detailed ownership disclosures.
• Proposed change: Doubling the threshold to ease compliance while maintaining transparency.
• Context: FPIs have withdrawn over ₹2 trillion from Indian equities in the past six months.

About PN3

• Introduced in April 2020 to regulate FDI from countries sharing land borders with India, including China.
• Mandates prior government approval for investments from these nations.

Advance Fee Collection Limits for Investment Advisors and Analysts

• Current limit: Collection of fees only up to one quarter in advance.
• Proposed change: Extend this limit to one year to offer greater flexibility and meet long-standing industry demands.

Relaxation for Category II AIFs and Angel Funds

• Proposed easing of debt investment norms for Category II Alternative Investment Funds (AIFs).
• Likely revision of the angel fund framework.
• Potential inclusion of accredited investors in the definition of Qualified Institutional Buyers (QIBs) for angel fund investments.

Cost Reduction for Sachet-Sized SIPs

• SEBI aims to make small-ticket SIPs (as low as ₹250) more cost-effective for asset management companies.
• Potential measures:
  • Lowering intermediary charges
  • Incentivizing distributors
• Fund houses like SBI Mutual Fund and Kotak Mahindra AMC have already launched such low-value SIPs.

Proposals Likely to Be Deferred

• Review of ownership norms for clearing corporations.
• Reforms in secretarial compliance and auditor appointments.
• Industry objections and suggestions on secretarial compliance need further deliberation.

Additional Expectation

• SEBI may hold a post-meeting press briefing, which would mark a shift from the recent trend of avoiding media interactions.

SEBI’s upcoming board meeting under new chairperson Tuhin Kanta Pandey signals significant regulatory shifts aimed at easing compliance for FPIs, increasing flexibility for advisors, supporting small-ticket SIP growth, and streamlining angel fund investments.

6. IndusInd Bank Crisis Raises Concerns Over Governance and Regulatory Transparency

Context:

RBI approved only a one-year extension for MD & CEO Sumant Kathpalia, despite the bank’s board recommending a three-year term. This follows a previous instance where RBI had approved a two-year term against a three-year recommendation.

Accounting Discrepancies and Market Reaction

• The bank disclosed derivatives accounting discrepancies amounting to 2.35% of its net worth.
• Required provisioning of around ₹1,600 crore due to these issues.
• The bank’s stock plummeted by over 25% in a single trading day.

Internal Control and Risk Management Lapses

• Discrepancy arose from differing treatments of derivatives exposure between the asset-liability management (ALM) team and the treasury desk.
• Treasury positions were marked-to-market, but internal contracts were not, creating accounting gaps.
• The issue was identified following an RBI circular in September 2023, mandating the discontinuation of such internal trades from April 1, 2024.

RBI and Market Communication

• RBI issued a public statement reassuring that IndusInd Bank is stable, with no risks to depositors.
• The bank’s promoters have expressed willingness to inject capital if required.

Key Questions Raised

1. Disclosure Gaps:

• Why were these issues not disclosed to markets earlier?
• Were auditors and the RBI fully aware of these discrepancies beforehand?

2. Appointment Decisions:

• If the RBI does not fully trust the board’s judgment in reappointing an MD for three years, why approve even a shorter term?
• Lack of clarity in such decisions can undermine market confidence.

3. Need for Regulator Transparency:

• RBI and regulators must disclose rationales behind key decisions on management appointments and oversight actions to avoid speculation and mistrust.

The IndusInd Bank episode underlines the critical need for stronger internal governance, audit oversight, and proactive regulatory transparency. In a trust-based business like banking, both board-level governance and regulator decision clarity are vital to maintaining market confidence and financial stability.

7. SEBI Considers ESOP Relaxation for Startup Founders

Context:

Under current Companies (Share Capital and Debentures) Rules, 2014, ESOPs (Employee Stock Ownership Plans) are only issued to employees and prohibited for promoters. Many startup founders, initially employees, later become classified as promoters as their shareholding increases or after company reclassification. This ambiguity has led to confusion about whether they can retain or exercise ESOPs granted before they became promoters.

SEBI’s Proposal and Consultation Paper

• SEBI is considering allowing startup founders, identified as promoters or part of the promoter group, to hold or exercise ESOP benefits granted one year before the IPO.
• The move aims to align incentives, especially for founders with diluted stakes who continue contributing to company growth.
• SEBI emphasized that a cooling-off period between ESOP grant and IPO would be required to prevent misuse.

Rationale Behind the Move

• Founders of new-age technology firms often receive ESOPs or equity-linked instruments instead of large cash compensation to align their interests with long-term company success.
• Removing this ambiguity will give policy certainty and support startup founders in maintaining ESOP benefits even if they become promoters.
• Vishal Yaduvanshi, partner at Cyril Amarchand Mangaldas, stated that this aligns founders’ interests with company performance.

Additional Regulatory Clarifications Proposed

• The consultation paper also seeks to clarify minimum holding periods for equity shares eligible for offer-for-sale in public issues.
• SEBI noted that regulations do not currently prohibit conversion of options after an individual ceases to be an employee.

Key Highlights of SEBI’s Proposed ESOP Relaxation

Aspect	Current Regulation	Proposed Change
ESOP eligibility for promoters	Prohibited for promoters or promoter groups	Allow founders to hold/exercise ESOPs granted 1 year prior to IPO
Ambiguity for founders	Founders reclassified as promoters lose clarity on ESOPs	Proposed change aims to provide clarity and policy certainty
Cooling-off period	Not specified	Cooling-off period between ESOP grant and IPO to prevent misuse

Impact on Startup IPOs

• This move will benefit startup founders, ensuring retention of ESOP incentives and aligning interests with investors and shareholders.
• It reflects SEBI’s responsiveness to the unique capital structures and incentive mechanisms of new-age companies.
• Clear regulatory guidance will support smoother IPO preparations for startups.

8. SEBI Proposes Key Changes to EBP and RFQ Platforms

Context:

The Securities and Exchange Board of India (SEBI) has released proposals aimed at strengthening the corporate bond market, increasing market liquidity, and improving transparency.
The proposals focus on changes to the Electronic Book Provider (EBP) platform and the Request for Quote (RFQ) platform.

Proposed Changes for the EBP Platform

Key Proposal	Current Norms	Proposed Change
EBP threshold for private placements	Mandatory for issue sizes over ₹50 crore	Lowered to ₹20 crore
EBP for InvITs and REITs	No specific requirement	Mandatory for private placements above ₹1,000 crore
Greenshoe portion	Up to 5 times the base issue size	Reduced to 3 times the base issue size
Settlement cycle	T+2 cycle	Move to T+1 cycle
Listing time	T+3 days	Reduced to T+2 days
Bidding process for large issues	Not mandatory	Mandatory open bidding for issues over ₹1,000 crore

An RFQ (Request for Quote) platform is an electronic platform where investors can request quotes from multiple dealers to buy or sell bonds and other debt instruments, facilitating a more transparent and efficient trading process. 

Proposed Changes for the RFQ Platform

• Yield-to-price computation for non-convertible securities will now align with government securities methodology.
• Cash flow dates for interest/dividend/redemption will be based on the scheduled due date and not adjusted for day count convention.
• This aims to simplify trading and reduce calculation complexities on the RFQ platform.

Impact of Proposed Changes

• Lowering the threshold for EBP will bring more corporate bond issues under transparent bidding.
• Faster settlement cycles (T+1) and quicker listing timelines (T+2) will increase efficiency.
• Mandatory open bidding for large issues is expected to improve price discovery and market depth.
• Simplified RFQ trading norms will make transactions more straightforward, especially for retail and institutional participants.

These reforms reflect SEBI’s ongoing efforts to:

• Deepen the corporate bond market.
• Encourage higher participation.
• Ensure efficient settlement and transparent pricing.
• Foster long-term growth in debt markets via streamlined and investor-friendly platforms.

9. Finfluencers Under Scrutiny

Context:

A recent study by the CFA Institute, a global not-for-profit organization, reveals troubling insights into the influence of financial influencers (finfluencers) in India:

• Only 2% of finfluencers are registered with the Securities and Exchange Board of India (SEBI).
• 33% of finfluencers provide explicit stock recommendations, despite lacking regulatory approval.
• 63% fail to disclose sponsorships or financial affiliations, creating potential conflicts of interest.

Investor Risks Highlighted

Data Point	Key Insight
8% of investors duped	Older investors (40+ years) are more susceptible to misleading advice.
Investors aged 26–30	Prioritize the number of followers over credibility or regulatory status.
50%+ of cautious investors unaware	Despite valuing SEBI registration, many investors are unaware of finfluencer registration status.

A “finfluencer” is a financial influencer, someone who uses social media to offer financial advice, share personal experiences about money management, and discuss various investment topics, often with a large following that can influence their audience’s financial decisions. 

Concerns Raised

• Lack of Regulation & Accountability:
  Finfluencers operate in a largely unregulated environment, which increases the risk of misinformation and misguided investment decisions.
• Undisclosed Sponsorships:
  Inadequate disclosure raises serious questions about bias and conflicts of interest.

Recommendations from CFA Institute

• Investors should consult SEBI-registered advisors.
• Social media platforms must enforce stricter transparency standards.
• The regulatory framework needs to evolve to protect retail investors.

With retail investors increasingly relying on finfluencers for stock tips, regulatory oversight, disclosure norms, and certification standards must be strengthened to protect investors.

10. IDFC FIRST Bank Launches ‘Ace’ Feature on Mobile App

Overview of the New ‘Ace’ Feature

• IDFC FIRST Bank has introduced the ‘Ace’ feature on its mobile banking app.
• The feature is designed to promote DIY (do-it-yourself) investing among customers.
• It offers access to detailed information on over 2,500 mutual funds across various categories.

Key Features of the Ace Platform

• Customers can browse funds by category:
  • Equity, Debt, Tax-Saving, Hybrid, and Index funds.
• Access to detailed analytics:
  • Historical performance data (1-year, 3-year, and 5-year returns).
  • Holding patterns categorized by sector, company, and market cap.
  • Expert ratings, including Morningstar Ratings for informed decision-making.
• The platform helps users build a diversified mutual fund portfolio tailored to their financial goals.

Ease of Use and Customer Empowerment

• Designed for convenient, at-your-fingertips investing.
• Helps customers select suitable funds quickly and confidently.
• Addresses the challenge of navigating through thousands of mutual fund options.

The IDFC FIRST Bank’s Ace feature is a significant step in empowering retail investors by offering a seamless, informed, and easy-to-use mutual fund investment platform. It aims to bridge the information gap and make wealth-building accessible for all customers.

Source: BL

11. SEBI Proposes Key Reforms on ESOPs and Lock-In Norms for IPO-Bound Promoters

Context:

SEBI has proposed allowing employees identified as “promoter” or “promoter group” in the draft offer document (DRHP) to hold, exercise, or avail of:

• Employee Stock Option Plans (ESOPs)
• Stock Appreciation Rights (SARs)
• Condition: These ESOPs or SARs must have been granted at least one year before the initial public offering (IPO).

Relief for Founders of New-Age Tech Companies

• Current rules disallow promoters and promoter group members from receiving ESOPs.
• The new proposal is significant for founders with diluted stakes who rely on ESOPs for motivation and retention.
• Founders forced to classify themselves as promoters (holding ≥10% stake) were at risk of losing ESOP benefits under existing norms.

Industry Perspective on ESOP Reform

• Binoy Parikh, Executive Director, Katalyst Advisors:

“This clarification helps founders retain ESOPs, avoiding disruptive last-minute restructuring and ensuring alignment with investors.”

• Founders of tech startups often get ESOPs in lieu of high salaries; blocking them from retaining ESOPs could harm retention and incentivize exits or competing ventures.
• Harish Kumar, Partner, Luthra and Luthra Law Offices India:

“SARs are non-dilutive and may be preferred by new-age companies as they don’t disturb the cap table while still rewarding key personnel.”

Changes in OFS (Offer for Sale) Lock-In Norms

• Current norms allow shares to be offered for sale to the public only if they’ve been held for at least one year prior to DRHP filing.
• SEBI now proposes that equity shares converted from compulsorily convertible securities and offered for sale can also be considered under the one-year lock-in calculation.
• SEBI’s reasoning:

“The one-year holding period demonstrates long-term shareholder commitment. The eligibility should be based on the period of existence of ‘invested capital’.”

SEBI’s proposed changes bring regulatory clarity and flexibility for IPO-bound companies, particularly founder-promoters in tech startups, by allowing continued ESOP and SAR benefits. Additionally, modifications in OFS lock-in norms will help investors demonstrate long-term commitment without unnecessary structural hurdles.

Source: BL

Facts To Remember

1. Minister launches mobile dental clinics for free check-up

Delhi Health Minister Pankaj Kumar Singh on Thursday flagged off six mobile dental clinics to provide free treatment to the city’s residents. 

2. Canada’s new PM Carney set to call snap elections for April 28

New Canadian Prime Minister Mark Carney is expected to call a snap election for April 28, triggering a campaign dominated by President Donald Trump’s trade war and demands to turn the U.S. ally into a 51st State.

3. Reserve Bank appoints Indranil Bhattacharyya as ED

The Reserve Bank of India (RBI) said it appointed Indranil Bhattacharyya as executive director (ED). As ED, he will look after the Department of Economic and Policy Research, the RBI said. Prior to his promotion, Mr. Bhattacharyya was Adviser in the Monetary Policy Department of the RBI.

4. India’s Bioeconomy Hits $165B; Dr. Jitendra Singh Launches Bio-Sarthi & BioEconomy Report

Union Minister of State for Science and Technology, Dr Jitendra Singh, highlighted today that there are around 10,000 biotechnology startups in India, contributing to an estimated 165 billion-dollar bioeconomy.

5. PM Modi hails India’s milestone of crossing one billion tonnes in coal production

Prime Minister Narendra Modi today hailed the milestone of India crossing one billion tonnes of coal production.

6. International Day of Forests being celebrated with theme ‘Forests & Food’

International Day of Forests is being celebrated today. The theme for this year is “Forests and Food”-emphasizing the vital link between healthy forests and global food security. 

7. Tuberculosis cases in India decline more than double global reduction rate: MoS Health Anupriya Patel

The government has said that India is moving fast to become a TB-free nation this year. The incidence rate of TB in the country has shown a 17.7 per cent decline from 237 per lakh population in 2015 to 195 per lakh population in 2023, which is more than double the global reduction.

8. India submits bid to host 2030 Commonwealth Games in Gujarat

India has taken a major step toward hosting global sporting events by officially submitting an expression of interest to organize the Centenary Commonwealth Games in Ahmedabad, Gujarat, in 2030.

9. World Down Syndrome Day being observed with theme ‘Improve Our Support Systems’

World Down Syndrome Day is being observed today. The day is a global event commemorated every year to highlight the need for stronger community networks, better caregiver support, inclusive education, workplace inclusion, and enhanced healthcare access for individuals with Down syndrome. The date March 21 symbolizes the triplication of chromosome 21, the genetic cause of the condition.

10. PM Modi underscores village development as first step toward Viksit Bharat

Prime Minister Narendra Modi has underscored the need to develop villages as the first step toward building a Viksit Bharat.

11. PFRDA notifies regulations for operationalisation of Unified Pension Scheme

The Pension Fund Regulatory and Development Authority (PFRDA) has notified regulations for the operationalisation of the Unified Pension Scheme (UPS).