Daily Current Affairs (DCA) 21 May, 2026

Daily Current Affairs Quiz
21 May, 2026

National Affairs

1. 3rd India-Nordic Summit in Oslo, Norway

Source: News on Air

Context:

Prime Minister Narendra Modi co-chaired the 3rd India-Nordic Summit in Oslo, Norway, alongside the heads of government of Denmark, Finland, Iceland, Norway, and Sweden — taking forward a plurilateral diplomatic format first held in Stockholm (2018) and Copenhagen (2022). The Oslo Summit produced substantive outcomes across trade, technology, space, maritime, climate, and diplomatic-support areas, including a formal elevation of the partnership into a “Green Technology and Innovation Strategic Partnership”. Anchoring the economic agenda was the operationalisation of the India-EFTA Trade and Economic Partnership Agreement (TEPA) — signed in March 2024 — with Norway and Iceland (EFTA members) committing alongside their EFTA partners to deliver $100 billion in investments and 1 million direct jobs in India. The five Nordic nations also reaffirmed support for India’s permanent membership of a reformed UN Security Council and endorsed India’s NSG application.

Key Highlights

• Summit: 3rd India-Nordic Summit.
• Venue: Oslo, Norway.
• Co-chair: PM Narendra Modi.
• Participating Nordic nations: Denmark, Norway, Finland, Iceland, Sweden.
• Previous editions: Stockholm (2018), Copenhagen (2022).
• Next edition: Finland to host the 4th summit.
• Strategic upgrade:
  • Formally elevated to “Green Technology and Innovation Strategic Partnership”.

Key Outcomes:

Area	Outcome
Trade & Investment	Operationalisation of India-EFTA TEPA; $100 billion investment + 1 million jobs target; progress on India-EU FTA
Geopolitics	Nordic 5 backs India’s UNSC permanent seat and NSG membership
Space	ISRO-Norwegian Space Agency framework implementation; Swedish payload on Venus Orbiter Mission
Maritime	Maritime Security Dialogues with Norway and Denmark; under MAHASAGAR + IPOI
Climate / Industry	LeadIT 2.0 expanded to include Iceland; focus on de-carbonising heavy industries
AI Governance	Commitment to human-centric, open-source AI; building on AI Impact Summit, New Delhi (Feb 2026)

• Strategic context: Final leg of PM Modi’s five-nation European tour (Netherlands → Sweden → Norway → Italy).
• Symbolic relevance: Reinforces India’s diversification within Europe beyond UK-France-Germany.

About the News

What is the India-Nordic Summit?

A plurilateral diplomatic platform that brings together India and the five Nordic countries — Denmark, Finland, Iceland, Norway, Sweden — for high-level political dialogue and substantive cooperation across trade, technology, climate, space, maritime, and people-to-people domains.

When and where were previous summits held?

(a) 1st India-Nordic Summit: Stockholm, 2018 (Sweden). (b) 2nd India-Nordic Summit: Copenhagen, 2022 (Denmark). (c) 3rd India-Nordic Summit: Oslo, 2026 (Norway) — current. (d) 4th India-Nordic Summit: Finland (upcoming).

What is the “Green Technology and Innovation Strategic Partnership”?

A formal strategic upgrade of the India-Nordic relationship, focusing on: (a) Green technology cooperation — clean energy, hydrogen, electric mobility. (b) Innovation collaboration — research, start-ups, deep tech. (c) Joint standards and certifications. (d) Industrial transition including LeadIT 2.0. This places the India-Nordic platform at the forefront of green-and-tech-led diplomacy.

What is the India-EFTA TEPA?

The India-EFTA Trade and Economic Partnership Agreement (TEPA) — signed on 10 March 2024, between India and the European Free Trade Association (EFTA) comprising Switzerland, Norway, Iceland, Liechtenstein. Key features: (a) $100 billion in investments in India committed over 15 years. (b) 1 million direct jobs to be created in India. (c) Tariff concessions on industrial goods. (d) First India FTA to include investment commitments. (e) Trade in services, IP, gender, labour, environment chapters. Two of the five Nordic countries — Norway and Iceland — are EFTA members.

Why is Nordic backing for UNSC and NSG significant?

(a) UNSC permanent membership — India is part of the G4 (with Japan, Brazil, Germany) seeking permanent seats. Five additional Western European voices supporting India strengthens the case. (b) NSG (Nuclear Suppliers Group) — India has been seeking membership since 2008; China has been the primary blocker. Nordic backing adds to the 48-member-state consensus India needs.

What is the ISRO-Norwegian Space Agency agreement?

A framework cooperation agreement between India’s ISRO and Norway’s Space Agency (NoSA) for collaboration in space science, satellite technology, remote sensing, and space-based applications — particularly relevant for Arctic and polar observations.

What is the Venus Orbiter Mission (Shukrayaan-1)?

India’s first mission to Venus, approved by the Union Cabinet in September 2024. Now to incorporate a Swedish scientific payload, deepening international cooperation in planetary exploration.

What is the MAHASAGAR vision?

MAHASAGAR — Mutual and Holistic Advancement for Security and Growth Across Regions — India’s evolved maritime vision, articulated by PM Modi in Mauritius in March 2025, building on and broadening the SAGAR vision (2015). It encompasses: (a) Global maritime cooperation (beyond Indian Ocean). (b) Security and growth as twin pillars. (c) Sustainable ocean economy. (d) Climate-resilient maritime infrastructure. (e) Multilateral maritime partnerships.

What is the Indo-Pacific Oceans Initiative (IPOI)?

Announced by PM Modi at the East Asia Summit (Bangkok, November 2019), IPOI is India’s framework for Indo-Pacific cooperation, with seven pillars: (a) Maritime Security. (b) Maritime Ecology. (c) Maritime Resources. (d) Capacity Building and Resource Sharing. (e) Disaster Risk Reduction and Management. (f) Science, Technology, and Academic Cooperation. (g) Trade Connectivity and Maritime Transport.

What is LeadIT?

Leadership Group for Industry Transition (LeadIT) — launched by India and Sweden at the UN Climate Action Summit in September 2019. It is a global platform of countries and companies committed to achieving net-zero emissions in hard-to-abate heavy industries (steel, cement, chemicals). LeadIT 2.0 expands this with deeper sectoral focus and now includes Iceland.

What is the AI Impact Summit?

A major international gathering on AI governance and applications, hosted by India in New Delhi in February 2026. India’s AI agenda centres on: (a) Human-centric AI. (b) Open-source models. (c) AI for inclusion and development. (d) Trustworthy AI principles.

How does the India-Nordic Summit fit India’s broader Europe strategy?

(a) Diversification beyond traditional EU partners (UK, France, Germany). (b) Sector-specific deep cooperation — green tech, semiconductors, space, defence. (c) Plurilateral platforms complementing bilateral ties. (d) People-to-people and skill-mobility frameworks. (e) Strategic positioning in Indo-Pacific and Arctic dimensions. The five-nation tour (Netherlands → Sweden → Norway → Italy) consolidates this strategic broadening.

Background Concepts (Q&A)

Who are the Nordic countries?

A grouping of five North European countries: Denmark, Norway, Sweden, Finland, Iceland. They cooperate through the Nordic Council (parliamentary forum, 1952) and the Nordic Council of Ministers (intergovernmental, 1971). They share: (a) Welfare-state economic models. (b) High HDI rankings. (c) Strong innovation ecosystems. (d) Climate leadership. (e) Stable democracies.

What is the European Free Trade Association (EFTA)?

A regional trade organisation established in 1960, currently comprising four states: Switzerland, Norway, Iceland, Liechtenstein. EFTA states are NOT EU members (Switzerland) or are in the European Economic Area (EEA) (Norway, Iceland, Liechtenstein) but maintain independent trade policy. India’s TEPA with EFTA (March 2024) is India’s first FTA with European countries since the EU FTA negotiations restarted in 2022.

What is the Arctic Council?

A high-level intergovernmental forum established in 1996 to promote cooperation among Arctic States and Indigenous Peoples on common Arctic issues. Members: 8 Arctic states: Canada, Denmark (incl. Greenland and the Faroe Islands), Finland, Iceland, Norway, Russia, Sweden, USA. India has Observer status since 2013, renewed in 2023.

What is India’s Arctic engagement?

(a) Himadri Station at Ny-Ålesund, Svalbard, Norway (since 2008) — India’s first Arctic research station. (b) IndArc observatory (since 2014) — underwater observatory in Kongsfjorden. (c) Multi-Sensor Moored Observatory (since 2016). (d) Arctic Policy released in 2022 by MoEFCC. (e) Observer status at Arctic Council since 2013.

What is the UN Security Council and the G4?

The UNSC has 15 members: 5 Permanent (P5) with veto power (US, UK, France, Russia, China) and 10 non-permanent (elected for 2-year terms). The G4 comprises India, Japan, Brazil, Germany — all seeking permanent UNSC seats. They have a mutual support arrangement for each other’s bids.

What is the Nuclear Suppliers Group (NSG)?

A multilateral export control regime with 48 member countries that regulates the export of nuclear materials, technology, and equipment. Established in 1974 after India’s Pokhran-I test. India has been seeking NSG membership since 2008, but China has blocked it citing non-NPT (Non-Proliferation Treaty) status.

What is the Carbon Border Adjustment Mechanism (CBAM)?

A carbon-pricing instrument introduced by the European Union (transition phase from October 2023, full implementation from 2026) on imports of carbon-intensive products (steel, aluminium, cement, fertilisers, electricity, hydrogen). It requires importers to pay a carbon levy equivalent to what EU producers pay under the EU Emissions Trading Scheme. It is a major concern for Indian exporters.

What is the Hong Kong Convention?

The Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, 2009 — adopted under the International Maritime Organization (IMO). It sets standards for safe and environmentally sound ship recycling. India ratified it in 2019. India’s Alang Ship Recycling Yard in Gujarat is the largest in the world and has been upgrading to meet HKC standards.

What is the India Semiconductor Mission (ISM)?

A comprehensive programme launched in 2021 under MeitY with an initial outlay of ₹76,000 crore (later expanded), to build India’s semiconductor and display manufacturing ecosystem. Key elements: (a) Fab incentives (50% capex support). (b) Display Fab scheme. (c) Compound semiconductor / OSAT (Outsourced Semiconductor Assembly and Test) support. (d) Design-Linked Incentive (DLI) scheme. (e) Skill development and design ecosystem.

What are Defence Industrial Corridors?

Two dedicated industrial corridors announced in 2018 to boost defence manufacturing: (a) Tamil Nadu Defence Industrial Corridor (TNDIC) — Chennai, Coimbatore, Salem, Tiruchirappalli, Hosur. (b) Uttar Pradesh Defence Industrial Corridor (UPDIC) — Aligarh, Agra, Lucknow, Kanpur, Jhansi, Chitrakoot. With 100% FDI under automatic route (up to 74%) and through government approval (above 74% in case of high-tech), the corridors aim to attract major global defence firms.

Why is 6G partnership relevant?

(a) Sweden’s Ericsson and Finland’s Nokia are major global telecom infrastructure players. (b) India launched Bharat 6G Vision in March 2023, aiming to be a 6G technology pioneer. (c) Joint research, IP development, and standards setting with Nordic partners can reduce India’s reliance on East Asian (particularly Chinese) telecom hardware.

Why is Nordic green expertise valuable?

(a) Wind power leadership — Denmark hosts Vestas (world leader in wind turbines). (b) Hydropower expertise — Norway, Iceland (Iceland is largely hydropower-driven). (c) Geothermal energy — Iceland. (d) Green hydrogen — Norway, Sweden investing heavily. (e) Electric vehicles — Norway has world’s highest EV penetration. (f) Sustainable shipping — green propulsion, fuels.

Practice MCQs

Q1. With reference to the 3rd India-Nordic Summit (2026), consider the following statements:

1. It was held in Oslo, Norway.
2. The Nordic countries that participated are Denmark, Finland, Iceland, Norway, and Sweden.
3. The summit formally elevated the partnership into a “Green Technology and Innovation Strategic Partnership.”
4. The 4th India-Nordic Summit will be hosted by Finland.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following statements about the India-EFTA TEPA:

1. The EFTA includes Switzerland, Norway, Iceland, and Liechtenstein.
2. The agreement was signed on March 10, 2024.
3. The agreement commits to $100 billion in investments and 1 million direct jobs in India over 15 years.
4. TEPA is India’s first FTA to include investment commitments as a binding component.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. Consider the following statements about India’s Arctic engagement:

1. India has Observer status at the Arctic Council since 2013.
2. India’s Himadri research station is located at Ny-Ålesund, Svalbard in Norway.
3. India released its Arctic Policy in 2022.
4. The Arctic Council has 12 member states.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. Consider the following statements about India’s strategic frameworks and partnerships:

1. The MAHASAGAR vision was articulated by PM Modi in Mauritius in March 2025, building on the earlier SAGAR vision.
2. The Indo-Pacific Oceans Initiative (IPOI) was announced at the East Asia Summit in November 2019.
3. The Leadership Group for Industry Transition (LeadIT) was launched jointly by India and Sweden in 2019.
4. India has been seeking membership of the Nuclear Suppliers Group (NSG) since 2008.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Answer Key

1. (d) — All four statements are correct.
2. (e) — All four statements are correct.
3. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; the Arctic Council has 8 member states (Canada, Denmark, Finland, Iceland, Norway, Russia, Sweden, USA), not 12. The 12 figure may confuse with the larger list of observers and participants.
4. (e) — All four statements are correct.

2. Ayush Anudan Portal under Ayush Grid Initiative

Source: PIB

Context:

The Union Ministry of Ayush has officially launched the Ayush Anudan Portal at Kartavya Bhawan, New Delhi — a fully paperless digital platform developed under the broader Ayush Grid initiative (launched 2018) to digitise the end-to-end submission, evaluation, and tracking of funding grants under the Central Sector Schemes of the Ministry. The portal aims to replace the existing manual, paper-heavy grant workflows with a structured, transparent, and user-friendly interface — targeting 100% transparency, operational efficiency, and strict accountability in the grant-management process.

Key Highlights

• Portal: Ayush Anudan Portal.
• Launched by: Union Ministry of Ayush.
• Location of launch: Kartavya Bhawan, New Delhi.
• Parent initiative: Ayush Grid (launched 2018).
• Nature: Centralised, interactive digital platform for grant management in the Ayush sector.
• Purpose: Digitise submission, evaluation, and tracking of grants under Central Sector Schemes.
• Stated aims:
  • 100% transparency.
  • Operational efficiency.
  • Strict accountability.
  • Advancing Ease of Doing Business and Ease of Living.

Key features of the Ayush Anudan Portal:

Feature	Function
NGO Darpan Integration	Cross-links with NITI Aayog’s NGO Darpan for automated authentication of applicant NGOs/institutions
Scheme-Wise Application Pathways	Customised evaluation paths for each Central Sector Scheme
Real-Time Tracking	Interactive dashboard for applicants and reviewers
Single-Window Integration	Accessible via the My Ayush Integrated Services Portal (MAISP)

About the Ayush Grid initiative:

• Launched: 2018 under the Digital India Program.
• Purpose: Unified digital backbone for the traditional Indian medicine sector.
• Coverage: All six AYUSH streams — Ayurveda, Yoga & Naturopathy, Unani, Siddha, Sowa-Rigpa, Homoeopathy.
• Key components:
  • ABDM compliance — interoperable with Ayushman Bharat Digital Mission.
  • AHMIS — cloud-based Ayush Health Management Information System.
  • Multi-sector modules: Healthcare Services (Tele-medicine, Ayush Sanjivani), Education & Capacity Building (with C-DAC), Research & Drug Regulation.
  • Citizen-facing portals: Yoga Locator, Bhuvan-based spatial tracking applications.

About the News

What is the Ayush Anudan Portal?

A paperless digital platform launched by the Ministry of Ayush to manage the end-to-end lifecycle of funding grants under the Ministry’s Central Sector Schemes — including application submission, evaluation, approval, and tracking.

Why was it launched?

To address the inefficiencies of the existing paper-heavy grant management process — which involved: (a) Manual application submission. (b) Slow and opaque evaluation. (c) No real-time visibility for applicants. (d) Cumbersome compliance for institutional applicants. (e) Limited accountability and audit trails.

What are its key features?

(a) NGO Darpan integration — automated, error-free background authentication of applicants. (b) Scheme-wise pathways — customised evaluation logic for each Central Sector Scheme. (c) Real-time tracking dashboard — live status visibility. (d) Single-window access via MAISP — integrated user experience.

What is the Ayush Grid initiative?

A nationwide IT infrastructure project launched by the Ministry of Ayush in 2018, under the Digital India Program, to serve as the unified digital backbone for India’s traditional medicine ecosystem. It bridges information gaps across all six AYUSH systems.

What are the six AYUSH systems?

(a) Ayurveda — Ancient Indian medical system, with Sanskrit textual heritage. (b) Yoga and Naturopathy — Mind-body and nature-based healing. (c) Unani — Greco-Arab system, brought to India in medieval period. (d) Siddha — Ancient Tamil medical system. (e) Sowa-Rigpa — Tibetan/Himalayan medical system, recognised in India in 2010. (f) Homoeopathy — German alternative medicine system.

What is MAISP?

The My Ayush Integrated Services Portal — the Ministry of Ayush’s single-window digital interface for citizens, practitioners, institutions, and stakeholders to access all Ayush-related services and information. The Ayush Anudan Portal is integrated within this.

What is NGO Darpan?

A portal operated by NITI Aayog for registering and managing data on Non-Governmental Organisations (NGOs) and Voluntary Organisations (VOs) in India. It provides a Unique Identification Number to each registered NGO, which is required to receive government grants and partnerships. Established in 2015.

What is the broader policy significance?

The portal reflects the Ministry of Ayush’s commitment to: (a) Digital governance in line with Digital India. (b) Transparency and anti-corruption mechanisms. (c) Efficient grant management and public-fund stewardship. (d) Institutional capacity building in the Ayush ecosystem. (e) Integration with broader e-government architecture (NGO Darpan, ABDM, MAISP).

How does this fit with Ayushman Bharat Digital Mission (ABDM)?

The Ayush Grid (under which the Ayush Anudan Portal sits) is ABDM-compliant — meaning traditional health records generated through Ayush systems can securely interoperate with the mainstream medical record systems under ABDM. This supports an integrated health-data architecture across modern medicine and Indian traditional medicine.

Why is the Ayush sector important?

(a) Growing global market for traditional medicine (estimated to exceed $200 billion). (b) Strong domestic adoption — over 8 lakh Ayush practitioners. (c) Affordable, accessible healthcare for primary care needs. (d) Soft-power dimension — Yoga, Ayurveda contribute to India’s global cultural identity. (e) WHO recognition — the WHO Global Centre for Traditional Medicine in Jamnagar (2022). (f) Export potential — Ayurvedic and herbal products.

What is the broader Digital India context?

The Ayush Anudan Portal is one of many initiatives under Digital India (launched 2015) that have digitised government service delivery: (a) NGO Darpan, GeM (Government e-Marketplace), UMANG, e-Sanjeevani, DigiLocker. (b) JAM Trinity (Jan Dhan, Aadhaar, Mobile) underpinning DBT. (c) National e-Governance Plan (NeGP). (d) Sector-specific portals for individual ministries.

Background Concepts (Q&A)

What is the Ministry of AYUSH?

A Union Ministry of India dedicated to the promotion and regulation of traditional Indian medicine systems. It was elevated from a Department of AYUSH (under the Ministry of Health and Family Welfare) to a separate Ministry in November 2014. The Ministry is responsible for: (a) Policy, regulation, education in Ayush systems. (b) Research through autonomous bodies (CCRAS, CCRYN, CCRUM, CCRH, CCRS). (c) Drug standardisation and quality control. (d) International cooperation and promotion. (e) Public awareness and capacity building.

What does the acronym AYUSH stand for?

(a) Ayurveda. (b) Yoga and Naturopathy. (c) Unani. (d) Siddha. (e) Homoeopathy. (f) Sowa-Rigpa — added subsequently after recognition in 2010.

What is Sowa-Rigpa?

A traditional medical system of Tibetan origin, practised in the Himalayan regions of India including Ladakh, Sikkim, Arunachal Pradesh, Himachal Pradesh. It got formal recognition as an Indian System of Medicine in 2010.

What is the WHO Global Centre for Traditional Medicine?

The first global WHO centre dedicated to traditional medicine, established in Jamnagar, Gujarat in March 2022. Its mandate includes: (a) Research and innovation in traditional medicine. (b) Setting global standards for safety and efficacy. (c) Building evidence base for traditional medical practices. (d) Knowledge sharing among countries. (e) Integration with modern medicine.

What is the Digital India Programme?

Launched on 1 July 2015, Digital India aims to transform India into a digitally empowered society and knowledge economy, built on three vision areas: (a) Digital infrastructure as a core utility. (b) Governance and services on demand. (c) Digital empowerment of citizens. Built on nine pillars including e-Governance, e-Kranti, broadband highways, electronics manufacturing, IT for jobs.

What is the Ayushman Bharat Digital Mission (ABDM)?

Launched on 27 September 2021 (after a pilot as National Digital Health Mission from August 2020), ABDM creates a digital health ecosystem for India. Key elements: (a) ABHA (Ayushman Bharat Health Account) — unique 14-digit health ID. (b) Healthcare Professional Registry (HPR). (c) Health Facility Registry (HFR). (d) Personal Health Records (PHR) framework. (e) Federated architecture — data stays with original holders. (f) Consent-based data sharing.

What are Central Sector Schemes?

Schemes 100% funded by the Central Government and implemented either directly by central agencies or through state agencies. Examples include Ayush schemes, Pradhan Mantri Krishi Sinchayee Yojana (some components), schemes of various Central Ministries. Different from Centrally Sponsored Schemes (CSS), where the Centre and States share funding in a defined ratio (typically 60:40 or 90:10 in NE/Hilly states).

What is the Centre for Development of Advanced Computing (C-DAC)?

A premier R&D organisation of the Ministry of Electronics and Information Technology (MeitY), established in 1988. C-DAC works in high-performance computing, electronics, software, and IT applications. It has multiple centres across India (Pune, Bengaluru, Mumbai, Chennai, Thiruvananthapuram, Mohali, etc.) and partners with various ministries for technology development.

What is Bhuvan?

ISRO’s Geo-Portal — a national geospatial platform that provides map services, satellite imagery, geospatial analytics, and decision-support tools. Launched in 2009 by the National Remote Sensing Centre (NRSC), ISRO. Bhuvan supports various ministries and applications including agriculture, urban planning, disaster management, and now Ayush services.

What is Ayush Sanjivani?

A mobile app developed by the Ministry of Ayush to: (a) Document the use of Ayush systems by citizens. (b) Gather scientific data on traditional medicine usage. (c) Build evidence on Ayush interventions. (d) Provide health information to citizens.

What is the Yoga Locator?

A citizen-facing app developed under the Ayush Grid that helps users locate yoga centres, instructors, and events near them — based on GPS and verified information.

Why is digital governance important for grant management?

(a) Reduces paperwork and administrative burden. (b) Eliminates physical file movement and associated delays. (c) Builds audit trails for transparency and accountability. (d) Provides real-time status visibility to applicants. (e) Enables data analytics for policy evaluation. (f) Reduces corruption through traceable processes. (g) Improves citizen experience of government services.

Practice MCQs

Q1. With reference to the Ayush Anudan Portal, consider the following statements:

1. It has been launched by the Union Ministry of Ayush.
2. It is developed under the Ayush Grid initiative.
3. It is designed to digitise the submission, evaluation, and tracking of grants under Central Sector Schemes of the Ministry.
4. It integrates with NITI Aayog’s NGO Darpan portal for applicant authentication.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. With reference to the AYUSH systems, consider the following statements:

1. The acronym AYUSH stands for Ayurveda, Yoga and Naturopathy, Unani, Siddha, and Homoeopathy.
2. Sowa-Rigpa is a traditional medical system of Tibetan origin, recognised in India in 2010.
3. The Ministry of AYUSH was established as a separate ministry in November 2014.
4. The WHO Global Centre for Traditional Medicine is located in Jamnagar, Gujarat.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. Consider the following statements about the Ayush Grid initiative:

1. It was launched in 2018 under the Digital India Programme.
2. It is fully compliant with the Ayushman Bharat Digital Mission (ABDM).
3. The Ayush Health Management Information System (AHMIS) is a cloud-based framework deployed across clinical establishments.
4. Citizen-facing portals include the Yoga Locator and Bhuvan-based applications.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. With reference to India’s digital health and governance ecosystem, consider the following statements:

1. The Ayushman Bharat Digital Mission was launched in September 2021.
2. The ABHA (Ayushman Bharat Health Account) is a 14-digit unique health ID.
3. NGO Darpan is a portal operated by NITI Aayog for registration and management of NGOs.
4. Bhuvan is ISRO’s national geoportal launched by the National Remote Sensing Centre.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Answer Key

1. (d) — All four statements are correct.
2. (e) — All four statements are correct.
3. (e) — All four statements are correct.
4. (e) — All four statements are correct.

3. Unmanned Aerial Vehicle Launched Precision Guided Missile (ULPGM)-V3

Context of the News

The Defence Research & Development Organisation (DRDO) has successfully completed the final deliverable configuration development trials of the Unmanned Aerial Vehicle Launched Precision Guided Missile (ULPGM)-V3 — also known as ULM-ER (Unmanned Launch Munition-Extended Range) — at its test range near Kurnool, Andhra Pradesh. The ULPGM-V3 is a lightweight (12.5 kg), fire-and-forget, precision-guided missile specifically engineered for drone warfare, allowing Indian armed-forces UAVs to execute high-accuracy surgical strikes against main battle tanks, reinforced concrete bunkers, and enemy surveillance drones — all from standoff ranges of up to 10 km, without endangering manned aircraft or relying on continuous data links.

Key Highlights

• System: Unmanned Aerial Vehicle Launched Precision Guided Missile (ULPGM)-V3.
• Alternate designation: ULM-ER (Unmanned Launch Munition-Extended Range).
• Developer: Research Centre Imarat (RCI), Hyderabad — DRDO’s premier missile-guidance lab.
• Trial location: Kurnool, Andhra Pradesh (DRDO test range).
• Type: Lightweight, fire-and-forget, precision-guided air-to-surface missile.
• Target classes:
  • Main battle tanks (top-attack).
  • Reinforced concrete bunkers.
  • Enemy surveillance/combat drones.

Key technical specifications:

Parameter	Value
Weight	12.5 kg
Max range	10 km
Active engagement range	4 km (day) / 2.5 km (night)
Guidance	Dual-channel Imaging Infrared (IIR) seeker + Laser guidance
Accuracy (CEP)	10 cm
Datalink	Two-way S-Band
Propulsion	Dual-thrust solid propellant, smokeless

Modular warhead configurations:

Configuration	Function
Anti-Armour (EFP)	Explosively Formed Penetrator — defeats tank armour via top-attack
PCB (Penetration-Cum-Blast)	Bunker-buster for reinforced concrete
Pre-Fragmented	Anti-personnel / soft-target interdiction

About the News

What is the ULPGM-V3?

A lightweight, fire-and-forget, precision-guided missile launched from unmanned aerial vehicles (UAVs/drones), developed by DRDO for the Indian Armed Forces. Also called ULM-ER (Unmanned Launch Munition-Extended Range).

Who has developed it?

The Research Centre Imarat (RCI), Hyderabad, was the nodal DRDO laboratory, working with other DRDO laboratories. RCI specialises in missile guidance, avionics, and control systems.

What is “fire-and-forget” technology?

A class of weapons where the missile acquires the target before launch or autonomously locks onto a designated target after launch, requiring no further input from the operator after firing. This allows: (a) Operator survivability (drone or pilot exits engagement zone). (b) Multiple-target engagement. (c) Operation in EW-denied or jammed environments.

What is the missile’s range?

(a) Maximum strike range: 10 km. (b) Active engagement range:

• 4 km in day conditions.
• 2.5 km at night. The day/night differential reflects the infrared seeker’s variable performance in different ambient thermal contexts.

What is the missile’s accuracy?

A Circular Error Probable (CEP) of 10 cm — meaning 50% of strikes fall within a 10 cm radius of the target. This is extraordinarily precise, comparable to top-tier precision-guided munitions globally (Hellfire, Spike).

What is “top-attack mode”?

A mode where the missile strikes a tank from above — exploiting the thinnest armour on modern main battle tanks, which is on the turret roof. Side and frontal armour are typically thicker; top armour is the weakest point. Top-attack capability dramatically increases lethality against modern armoured vehicles.

What are EFP, PCB, and pre-fragmented warheads?

(a) EFP (Explosively Formed Penetrator): A specialised warhead that shapes a metal slug at very high velocity to punch through armour. Used in anti-tank applications. (b) PCB (Penetration-Cum-Blast): A bunker-buster that first penetrates a hardened target (concrete) and then detonates inside. (c) Pre-Fragmented: A warhead pre-cut with fragmentation grooves to generate optimised shrapnel patterns against soft targets (personnel, vehicles, equipment).

What is the dual-channel IIR seeker?

An Imaging Infrared (IIR) seeker that captures infrared images of the battlefield in two wavelength bands (channels) — providing: (a) Better target discrimination. (b) Resilience against decoys/flares. (c) All-weather, day-and-night operation. Combined with laser guidance, the missile can operate across diverse conditions.

Why is the two-way S-Band datalink important?

Because it allows: (a) Real-time target updates — terrain or movement changes. (b) Mid-course flight corrections. (c) In-flight retargeting — switch targets if conditions change. (d) Battle damage assessment feedback to the operator.

Why is the smokeless propellant significant?

Because smoke and flame signatures would: (a) Reveal the drone’s launch position to the enemy. (b) Make the drone vulnerable to counter-attack. (c) Compromise operational secrecy. A low-signature smokeless motor preserves the drone’s covert nature and enables persistent reconnaissance + strike profiles.

Why is operation in “communication-denied environments” critical?

Because modern warfare increasingly features: (a) Electronic Warfare (EW) that jams datalinks. (b) GPS spoofing and denial. (c) Comms cyber attacks. A fire-and-forget missile can complete its mission even if all comms are cut after launch.

What are the strategic implications?

(a) Drone-warfare modernisation for India. (b) Atmanirbhar Bharat — reducing dependence on foreign PGMs (Hellfire, Spike). (c) Cost advantage — indigenous production at much lower cost than imports. (d) Export potential — Indian PGMs for friendly nations under defence exports. (e) Tactical edge in conflicts requiring standoff precision strikes.

What is the broader operational context?

(a) Drone-launched PGMs have become decisive in modern conflicts — Armenia-Azerbaijan, Ukraine, recent India-Pakistan operations. (b) Loitering munitions and drone-missile combinations represent a revolution in military affairs. (c) India is rapidly expanding its drone and UAV ecosystem — including HAL CATS Warrior, DRDO Rustom, indigenous loitering munitions. (d) Drone-precision-strike capability is now central to Indian Army, Air Force, and Navy modernisation.

Background Concepts (Q&A)

What is DRDO?

The Defence Research & Development Organisation — established in 1958, under the Ministry of Defence. DRDO has 52+ laboratories across India and develops a wide range of indigenous defence systems including: (a) Missiles — Akash, Astra, Nag, BrahMos (with Russia), Pinaka, NAG, MRSAM (with Israel). (b) Aircraft systems — LCA Tejas avionics, AEW&C, UAVs. (c) Naval systems — sonars, torpedoes, ships’ weapon systems. (d) Battle systems — Arjun MBT, BMPs, artillery. (e) Strategic systems — nuclear-related, space-related.

What is Research Centre Imarat (RCI)?

A premier DRDO laboratory based in Hyderabad, established in 1988. RCI specialises in: (a) Missile guidance systems. (b) Avionics for missiles and aircraft. (c) Control systems. (d) Inertial navigation and sensors. (e) Embedded software for defence applications.

What is a Precision Guided Munition (PGM)?

A highly accurate weapon with integrated guidance systems that enable it to strike a designated target with minimal collateral damage. Categories: (a) Laser-guided (e.g., Paveway). (b) GPS/GNSS-guided (e.g., JDAM). (c) Imaging Infrared (IIR) guided (e.g., Spike). (d) Radar-guided (anti-ship missiles). (e) Inertial + multiple-sensor fusion (modern systems). PGMs are a force multiplier in modern warfare.

What is Circular Error Probable (CEP)?

A measure of accuracy — the radius of a circle within which 50% of the rounds/missiles land. Lower CEP = greater accuracy. Modern PGMs achieve CEP in single-digit metres or even centimetres.

What are the main categories of UAVs in military use?

(a) Mini/Micro UAVs — handheld, very short range. (b) Tactical UAVs — short to medium range, battlefield reconnaissance. (c) MALE (Medium Altitude Long Endurance) — multi-hour missions (e.g., MQ-1 Predator, Heron). (d) HALE (High Altitude Long Endurance) — strategic reconnaissance (e.g., MQ-9 Reaper, Global Hawk). (e) UCAVs (Unmanned Combat Aerial Vehicles) — armed drones. (f) Loitering munitions — “suicide drones” that loiter and strike.

What is the Integrated Guided Missile Development Programme (IGMDP)?

A landmark Indian missile programme launched in 1983 under APJ Abdul Kalam’s leadership. It developed: (a) Prithvi — short-range surface-to-surface missile. (b) Agni — intermediate to ICBM-range missiles. (c) Akash — medium-range surface-to-air missile. (d) Trishul — short-range surface-to-air missile. (e) Nag — anti-tank guided missile. IGMDP laid the foundation for India’s modern missile capabilities.

What is Atmanirbhar Bharat in defence?

A self-reliance policy aimed at reducing India’s dependence on defence imports through: (a) Indigenisation lists — items prohibited for import. (b) Make in India in defence. (c) iDEX (Innovations for Defence Excellence) for start-ups. (d) Defence Industrial Corridors (Tamil Nadu, Uttar Pradesh). (e) DAP 2020 — Defence Acquisition Procedure favoring domestic production. (f) Strategic Partnership Model for major platforms. (g) Defence exports target of $5 billion by 2025.

What is the Defence Acquisition Procedure (DAP) 2020?

The operational framework governing defence procurement in India, replacing the earlier DPP (Defence Procurement Procedure) documents. DAP 2020 emphasises: (a) Buy (Indian-IDDM) — Indian Designed, Developed and Manufactured. (b) Make-in-India prioritisation. (c) Strategic Partnership Model. (d) Defence offsets. (e) MSME participation.

Why is “drone warfare” considered a revolution in military affairs?

(a) Reduces casualties to one’s own forces. (b) Enables 24×7 persistent operations. (c) Provides intelligence + strike fusion. (d) Cost-effective compared to manned platforms. (e) Hard to counter in large swarms. (f) Decisive demonstrations — Armenia-Azerbaijan (2020), Ukraine-Russia (since 2022), Israel-Hamas (2023-).

What lessons has India drawn from recent conflicts?

(a) Drone-based PGMs can shape conflict outcomes. (b) Loitering munitions are valuable cost-effective tools. (c) EW resilience is critical. (d) Indigenous production at scale is necessary. (e) Integrating drones with traditional forces requires doctrine evolution.

What is the strategic role of standoff weapons?

Standoff weapons strike from outside the range of enemy defences, allowing: (a) Force protection for delivery platforms. (b) High-value-target engagement without exposure. (c) Operations in contested airspace. (d) Reduced risk to manned crews. ULPGM-V3 fits this standoff concept for drone platforms.

Practice MCQs

Q1. With reference to the ULPGM-V3 missile, consider the following statements:

1. It has been developed by the Defence Research & Development Organisation (DRDO).
2. The Research Centre Imarat (RCI), Hyderabad is the nodal lab for its development.
3. It has a maximum strike range of 10 km and is launched from unmanned aerial vehicles.
4. It is a fire-and-forget weapon engineered for drone warfare.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following statements about the ULPGM-V3’s technical features:

1. It uses a dual-channel Imaging Infrared (IIR) seeker along with laser guidance.
2. It achieves a Circular Error Probable (CEP) of 10 cm.
3. It uses a smokeless solid-propellant motor to avoid revealing the launch drone’s position.
4. It cannot operate in jammed or communication-denied environments.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 2 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. Consider the following statements about DRDO:

1. DRDO was established in 1958 and operates under the Ministry of Defence.
2. The Integrated Guided Missile Development Programme (IGMDP) was launched in 1983 under the leadership of A.P.J. Abdul Kalam.
3. Akash, Agni, Prithvi, Trishul, and Nag missiles were developed under the IGMDP.
4. Research Centre Imarat (RCI), Hyderabad, specialises in missile guidance, avionics, and control systems.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. With reference to India’s defence indigenisation, consider the following statements:

1. The Defence Acquisition Procedure (DAP) 2020 prioritises “Buy (Indian-IDDM)” category for procurement.
2. India has two Defence Industrial Corridors — one in Tamil Nadu and one in Uttar Pradesh.
3. iDEX (Innovations for Defence Excellence) is a programme to engage start-ups in defence innovation.
4. India does not allow FDI in the defence sector under any route.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Answer Key

1. (d) — All four statements are correct.
2. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; the missile is specifically designed to operate in communication-denied / heavily jammed EW environments — that’s one of its key features, enabled by its fire-and-forget design.
3. (e) — All four statements are correct.
4. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; India does allow FDI in defence — up to 74% under the automatic route and above 74% (up to 100%) under government approval in specific cases.

Exam Relevance

Exam	Relevance
UPSC Prelims	GS Paper III — Security (Defence technology, DRDO, missiles, drone warfare); Science & Technology
UPSC Mains	GS Paper III — Internal Security, Defence indigenisation, Drone warfare, S&T
BPSC / State PCS	Defence, Science & Tech

4. Exercise PRAGATI 2026

Context of the News

A 13-nation multinational military exercise — Exercise PRAGATI 2026 — has commenced at the Umroi Military Station in Meghalaya, hosted by India along with 12 friendly nations drawn from across South Asia, Southeast Asia, and the Indian Ocean Region (IOR). The participating countries include Bhutan, Cambodia, Indonesia, Laos, Malaysia, Maldives, Myanmar, Nepal, Philippines, Seychelles, Sri Lanka, and Vietnam — together representing a strategic arc of India’s neighbourhood and extended neighbourhood. The exercise, conducted by the Indian Army’s Eastern Command, aims to provide a common platform for participating armies to engage in professional exchange, share best practices, and build closer military-to-military ties.

Key Highlights

• Exercise name: PRAGATI 2026.
• Type: Multinational military exercise.
• Venue: Umroi Military Station, Meghalaya.
• Host: India.
• Participating nations (12 + India = 13):

South Asia	Southeast Asia	Indian Ocean
Bhutan	Cambodia	Maldives
Nepal	Indonesia	Seychelles
Sri Lanka	Laos
	Malaysia
	Myanmar
	Philippines
	Vietnam

About the News

What is PRAGATI 2026?

A 13-nation multinational military exercise hosted by India at the Umroi Military Station in Meghalaya, with 12 friendly nations participating alongside the Indian Army.

Which nations are participating?

(a) South Asia: Bhutan, Nepal, Sri Lanka, Maldives. (b) Southeast Asia: Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Vietnam. (c) Indian Ocean: Seychelles. (d) Host: India.

Where is the exercise being held?

At the Umroi Military Station, located in Ri-Bhoi district of Meghalaya, near Shillong — under the Indian Army’s Eastern Command.

What is the aim of the exercise?

The Defence Ministry has stated that the exercise seeks to: (a) Provide a common platform for participating armies. (b) Enable professional exchange. (c) Build closer military-to-military ties. (d) Implicitly, strengthen interoperability for joint operations such as disaster relief, peacekeeping, and counter-terrorism.

Why is the choice of Meghalaya significant?

(a) Strategic location in India’s northeast, the gateway to ASEAN and the Bay of Bengal. (b) Eastern Command’s operational headquarters and training infrastructure. (c) Symbolic projection of India’s commitment to its Act East partners. (d) Geographic convenience for participants from Southeast Asia and the Indian Ocean. (e) Domestic boost for the northeast as a hub of strategic activity.

How does this fit into India’s defence diplomacy?

India has built a robust portfolio of military exercises: Bilateral examples:

• Yudh Abhyas — with the US.
• Vajra Prahar — Special Forces with the US.
• Surya Kiran — with Nepal.
• Mitra Shakti — with Sri Lanka.
• Sampriti — with Bangladesh.
• Maitri — with Thailand.
• Garuda Shakti — with Indonesia.
• VINBAX — with Vietnam.
• IMBAX — with Myanmar.
• Cope India (Air Force) — with the US. Multilateral examples:
• MILAN (Navy) — multiple Indian Ocean nations.
• ASEAN-India Maritime Exercise.
• Malabar (Quad navies — India, US, Japan, Australia).
• Tarang Shakti (Air Force multilateral). PRAGATI adds to this list as a broad-based regional army exercise.

Why does India host such exercises?

(a) Build military partnerships as part of broader diplomatic ties. (b) Project soft power as a net security provider. (c) Build interoperability for joint operations (HADR, peacekeeping, etc.). (d) Counter the influence of strategic rivals in the region. (e) Showcase Indian defence capability and platforms, supporting defence exports. (f) Strengthen Indo-Pacific architecture.

How does this connect to India’s Act East Policy?

The presence of seven ASEAN-region nations (Cambodia, Indonesia, Laos, Malaysia, Myanmar, Philippines, Vietnam) reflects India’s deepening Act East engagement — extending beyond economic ties (trade, FTAs) into defence cooperation and joint training.

How does this connect to SAGAR vision?

The participation of Indian Ocean nations (Maldives, Sri Lanka, Seychelles) reflects India’s commitment to Security and Growth for All in the Region (SAGAR) — India’s framework for maritime security cooperation in the Indian Ocean.

How does this connect to Neighbourhood First?

The participation of South Asian neighbours (Bhutan, Nepal, Sri Lanka, Maldives, plus Myanmar) reflects the Neighbourhood First Policy — prioritising constructive engagement with immediate neighbours.

Why is this timing strategically significant?

(a) 2026 West Asia conflict — disrupting global supply chains and security. (b) Pakistan-Saudi Arabia defence accord — altering Gulf security geometry. (c) Continued China-related strategic concerns in the Indo-Pacific. (d) Reorganisation of regional alliances — including the I2U2, IMEC, Quad. (e) India-UAE strategic upgrade — covered earlier this session. The PRAGATI exercise is a timely show of India’s regional defence engagement amid this evolving landscape.

Background Concepts (Q&A)

What is the “Act East” Policy?

Articulated under PM Modi’s government in 2014 (building on the earlier Look East Policy of the 1990s), Act East is India’s strategic engagement with ASEAN and East Asia through: (a) Trade and investment (ASEAN-India FTA). (b) Connectivity (Kaladan Multimodal Transit Transport, Trilateral Highway). (c) Defence and security cooperation. (d) Cultural and people-to-people ties (Buddhism, diaspora). (e) Engagement with ASEAN, ASEAN-led forums (EAS, ARF, ADMM+), BIMSTEC, Mekong-Ganga Cooperation.

What is the SAGAR vision?

Security and Growth for All in the Region (SAGAR) — announced by PM Modi during his Mauritius visit in March 2015. It outlines India’s vision for the Indian Ocean Region: (a) Cooperative security with maritime neighbours. (b) Capacity building in coastal states. (c) Sustainable development of ocean economy. (d) Disaster relief and humanitarian assistance. (e) Counter-piracy and maritime law enforcement.

What is the Neighbourhood First Policy?

India’s foreign-policy doctrine of prioritising relations with immediate South Asian neighbours — Bhutan, Bangladesh, Maldives, Myanmar, Nepal, Pakistan (where possible), Sri Lanka, Afghanistan — through: (a) Connectivity and economic ties. (b) Development cooperation. (c) Security collaboration. (d) People-to-people engagement.

What is the Indian Army’s Eastern Command?

One of the six operational commands of the Indian Army, headquartered in Kolkata. The Eastern Command is responsible for: (a) Defence of India’s northeast including the borders with China, Bhutan, Myanmar, Bangladesh. (b) Counter-insurgency operations in the northeast. (c) HADR (Humanitarian Assistance and Disaster Relief) in the region. The Eastern Command’s responsibility includes Meghalaya, Sikkim, parts of Arunachal Pradesh, Nagaland, Manipur, Mizoram, Tripura, Assam.

What are major Indian Army multilateral exercises?

(a) Cobra Warrior (Air Force, multinational). (b) Tarang Shakti (Air Force). (c) MILAN (Navy). (d) Malabar (Navy, Quad). (e) ASEAN-India Maritime Exercise. (f) PRAGATI (Army, this exercise).

What is the role of “military diplomacy”?

A subset of foreign policy that uses defence-related interactions to: (a) Build trust with partner nations. (b) Share best practices in military operations. (c) Strengthen interoperability for joint operations. (d) Project soft power via training, education, equipment supply. (e) Promote defence exports. (f) Support broader political objectives.

Where is Meghalaya?

A northeastern Indian state with capital Shillong. It is bordered by: (a) Assam to the north. (b) Bangladesh to the south. Known for: (a) High rainfall — Cherrapunji and Mawsynram are among the wettest places on Earth. (b) Tribal-majority population — Khasi, Jaintia, Garo. (c) Unique cultural and ecological heritage. (d) Strategic location as a gateway to Bangladesh and ASEAN routes.

What is BIMSTEC and how does it relate?

Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation — a regional grouping of 7 countries: India, Bangladesh, Bhutan, Myanmar, Nepal, Sri Lanka, Thailand. BIMSTEC complements India’s Act East and Neighbourhood First by focusing on Bay of Bengal connectivity. Several PRAGATI 2026 participants are BIMSTEC members.

What is the Indo-Pacific framework?

A strategic geographical framework encompassing the Indian Ocean and Pacific Ocean regions, recognised by India, US, Japan, Australia, ASEAN, EU, France, UK, Germany, and others. It reflects the interconnectedness of these maritime spaces and includes initiatives like the Quad (India-US-Japan-Australia) and IPOI (Indo-Pacific Oceans Initiative) announced by India.

What is the IPOI (Indo-Pacific Oceans Initiative)?

Announced by PM Modi at the East Asia Summit in November 2019, the IPOI is India’s framework for cooperation in the Indo-Pacific covering seven pillars: (a) Maritime Security. (b) Maritime Ecology. (c) Maritime Resources. (d) Capacity Building and Resource Sharing. (e) Disaster Risk Reduction and Management. (f) Science, Technology, and Academic Cooperation. (g) Trade Connectivity and Maritime Transport.

Why is multi-nation military exercise diplomacy growing globally?

(a) Shifting power balances require broader alliance structures. (b) Interoperability is essential for HADR, peacekeeping, counter-terrorism. (c) Non-traditional threats (piracy, illegal trafficking, climate disasters) need coordinated responses. (d) Defence partnerships signal political alignments without formal treaties. (e) Military exercises offer a flexible diplomatic tool.

Practice MCQs

Q1. With reference to Exercise PRAGATI 2026, consider the following statements:

1. It is a 13-nation multinational military exercise hosted by India.
2. It is being held at the Umroi Military Station in Meghalaya.
3. The participating nations include Bhutan, Cambodia, Indonesia, Maldives, Sri Lanka, and Vietnam.
4. The exercise aims to provide a common platform for participating armies for professional exchange and military-to-military ties.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following statements about India’s regional strategic frameworks:

1. The Act East Policy was articulated in 2014, building on the earlier Look East Policy.
2. The SAGAR vision was announced by PM Modi in 2015 during his visit to Mauritius.
3. The Indo-Pacific Oceans Initiative (IPOI) covers seven pillars including Maritime Security and Maritime Ecology.
4. Neighbourhood First Policy is India’s strategic engagement with East Asian countries only.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. Consider the following Indian military exercises and their bilateral partner:

1. Yudh Abhyas — United States.
2. Surya Kiran — Nepal.
3. Mitra Shakti — Sri Lanka.
4. Garuda Shakti — Indonesia.

Which of the above pairs are correctly matched? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. With reference to Indian military and strategic geography, consider the following statements:

1. The Indian Army’s Eastern Command is headquartered in Kolkata.
2. Meghalaya shares an international border with Bangladesh.
3. BIMSTEC is a regional grouping that includes India, Bangladesh, Bhutan, Myanmar, Nepal, Sri Lanka, and Thailand.
4. The Quad consists of India, the United States, Japan, and Australia.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Answer Key

1. (d) — All four statements are correct.
2. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; Neighbourhood First Policy applies to India’s immediate South Asian neighbours (Bhutan, Bangladesh, Maldives, Myanmar, Nepal, Pakistan, Sri Lanka, Afghanistan), not East Asia. Engagement with East Asia is under Act East Policy.
3. (e) — All four statements are correctly matched.
4. (e) — All four statements are correct.

5. Shaheed Veer Gundadhur Seva Dera Jan Suvidha Kendra

Context:

The Union Home Minister inaugurated the Shaheed Veer Gundadhur Seva Dera Jan Suvidha Kendra in Bastar, Chhattisgarh — a tribute to the legendary tribal revolutionary leader who spearheaded the historic Bhumkal Rebellion of 1910 against the British colonial administration. Veer Shaheed Gundadhur, born Baga Dhurva in Netanar village of Bastar’s dense forests and belonging to the Dhurwa tribal community, mobilised tribal communities against British exploitation of forest resources, oppressive forest-reservation policies, and colonial overreach — using a distinctive secret messenger system in which red chillies, clay bows and arrows, and mango branches were passed from village to village as symbols of urgent rebellion, armed resistance, and tribal solidarity.

Key Highlights

• Personality: Veer Shaheed Gundadhur (also: Baga Dhurva — birth name).
• Tribe: Dhurwa.
• Place of origin: Netanar village, Bastar, Chhattisgarh.
• Rebellion led: Bhumkal Rebellion, 1910 — against British colonial authority.
• Title’s origin: “Gundadhur” — name given by the British to describe his formidable rebel status.
• Age at the time of rebellion: ~35 years.

About the Bhumkal Rebellion (1910):

• Meaning of “Bhumkal”: Earthquake / earth-rebellion.
• Triggers:
  • British exploitation of local forest and mineral resources.
  • Severe forest reservation policies restricting tribal access.
  • Colonial overreach in tribal lifeworlds.
  • Collaboration of King Rudrapratap (Bastar’s ruler) with British oversight.
• Mobilisation mechanism — secret symbolic messaging:
  • Red chillies — signal of urgent revolutionary action.
  • Clay bows and arrows — preparation for armed resistance.
  • Mango branches — solidarity to protect tribal identity.
• Military tactics: Guerilla ambushes, terrain knowledge, surprise attacks.

Modern recognition:

• Chhattisgarh’s annual Shaheed Gundadhur Award in archery.
• Government colleges named after him.
• Seva Dera Jan Suvidha Kendra in his name (inaugurated by Home Minister).
• Tribal folklore preserves his memory.

About the News

Who was Veer Shaheed Gundadhur?

A tribal revolutionary leader from the Dhurwa community of Bastar, who led the Bhumkal Rebellion of 1910 against British colonial rule. He is one of India’s most iconic tribal freedom fighters.

What was his birth name and origin?

His birth name was Baga Dhurva, and he was born in Netanar village in the dense forests of Bastar, Chhattisgarh. The name “Gundadhur” was given by the British to describe his formidable rebel character.

What was the Bhumkal Rebellion?

The 1910 tribal rebellion in Bastar against British colonial rule, led by Gundadhur. “Bhumkal” literally means earthquake or earth-rebellion in tribal usage — capturing the seismic impact of the uprising. It was directed against: (a) British forest reservation policies. (b) Resource exploitation of tribal lands. (c) Colonial taxation and administrative interference. (d) Compromised local rulers (King Rudrapratap of Bastar).

Why was forest reservation a key trigger?

The British Indian Forest Acts of 1865 and 1878 classified vast forest tracts as “reserved” or “protected” — drastically curtailing traditional tribal rights to: (a) Collect forest produce. (b) Hunt animals. (c) Practise shifting cultivation. (d) Grazing. For forest-dependent tribes like the Dhurwa, this was an existential threat to their way of life.

What was the “secret messenger system”?

A brilliant mobilisation strategy under British surveillance: Gundadhur distributed specific symbolic items from house to house across tribal villages — each carrying coded meaning: (a) Red chillies — signalled urgent revolutionary action. (b) Clay bows and arrows — symbolised armed preparation. (c) Mango branches — represented tribal solidarity. This avoided written communication (which the British could intercept) and relied entirely on cultural symbols and oral transmission.

What guerrilla tactics did he employ?

(a) Forest-based ambushes exploiting Bastar’s dense terrain. (b) Surprise attacks on colonial outposts. (c) Knowledge of forest paths and water sources. (d) Coordinated village mobilisation. (e) Hit-and-run tactics. These tactics paralysed British and local-ruler forces, forcing them to retreat into forest caves for refuge.

Why was the suppression so brutal?

(a) The British viewed tribal autonomy as a direct challenge to colonial authority. (b) Bastar’s resources (forests, minerals, land) were of high economic value. (c) Example-setting to deter similar uprisings elsewhere. (d) Public executions at Golbazar Chowk in Jagdalpur were meant to terrorise local populations into submission.

What happened to Gundadhur?

He was never captured. Multiple accounts suggest he disappeared into Bastar’s forests after the suppression, never to be found. This uncaptured legend transformed him into an immortal symbol in tribal memory — a leader who never surrendered.

Why is his memorialisation significant today?

(a) Recognition of tribal contributions to India’s freedom struggle, often overlooked in mainstream history. (b) Cultural restoration for tribal communities. (c) Political symbolism in a region (Bastar) that has faced decades of Maoist conflict and underdevelopment. (d) Development outreach — the Seva Dera Jan Suvidha Kendra is a service-delivery center. (e) Mainstreaming tribal identity within national narrative.

How does this fit into the broader tribal freedom-fighter recognition agenda?

(a) Janjati Gaurav Diwas (15 November) — declared in 2021 to mark Birsa Munda’s birthday and honour tribal contributions. (b) Tribal Museums across India — including the Birsa Munda Tribal Freedom Fighters Museum in Ranchi. (c) PM JANMAN (Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan) for development of PVTGs (Particularly Vulnerable Tribal Groups) — launched 2023. (d) Statue installations of tribal heroes across the country. (e) Curriculum inclusion of tribal freedom fighters.

What is the Bastar context?

Bastar is: (a) One of India’s largest districts by area. (b) Tribal-majority — Gond, Maria, Muria, Dhurwa, Halba, Bhatra communities. (c) Heavily forested — Sal, Teak, Bamboo. (d) Historical seat of the Bastar princely state (until 1948). (e) One of India’s Naxal-affected regions in recent decades. (f) Mineral-rich — iron ore, dolomite, limestone, etc. (g) Now seeing expanded development outreach under the government’s tribal welfare agenda.

Background Concepts (Q&A)

What were the major tribal uprisings during British rule?

India saw numerous tribal uprisings against colonial rule:

Uprising	Year	Leader	Region
Chuar Rebellion	1799	—	Bengal-Bihar
Bhil Rebellion	1818-31	—	Western India
Kol Rebellion	1831-32	Buddhu Bhagat	Chhota Nagpur
Khasi Rebellion	1829-33	Tirot Singh	Meghalaya
Santhal Rebellion (Hul)	1855-56	Sidhu, Kanhu, Chand, Bhairav Murmu	Jharkhand, Bengal
Tilka Manjhi’s Revolt	1784	Tilka Manjhi	Bengal/Bihar
Munda Ulgulan	1899-1900	Birsa Munda	Chhota Nagpur
Bhumkal	1910	Veer Gundadhur	Bastar
Tana Bhagat Movement	1914	Jatra Oraon	Chhota Nagpur
Rampa Rebellion	1922-24	Alluri Sitarama Raju	Andhra
Warli Revolt	1945-47	Godavari Parulekar	Maharashtra

Who was Birsa Munda?

A tribal revolutionary of the Munda community in Chhota Nagpur, who led the Ulgulan (the Great Tumult) of 1899-1900 against British rule and exploitative landlords. He is revered as “Dharti Aba” (Father of the Earth) and his 15 November birthday is celebrated as Janjati Gaurav Diwas since 2021.

Who was Tilka Manjhi?

A Santhal warrior considered by many as the first tribal freedom fighter against the British, who led an uprising in 1784 in present-day Bihar-Jharkhand. He was captured and executed by hanging in Bhagalpur in 1785.

Who was Sidhu Kanhu Murmu?

Sidhu and Kanhu Murmu (along with brothers Chand and Bhairav) were the leaders of the Santhal Hul of 1855-56 — one of the largest tribal rebellions against British and Bengal-Bihar zamindari oppression. The Hul was crushed but led to the creation of the Santhal Parganas district with special tribal protection laws.

Who was Alluri Sitarama Raju?

A revolutionary who led the Rampa Rebellion (1922-24) in the Agency tracts of Andhra Pradesh against British forest laws and forced labour. He combined tribal mobilisation with revolutionary nationalism. Killed in 1924 by British forces.

What was the colonial forest-reservation policy?

A series of British Indian forest legislation: (a) Indian Forest Act, 1865 — first formal classification. (b) Indian Forest Act, 1878 — comprehensive classification into reserved, protected, village forests. (c) Indian Forest Act, 1927 — consolidated framework, still partly applicable. These Acts drastically restricted tribal rights to forests — triggering many uprisings.

What is the Forest Rights Act, 2006?

The Scheduled Tribes and Other Traditional Forest Dwellers (Recognition of Forest Rights) Act, 2006 — a major piece of post-Independence legislation that: (a) Recognises tribal and traditional forest dwellers’ rights to forest lands and resources. (b) Vests Gram Sabhas with authority to determine and recognise rights. (c) Corrects “historical injustice” of forest-law dispossession. (d) Includes Community Forest Resource (CFR) rights.

What is the PESA Act, 1996?

Panchayats (Extension to Scheduled Areas) Act, 1996 — extends provisions of the 73rd Constitutional Amendment (panchayati raj) to Scheduled V Areas of India (predominantly tribal areas), with specific provisions for: (a) Gram Sabha as the primary body. (b) Tribal customary laws recognition. (c) Mandatory consultation for land acquisition, displacement. (d) Control over minor forest produce.

What is Schedule V vs Schedule VI of the Constitution?

Feature	Schedule V	Schedule VI
Areas covered	Tribal areas in mainland states (other than NE)	Tribal areas in Assam, Meghalaya, Tripura, Mizoram
Governance	Through Tribes Advisory Council and Governor’s role	Autonomous District Councils with significant powers
Examples	Bastar (Chhattisgarh), Jharkhand, Andhra agency tracts	Bodoland, Khasi-Jaintia areas, Garo Hills, Tripura TTAADC

What is Janjati Gaurav Diwas?

A commemorative day declared by the Government of India in November 2021 — celebrated on 15 November, the birth anniversary of Birsa Munda — to honour the contribution of tribal communities to India’s freedom struggle and culture.

What is PM JANMAN?

Pradhan Mantri Janjati Adivasi Nyaya Maha Abhiyan — launched on 15 November 2023 (Janjati Gaurav Diwas) — a comprehensive scheme targeting Particularly Vulnerable Tribal Groups (PVTGs) for development across 11 critical areas including housing, road connectivity, drinking water, electricity, healthcare, education, livelihoods. ₹24,000+ crore budget over 3 years.

What is Bastar’s significance?

(a) Largest district of Chhattisgarh by area historically (now split into multiple districts). (b) Tribal heartland — multiple tribes including Gond, Maria, Muria, Dhurwa. (c) Forest-rich — significant biodiversity. (d) Historic tribal kingdom — Bastar State, ruled by the Kakatiya dynasty until merger in 1948. (e) Mineral resources — iron ore, dolomite, limestone. (f) Naxalism-affected in recent decades. (g) Cultural heritage — Bastar Dussehra (75-day festival), tribal art and crafts.

Practice MCQs

Q1. With reference to Shaheed Veer Gundadhur, consider the following statements:

1. He belonged to the Dhurwa tribal community of Bastar, Chhattisgarh.
2. He led the Bhumkal Rebellion of 1910 against British colonial rule.
3. He used a symbolic messenger system involving red chillies, clay bows and arrows, and mango branches.
4. He was captured by the British and publicly executed at Jagdalpur.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following tribal uprisings and their leaders:

1. Santhal Hul (1855-56) — Sidhu and Kanhu Murmu.
2. Munda Ulgulan (1899-1900) — Birsa Munda.
3. Bhumkal Rebellion (1910) — Veer Gundadhur.
4. Rampa Rebellion (1922-24) — Alluri Sitarama Raju.

Which of the above pairs are correctly matched? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. Consider the following statements about tribal areas governance in India:

1. The Fifth Schedule covers tribal areas in mainland Indian states other than the Northeast.
2. The Sixth Schedule covers tribal areas in Assam, Meghalaya, Tripura, and Mizoram.
3. The Panchayats (Extension to Scheduled Areas) Act, 1996 extends panchayati raj to Schedule V areas.
4. The Forest Rights Act, 2006 recognises tribal and traditional forest dwellers’ rights to forest lands.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. With reference to tribal welfare initiatives in India, consider the following statements:

1. Janjati Gaurav Diwas is celebrated on 15 November, marking the birth anniversary of Birsa Munda.
2. PM JANMAN was launched in November 2023 for the development of Particularly Vulnerable Tribal Groups (PVTGs).
3. The Forest Rights Act, 2006 vests Gram Sabhas with authority to determine and recognise forest rights.
4. The Bhumkal Rebellion was primarily directed against the British policy of forest reservation in Bastar.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Answer Key

1. (c) — Statements 1, 2, 3 are correct. Statement 4 is wrong; Gundadhur was NEVER captured by the British — he disappeared into Bastar’s forests and was never found, becoming a legendary symbol of resistance. The Golbazar Chowk executions were of other tribal leaders, not him.
2. (e) — All four statements are correctly matched.
3. (e) — All four statements are correct.
4. (e) — All four statements are correct.

Banking/Finance

1. RBI Draft Rules Allow Limited Phone Restrictions for Loan Defaults

Context of the News

The Reserve Bank of India (RBI) has issued revised draft amendment directions on the “Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents” — a major consumer-protection reform for India’s rapidly growing digital and consumer lending markets. The draft permits banks and NBFCs to disable or restrict mobile devices and tablets of loan defaulters — but only if (a) the device itself was financed by them, and (b) the loan contract unambiguously permits such action. It imposes a strict process: a first notice after 60 days past due giving the borrower at least 21 days to cure the default, followed by a second notice with at least 7 more days. Importantly, the directions prohibit lenders from restricting essential device functions — internet, incoming calls, SOS features, emergency public-safety notifications — and require reversal within 1 hour of the borrower curing the default, with ₹250/hour compensation for wrongful restriction or delayed reversal.

Key Highlights

• Regulator: Reserve Bank of India (RBI).
• Action: Revised draft amendment directions on Conduct of Regulated Entities in Recovery of Loans and Engagement of Recovery Agents.
• Effective date: 1 October 2026.
• Applicability: Banks and NBFCs.
• Core provision — Mobile device disabling:
  • Permitted only if:
    • The device was financed by the lender.
    • The loan contract unambiguously permits such action.
  • Process:
    • First notice: After 60 days past due date, providing at least 21 days to cure.
    • Second notice: After expiry of first notice, with at least 7 more days to cure.
  • Gradual approach required (no sudden total blocking).
• Mandatory exceptions (cannot be restricted):
  • Internet access.
  • Incoming calls.
  • Emergency SOS features.
  • Government or public-safety notifications.
• Reversal and compensation:
  • Restrictions to be reversed within 1 hour of borrower curing default.
  • ₹250 per hour compensation for wrongful restriction or delayed reversal.
  • Tech mechanism to be uninstalled after full loan repayment.
• Data privacy:
  • Lenders prohibited from accessing, using, obtaining, or retaining data on borrowers’ devices — for recovery or any other purpose.
• Wider recovery-agent framework:
  • Lenders must adopt policies covering:
    • Triggers for recovery action.
    • Escalation matrices.
    • Code of conduct for recovery agents.
    • Compensation mechanisms for borrowers.
    • Due diligence standards for recovery agencies.
  • Recovery agents must be certified by IIBF or affiliated institutions.
  • Lenders must maintain updated lists of recovery agencies at branches, websites, apps, and customer touchpoints.
  • Borrowers/guarantors to be informed at least 1 day in advance (SMS/email) or 3 days by letter before first in-person visit.
• Conduct standards for recovery agents:
  • Contact only between 8 am and 7 pm (unless borrower authorises otherwise).
  • Prohibited: Abusive language, threats, excessive messaging, public humiliation, social media posts, intimidation.
  • Recovery calls to be recorded and preserved for at least 6 months (longer in litigation).

About the News

What is the RBI’s new draft regulation about?

The draft governs loan recovery practices by banks and NBFCs, including the contentious practice of disabling or restricting mobile devices financed by lenders when the borrower defaults.

Can lenders disable any phone of a defaulter?

No. Lenders can only disable mobile devices and tablets that were directly financed by them, AND only if the loan contract unambiguously permits such action.

What is the process for disabling a device?

(a) First notice: After the loan is 60 days past due, giving the borrower at least 21 days to cure the default. (b) Second notice: After the expiry of the first, with at least 7 more days to cure. (c) Gradual approach — not immediate full blocking.

What functions cannot be restricted?

(a) Internet access. (b) Incoming calls. (c) Emergency SOS features. (d) Government and public-safety notifications. These protect the borrower’s basic safety and communication rights.

What happens once the borrower cures the default?

The lender must reverse the restrictions within 1 hour. If they fail to do so or wrongfully restrict the device, they must compensate the borrower ₹250 per hour until the wrongful action is remedied.

What if the loan is fully repaid?

The technology-based restriction mechanism must be uninstalled from the device after full repayment of the loan.

Can the lender access data on the borrower’s device?

No. The RBI has explicitly prohibited lenders from accessing, using, obtaining, or retaining data stored on borrowers’ devices — for recovery or any other purpose. This is a significant data privacy safeguard.

What new rules apply to recovery agents?

(a) Must be certified through training programmes by the Indian Institute of Banking and Finance (IIBF) or affiliated institutions. (b) Contact hours: Only between 8 am and 7 pm, unless borrower authorises otherwise. (c) Prohibited conduct: Abusive language, threats, excessive messaging, public humiliation, social media posts, intimidation. (d) Advance notice: Borrowers/guarantors must be informed 1 day in advance (SMS/email) or 3 days in advance by letter before first in-person visit. (e) Call recording: Recovery calls must be recorded and preserved for 6 months minimum (longer in litigation).

Why does the RBI consider this important?

(a) Aggressive recovery practices have led to suicides, harassment, public humiliation, and privacy violations — particularly in digital lending and fintech-led consumer lending. (b) Mobile device disabling by some lenders has become a controversial practice without clear legal framework. (c) Recovery agent abuses have been a persistent complaint category at RBI’s Ombudsman. (d) Strengthens consumer protection as digital lending grows rapidly.

What is the consumer-protection rationale?

The RBI is balancing legitimate recovery rights of lenders with borrower protections — particularly: (a) Essential communication (internet, calls, emergency services) must not be restricted. (b) Privacy of personal data on devices must be respected. (c) Dignity of borrowers must be preserved. (d) Process must be transparent and predictable.

How does this fit into RBI’s broader regulatory framework?

(a) Digital Lending Guidelines (September 2022) — comprehensive regulations on digital lending. (b) First Loss Default Guarantee (FLDG) guidelines (2023). (c) Fair Practices Code for banks and NBFCs. (d) Ombudsman Scheme for grievance redressal. (e) Now — revised recovery practices and device-disabling framework (2026).

What is the secondary news about the VRR auction?

The RBI plans an overnight Variable Rate Repo (VRR) auction of ₹1.25 trillion to manage short-term liquidity. The earlier 5-day VRR auction saw weaker-than-notified demand (₹16,435 crore vs ₹1.5 trillion notified), reflecting comfortable liquidity in the banking system (surplus of ₹1.50 trillion).

Why does the RBI conduct VRR operations?

(a) Manage short-term liquidity in the banking system. (b) Steer the WACR (weighted average call rate) toward the policy repo rate. (c) Operate within the Liquidity Adjustment Facility (LAF) corridor. (d) Respond to evolving liquidity conditions during the day.

Background Concepts (Q&A)

What is the Indian Institute of Banking and Finance (IIBF)?

A professional body of bankers established in 1928 (as the Indian Institute of Bankers), based in Mumbai. It conducts examinations, training, and certification programmes for banking professionals across India. The IIBF is widely recognised as the standard-setter for banking-related certifications in India.

What are the RBI’s Digital Lending Guidelines (2022)?

Issued in September 2022, these guidelines apply to all regulated entities and Lending Service Providers (LSPs). They cover: (a) Direct disbursement to borrowers’ bank accounts (no intermediary holding). (b) No automatic increase in credit limit without explicit consent. (c) Standardised Key Fact Statement (KFS). (d) Cooling-off period to exit the loan. (e) Grievance redressal mechanisms. (f) Data protection — only need-based data collection, with consent. (g) No charge or fee without prior consent.

What is the Variable Rate Repo (VRR)?

A liquidity-adjustment operation by the RBI under the Liquidity Adjustment Facility (LAF). Under VRR: (a) Banks can borrow funds from the RBI against government securities. (b) Tenor varies — overnight, 3-day, 7-day, 14-day, etc. (c) Interest rate is market-determined through auction (not fixed at repo rate). (d) Helps RBI manage short-term liquidity.

What is the difference between VRR and Fixed Rate Repo?

Feature	VRR	Fixed Rate Repo
Rate	Market-determined via auction	Fixed at policy repo rate
Quantity	Notified by RBI; bids submitted	Available at fixed rate
Use	Active liquidity management	Standing facility
Frequency	Periodic, as needed	Always available

What is the LAF (Liquidity Adjustment Facility)?

The main monetary policy operating framework of the RBI: (a) Repo rate — rate at which RBI lends to banks (currently 5.25%). (b) Reverse repo rate — rate at which RBI absorbs liquidity. (c) Standing Deposit Facility (SDF) — rate at which banks deposit funds with RBI (introduced 2022; replaces reverse repo as floor). (d) Marginal Standing Facility (MSF) — emergency borrowing window (above repo rate; ceiling). The LAF corridor is bounded by MSF (ceiling) and SDF (floor).

What is the Weighted Average Call Rate (WACR)?

The interest rate at which banks lend to and borrow from each other in the overnight call money market — calculated as a weighted average of transactions. It is the RBI’s primary operating target for monetary policy — the RBI aims to keep WACR aligned with the policy repo rate.

What is the difference between repo and reverse repo?

Repo: RBI lends to banks against government securities (banks borrow from RBI). Reverse repo: RBI borrows from banks (banks lend to RBI). Now largely replaced by SDF. Standing Deposit Facility (SDF): Banks can deposit unlimited excess liquidity with RBI without giving collateral. SDF rate is typically 25 bps below repo rate.

Who can lenders engage as recovery agents?

Under RBI guidelines, recovery agents must be: (a) Trained and certified by IIBF or affiliated institutions. (b) Operating within the lender’s empanelled list. (c) Subject to a code of conduct. (d) Identifiable with proper authorisation letters.

What is the RBI Ombudsman Scheme?

An independent grievance redressal mechanism for customers of banks, NBFCs, and digital lenders — now under the Reserve Bank – Integrated Ombudsman Scheme (RB-IOS), 2021. It allows customers to file complaints free of charge for resolution of grievances.

Why is data privacy in digital lending a critical issue?

Because some predatory digital lenders have been found: (a) Accessing contacts, photos, location of borrowers. (b) Using these for public shaming campaigns in cases of default. (c) Misusing personal data without consent. (d) Selling data to third parties. The new RBI directions directly prohibit data access for recovery.

What are some past concerns with mobile device disabling?

Some fintech lenders, particularly in smartphone-financed loans, have been: (a) Locking devices remotely without proper notice. (b) Disabling devices even when essential functions (emergency calls) were affected. (c) Withholding device access even after partial repayments. (d) Continuing to access data post-disabling. The new framework standardises and constrains this practice.

What are major consumer protection laws applicable to lending?

(a) Banking Regulation Act, 1949 — regulates banks. (b) Reserve Bank of India Act, 1934 — RBI’s powers. (c) Consumer Protection Act, 2019 — covers banking and financial services. (d) Information Technology Act, 2000 — data protection. (e) Digital Personal Data Protection Act, 2023 (DPDP) — personal data. (f) RBI guidelines and Fair Practices Code.

Practice MCQs

Q1. With reference to the RBI’s draft directions on loan recovery and mobile device disabling, consider the following statements:

1. Banks and NBFCs can disable mobile devices financed by them only if the loan contract unambiguously permits such action.
2. Lenders must give a borrower at least 21 days to cure the default after the first notice.
3. Essential functions such as internet, incoming calls, and emergency SOS features cannot be restricted.
4. Lenders are permitted to access and retain data stored on borrowers’ devices for legitimate recovery purposes.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following statements about the conduct standards for recovery agents under the RBI’s draft directions:

1. Recovery agents must be certified through training by the Indian Institute of Banking and Finance (IIBF) or affiliated institutions.
2. Agents can contact borrowers only between 8 am and 7 pm unless the borrower authorises otherwise.
3. Borrowers must be informed at least one day in advance (via SMS/email) before a recovery agent’s first in-person visit.
4. Recovery calls must be recorded and preserved for a minimum of six months.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. With reference to the RBI’s Liquidity Adjustment Facility (LAF), consider the following statements:

1. The repo rate is the rate at which the RBI lends to banks against government securities.
2. The Standing Deposit Facility (SDF) was introduced in 2022 and serves as the floor of the LAF corridor.
3. The Marginal Standing Facility (MSF) serves as the ceiling of the LAF corridor.
4. The Weighted Average Call Rate (WACR) is the RBI’s primary operating target for monetary policy.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. Consider the following statements about Variable Rate Repo (VRR) auctions:

1. VRR auctions are used by the RBI to manage short-term liquidity in the banking system.
2. Under VRR, the interest rate is fixed at the policy repo rate.
3. Banks borrow from the RBI under VRR against government securities.
4. VRR is conducted under the Liquidity Adjustment Facility (LAF).

Which of the above are correct? (a) 1, 3 and 4 only (b) 1, 2 and 4 only (c) 2 and 3 only (d) 1 and 4 only (e) All four

Answer Key

1. (c) — Statements 1, 2, 3 are correct. Statement 4 is wrong; the RBI has explicitly prohibited lenders from accessing, using, obtaining, or retaining data on borrowers’ devices — for recovery or any other purpose.
2. (e) — All four statements are correct.
3. (e) — All four statements are correct.
4. (a) — Statements 1, 3, 4 are correct. Statement 2 is wrong; under VRR, the interest rate is market-determined through auction, NOT fixed at the policy repo rate. This is exactly what differentiates VRR from fixed-rate repo operations.

Exam Relevance

Exam	Relevance
UPSC Prelims	GS Paper III — Indian Economy (Banking, Digital lending, RBI Regulation, Monetary Policy)
UPSC Mains	GS Paper III — Indian Economy, Banking sector, Consumer protection
State PCS	Indian Economy, Banking, Current Affairs
Banking (RBI Gr B, SBI PO, IBPS, NABARD)	Banking & Economy — high importance
SEBI / IRDAI / NABARD Grade A	Financial regulation, consumer protection

2. RBI Withdraws IFR Requirement for Banks Maintaining Market Risk Capital

Source: BS

Context of the News

The Reserve Bank of India (RBI) has issued final amendment directions that withdraw the Investment Fluctuation Reserve (IFR) requirement for banks maintaining capital charge for market risk under the revised investment portfolio framework — while allowing existing IFR balances to be recognised as Common Equity Tier 1 (CET1) capital after transfer to statutory reserves, general reserves, or the profit and loss balance. For regulated entities continuing under IFR — namely Urban Co-operative Banks (UCBs), Small Finance Banks (SFBs), Payments Banks, and Regional Rural Banks (RRBs) — the minimum IFR will now be assessed only on balance-sheet dates, not continuously.

Key Highlights

• Regulator: Reserve Bank of India (RBI).
• Action: Final amendment directions on IFR (Investment Fluctuation Reserve) requirements.
• Date: 18 May 2026 (Monday).
• Source: Amendments to RBI Master Direction on bank investment portfolios.
• Key decisions:

Decision	Applicability
IFR requirement withdrawn	Banks maintaining capital charge for market risk under revised investment portfolio framework
IFR balance → CET1 capital	Via transfer to statutory reserve, general reserve, or P&L balance
IFR retained but eased	UCBs, SFBs, Payments Banks, RRBs — assessment only on balance-sheet dates (not continuous)

• Foreign banks in branch mode can transfer IFR to:
  • Statutory reserve kept in Indian books, OR
  • Remittable surplus retained in Indian books (not repatriable while operating in India).
• UCB-specific clarification:
  • Excess IFR (above threshold) can be drawn down below the line at UCB’s discretion.
  • Paragraph 154(3) of investment portfolio directions applies in all scenarios.
• Stakeholder requests rejected:
  • UCBs (Tier 1/2): “All entities exposed to MTM market risk; size is no basis for exemption.”
  • SFBs: They don’t maintain capital charge for market risk → no exemption.
  • RRBs with accumulated losses: Exempting would make IFR “contingent on profitability” — defeats its countercyclical objective.
• IDR vs IFR — RBI clarification:
  • IDR (Investment Depreciation Reserve): A provision against specific depreciation.
  • IFR (Investment Fluctuation Reserve): A reserve built from investment-cycle gains.
  • The two are structurally distinct.
• Operational rules:
  • SFBs and Payments Banks: IFR transfers must be made from net profit after mandatory appropriations.

About the News

What has the RBI changed?

The RBI has withdrawn the IFR requirement for banks that already maintain capital charge for market risk under the revised investment portfolio framework — while easing the IFR assessment frequency (from continuous to balance-sheet date) for other categories (UCBs, SFBs, payments, RRBs).

Why was the IFR introduced in the first place?

The Investment Fluctuation Reserve was introduced as a countercyclical buffer: (a) Banks build it from gains in their investment portfolios during favourable phases. (b) The buffer absorbs losses from market fluctuations during stress. (c) It addresses the MTM volatility risk in banks’ bond and securities portfolios.

Why is the IFR being withdrawn for some banks?

Because banks that already maintain capital charge for market risk (under Basel III norms) effectively hold regulatory capital against the same risk. Imposing both capital and IFR becomes duplicative reserving, unnecessarily reducing the flexibility and lendable capital of these banks.

Which banks continue to be under the IFR framework?

(a) Urban Co-operative Banks (UCBs). (b) Small Finance Banks (SFBs). (c) Payments Banks. (d) Regional Rural Banks (RRBs). These categories do not maintain capital charge for market risk under existing prudential norms — and so the IFR continues to play a useful risk-absorption function for them.

How does the IFR balance become CET1 capital?

For exempted banks, outstanding IFR balances can be transferred below the line to: (a) Statutory reserve. (b) General reserve. (c) Profit and Loss balance. These reserves qualify as Common Equity Tier 1 (CET1) capital under Basel III — the highest-quality regulatory capital, directly boosting the bank’s Capital Adequacy Ratio (CRAR).

Why is the IFR-to-CET1 transition significant?

(a) Frees up capital for banks to lend or invest. (b) Improves Basel-III metric reporting (CET1 ratio, CRAR). (c) Eliminates double-counting of risk buffers. (d) Aligns with global best practices that integrate market-risk reserving into the broader capital framework.

What did the RBI clarify for foreign banks?

Foreign banks operating as branches in India (not subsidiaries) can transfer IFR balances to either: (a) Statutory reserve in Indian books, OR (b) Remittable surplus retained in Indian books — which is not repatriable while the bank operates in India. This addresses the specific accounting and remittance structure of foreign branch operations.

Why did the RBI reject UCB and SFB exemption requests?

The RBI applied a clear, principle-based criterion: (a) UCBs: Argued that IDR and IFR serve the same purpose and that smaller UCBs should be exempt.

• RBI’s response: IDR (provision) and IFR (reserve) are structurally different; and size is not a valid criterion — “all entities are exposed to market risk on their MTM portfolios.” (b) SFBs: Argued that their higher capital adequacy should qualify them for exemption.
• RBI’s response: SFBs do not maintain capital charge for market risk under existing norms — so they don’t meet the specific criterion for exemption.

Why did the RBI reject RRB requests too?

RRBs with accumulated losses sought exemption — RBI rejected this, holding that: (a) Linking IFR to profitability would defeat its countercyclical purpose. (b) The IFR is meant to be built from investment-cycle gains — making it automatically procyclical-resistant. (c) Exempting loss-making RRBs would create a perverse incentive structure.

What is the IDR vs IFR distinction?

Aspect	IDR (Investment Depreciation Reserve)	IFR (Investment Fluctuation Reserve)
Nature	Provision	Reserve
Trigger	Specific mark-to-market depreciation	Investment-cycle gains
Function	Cover specific identified losses	Build countercyclical buffer
Treatment in accounting	Below the line (charge to P&L)	Reserve from appropriation of profits
Regulatory purpose	Loss recognition	Stability buffer

Why is the broader reform agenda relevant?

The IFR amendment is one part of a comprehensive modernisation of Indian banking regulation: (a) Revised Investment Portfolio Directions (April 2024) — Ind-AS-aligned classification (HTM, AFS, FVTPL). (b) IFR withdrawal for market-risk-capital banks (this reform). (c) Draft Pillar 3 disclosure norms (covered earlier). (d) Standardised disclosure templates (covered earlier). (e) Expected Credit Loss (ECL) framework for forward-looking provisioning. (f) AI-driven fraud and credit infrastructure (IDPIC, MuleHunter.AI, ULI). Together, these represent a systemic upgrade toward Basel-compliant, internationally comparable banking regulation.

What is the takeaway on regulatory philosophy?

The RBI has demonstrated a principle-based, non-discretionary approach: (a) Clear criteria for IFR exemption — market risk capital charge + revised investment guidelines. (b) No size-based, profitability-based, or sector-based exceptions. (c) Categorical consistency — all entities exposed to MTM risk face appropriate buffers. (d) Differentiated assessment frequency — easing compliance burden where merit exists. (e) Logical coherence — IFR and IDR distinction preserved against blurring requests.

Background Concepts

What is the Investment Fluctuation Reserve (IFR)?

A reserve that banks build from gains in their investment portfolios during favourable interest-rate / market phases, designed to absorb future losses from market fluctuations. It functions as a countercyclical financial-stability buffer, particularly relevant to banks’ government securities and bond portfolios.

What is the Investment Depreciation Reserve (IDR)?

A provision required to cover specific mark-to-market depreciation in a bank’s investment portfolio. Created when securities in AFS (Available for Sale) or HFT (Held for Trading) categories are valued at market and their value has declined.

What is “capital charge for market risk”?

A Basel-mandated requirement that banks set aside regulatory capital to cover potential losses from adverse movements in market prices — interest rates, equity prices, exchange rates, commodity prices — on their trading book and certain other positions. Larger commercial banks maintain this charge under the standardised approach or internal models approach (IMA).

What is the revised investment portfolio framework?

Issued in September 2023, effective April 2024, the RBI’s Master Direction on Classification, Valuation and Operation of Investment Portfolio of Commercial Banks introduced Ind-AS-aligned investment accounting: (a) Held to Maturity (HTM) — long-term, cost-based valuation. (b) Available for Sale (AFS) — MTM through OCI (other comprehensive income). (c) Fair Value Through Profit and Loss (FVTPL) — MTM through P&L.

What is Common Equity Tier 1 (CET1) capital?

Under Basel III, CET1 is the highest-quality regulatory capital — comprising: (a) Paid-up equity capital. (b) Statutory reserves. (c) Retained earnings. (d) Certain other reserves. CET1 is the core loss-absorbing capital in a bank’s capital structure.

What is the Basel III framework?

A global, voluntary regulatory framework developed by the Basel Committee on Banking Supervision (BCBS) after the 2008 Global Financial Crisis to strengthen bank capital, leverage, liquidity, and risk management. Three pillars: Pillar 1: Minimum capital requirements. Pillar 2: Supervisory review. Pillar 3: Market discipline through disclosures.

What is the Capital to Risk-Weighted Assets Ratio (CRAR)?

The ratio of a bank’s regulatory capital (Tier 1 + Tier 2) to its risk-weighted assets. Under Basel III in India, the minimum CRAR is 9% plus a Capital Conservation Buffer (2.5%), taking the effective minimum to 11.5%. Banks must hold at least 5.5% CET1 within this.

What are the categories of banks under different RBI regulations?

(a) Commercial Banks — Public Sector, Private Sector, Foreign Banks. (b) Cooperative Banks — Urban Co-operative Banks (UCBs), State and District Central Cooperative Banks, Primary Agricultural Credit Societies. (c) Differentiated Banks — Small Finance Banks (SFBs), Payments Banks. (d) Regional Rural Banks (RRBs) — rural-focused banks under joint Centre-State-sponsor-bank ownership.

What is a Small Finance Bank (SFB)?

A differentiated bank category licensed by the RBI (final guidelines 2015) to provide basic banking services to underserved segments — small businesses, marginal farmers, MSEs. SFBs must direct at least 75% of ANBC to priority sector and have at least 25% branches in unbanked rural centres.

What is a Payments Bank?

A differentiated bank category (final guidelines 2014) that can accept deposits up to ₹2 lakh per customer but cannot lend. Examples: Paytm Payments Bank, India Post Payments Bank, Airtel Payments Bank, Fino Payments Bank.

What is a Regional Rural Bank (RRB)?

A specialised rural-focused bank owned jointly by: (a) Central Government (50%). (b) Sponsor commercial bank (35%). (c) State Government (15%). Established under the Regional Rural Banks Act, 1976, regulated by the RBI, supervised by NABARD.

Why is countercyclical reserving important?

Because banking is inherently procyclical — banks tend to expand lending and reduce buffers during booms, and contract lending and consume buffers during busts, amplifying business cycles. Countercyclical buffers (like IFR, capital conservation buffer, countercyclical capital buffer) force banks to build defenses in good times to absorb shocks in bad times.

What is the role of the Basel Committee on Banking Supervision (BCBS)?

A global standard-setter for bank regulation, established in 1974, housed at the Bank for International Settlements (BIS) in Basel, Switzerland. Members include central banks of major economies (RBI is India’s representative). The BCBS does not have legal authority but its standards are adopted by member jurisdictions through national regulation.

Practice MCQs

Q1. With reference to the recent RBI directions on the Investment Fluctuation Reserve (IFR), consider the following statements:

1. The IFR requirement has been withdrawn for banks maintaining capital charge for market risk under the revised investment portfolio framework.
2. Banks exempted from IFR can transfer existing IFR balances to statutory reserve, general reserve, or P&L balance, qualifying as CET1 capital.
3. For UCBs, SFBs, Payments Banks, and RRBs, the IFR requirement is now assessed only on balance-sheet dates.
4. The new directions take effect from 1 July 2026.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following statements about the IFR and IDR:

1. The Investment Fluctuation Reserve (IFR) is a reserve built from investment-cycle gains.
2. The Investment Depreciation Reserve (IDR) is a provision against specific mark-to-market depreciation.
3. The RBI has clarified that IFR and IDR serve distinct purposes.
4. Both IFR and IDR are designed to provide countercyclical buffers.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. With reference to the rationale behind the RBI’s recent IFR amendments, consider the following statements:

1. The RBI based the exemption criteria on the maintenance of capital charge for market risk.
2. The RBI rejected size-based and profitability-based exemption requests as inconsistent with the IFR’s purpose.
3. The RBI accepted that smaller UCBs and SFBs with higher capital ratios should be exempted from IFR.
4. The IFR is designed to function as a countercyclical buffer built from investment-cycle gains.

Which of the above are correct? (a) 1, 2 and 4 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. Consider the following statements about differentiated banking and cooperative banks in India:

1. Small Finance Banks (SFBs) must direct at least 75% of adjusted net bank credit to priority sectors.
2. Payments Banks can accept deposits up to ₹2 lakh per customer but cannot lend.
3. Regional Rural Banks (RRBs) are owned jointly by the Centre, sponsor commercial bank, and the State government.
4. Urban Co-operative Banks are regulated solely by the Reserve Bank of India.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Answer Key

1. (d) — All four statements are correct.
2. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; the IFR is designed as a countercyclical buffer, but the IDR is a provision against specific depreciation — not a countercyclical buffer. They are structurally different in purpose.
3. (a) — Statements 1, 2, 4 are correct. Statement 3 is wrong; the RBI explicitly REJECTED these arguments — holding that size and capital adequacy are not valid criteria for IFR exemption. The only valid criterion is the maintenance of capital charge for market risk.
4. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; UCBs face dual regulation — by the RBI (for banking functions) and the Registrar of Cooperative Societies (for cooperative functions), not solely by the RBI.

3. RBI imposes restrictions on Etawah-based Nagar Sahakari Bank for 6 months

Context of the News

The Reserve Bank of India (RBI) has imposed stringent regulatory restrictions — popularly known as All Inclusive Directions (AID) — on Nagar Sahakari Bank Limited, Etawah (Uttar Pradesh), in May 2026, citing deteriorating financial conditions and supervisory concerns. The directions, issued under the Banking Regulation Act, 1949, place a withdrawal cap of ₹10,000 per customer across all savings, current, and other deposit accounts for six months, and prohibit the bank from granting loans, accepting fresh deposits, or borrowing funds without prior written approval of the RBI.

Key Highlights

• Bank: Nagar Sahakari Bank Limited.
• Location: Etawah, Uttar Pradesh.
• Regulator action: All Inclusive Directions (AID) under the Banking Regulation Act, 1949.
• Duration: 6 months (subject to RBI review).
• Reasons cited: Deteriorating financial conditions and supervisory concerns.
• Key restrictions:
  • Withdrawal cap: ₹10,000 per customer across all deposit accounts.
  • No granting of loans.
  • No accepting fresh deposits.
  • No borrowing of funds.
  • All material actions require prior written RBI approval.
• Allowed expenditure:
  • Salaries of employees.
  • Rent payments.
  • Electricity bills.
  • Other essential operating expenses.
• Critical clarification: The restrictions are NOT a cancellation of the banking licence — the bank legally continues to exist.
• Depositor protection:
  • Eligible depositors get DICGC insurance up to ₹5 lakh per depositor per bank.
  • Provided under the DICGC Act, 1961, by the Deposit Insurance and Credit Guarantee Corporation (subsidiary of RBI).

About the News

What has the RBI imposed on Nagar Sahakari Bank?

The RBI has imposed regulatory restrictions (All Inclusive Directions) on the bank, including a withdrawal cap of ₹10,000 per depositor, prohibition on loans, fresh deposits, and borrowings, for 6 months, under the Banking Regulation Act, 1949.

Where is the bank located?

Etawah district, Uttar Pradesh.

Why was action taken?

Due to: (a) Deteriorating financial condition of the bank. (b) Supervisory concerns identified by the RBI during its oversight. The specific issues (e.g., capital shortfall, asset quality, governance, liquidity) are typical drivers of such RBI interventions.

Is this a cancellation of licence?

No. The RBI has explicitly clarified that the restrictions do not amount to cancellation of the banking licence. The bank continues to legally exist as a banking entity, but with restricted operational scope. This is a moratorium-style intervention that often precedes one of three outcomes: (a) Recovery — restrictions lifted after financial stabilisation. (b) Merger or amalgamation with a stronger bank. (c) Eventual licence cancellation if recovery proves impossible.

Can depositors withdraw their money?

Yes, but only up to ₹10,000 per depositor across all their accounts in the bank, for the duration of the restrictions (6 months, unless varied).

What if a depositor has more than ₹10,000?

(a) Excess deposits cannot be withdrawn during the restriction period. (b) Up to ₹5 lakh is covered by DICGC insurance, payable if conditions worsen. (c) Amounts above ₹5 lakh would be subject to recovery from the bank’s assets in case of liquidation — typically with partial recovery.

Why is the bank still allowed essential expenditure?

To ensure: (a) Operational continuity of the bank during the restriction period. (b) Employee salaries are paid — preventing labour distress. (c) Premises and infrastructure are maintained. (d) Basic services to depositors continue. This is consistent with standard regulatory practice during AIDs.

What is the DICGC and what does it cover?

The Deposit Insurance and Credit Guarantee Corporation is a wholly-owned subsidiary of the RBI, established in 1978, that insures deposits in: (a) All commercial banks (including foreign bank branches). (b) Regional Rural Banks (RRBs). (c) Local Area Banks. (d) Cooperative banks (Urban + State + District Central). The current insurance limit is ₹5 lakh per depositor per bank, including both principal and interest.

How did DICGC’s role evolve recently?

(a) February 2020: Insurance limit raised from ₹1 lakh to ₹5 lakh after the PMC Bank crisis. (b) August 2021 (DICGC Amendment): Depositors can now receive insured deposits within 90 days of a bank being placed under moratorium or restriction — even before formal liquidation. This dramatically shortened wait times.

Will depositors get money from DICGC immediately?

Not necessarily immediately, but the 90-day rule under the 2021 DICGC Amendment allows depositors to receive their insured amounts within 90 days of the bank being placed under restrictions — without waiting for formal liquidation.

What is the broader policy context?

This case is part of an ongoing pattern of RBI interventions in the Urban Co-operative Bank (UCB) sector — driven by: (a) Structural vulnerabilities of small UCBs. (b) Weak governance under historical dual-regulation framework. (c) Concentration risks in lending. (d) Limited capital cushions. The Banking Regulation (Amendment) Act, 2020, brought all cooperative banks fully under RBI’s regulatory ambit, giving the central bank enhanced powers including supersession of boards, restrictions, and mergers without prior central government approval.

What lessons can be drawn?

(a) Strong deposit insurance protects most retail savers — the ₹5 lakh limit covers a vast majority of UCB depositors. (b) Small UCBs remain structurally vulnerable without consolidation or capital infusion. (c) RBI’s proactive use of AIDs allows early intervention before collapse. (d) Depositor awareness of insurance limits and bank financial health is critical.

Background Concepts (Q&A)

What are “All Inclusive Directions” (AIDs)?

AIDs are restrictive operational directives issued by the RBI under Section 35A of the Banking Regulation Act, 1949 (read with Section 56 for cooperative banks). They: (a) Restrict the bank from making fresh loans, accepting fresh deposits, borrowing, paying out beyond limits, etc. (b) Allow certain essential expenditures (salaries, rent, utilities). (c) Cap withdrawals to protect remaining assets. (d) Apply for a specified period (typically 6 months), often extended periodically. (e) Do not cancel the banking licence — they are operational restraints, not closure.

What is Section 35A of the Banking Regulation Act, 1949?

The section empowers the RBI to issue directions to banks in the public interest, in the interest of banking policy, or to prevent the affairs of a bank from being conducted in a manner detrimental to depositors’ interests — including specific operational restrictions like those imposed on Nagar Sahakari Bank.

What is Section 56 of the Banking Regulation Act?

A section that applies the BR Act to cooperative societies (with modifications). It is the legal bridge through which RBI exercises banking regulation over cooperative banks — including UCBs and State/District Central Cooperative Banks.

What is the Banking Regulation (Amendment) Act, 2020?

A landmark reform that: (a) Brought all cooperative banks fully under RBI’s regulatory ambit. (b) Empowered the RBI to supersede the board of a cooperative bank. (c) Gave RBI authority on schemes of amalgamation, reconstruction. (d) Removed requirement for prior central government approval for many RBI actions. (e) Was driven partly by the PMC Bank crisis of 2019.

What are Urban Co-operative Banks (UCBs)?

Co-operative banks operating in urban and semi-urban areas, regulated by the RBI. They provide basic banking services primarily to small businesses, professionals, and the urban middle class — and are organised under state or central cooperative laws alongside the BR Act.

What are the categories of UCBs?

The RBI has categorised UCBs into four tiers based on deposit size (revised in 2022): (a) Tier 1: Deposits up to ₹100 crore, operating in a single district. (b) Tier 2: Deposits up to ₹1,000 crore. (c) Tier 3: Deposits between ₹1,000 crore and ₹10,000 crore. (d) Tier 4: Deposits above ₹10,000 crore. Each tier has graded regulatory requirements.

What is the difference between AID and licence cancellation?

Aspect	All Inclusive Direction (AID)	Licence Cancellation
Bank’s legal existence	Continues	Ceases as a bank
Operational scope	Restricted, but ongoing	Wound up
Reversibility	Reversible (can be lifted)	Irreversible
Outcome	Recovery / merger / liquidation	Liquidation
Section of BR Act	Section 35A	Sections 22 and 36AA
Depositor recourse	Withdrawals capped + DICGC	Full DICGC payout + liquidation distribution

What was the PMC Bank case?

In September 2019, the Punjab and Maharashtra Co-operative (PMC) Bank was placed under an AID after it was found to have massive concentration of loans (~73%) to a single real-estate group (HDIL), with much of it concealed through fake accounts. The crisis exposed: (a) Deep governance failures in UCBs. (b) Inadequacy of the then ₹1 lakh deposit insurance limit. (c) Need for stronger RBI powers over cooperative banks. It led to: (a) The 2020 BR Amendment strengthening RBI’s powers. (b) The DICGC limit increase to ₹5 lakh. (c) The 2021 DICGC Amendment for 90-day interim payouts. (d) Eventual merger of PMC Bank with Unity Small Finance Bank in 2022.

What are the RBI’s resolution options for stressed cooperative banks?

(a) All Inclusive Directions for stabilisation. (b) Supersession of board under amended BR Act. (c) Merger or amalgamation with a stronger bank. (d) Scheme of reconstruction. (e) Licence cancellation and liquidation (last resort).

What is Etawah?

A city and district in Uttar Pradesh, located in the Chambal river basin. Historically significant for: (a) Its location in the historic Chambal region. (b) Cultural and political significance in UP. (c) Agricultural economy of the surrounding region. (d) Connectivity hub on the Agra-Lucknow road.

Why are small UCBs particularly vulnerable?

(a) Small capital base — limits loss-absorption. (b) Concentration risk — often dependent on local economies. (c) Weak governance — boards often dominated by local elites. (d) Limited technology and risk-management capacity. (e) Difficulty attracting professional management. (f) Limited business diversification.

Practice MCQs

Q1. With reference to the recent regulatory action against Nagar Sahakari Bank, Etawah, consider the following statements:

1. The RBI has imposed restrictions on the bank under the Banking Regulation Act, 1949.
2. The withdrawal cap is ₹10,000 per customer for 6 months.
3. The bank’s licence has been cancelled.
4. The bank is permitted to incur essential expenditure such as salaries, rent, and electricity bills.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following statements about the Deposit Insurance and Credit Guarantee Corporation (DICGC):

1. It is a wholly-owned subsidiary of the Reserve Bank of India.
2. It functions under the DICGC Act, 1961.
3. The DICGC insurance limit is currently ₹5 lakh per depositor per bank.
4. The 2021 DICGC Amendment allows depositors to receive insured deposits within 90 days of a bank being placed under moratorium or restriction.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q3. With reference to the regulation of cooperative banks in India, consider the following statements:

1. Section 35A of the Banking Regulation Act empowers the RBI to issue directions in the public interest or to protect depositors.
2. Section 56 of the BR Act applies the Act to cooperative societies with modifications.
3. The Banking Regulation (Amendment) Act, 2020, brought all cooperative banks fully under the RBI’s regulatory ambit.
4. Cooperative banks in India face exclusive regulation only by the State Registrar of Cooperative Societies.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. Consider the following statements about the difference between an All Inclusive Direction (AID) and licence cancellation by the RBI:

1. Under an AID, the bank’s legal existence continues; under licence cancellation, it ceases as a bank.
2. AIDs are imposed under Section 35A of the Banking Regulation Act, 1949.
3. Licence cancellation triggers full liquidation of the bank.
4. AIDs cannot be reversed once imposed.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Answer Key

1. (c) — Statements 1, 2, 4 are correct. Statement 3 is wrong; the RBI has explicitly clarified that the restrictions do NOT amount to cancellation of the banking licence — the bank continues to legally exist under operational restrictions.
2. (d) — All four statements are correct.
3. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; cooperative banks face dual regulation — by the RBI (for banking functions) and the Registrar of Cooperative Societies (for cooperative functions), not exclusively by the latter.
4. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; AIDs can be reversed — they can be lifted by the RBI if the bank’s financial condition improves, or extended, or eventually converted into licence cancellation if recovery is impossible.

4. Viyona Fintech gets NPCI certification

Context of the News

Hyderabad-based fintech start-up Viyona Fintech India Private Limited has secured NPCI (National Payments Corporation of India) certifications for four core payment integrations — UPI Acquirer, UPI Issuer, IMPS, and IBMB — marking a significant step in the company’s evolution into an end-to-end payment orchestration platform. The certifications, aligned with NPCI’s technical and operational standards, enable Viyona to directly integrate with India’s Digital Public Infrastructure (DPI) for payments — supporting merchant acceptance, QR-based acquiring, customer issuance, real-time fund transfers, interoperable banking, embedded finance, digital onboarding, merchant settlements, and rural banking services.

Key Highlights

• Company: Viyona Fintech India Private Limited.
• Headquarters: Hyderabad, Telangana.
• Founded: 2022 by Ravindranath Yarlagadda.
• Strategic focus: Bridging digital banking and payment access gaps in semi-urban and rural India.
• Certifications secured (May 2026):
  • UPI Acquirer.
  • UPI Issuer.
  • IMPS (Immediate Payment Service).
  • IBMB (Interoperable Mobile Banking).
• Certifying body: National Payments Corporation of India (NPCI).
• Enabled capabilities:
  • Merchant acceptance.
  • QR (Bharat QR-style) acquiring.
  • Customer issuance infrastructure.
  • Interoperable banking.
  • Real-time fund transfers.
  • Embedded finance.
  • Digital onboarding.
  • Merchant settlements.
  • Rural banking services.

About the News

What has Viyona Fintech achieved?

Viyona Fintech has secured NPCI certifications for four key payment integrations — UPI Acquirer, UPI Issuer, IMPS, and IBMB — enabling end-to-end payment orchestration for banks, fintech firms, and merchants.

What does NPCI certification mean?

NPCI certification confirms that a fintech’s payment systems, technical integrations, and operational processes meet NPCI’s standards for security, scalability, interoperability, and reliability. It is the technical gateway through which fintechs can directly connect to India’s payment rails (UPI, IMPS, RuPay, AePS).

What is UPI Issuer vs UPI Acquirer?

(a) UPI Issuer: A bank or Payment Service Provider (PSP) that issues UPI IDs (handles) to customers and manages their UPI accounts — i.e., the customer side of UPI. (b) UPI Acquirer: A bank or PSP that enables merchants to accept UPI payments — i.e., the merchant side of UPI. By securing both certifications, Viyona can operate on both sides of UPI transactions.

What is IMPS?

Immediate Payment Service — a 24×7, real-time, inter-bank electronic fund transfer service developed by NPCI. Launched widely in 2010-2014, IMPS was the first real-time payment service in India and remains in use for higher-value transactions (typically up to ₹5 lakh per transaction in many channels), complementing UPI.

What is IBMB?

Interoperable Mobile Banking (IBMB) — an NPCI service that enables interoperable mobile banking transactions between banks, particularly for basic banking services accessible from mobile phones. It supports financial inclusion by providing mobile banking even via basic feature phones in some configurations.

What is “payment orchestration”?

A technology layer that allows merchants, banks, and platforms to route, manage, and optimise digital payments across multiple payment methods (UPI, cards, wallets, NEFT, IMPS), channels (web, mobile, POS), and providers (gateways, banks, processors). Payment orchestration platforms simplify the complexity for merchants and improve transaction success rates.

What is Viyona’s strategic focus?

Bridging digital banking and payment access gaps in semi-urban and rural India — including: (a) POS deployment in rural towns. (b) Local-language and feature-phone integration. (c) Merchant onboarding for small traders, kirana stores. (d) Connected banking for rural cooperative and small finance banks. (e) Interoperable payment routing for unbanked or semi-banked customers.

What is the broader fintech context?

India has the world’s largest UPI ecosystem (~₹29.53 lakh crore in March 2026, 81% of retail payment volume). New fintechs like Viyona join an ecosystem that includes: (a) Established players: Paytm, PhonePe, Google Pay, Amazon Pay. (b) Payment gateways: Razorpay, Cashfree, PayU. (c) Aggregators: BharatPe, Pine Labs. (d) Banking-as-a-Service platforms. (e) Embedded finance and lending tech.

Why is rural focus strategically significant?

Because: (a) Urban payment penetration is high — saturation is approaching. (b) Next wave of UPI/payment growth will come from semi-urban and rural India. (c) Small merchants and kirana stores are the new battleground. (d) Cooperative banks, SFBs, RRBs need digital partners. (e) Government push (PMJDY, DBT, JAM, ULI, Bhashini) is increasingly rural-focused.

How does this connect to the broader DPI story?

Viyona’s certification illustrates the open, permissionless innovation that India’s DPI architecture enables: (a) Anyone meeting standards can build on top of UPI, IMPS, AePS, RuPay. (b) NPCI provides the rails, fintechs build the applications. (c) Competition drives better products for end users. (d) DPI is exportable — India’s model is being studied globally.

Background Concepts (Q&A)

What is the National Payments Corporation of India (NPCI)?

An umbrella organisation for retail payments and settlements in India, founded in 2008 as an initiative of the Reserve Bank of India (RBI) and the Indian Banks’ Association (IBA). NPCI operates as a Section 8 (not-for-profit) company under the Companies Act.

What products does NPCI operate?

(a) UPI (Unified Payments Interface). (b) IMPS (Immediate Payment Service). (c) RuPay — domestic card payment scheme. (d) AePS (Aadhaar enabled Payment System). (e) BBPS (Bharat Bill Payment System). (f) NACH (National Automated Clearing House). (g) NETC (National Electronic Toll Collection) — FASTag. (h) IBMB (Interoperable Mobile Banking). (i) Bharat QR. (j) NPCI Bharat BillPay (NBBL).

What is UPI?

The Unified Payments Interface — a real-time, 24×7, mobile-based interbank fund transfer system developed by NPCI and launched in April 2016. Key features: (a) Single mobile app can link to multiple bank accounts. (b) Virtual Payment Address (VPA) instead of bank account details. (c) Push and pull payments. (d) 2-factor authentication. (e) Now the world’s largest real-time payment system by volume.

What is the difference between UPI and IMPS?

Aspect	UPI	IMPS
Launch year	2016	2010-14
Channel	Mobile (UPI app)	Mobile, internet, ATM, branch
Address	VPA (UPI ID)	Account number + IFSC, or mobile + MMID
Authentication	UPI PIN	Bank’s authentication
Transaction limit (typical)	₹1 lakh (₹5 lakh for specific use cases)	₹5 lakh
Volume share	Dominant	Smaller, declining

What is the Bharat QR?

A interoperable Quick Response code standard developed by NPCI, Visa, Mastercard, and AmEx, allowing merchants to accept payments via QR code from any compatible app — regardless of which payment network the customer uses. First interoperable QR system globally.

What is AePS (Aadhaar-enabled Payment System)?

A payment system developed by NPCI that uses Aadhaar authentication (typically biometric) to enable basic banking transactions — cash withdrawal, deposit, balance inquiry, mini statement, fund transfer — even at micro-ATM-equipped Business Correspondents in rural areas.

What is BBPS?

Bharat Bill Payment System — an integrated bill payment system operated by NPCI that provides interoperable bill payment services for utility bills (electricity, water, gas, telephone, DTH, education, insurance, etc.). It is accessible through multiple channels (bank branches, apps, fintech platforms).

What is RuPay?

India’s domestic card payment scheme, launched by NPCI in 2012, competing with international networks like Visa and Mastercard. RuPay cards are issued by Indian banks and work across ATMs, POS, and online merchants in India, with growing international acceptance (linked to JCB Japan, Discover US, UnionPay China networks).

What is the role of fintechs in India’s payment ecosystem?

(a) Build user-facing applications on top of NPCI rails. (b) Serve specific customer segments (rural, MSME, gig workers). (c) Innovate in UX, payment routing, embedded finance. (d) Distribute financial services at scale. (e) Drive adoption of UPI and digital payments.

What is “Digital Public Infrastructure” (DPI)?

Open, interoperable digital systems that serve as foundational layers for government, private sector, and citizen interactions. India’s DPI stack includes: (a) Identity: Aadhaar. (b) Payments: UPI, IMPS, AePS. (c) Data: Account Aggregator. (d) Credit: Unified Lending Interface (ULI). (e) Language: Bhashini. (f) Commerce: ONDC.

Why is the rural digital payment market important?

(a) 800+ million rural Indians form the next growth frontier. (b) Significant penetration gaps in retail banking and payments. (c) Government schemes (DBT, PMJDY) drive rural digital uptake. (d) Small merchants, kirana stores are the distribution layer. (e) Local language and feature-phone compatibility matter.

Practice MCQs

Q1. With reference to the National Payments Corporation of India (NPCI), consider the following statements:

1. NPCI was founded in 2008 as an initiative of the RBI and the Indian Banks’ Association.
2. It operates as a Section 8 (not-for-profit) company under the Companies Act.
3. NPCI operates UPI, IMPS, RuPay, AePS, BBPS, FASTag, and IBMB among other services.
4. NPCI directly issues cards and operates ATMs across India.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following statements about the Unified Payments Interface (UPI):

1. UPI was launched in 2016 by the NPCI.
2. UPI allows a single mobile app to link to multiple bank accounts.
3. UPI is the world’s largest real-time payment system by volume.
4. UPI Acquirer and UPI Issuer refer to merchant-side and customer-side payment infrastructure respectively.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 2 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. Consider the following NPCI-operated services and their primary function:

1. AePS — Aadhaar-based authentication for basic banking transactions.
2. BBPS — Interoperable bill payment system for utilities.
3. RuPay — India’s domestic card payment scheme.
4. NETC FASTag — Real-time inter-bank fund transfer service.

Which of the above pairs are correctly matched? (a) 1, 2 and 3 only (b) 1, 2 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. With reference to India’s Digital Public Infrastructure (DPI), consider the following statements:

1. Aadhaar provides the foundational layer for digital identity.
2. UPI provides the foundational layer for real-time digital payments.
3. The Account Aggregator framework provides consent-based data sharing.
4. The Unified Lending Interface (ULI) provides interoperable digital credit infrastructure.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Answer Key

1. (c) — Statements 1, 2, 3 are correct. Statement 4 is wrong; NPCI does not directly issue cards or operate ATMs — it provides the payment rails (RuPay scheme, switching infrastructure) on which banks issue cards and operate ATMs.
2. (e) — All four statements are correct.
3. (a) — Statements 1, 2, 3 are correct. Statement 4 is wrong; NETC FASTag is the National Electronic Toll Collection system using RFID for toll plazas — it is NOT a real-time inter-bank fund transfer service (that would be IMPS).
4. (d) — All four statements are correct.

4. RBI’s new draft guidelines have digital wallets feeling the pinch

Context:

The Reserve Bank of India (RBI) has released draft guidelines on Prepaid Payment Instruments (PPIs) / mobile wallets (on 22 April 2026) — proposing a substantial tightening of operational parameters that has alarmed India’s digital payments industry. The draft proposes: (a) A monthly person-to-person (P2P) transfer cap of ₹25,000 via wallets. (b) Reduction of the cash loading limit from ₹50,000 to ₹10,000. (c) Overall monthly balance cap of ₹2 lakh. (d) Restricting small PPI (minimum-KYC) wallets to purchase of goods and services only — barring inter-personal transactions, including domestic remittances.

Key Highlights

• Regulator: Reserve Bank of India (RBI).
• Draft date: 22 April 2026.
• Affected instruments: Prepaid Payment Instruments (PPIs) / Mobile Wallets.
• Industry response: Coordinated through Payments Council of India (PCI).

Key proposed changes:

Provision	Existing	Proposed
P2P monthly transfer cap	(Higher)	₹25,000
Cash loading limit (monthly)	₹50,000	₹10,000
Overall monthly balance cap	(Higher)	₹2 lakh
Small PPI use	Wider use	Only for goods & services purchase

• Specific restriction on small PPI / minimum-KYC wallets: No inter-personal transactions, including domestic remittances even before KYC upgrade.

About the News

What has the RBI proposed?

A tightening of regulations governing mobile wallets / Prepaid Payment Instruments (PPIs), including lower transaction limits, lower cash-loading caps, and restrictions on the use of minimum-KYC wallets for remittances.

What is a PPI?

A Prepaid Payment Instrument — a payment tool that allows the user to transact within a pre-loaded amount. It includes: (a) Mobile wallets (e.g., Paytm, Mobikwik). (b) Smart cards / gift cards. (c) Magnetic-stripe cards / online accounts. PPIs are regulated under the RBI Master Direction on PPIs (2017, updated periodically).

What are the categories of PPIs?

(a) Small PPI (Minimum-KYC): Lower limits, easier to obtain. (b) Full KYC PPI: Higher limits, stricter KYC requirements. (c) Closed PPI: Usable only at issuer’s outlets (e.g., metro cards). (d) Semi-closed PPI: Usable at multiple merchants (most wallets). (e) Open PPI: Linked to broader banking (e.g., bank-issued cards).

Why is the cash-loading limit reduction significant?

Because: (a) Many users, especially those in rural areas, daily wage workers, and the unbanked, load cash into wallets for digital transactions. (b) Reducing the cash load limit from ₹50,000 to ₹10,000 per month would dramatically constrain wallet utility for these segments. (c) It pushes users toward bank accounts, but bank access remains uneven.

Why is the P2P transfer limit problematic?

(a) ₹25,000 monthly cap is much lower than typical UPI limits (which can go up to ₹1 lakh-₹5 lakh per transaction). (b) Disadvantages wallet-based P2P transfers compared to bank-account-based UPI. (c) Reduces utility for users who rely on wallets for inter-personal transfers.

Why is the minimum-KYC wallet restriction problematic?

Because: (a) Small PPIs (minimum-KYC) are designed for easy onboarding of underserved users. (b) Many migrant workers, daily wage earners, and rural users start with minimum-KYC wallets and use them for small remittances to family. (c) Banning inter-personal transactions even temporarily, until KYC is upgraded, breaks the financial inclusion pathway. (d) Wallet-based domestic remittances — a significant segment — would be disrupted.

What is the wallet-UPI interoperability issue?

In 2022, the RBI approved interoperability between wallets and UPI — allowing wallet payments to merchants through the UPI rails. However: (a) Interchange arrangements (how revenue is shared between wallet providers and PSPs/banks) are still being finalised. (b) Without clear economics, wallet-UPI transactions have not picked up. (c) The combination of tighter wallet rules and stalled interoperability could double-pressure the wallet industry.

Why is Mobikwik particularly affected?

(a) Mobikwik is a listed pure-play wallet company — its business depends largely on PPIs. (b) Tighter limits would directly shrink its addressable market. (c) Already operating in a low-margin environment post-UPI dominance.

What is Paytm’s situation?

(a) Paytm Payments Bank — Paytm’s associate — was placed under severe RBI restrictions in January 2024 for repeated supervisory non-compliance. (b) Paytm lost its wallet licence as a result. (c) Paytm is now seeking to regain its wallet licence, but the proposed tighter rules would make the regained licence less valuable.

Why is the industry worried?

(a) Multiple revenue streams threatened. (b) Existing customer pools shrinking due to lower limits. (c) No clear alternative revenue model to UPI. (d) Onboarding barriers rise due to KYC requirements. (e) Wallet payments via UPI may “never pick up” — per industry voices.

Why does the RBI tighten regulations?

The RBI is concerned about: (a) Money laundering and terror financing risks through high-cash-load wallets. (b) Fraud and consumer protection — wallet frauds have surged. (c) Systemic risk — wallets handle large transaction volumes. (d) KYC compliance — to ensure traceability of users. (e) Channeling activity into KYC-compliant bank systems for better oversight.

What is the industry’s request?

(a) Consultations with industry representatives. (b) Postponement of implementation by 6-12 months. (c) Reconsideration of specific restrictions — particularly on minimum-KYC remittances and cash loading. (d) Clarity on wallet-UPI interoperability economics.

Background Concepts (Q&A)

What are Prepaid Payment Instruments (PPIs)?

Payment instruments that facilitate purchases of goods and services or financial services against a pre-loaded value. They are governed by the RBI Master Direction on Issuance and Operation of Prepaid Payment Instruments, 2017 (with subsequent amendments).

What is the difference between a wallet and a bank account?

Feature	Wallet (PPI)	Bank Account
Issuer	Banks or non-banks (wallet companies)	Banks only
Regulation	PPI Master Direction	Banking Regulation Act, 1949
Interest on balance	None	Yes (savings rate)
Cheque book / debit card	No (typically)	Yes
KYC	Tiered (minimum / full)	Mandatory full KYC
Deposit insurance	No (until 2022 amendment for banks only)	Yes (DICGC up to ₹5 lakh)

What is UPI?

The Unified Payments Interface — a real-time, 24×7, interbank mobile payment system developed by the NPCI. Launched in April 2016, UPI has become the dominant retail payment platform in India, with ₹29.53 lakh crore in transactions in March 2026 alone (81% of retail payment volume).

Why has UPI squeezed wallet revenues?

(a) UPI is free for users and merchants (zero MDR — Merchant Discount Rate). (b) Wallet transactions typically attracted interchange fees and convenience fees. (c) When UPI took over the person-to-person and consumer-to-merchant payment space, wallets lost their primary revenue base.

What is the Payments Council of India (PCI)?

An industry body representing the digital payments sector in India — including wallets, payment aggregators, payment gateways, and other payment service providers. PCI advocates for the industry before regulators like the RBI.

Why was Paytm Payments Bank restricted by RBI?

In January 2024, the RBI took stringent action against Paytm Payments Bank citing repeated supervisory non-compliance including issues with KYC, customer onboarding, and operational governance. The action: (a) Barred Paytm Payments Bank from onboarding new customers. (b) Stopped new deposits and credit transactions after a deadline. (c) Resulted in migration of users to other banks/wallets. (d) Paytm’s parent (One97 Communications) had to restructure operations.

Why is “interoperability” important for digital payments?

Because: (a) Users want to send/receive money across platforms. (b) Network effects drive payment adoption. (c) Interoperability prevents “walled gardens” that fragment the user base. (d) Competition flourishes when platforms can interconnect. (e) DPI (Digital Public Infrastructure) is built on interoperability.

Why is the cash-loading issue important?

Because: (a) Many users still rely on cash — especially in rural and informal economies. (b) Cash-loaded wallets bridge the cash-to-digital transition. (c) Tighter cash-load limits push users back to cash if digital alternatives are restricted. (d) Financial inclusion depends on flexible on-ramps.

What is KYC and tiered KYC?

Know Your Customer (KYC) — the regulatory process of verifying customer identity. India has tiered KYC: (a) Minimum KYC: Basic identity (e.g., Aadhaar OTP, mobile number) — lower transaction limits. (b) Full KYC: Biometric or video-based verification with full document set — higher limits. (c) Some types involve e-KYC (electronic KYC via Aadhaar). Tiered KYC enables easier customer onboarding while maintaining regulatory compliance.

Why does the RBI prioritise KYC compliance?

(a) Prevention of money laundering (PMLA). (b) Prevention of terror financing (FATF compliance). (c) Fraud prevention — traceability of accounts. (d) Tax compliance — preventing benami transactions. (e) Consumer protection — enabling grievance redressal.

What is the structural challenge for the wallet industry?

(a) UPI dominance — squeezes traditional wallet revenue. (b) Regulatory tightening — increases compliance costs and operational restrictions. (c) Limited differentiation — most wallets offer similar features. (d) Customer acquisition costs — without strong retention. (e) Path to interoperability with UPI still incomplete. The industry is searching for new revenue models — including B2B payments, loyalty, embedded finance.

What are the major mobile wallets in India?

(a) Paytm Wallet — formerly the largest. (b) Mobikwik — listed pure-play wallet. (c) PhonePe Wallet — primarily UPI-based now. (d) Google Pay Wallet — primarily UPI-based. (e) Amazon Pay Wallet. (f) Airtel Payments Bank Wallet. (g) FreeCharge.

Practice MCQs

Q1. With reference to the RBI’s recent draft guidelines on Prepaid Payment Instruments (PPIs), consider the following statements:

1. The draft proposes a monthly person-to-person transfer limit of ₹25,000 via wallets.
2. The cash loading limit is proposed to be reduced from ₹50,000 to ₹10,000 per month.
3. The draft proposes an overall monthly balance cap of ₹2 lakh for wallets.
4. Minimum-KYC wallets would be permitted to be used for all inter-personal transactions including remittances.

How many of the above statements are correct? (a) Only one (b) Only two (c) Only three (d) All four (e) None

Q2. Consider the following statements about Prepaid Payment Instruments (PPIs) in India:

1. PPIs are governed by the RBI Master Direction on Issuance and Operation of Prepaid Payment Instruments, 2017.
2. PPIs include mobile wallets, smart cards, and gift cards.
3. Small PPIs (minimum-KYC) have lower transaction limits than full-KYC PPIs.
4. The Payments Council of India (PCI) is the industry body representing digital payments providers.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 2 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q3. Consider the following statements about the Indian digital payments ecosystem:

1. UPI (Unified Payments Interface) was launched in 2016 by the National Payments Corporation of India.
2. UPI accounts for over 80% of India’s retail payment volume.
3. UPI is operated by the Reserve Bank of India.
4. Wallet-UPI interoperability was approved by the RBI in 2022.

Which of the above are correct? (a) 1, 2 and 4 only (b) 1, 2 and 3 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Q4. Consider the following statements about KYC and consumer protection in payments:

1. India has a tiered KYC framework with minimum-KYC and full-KYC categories.
2. KYC compliance is mandated to prevent money laundering and terror financing.
3. The Prevention of Money Laundering Act (PMLA), 2002 is the primary AML framework in India.
4. The Financial Action Task Force (FATF) is a global body for combating money laundering.

Which of the above are correct? (a) 1, 2 and 3 only (b) 1, 3 and 4 only (c) 2 and 4 only (d) 1 and 4 only (e) All four

Answer Key

1. (c) — Statements 1, 2, 3 are correct. Statement 4 is wrong; the draft specifically restricts minimum-KYC wallets to purchase of goods and services only, prohibiting inter-personal transactions including remittances — not permitting them.
2. (e) — All four statements are correct.
3. (a) — Statements 1, 2, 4 are correct. Statement 3 is wrong; UPI is operated by the National Payments Corporation of India (NPCI), not the RBI. NPCI is regulated by the RBI but is an independent umbrella organisation.
4. (e) — All four statements are correct.

Facts To Remember

1. BIS Notifies E22-E30 Fuel Norms, Approves Up to 30% Ethanol Blending

The Bureau of Indian Standards notified specifications for E22, E25, E27, and E30 fuel blends, allowing petrol blending with up to 30% ethanol beyond the current E20 target. The standards were issued under IS 19850:2026 for ethanol-blended motor gasoline used in positive ignition engine vehicles. The move aims to reduce India’s dependence on imported crude oil, support cleaner fuel adoption, and strengthen domestic biofuel production. However, the notification currently outlines only technical specifications and does not mandate immediate nationwide rollout of E30 fuel.

2. Union Minister Prataprao Jadhav Launches ‘Ayush Anudan’ Portal

Union Minister Prataprao Jadhav launched the ‘Ayush Anudan Portal’ to strengthen digital governance and transparency in the AYUSH sector. Developed by the Ministry of AYUSH under the Ayush Grid initiative, the portal streamlines online submission, approval, and monitoring of funding proposals under various Central Sector Schemes. It also integrates with the NGO Darpan portal for organisation verification and aims to eliminate manual and paper-based processes.

3. CBI Launches AI-Based ‘ABHAY’ Helpbot Against Cyber Fraud

The Central Bureau of Investigation launched an AI-powered helpbot named ‘ABHAY’ to help citizens verify fake notices and protect themselves from digital arrest and cyber fraud scams. The platform enables users to upload suspected notices after OTP verification and instantly check their authenticity. The initiative also provides guidance on cyber fraud reporting and digital safety practices.

4. Bharat Forge to Establish India’s First Private Marine Gas Turbine Facility

Bharat Forge signed an MoU with the Government of Andhra Pradesh to establish India’s first private-sector Marine Gas Turbine Repair, Overhaul, and Development Complex in Visakhapatnam. The facility will support indigenous marine turbine development, testing, assembly, and overhaul operations for the Indian Navy. The project will be developed in phases and is expected to strengthen India’s naval self-reliance and defence manufacturing ecosystem.

5. PM Narendra Modi Visits Netherlands

Narendra Modi visited the Netherlands from May 16–17, 2026, during the second leg of his five-nation tour. India and the Netherlands agreed to elevate bilateral relations to a Strategic Partnership and adopted a five-year roadmap for cooperation from 2026–2030. During the visit, 17 agreements were signed across sectors including technology, trade, green energy, and water management. The Netherlands also returned 11th-century Chola copper plates to India.

6. Mahindra and DBS Launch India’s First Green Dealer Financing Scheme

Mahindra & Mahindra partnered with DBS Bank India to launch India’s first sustainability-linked dealer financing scheme in the automotive sector. Under the initiative, Mahindra dealers meeting predefined Environmental, Social, and Governance (ESG) standards will receive preferential financing benefits. Parameters include renewable energy usage, EV charging infrastructure, water conservation, and waste management practices.

7. UNESCO–L’Oréal Honours Five Women Scientists

UNESCO and L’Oréal Foundation recognised five women scientists with the UNESCO–L’Oréal International Awards for Women in Science 2026. The awardees were honoured for contributions in life sciences and environmental sciences, including cardiovascular medicine, nutritional psychiatry, agricultural biotechnology, and tissue engineering.

8. Bharat Singh Chauhan Re-Elected Chairman of Commonwealth Chess Association

Bharat Singh Chauhan was re-elected as Chairman of the Commonwealth Chess Association for the 2026–2030 term during the Annual General Body Meeting held in Sri Lanka. The association also announced the launch of the Commonwealth School Chess Championship, with the first edition scheduled in Malaysia in October 2026.

9. Medha Kulkarni Appointed Chairperson of Parliamentary Panel

Medha Vishram Kulkarni was appointed Chairperson of the Department-related Parliamentary Standing Committee on Science and Technology, Environment, Forests and Climate Change. The committee examines legislation, policy matters, and governance issues related to science, environment, and climate sectors.

10. Liberty Mutual Raises Stake in Liberty General Insurance

Liberty Mutual Insurance increased its stake in Liberty General Insurance from 55.4% to 74% following India’s approval of 100% FDI in the insurance sector. The move is expected to strengthen the company’s retail and commercial insurance operations and expand insurance penetration across India.

11. DRDO Successfully Completes ULPGM-V3 Missile Trials

The Defence Research and Development Organisation successfully completed development trials of the UAV-Launched Precision Guided Missile (ULPGM)-V3 in both air-to-ground and air-to-air modes. The missile system was integrated with indigenous UAV platforms and validated for anti-tank and aerial target engagements, enhancing India’s precision strike capabilities.

12. ESA and CAS Launch SMILE Space Weather Satellite

The European Space Agency and the Chinese Academy of Sciences jointly launched the SMILE satellite aboard the Vega-C rocket from French Guiana. The mission aims to study interactions between solar wind and Earth’s magnetosphere and improve forecasting of solar and geomagnetic storms that affect satellites and communication systems.

13. Former Uttarakhand CM B.C. Khanduri Passes Away

Former Uttarakhand Chief Minister Bhuvan Chandra Khanduri passed away at the age of 91 in Dehradun. A senior BJP leader and retired Army officer, he was awarded the Ati Vishisht Seva Medal (AVSM) for distinguished military service.

14. Shyam Srinivasan Launches Leadership Book “Better Never Stops”

Former Federal Bank CEO Shyam Srinivasan launched his leadership book Better Never Stops based on his experiences in India’s banking and financial services sector. The book discusses leadership, resilience, adaptability, and the transformation of mid-sized private banks in India.

15. International Museum Day 2026 – May 18

International Museum Day 2026 was observed globally on May 18 to promote the role of museums in cultural exchange, peace, and public education. The 2026 theme was “Museums Uniting a Divided World.” The observance is coordinated annually by the International Council of Museums (ICOM).

16. World AIDS Vaccine Day 2026 – May 18

World AIDS Vaccine Day 2026 was observed on May 18 to highlight the importance of developing an effective HIV/AIDS vaccine and recognise the contributions of researchers, healthcare workers, and volunteers working in HIV prevention and vaccine research.

17. International Day for Women in Maritime 2026 – May 18

International Day for Women in Maritime 2026 was observed globally on May 18 to promote gender equality and women’s participation in the maritime industry. The 2026 theme was “From Policy to Practice: Advancing Gender Equality for Maritime Excellence.”