Daily Current Affairs (DCA) 25 June, 2026

Daily Current Affairs Quiz
25 June, 2026

National Affairs

1. Padma Awards 2026

Source: News on Air

Context

The President of India, Smt. Droupadi Murmu, on Tuesday, 24 June 2026, conferred 65 Padma Awards at the Second Civil Investiture Ceremony held at Rashtrapati Bhavan, New Delhi. The ceremony was attended by Prime Minister Narendra Modi, Vice President C. P. Radhakrishnan, Union Home Minister Amit Shah, and other dignitaries. The Second Investiture Ceremony presented 2 Padma Vibhushan, 7 Padma Bhushan, and 56 Padma Shri awards — following the First Civil Investiture Ceremony on 26 May 2026 which conferred 66 awards. The President had announced 131 Padma Awards for 2026 on the eve of Republic Day (25 January 2026), comprising 5 Padma Vibhushan, 13 Padma Bhushan, and 113 Padma Shri honours (including 2 duo cases counted as one), with 19 women awardees, 16 posthumous honourees, and 6 foreigners / NRI / PIO / OCI recipients. Notable awardees included Padma Vibhushan posthumously to Dharmendra Singh Deol (actor; received by wife Hema Malini at the first ceremony) and V S Achuthanandhan (former Kerala CM); Padma Bhushan to Mammootty (Malayalam cinema legend), Alka Yagnik (playback singer), Uday Kotak (banker), Vijay Amritraj (tennis), and posthumously to Shibu Soren (former Jharkhand CM) and Piyush Pandey (advertising); and Padma Shri to Rohit Sharma (cricket captain), R Madhavan (actor), and posthumously to Satish Shah (TV actor). The Padma Awards are India’s highest civilian honours, ranked immediately after the Bharat Ratna, instituted in 1954 and announced annually on Republic Day by the Ministry of Home Affairs (MHA).

Complete Padma Vibhushan 2026 List (5 recipients)

#	Name	Field	State / Country
1	Shri Dharmendra Singh Deol (Posthumous)	Art (Cinema)	Maharashtra
2	Shri K T Thomas	Public Affairs (Law)	Kerala
3	Ms. N Rajam	Art (Violinist)	Uttar Pradesh
4	Shri P Narayanan	Literature and Education	Kerala
5	Shri V S Achuthanandhan (Posthumous)	Public Affairs	Kerala

Complete Padma Bhushan 2026 List (13 recipients)

#	Name	Field	State / Country
1	Ms. Alka Yagnik	Art (Playback Singing)	Maharashtra
2	Shri Bhagat Singh Koshyari	Public Affairs	Uttarakhand
3	Shri Kallipatti Ramasamy Palaniswamy	Medicine	Tamil Nadu
4	Shri Mammootty	Art (Cinema)	Kerala
5	Dr. Nori Dattatreyudu	Medicine (Oncology)	United States of America
6	Shri Piyush Pandey (Posthumous)	Art (Advertising)	Maharashtra
7	Shri S K M Maeilanandhan	Social Work	Tamil Nadu
8	Shri Shatavadhani R Ganesh	Art	Karnataka
9	Shri Shibu Soren (Posthumous)	Public Affairs	Jharkhand
10	Shri Uday Kotak	Trade and Industry (Banking)	Maharashtra
11	Shri V K Malhotra (Posthumous)	Public Affairs	Delhi
12	Shri Vellappally Natesan	Public Affairs (Social Leadership)	Kerala
13	Shri Vijay Amritraj	Sports (Tennis)	United States of America

Notable Padma Shri 2026 Recipients (113 in total)

Recipient	Field	State
Shri Rohit Sharma	Sports (Cricket)	Maharashtra
Shri R Madhavan	Art (Cinema)	Maharashtra
Shri Satish Shah (Posthumous)	Art (TV)	Maharashtra
Ms. Harmanpreet Kaur Bhullar	Sports (Cricket)	Punjab
Ms. Savita Punia	Sports (Hockey)	Haryana
Shri Anke Gowda M	Agriculture (Organic Farming)	Karnataka
Ms. Armida Fernandez	Medicine	Maharashtra
Ms. Deepika Reddy	Art (Kuchipudi)	Telangana
Ms. Kalamandalam Vimala	Art	Kerala
Shri A E Muthunayagam	Science and Engineering	Kerala
Shri Shashi Shekhar Vempati	Literature and Education	Karnataka
Ms. Sivasankari	Literature and Education	Tamil Nadu
Shri Ashok Khade	Trade and Industry	Maharashtra

Padma Awards — Three Categories

Category	Significance	Position in Civilian Awards
Padma Vibhushan	Exceptional and distinguished service	2nd highest (after Bharat Ratna)
Padma Bhushan	Distinguished service of high order	3rd highest
Padma Shri	Distinguished service in any field	4th highest

The Padma Awards System

• What: India’s highest civilian honours, ranked immediately after the Bharat Ratna; recognise exceptional and distinguished achievements or service across Art, Social Work, Public Affairs, Science and Engineering, Trade and Industry, Medicine, Literature and Education, Civil Service, Sports; announced annually on Republic Day; formally presented by the President of India at Civil Investiture Ceremony typically in March-April (sometimes May-June in recent years); NOT titles under Article 18(1) of the Constitution and cannot be used as prefixes or suffixes to names.
• Where: Administered by the Ministry of Home Affairs (MHA), New Delhi; announced through The Gazette of India; ceremony at Rashtrapati Bhavan, New Delhi.

Practice MCQs

Q1. With reference to the Padma Awards 2026, consider the following statements:

1. A total of 131 Padma Awards were announced for 2026, including 5 Padma Vibhushan, 13 Padma Bhushan, and 113 Padma Shri.
2. The awards were announced on the eve of Republic Day (25 January 2026).
3. The list included 19 women, 16 posthumous awardees, and 6 foreigners/NRI/PIO/OCI.
4. The Padma Vibhushan 2026 was conferred on only 2 individuals.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the Padma Vibhushan 2026 was conferred on 5 individuals, NOT 2: Dharmendra (posthumous), K T Thomas, N Rajam, P Narayanan, and V S Achuthanandhan (posthumous).)

Q2. With reference to the Padma Vibhushan 2026 recipients, consider the following statements:

1. Shri Dharmendra Singh Deol received the award posthumously for his contribution to art (cinema).
2. Shri V S Achuthanandhan, former Chief Minister of Kerala, received the award posthumously for public affairs.
3. Smt. N Rajam received the award for her contribution to art (violin).
4. Shri P Narayanan was awarded for his contribution to sports.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; Shri P Narayanan was awarded for Literature and Education, NOT sports.)

Q3. With reference to the Padma Bhushan 2026 list, consider the following statements:

1. Veteran Malayalam actor Mammootty received the Padma Bhushan for Art.
2. Banker Uday Kotak (founder of Kotak Mahindra Bank) was awarded for Trade and Industry.
3. Former Jharkhand CM Shibu Soren received the Padma Bhushan posthumously for Public Affairs.
4. Cricketer Rohit Sharma received the Padma Bhushan for Sports.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; Rohit Sharma received the Padma SHRI (not Bhushan), the fourth-highest civilian award.)

Q4. With reference to the Padma Awards system in India, consider the following statements:

1. The Padma Awards were instituted by the Government of India in 1954, alongside the Bharat Ratna.
2. They were originally designated as Pahla Varg, Dusra Varg, and Tisra Varg.
3. They were renamed to Padma Vibhushan, Padma Bhushan, and Padma Shri via a Presidential Notification issued in January 1955.
4. Padma Awards are titles under Article 18(1) of the Constitution and can be used as prefixes to names.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; Padma Awards are NOT titles under Article 18(1) and cannot be used as prefixes or suffixes to names — upheld by the Supreme Court in Balaji Raghavan v. Union of India (1995).)

Q5. With reference to the Second Civil Investiture Ceremony of 2026, consider the following statements:

1. It was held at Rashtrapati Bhavan in New Delhi on 23-24 June 2026.
2. President Droupadi Murmu conferred 65 Padma Awards at this ceremony.
3. Prime Minister Narendra Modi, Vice President C P Radhakrishnan, and Home Minister Amit Shah attended.
4. The Second Investiture conferred all 131 Padma Awards in a single event.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the Second Investiture conferred 65 awards; the First Investiture (26 May 2026) conferred 66 awards — NOT all 131 in a single event.)

Q6. With reference to the historical and institutional details of the Padma Awards, consider the following statements:

1. The Padma Awards have been suspended twice in their history — in 1977-80 and 1993-97.
2. The Padma Awards Committee is constituted annually by the Prime Minister.
3. The Padma Awards Committee is chaired by the Cabinet Secretary.
4. The Padma Awards are administered by the Ministry of Culture.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the Padma Awards are administered by the Ministry of Home Affairs (MHA), NOT the Ministry of Culture.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Padma Vibhushan 2026 had 5 recipients.
2. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because P Narayanan was awarded for Literature and Education.
3. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Rohit Sharma received Padma Shri.
4. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Padma Awards are not titles.
5. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because 65 awards were given at the Second Investiture (not all 131).
6. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because MHA (not Culture Ministry) administers Padma Awards.

2. Union Home Minister Amit Shah Launches NAFED’s Digital Auction Portal “NAFEX.in”

Source: ET

Context

On Tuesday, 23 June 2026, Union Home Minister and Minister of Cooperation Shri Amit Shah launched NAFED’s digital auction portal “NAFEX.in” along with three other major digital and farmer-centric initiatives — DRISHTI Portal (inventory management for pulses and oilseeds), Saksham ERP (Enterprise Resource Planning for organisational efficiency), and the NAFED-KALYAN Scholarship Scheme (for children of farming families) — at Atal Akshay Urja Bhawan, New Delhi. The event was attended by Union Agriculture and Farmers Welfare Minister Shri Shivraj Singh Chouhan, Union Minister of State for Cooperation Shri Krishan Pal Gurjar, Secretary, Ministry of Cooperation Dr. Ashish Kumar Bhutani, NAFED Chairman Shri Jethabhai Ahir, NAFED Managing Director Shri Deepak Agarwal, and other senior officials and Board members. NAFEX.in — developed in collaboration with consulting firm Deloitte — is a dedicated digital auction portal designed to centralise and digitise the auction process for agricultural commodities, particularly oilseeds and pulses procured under the Government’s Price Support Scheme (PSS) and Price Stabilisation Fund (PSF). NAFED currently handles approximately 5.3 million tonnes of commodities annually and has so far relied on private e-auction service providers — NCDEX e Markets (NeML), mjunction, and E-Teach — for selling its stocks. NAFEX.in marks a strategic pivot by NAFED towards in-house digital infrastructure, allowing full control over data and transaction processes, and may eventually be opened to other state-level cooperative agencies to create a centralised digital ecosystem for cooperative agricultural trade. Addressing the gathering, Shah highlighted NAFED’s remarkable turnaround: from verge of closure in 2014, it now serves 74 lakh farmers, has a turnover of ₹30,000 crore, and earns profits of ~₹500 crore, with the target to cross ₹50,000 crore turnover. Under the NAFED-KALYAN scheme, 1% of NAFED’s profits will be earmarked for scholarships and career development of children of farming families. The launch aligns with PM Modi’s vision of “Sahkar Se Samriddhi” (Prosperity through Cooperation) and the Ministry of Cooperation’s efforts to strengthen cooperative institutions through technology, transparency, and farmer-centric reforms.

The Launch

• Venue: Atal Akshay Urja Bhawan, New Delhi.
• Launched by: Shri Amit Shah, Union Home Minister and Minister of Cooperation.
• Also Present: Shri Shivraj Singh Chouhan (Agriculture & Farmers Welfare), Shri Krishan Pal Gurjar (MoS Cooperation), Dr. Ashish Kumar Bhutani (Secretary, Ministry of Cooperation), Shri Jethabhai Ahir (NAFED Chairman), Shri Deepak Agarwal (NAFED MD), Board members.

Four Initiatives Launched

#	Initiative	Purpose
1	NAFEX.in	Digital auction portal for transparent agricultural commodity trading
2	DRISHTI Portal	Integrated inventory management for pulses and oilseeds
3	Saksham ERP	Enterprise Resource Planning for organisational efficiency
4	NAFED-KALYAN Scholarship Scheme	1% of NAFED’s profits for scholarships and career development of farmers’ children

NAFEX.in — Key Features

• What: A dedicated digital auction platform developed by NAFED in collaboration with Deloitte, that centralises and digitises auction processes for agricultural commodities, particularly oilseeds and pulses procured under Price Support Scheme (PSS) and Price Stabilisation Fund (PSF); replaces dependence on private e-auction service providers; enables competitive bidding, transparent price discovery, and direct connection between farmers, cooperatives, traders, processors, and institutional buyers; may be opened to other state-level cooperative agencies for a centralised digital cooperative trade ecosystem.
• Where: Hosted and operated by NAFED from its HQ in New Delhi; accessible across India via internet; inventory and warehouses across India participate via the portal.

NAFED-KALYAN Scholarship Scheme

• Allocation: 1% of NAFED’s annual profits.
• Beneficiaries: Children of farmer/farming families.
• Purpose: Higher education and career development.
• Scholarship cheques distributed at the launch event.

National Agricultural Cooperative Marketing Federation of India (NAFED)

• What: An apex cooperative organisation for marketing of agricultural produce in India; established on 2 October 1958 (Gandhi Jayanti); registered initially under the Bombay Co-operative Societies Act, 1925, currently under the Multi-State Cooperative Societies Act, 2002; serves as the central nodal agency for procurement of pulses, oilseeds, copra, and other commodities under the Government’s Price Support Scheme (PSS) at Minimum Support Price (MSP); key implementer of PM-AASHA; engages in storage, warehousing, export-import of agricultural commodities, trade in fertilizers and agri-inputs, organic farming, seed production, bio-fertilizers, retail operations.
• Where: HQ at Sidhartha Enclave, Ashram Chowk, New Delhi; operates branches and warehouses across India; under the Ministry of Cooperation (since July 2021).

“Sahkar Se Samriddhi” (Prosperity through Cooperation)

• What: A vision articulated by PM Narendra Modi to strengthen cooperative institutions and use them as engines of inclusive economic development; coined and operationalised with the creation of the Ministry of Cooperation in July 2021; aims to integrate technology, transparency, and farmer-centric reforms in cooperatives; target: cooperatives in every village.
• Where: Implemented across India through the Ministry of Cooperation and apex bodies like NAFED, NCCF, NCDC.

Price Support Scheme (PSS)

• What: A Government of India scheme under which NAFED, NCCF, FCI, CCI etc. procure agricultural commodities (pulses, oilseeds, copra, cotton) at Minimum Support Price (MSP) from farmers; procurement triggered when market price falls below MSP; part of the broader PM-AASHA (Pradhan Mantri Annadata Aay SanraksHan Abhiyan) umbrella since 2018.
• Where: Implemented across India by Department of Agriculture and Farmers Welfare and central nodal agencies (NAFED for pulses/oilseeds).

Price Stabilisation Fund (PSF)

• What: A Central Sector Scheme set up in 2014–15 with a corpus of ₹500 crore (subsequently augmented) to regulate price volatility of agricultural and horticultural commodities like onions, pulses, potatoes; procures, stocks, and releases to manage prices.
• Where: Administered by the Department of Consumer Affairs, Ministry of Consumer Affairs, in coordination with NAFED, NCCF, and state governments.

Practice MCQs

Q1. With reference to the launch of NAFEX.in on 23 June 2026, consider the following statements:

1. NAFEX.in was launched by Union Home Minister and Minister of Cooperation Shri Amit Shah at Atal Akshay Urja Bhawan, New Delhi.
2. It is a digital auction portal developed by NAFED in collaboration with Deloitte.
3. The launch event also saw the unveiling of the DRISHTI inventory management portal, Saksham ERP, and the NAFED-KALYAN scholarship scheme.
4. NAFEX.in was developed independently by the Reserve Bank of India.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; NAFEX.in was developed by NAFED in collaboration with Deloitte, NOT by the RBI.)

Q2. With reference to NAFED’s existing auction operations, consider the following statements:

1. NAFED currently handles approximately 5.3 million tonnes of agricultural commodities annually.
2. NAFED has so far used private e-auction service providers such as NCDEX e Markets (NeML), mjunction, and E-Teach.
3. NAFED procures commodities at Minimum Support Price (MSP) under the Price Support Scheme (PSS) and Price Stabilisation Fund (PSF).
4. NAFEX.in will exclusively serve only state government departments and will not allow private traders.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; NAFEX.in is designed to connect farmers, cooperatives, traders, processors, and institutional buyers, NOT only state government departments. Private traders ARE allowed.)

Q3. With reference to NAFED, consider the following statements:

1. NAFED was established on 2 October 1958 (Gandhi Jayanti).
2. It is registered under the Multi-State Cooperative Societies Act, 2002.
3. NAFED is headquartered in New Delhi and is currently under the Ministry of Cooperation.
4. NAFED is primarily responsible for fertilizer manufacturing in India.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; fertilizer manufacturing is the domain of cooperatives like IFFCO and KRIBHCO, NOT NAFED. NAFED focuses on agricultural marketing and procurement.)

Q4. With reference to the Ministry of Cooperation and “Sahkar Se Samriddhi”, consider the following statements:

1. The Ministry of Cooperation was established on 6 July 2021 by bifurcating the Cooperation Division from the Ministry of Agriculture.
2. The current Union Minister of Cooperation is Shri Amit Shah.
3. “Sahkar Se Samriddhi” is PM Narendra Modi’s vision to drive inclusive development through cooperatives.
4. The Ministry of Cooperation administers the Companies Act, 2013.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the Companies Act, 2013 is administered by the Ministry of Corporate Affairs, NOT the Ministry of Cooperation. The Ministry of Cooperation administers laws related to cooperative societies, particularly the Multi-State Cooperative Societies Act, 2002.)

Q5. With reference to the NAFED-KALYAN Scholarship Scheme launched on 23 June 2026, consider the following statements:

1. Under the scheme, 1% of NAFED’s annual profits will be earmarked for scholarships.
2. The scheme is targeted at children of farming families for higher education and career development.
3. Scholarship cheques were distributed at the launch event by the Union Cooperation Minister.
4. The scheme is funded by the Reserve Bank of India.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the scheme is funded from NAFED’s own profits (1%), NOT by the RBI.)

Q6. With reference to the 97th Constitutional Amendment and cooperative reforms, consider the following statements:

1. The 97th Constitutional Amendment (2011) inserted Part IX-B (Articles 243-ZH to 243-ZT) on cooperatives.
2. It also inserted Article 43-B in the Directive Principles of State Policy promoting cooperatives.
3. The Ministry of Cooperation was set up to provide a dedicated administrative and policy framework for cooperatives.
4. India does not have any apex cooperative for consumer goods.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; NCCF (National Cooperative Consumers’ Federation) is India’s apex consumer cooperative body — running Bharat Atta, Bharat Dal, Bharat Rice brands.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because NAFED (not RBI) developed NAFEX.in.
2. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because NAFEX.in serves multiple stakeholders.
3. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because fertilizer manufacturing is by IFFCO/KRIBHCO.
4. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Companies Act is administered by Ministry of Corporate Affairs.
5. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the scheme is funded by NAFED’s own profits.
6. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because NCCF is the apex consumer cooperative.

Exam Relevance

Banking (RBI Gr B, SBI PO, IBPS, NABARD)	Very high importance, NAFED, cooperatives, agricultural marketing, MSP
NABARD Grade A	Extremely high importance, Direct subject — NAFED, cooperatives, PSS, PSF, PM-AASHA

3. ASI Uncovers Three 16th-Century Trilingual Inscriptions at Sadasivakona in Seshachalam Forest, Tirupati

Source: The Hindu

Context

In a major addition to the epigraphical corpus of medieval South India, an expert team from the Archaeological Survey of India (ASI) has discovered three rare 16th-century stone inscriptions deep inside the Seshachalam reserve forest range of Tirupati district, Andhra Pradesh — at a pristine, mostly under-explored sacred site called Sadasivakona. Carved in characters of the 16th century and copied by ASI scholars in the form of estampages (paper impressions) for preservation and linguistic study, the inscriptions are remarkable for their trilingual format using Telugu, Tamil, and Kannada — reflecting the multilingual administrative character of the Vijayanagara Empire, which spanned Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, and Kerala. The principal inscription documents the personal visit of King Sadasiva Raya — the last sovereign monarch of the Tuluva Dynasty (reigned 1542–1570 CE) — to this sacred spot to take a holy bath, records his official royal donation, and registers the construction of a Shiva temple and a monastery (mutt) at Papavinasa in Sadasivakona. According to corroborating reports, the inscriptions also include records of land grants for daily rituals and offerings at the Parashurameswara temple in Gudimallam village of Yerpedu mandal — a site already known to scholars for housing the Gudimallam Lingam, considered the oldest known Shiva lingam in India. The Sadasivakona find continues the team’s earlier epigraphical survey work in the nearby Nallamala Hills. The discovery enriches understanding of Vijayanagara temple administration, royal patronage of Shaivism, land grant systems, and the religious geography of the Seshachalam pilgrimage circuit during the politically turbulent decade preceding the catastrophic Battle of Talikota (1565).

The Discovery

• Discovered by: Archaeological Survey of India (ASI) expert team.
• Number of Inscriptions: 3 rare epigraphical records.
• Date: 16th century CE (Vijayanagara era).
• Languages: Trilingual — Telugu, Tamil, Kannada.
• Documentation Method: Estampages (paper impressions) for preservation and linguistic study.

Location of the Discovery

Aspect	Detail
Site	Sadasivakona (under-explored sacred site)
Forest Range	Seshachalam reserve forest
District	Tirupati district
State	Andhra Pradesh
Region	Eastern Ghats (Saptagiri / Seven Hills cluster)
Earlier Surveys	Nallamala Hills (by the same team)

Vijayanagara Empire

• A powerful South Indian Hindu empire (1336–1646 CE) that dominated the Deccan plateau and peninsular India (except Kerala); founded in 1336 by Harihara I and Bukka Raya I of the Sangama Dynasty with support of saint Vidyaranya; capital at Vijayanagara (Hampi), an iconic city described by Persian envoy Abdur Razzaq (1443) as “such that the pupil of the eye has never seen such a place like it”; reached its zenith under Krishna Deva Raya (1509–1529) of the Tuluva dynasty; ended its effective political dominance with the catastrophic defeat at the Battle of Talikota (1565); the ruined capital, Hampi, was inscribed as a UNESCO World Heritage Site in 1986.
• Where: Empire spread across Karnataka, Andhra Pradesh, Telangana, Tamil Nadu, Kerala, parts of Maharashtra, Goa, Odisha, and northern Sri Lanka; capital at Hampi, on the southern banks of the Tungabhadra River, in present-day Bellary district, Karnataka.

Four Dynasties of the Vijayanagara Empire

#	Dynasty	Period	Founder / Key Ruler
1	Sangama	1336–1485 CE	Harihara I, Bukka Raya I, Deva Raya II (greatest Sangama)
2	Saluva	1485–1505 CE	Saluva Narasimha (briefly held off Bahmani decline)
3	Tuluva	1505–1565/70 CE	Vira Narasimha; Krishna Deva Raya (greatest Vijayanagara); Achyuta Raya; Sadasiva Raya (last)
4	Aravidu	1542–1646 CE	Tirumala (Rama Raya’s brother); Sri Ranga; Venkata II

Tuluva Dynasty

Ruler	Reign	Significance
Vira Narasimha	1505–1509	Tuluva founder
Krishna Deva Raya	1509–1529	Greatest Vijayanagara ruler; patron of arts and literature; author of Amuktamalyada (Telugu); ushered in Telugu Golden Age (Ashtadiggajas)
Achyuta Raya	1529–1542	Continued patronage; struggled with rising nobility
Venkata I	1542	Brief reign; killed in court intrigues
Sadasiva Raya	1542–1570	Last Tuluva ruler; puppet king; subject of the newly discovered inscriptions

King Sadasiva Raya (1542–1570 CE)

• What: The last sovereign monarch of the Tuluva Dynasty of the Vijayanagara Empire; nephew of Achyuta Raya; ascended the throne after his cousin Venkata I was killed in court intrigues following Achyuta Raya’s death (1542); though he was the nominal ruler, real power was wielded by his regent and de facto ruler Aliya Rama Raya (Krishna Deva Raya’s son-in-law) and Rama Raya’s brothers; kept under guard / imprisoned by Rama Raya in later years; his reign witnessed the devastating Battle of Talikota (1565); died soon after the battle, ending the Tuluva line.
• Where: Ruled from the Vijayanagara Empire (capital at Hampi); his name lives on in Sadasivakona, the sacred site in the Seshachalam Hills, Tirupati, where the new inscriptions were just discovered.

Aliya Rama Raya — The De Facto Ruler

• Krishna Deva Raya’s son-in-law (“Aliya” means son-in-law in Telugu/Kannada).
• Powerful noble who placed Sadasiva Raya on the throne after defeating Salakaraju at the Battle of Tungabhadra (1543).
• Regent and effective ruler for over two decades (1543–1565).
• Manipulated Deccan Sultanate politics, eventually uniting them against him.
• Captured and beheaded by Hussain Nizam Shah at the Battle of Talikota (1565).

Battle of Talikota (1565) — Decisive Turning Point

• Date: 23 January 1565.
• Also known as: Battle of Rakshasi-Tangadi or Battle of Bannihatti.
• Location: Near Talikota, on the banks of the Krishna River (present-day Karnataka).
• Sides:
  • Vijayanagara Empire (led by Aliya Rama Raya, with brothers Tirumala and Venkatadri).
  • Confederation of Deccan Sultanates: Bijapur (Adil Shahi), Ahmadnagar (Nizam Shahi), Golconda (Qutb Shahi), Bidar (Barid Shahi) — excluding Berar (Imad Shahi).
• Outcome: Catastrophic defeat for Vijayanagara; Rama Raya captured and beheaded by Hussain Nizam Shah of Ahmadnagar.

Deccan Sultanates (Five Successor States of the Bahmani Sultanate)

Sultanate	Capital	Dynasty	Founder
Bijapur	Bijapur	Adil Shahi	Yusuf Adil Shah
Ahmadnagar	Ahmadnagar	Nizam Shahi	Malik Ahmad
Golconda	Golconda	Qutb Shahi	Quli Qutb Mulk
Bidar	Bidar	Barid Shahi	Qasim Barid
Berar	Achalpur	Imad Shahi	Fathullah Imad-ul-Mulk

Practice MCQs

Q1. With reference to the ASI’s recent discovery at Sadasivakona, consider the following statements:

1. The discovery comprises three rare 16th-century inscriptions.
2. The inscriptions are trilingual, written in Telugu, Tamil, and Kannada.
3. The inscriptions were copied as estampages by the ASI for preservation and linguistic study.
4. The site is located in the Nallamala Hills of Telangana.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the site is in the Seshachalam forest range, Tirupati district, Andhra Pradesh — NOT in the Nallamala Hills of Telangana. The ASI team’s earlier surveys had been in the Nallamala Hills.)

Q2. With reference to the contents of the primary inscription discovered at Sadasivakona, consider the following statements:

1. It documents the personal visit of King Sadasiva Raya to take a holy bath at the sacred spot.
2. It records his official grant of a royal donation.
3. It registers the construction of a Shiva temple and a monastery (mutt) at Papavinasa.
4. The inscription names Krishna Deva Raya as the ruling king.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the inscription is from the reign of Sadasiva Raya (1542–1570 CE), NOT Krishna Deva Raya (1509–1529 CE), who had died decades earlier.)

Q3. With reference to King Sadasiva Raya, consider the following statements:

1. He was the last sovereign monarch of the Tuluva Dynasty of the Vijayanagara Empire.
2. He reigned from 1542 to 1570 CE.
3. Real power during his reign was wielded by his regent Aliya Rama Raya, who later imprisoned him.
4. Sadasiva Raya himself led the Vijayanagara army at the Battle of Talikota in 1565.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; Aliya Rama Raya (NOT Sadasiva Raya) led the Vijayanagara forces at the Battle of Talikota — Sadasiva was a puppet king kept under guard.)

Q4. With reference to the Battle of Talikota (1565), consider the following statements:

1. It was fought on 23 January 1565 between Vijayanagara and the confederated Deccan Sultanates.
2. The four Deccan Sultanates that fought against Vijayanagara were Bijapur, Ahmadnagar, Golconda, and Bidar.
3. Aliya Rama Raya was captured and beheaded; the Vijayanagara capital Hampi was subsequently sacked.
4. After the battle, the Vijayanagara Empire continued as the dominant political force in South India.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; after Talikota, Vijayanagara’s political dominance permanently ended — the Aravidu dynasty continued nominally but was much reduced, with capital shifted to Penukonda.)

Q5. With reference to the Vijayanagara Empire, consider the following statements:

1. The Vijayanagara Empire was founded in 1336 CE by Harihara I and Bukka Raya I of the Sangama Dynasty.
2. The capital, Vijayanagara (Hampi), was located on the banks of the Tungabhadra River.
3. The empire comprised four dynasties — Sangama, Saluva, Tuluva, and Aravidu.
4. Hampi was inscribed as a UNESCO Intangible Cultural Heritage site in 1986.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; Hampi is a UNESCO World Heritage Site (1986) under the Cultural Heritage category — NOT Intangible Cultural Heritage.)

Q6. With reference to the Archaeological Survey of India (ASI) and epigraphical methods, consider the following statements:

1. The ASI was established in 1861 by Sir Alexander Cunningham, regarded as the “Father of Indian Archaeology”.
2. The ASI functions under the Ministry of Culture, Government of India.
3. An estampage is a paper impression of an inscription used for preservation and scholarly study.
4. Gudimallam village in Tirupati district houses the Parashurameswara temple, considered to have the oldest known Shiva lingam in India.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(d) All four — all four statements are correct.

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the site is in Seshachalam, not Nallamala.
2. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the inscription is from Sadasiva Raya’s reign.
3. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Rama Raya led the forces at Talikota.
4. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Vijayanagara’s dominance permanently ended.
5. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because Hampi is a World Heritage Site (Cultural), not ICH.
6. (d) All four — all statements are correct.

Banking/Finance

1. RBI Revises NBFC Norms

Source: Business Standard

Context

The Reserve Bank of India (RBI) on Wednesday, 24 June 2026 issued revised final norms for the registration of and exemptions to Non-Banking Financial Companies (NBFCs), simplifying the methodology for identifying Upper Layer NBFCs (NBFC-UL) under the Scale-Based Regulation (SBR) framework. The revised norms mandate that NBFCs with an asset size of ₹1 lakh crore (₹1 trillion) and above, based on their latest audited balance sheet, will be classified as Upper Layer entities and subjected to enhanced regulatory oversight. This replaces the earlier parametric scoring methodology (which weighed size + leverage, interconnectedness, complexity, and qualitative factors). The asset-size threshold will be reviewed every three years. The directions come into force with immediate effect. The norms significantly tighten concentration-risk norms for government-owned NBFCs by withdrawing the exemptions previously available to them, bringing them under the same exposure framework applicable to their respective regulatory layers (Base, Middle, or Upper). Existing breaches of exposure limits will be allowed to run off until maturity, but no fresh exposures to such obligors will be permitted. The RBI also introduced new guidelines for NBFCs that are group entities of scheduled commercial banks: where both the NBFC and its parent bank undertake the same financial activity, the NBFC must comply with norms applicable to commercial banks — irrespective of its SBR classification (to prevent regulatory arbitrage); however, such entities will retain their existing layer classification.

The Revised Norms

• Issued by: Reserve Bank of India (RBI).
• Earlier Notification: 28 November 2025.
• Effective: Immediate.

Key Changes

Change	Earlier	Revised (24 June 2026)
Upper Layer Identification	Parametric scoring methodology + Top 10 by asset size	Simple ₹1 lakh crore (₹1 trillion) asset-size threshold
Government-owned NBFC Concentration Risk	Exemptions available	Exemptions WITHDRAWN — same limits as private NBFCs
Bank-Group NBFCs	Regulated as per their SBR layer	Must follow commercial bank norms if same activity as parent bank
NBFC-IFC Large Exposure Limit (Group of Connected Counterparties)	35%	45% of eligible capital base
NBFC-IFC Exposure with State Government Guarantee	Subject to prudential limits	Exempted (20% risk weight)
Review of Asset-Size Threshold	—	Every 3 years
Identification Frequency	—	Annual

Scale-Based Regulation (SBR) Framework

• What: A risk-based regulatory framework for NBFCs introduced by the RBI on 22 October 2021, effective 1 October 2022, that categorises NBFCs into four layers — Base, Middle, Upper, and Top — based on size, activity, and perceived riskiness; aligns regulatory intensity with the systemic significance of each NBFC; calibrates capital requirements, governance standards, prudential regulation, large exposure framework, disclosure norms accordingly.
• Where: Issued by RBI from Mumbai; applicable to all NBFCs registered in India under the RBI Act, 1934.

Four Layers Under SBR Framework

Layer	Asset Size Criteria	Examples
Base Layer (NBFC-BL)	<₹1,000 crore non-deposit-taking	NBFC-P2P, NBFC-AA, NOFHC, NBFCs without public funds
Middle Layer (NBFC-ML)	₹1,000 crore – ₹1 lakh crore	All Deposit-taking NBFCs (NBFC-Ds), CICs, IFCs, HFCs, NBFC-IDF, NBFC-SPD
Upper Layer (NBFC-UL)	≥₹1 lakh crore (₹1 trillion)	Systemically important NBFCs; ~15 entities (incl. Tata Sons, Bajaj Finance)
Top Layer (NBFC-TL)	Discretionary	Ideally empty; populated only if RBI identifies substantial systemic risk in Upper Layer

Newly Revised Upper Layer Criteria

• Asset size ≥ ₹1 lakh crore (₹1 trillion) based on latest audited balance sheet.
• Identified annually.
• Threshold reviewed every 3 years.
• NBFC-UL must list within 3 years of identification.
• Government-owned NBFC-UL exempted from mandatory listing.
• Enhanced regulatory oversight: CET1 capital, LCR, exposure norms, stress tests, disclosures.

Government-Owned NBFCs — Key Changes

Aspect	Earlier	Revised
Placement in Upper Layer	Generally placed in Base or Middle Layer	Can now be in any layer based on asset size
Concentration Norms	Exempted	NOT exempted — same as private NBFCs in respective layer
Mandatory Listing (if in NBFC-UL)	Exempted	Exemption retained (this is one carve-out)
Existing Exposure Breaches	—	Allowed to run off till maturity (no fresh breaches)

Bank-Group NBFCs — New Rule

• Definition: NBFCs that are group entities (subsidiaries, associates) of scheduled commercial banks (SCBs).
• New Rule: If both NBFC and parent bank undertake same financial activity, NBFC must follow commercial bank norms for that activity.
• Layer Retention: NBFC retains its existing SBR layer classification.
• Purpose: Prevent regulatory arbitrage.
• Example: An Infrastructure Debt Fund (IDF) NBFC in a banking group will remain in Middle Layer but must comply with regulations applicable to Upper Layer NBFCs.

Concentration Risk / Exposure Norms (SBR-based)

Layer	Single Counterparty	Group of Connected Counterparties
NBFC-ML	15% of Tier I	25% of Tier I
NBFC-UL	20% of Tier I	25% of Tier I
NBFC-UL (IFC)	25% of Tier I	45% (revised from 35%) of eligible capital base

Infrastructure Finance Company (NBFC-IFC)

• What: An NBFC that deploys at least 75% of its total assets in infrastructure loans; has minimum Net Owned Fund (NOF) of ₹300 crore; minimum CRAR of 15% (Tier I ≥ 10%); has investment grade credit rating from a SEBI-registered CRA; specialises in infrastructure financing for sectors like power, roads, ports, airports, telecom; examples: REC Ltd, Power Finance Corporation (PFC), India Infrastructure Finance Company Ltd (IIFCL), Indian Renewable Energy Development Agency (IREDA), IRFC, L&T Finance.
• Where: Operates pan-India; some are central PSUs (REC, PFC, IRFC under Ministry of Finance/Power/Railways), others are private (L&T Finance).

Core Investment Company (CIC)

• What: An NBFC that holds ≥ 90% of its net assets as investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies; min ₹100 crore asset size; engages in investment activity rather than lending; systemically important if asset size ≥ ₹100 crore and accepts public funds; examples: Tata Sons, Bajaj Holdings & Investment Ltd, L&T Holdings.
• Where: Operates as a holding company under group structures; primary registration under RBI Master Direction — CIC, 2016.

Non-Banking Financial Company (NBFC)

• What: A company registered under the Companies Act, 1956/2013 that engages in lending, investment, hire-purchase, leasing, insurance, chit fund activities, etc. but does NOT hold a banking licence; cannot accept demand deposits; not part of the payment and settlement system; deposit insurance NOT available; regulated by RBI under the RBI Act, 1934 (Chapter III-B); ~9,500 NBFCs registered in India.
• Where: Registered with RBI’s Department of Regulation; operates pan-India (and some abroad through subsidiaries).

Practice MCQs

Q1. With reference to the RBI’s revised NBFC norms issued on 24 June 2026, consider the following statements:

1. NBFCs with an asset size of ₹1 lakh crore (₹1 trillion) and above will be classified as Upper Layer entities.
2. The asset-size threshold for classification will be reviewed every three years.
3. The earlier parametric scoring methodology for identifying Upper Layer NBFCs has been replaced by the simpler asset-size threshold.
4. The new norms abolish the Scale-Based Regulation (SBR) framework entirely.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the new norms refine and simplify the SBR framework, NOT abolish it. The SBR framework remains in force with four layers.)

Q2. With reference to the treatment of government-owned NBFCs under the revised norms, consider the following statements:

1. The exemptions previously available to government-owned NBFCs on concentration risk norms have been withdrawn.
2. Government-owned NBFCs will now have to adhere to concentration limits based on their classification under the SBR framework.
3. Existing breaches of exposure limits will be allowed to run off until maturity.
4. Fresh exposures to such obligors that breach the new limits will continue to be permitted without restriction.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; fresh exposures to such obligors are NOT permitted under the revised norms — only existing breaches are allowed to run off till maturity.)

Q3. With reference to the Scale-Based Regulation (SBR) framework for NBFCs, consider the following statements:

1. The SBR framework was introduced by RBI on 22 October 2021 and came into effect on 1 October 2022.
2. It classifies NBFCs into four layers — Base, Middle, Upper, and Top — based on size, activity, and perceived riskiness.
3. The Top Layer is ideally expected to remain empty.
4. The SBR framework is administered by the Ministry of Finance.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the SBR framework is administered by the Reserve Bank of India (RBI), NOT the Ministry of Finance.)

Q4. With reference to the new rule for NBFCs that are group entities of scheduled commercial banks, consider the following statements:

1. Such NBFCs must comply with norms applicable to commercial banks if both the NBFC and its parent bank undertake the same financial activity.
2. These requirements apply irrespective of the NBFC’s classification under the SBR framework.
3. Such NBFCs will retain their existing SBR layer classification.
4. The new rule aims to encourage regulatory arbitrage between banks and bank-group NBFCs.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the new rule aims to PREVENT (not encourage) regulatory arbitrage between banks and bank-group NBFCs.)

Q5. With reference to the eased exposure norms for Infrastructure Finance Companies (NBFC-IFCs), consider the following statements:

1. The Large Exposure Framework (LEF) limit for NBFC-IFCs has been raised from 35% to 45% of their eligible capital base.
2. Exposures backed by state government guarantees will be treated as exposures to the guaranteeing state government, subject to a 20% risk weight.
3. IFCs may exceed the prescribed exposure limits by up to 20% of their Tier-I capital for such exposures.
4. The relaxation aims to discourage infrastructure financing in India.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the relaxation aims to SUPPORT (not discourage) infrastructure financing in India.)

Q6. With reference to Upper Layer NBFCs (NBFC-UL), consider the following statements:

1. NBFC-ULs must list on stock exchanges within 3 years of their identification.
2. Government-owned NBFC-ULs are exempted from this mandatory listing requirement.
3. Tata Sons, a Core Investment Company (CIC), has sought to deregister as an Upper Layer NBFC to avoid public listing; this decision is pending with RBI.
4. The mandatory listing rule was first introduced after the IL&FS crisis of 2008.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the IL&FS crisis occurred in 2018, NOT 2008, and the mandatory listing rule was introduced as part of the SBR framework in October 2021, not directly after the IL&FS crisis.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the SBR framework is not abolished.
2. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because fresh exposures breaching limits are not permitted.
3. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because RBI (not Ministry of Finance) administers SBR.
4. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the rule prevents (not encourages) regulatory arbitrage.
5. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the relaxation supports infrastructure financing.
6. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because IL&FS crisis was in 2018, not 2008.

2. RBI Releases Draft Guidance on Model Risk Management (MRMF) for AI/ML Models

Source: Business Standard

Context

The Reserve Bank of India (RBI) on Wednesday, 24 June 2026, released the Draft Guidance on Regulatory Principles for Model Risk Management, 2026 under Press Release No. 2026-2027/528, setting comprehensive governance, validation, monitoring, and oversight requirements for all models used by regulated entities (REs) — including Artificial Intelligence (AI) and Machine Learning (ML) models. Regulated entities will be required to put in place a board-approved Model Risk Management Framework (MRMF) covering all models, irrespective of whether they are developed internally, sourced from third parties, or built using a combination of both. The draft applies to 11 categories of RBI-regulated entities — commercial banks, cooperative banks, small finance banks, payment banks, NBFCs, asset reconstruction companies (ARCs), credit information companies (CICs), all-India financial institutions, etc. Feedback is invited via RBI’s “Connect 2 Regulate” portal or by post/email to the Chief General Manager, Operational Risk Group, Department of Regulation, RBI, Mumbai until 24 July 2026. Key provisions include: mandatory kill switches for AI systems to halt them instantly if they produce harmful outputs; mandatory human oversight for AI-driven decision-making; three lines of defence (3LoD) structure — model owners (1st), independent validation (2nd), internal audit (3rd); risk-tiered model classification; comprehensive model inventory (active, inactive, decommissioned); explainability and transparency thresholds; customer disclosure when interacting with AI; option to speak with a human for customer-facing AI; red-teaming under edge cases, abnormal inputs, manipulation attempts, and adversarial conditions; and mandatory accountability of REs for outcomes, regardless of vendor origin.

11 Categories of RBI-Regulated Entities Covered

1. Commercial Banks.
2. Cooperative Banks.
3. Small Finance Banks (SFBs).
4. Payment Banks.
5. Local Area Banks.
6. NBFCs (all layers).
7. Asset Reconstruction Companies (ARCs).
8. Credit Information Companies (CICs).
9. All-India Financial Institutions (AIFIs).
10. Primary Dealers (PDs).
11. Other RBI-regulated entities.

Core Pillars of the MRMF Framework

Pillar	Requirement
1. Board Accountability	Board-approved MRMF; periodic review; approve risk appetite and tolerance for model risk; scenario analysis and stress testing
2. Three Lines of Defence (3LoD)	1st: Model owners; 2nd: Independent validation function; 3rd: Internal audit
3. Model Inventory	Maintain comprehensive inventories (active, inactive, decommissioned); no model deployed without formal documentation
4. Risk-Tiered Classification	Every model assigned a risk level (high, medium, low)
5. Independent Validation	High-risk models validated before deployment
6. Ongoing Monitoring	Regular performance review, drift detection, recalibration
7. Audit Trail	Complete documentation of model development, validation, and deployment

Role of Risk Management Committee of the Board (RMCB)

• Review validation reports of models classified as high risk before deployment.
• Oversee monitoring of third-party and AI-based models.
• Review model-risk classification reports at least annually.
• Examine material breaches and other major concerns.
• Approve material exceptions to MRMF policies.

AI/ML-Specific Mandates

Mandate	Description
Kill Switches	Mandatory override, suspension, deactivation mechanisms to halt AI systems instantly
Human Oversight	Mandatory review mechanisms addressing automation bias, over-reliance, decision fatigue
Explainability	Define explainability and transparency thresholds for AI models
Customer Disclosure	Customers must be informed when interacting with AI
Human Option	Customer-facing AI must offer option to speak with a human
Pre-Deployment Risk Assessment	Assess if risks can be identified, measured, monitored, managed
Red-Teaming	Test under edge cases, abnormal inputs, manipulation attempts, adversarial conditions
GenAI Cybersecurity	Additional cybersecurity requirements for generative AI interacting with customers/external users
Supply Chain Concentration	Address dependence on few global AI providers
No Consumer Harm	REs must not use models that harm consumers
Grievance Redress	Mechanisms must address complaints arising from customer-facing AI

7 AI Risk Dimensions

1. Hallucinations (false outputs presented as facts).
2. Bias (discriminatory outputs).
3. Drift (model performance degradation over time).
4. Adversarial attacks (manipulation by bad actors).
5. Explainability gaps.
6. Data privacy and leakage.
7. Concentration risk (dependence on few vendors).

Third-Party Model Risk Provisions

• Vendor disclosure: If vendors don’t disclose adequate information, REs must identify risks and put safeguards in place.
• Restriction: REs may restrict use of such models where necessary.
• Accountability: RE is accountable for outcomes of all models, irrespective of source.
• No “vendor blame” for AI-driven decisions gone wrong.

FREE-AI Committee (Framework for Responsible and Ethical Enablement of AI)

• What: An RBI-constituted committee that submitted its report in August 2025 on responsible AI deployment in India’s financial sector; proposed AI governance principles, explainability standards, human oversight mechanisms, and AI ethics norms; chaired by an external expert.
• Where: Constituted by RBI from Mumbai; report applicable to India’s financial sector.

Utkarsh 2029

• What: RBI’s medium-term strategic framework (2024–2029) that outlines regulatory and supervisory priorities, including digital innovation, AI governance, financial inclusion, cybersecurity, monetary policy modernisation.
• Where: Issued by RBI, Mumbai; applies to all RBI-regulated entities in India.

Practice MCQs

Q1. With reference to the RBI’s Draft Guidance on Regulatory Principles for Model Risk Management, 2026, consider the following statements:

1. The Draft was released on 24 June 2026 under RBI Press Release No. 2026-2027/528.
2. Regulated entities will be required to put in place a board-approved Model Risk Management Framework (MRMF) covering all models, including AI/ML.
3. Feedback can be submitted until 24 July 2026 via the “Connect 2 Regulate” portal.
4. The Guidance applies only to commercial banks and excludes NBFCs and other entities.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the Guidance applies to 11 categories of RBI-regulated entities including NBFCs, ARCs, CICs, SFBs, payment banks, cooperative banks, and others — NOT just commercial banks.)

Q2. With reference to the AI/ML-specific mandates in the draft, consider the following statements:

1. Regulated entities must implement mandatory kill switches for AI systems to halt them instantly if they produce harmful outputs.
2. Mandatory human oversight is required for AI-driven decision-making to address automation bias and over-reliance.
3. Customers must be informed when they are interacting with an AI model and given the option to speak with a human.
4. Regulated entities can shift accountability for AI-driven decisions to third-party vendors who developed the models.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; REs remain fully accountable for outcomes of all models, irrespective of whether they are developed internally or sourced from third parties — accountability cannot be shifted to vendors.)

Q3. With reference to the three lines of defence (3LoD) structure under the MRMF, consider the following statements:

1. The first line of defence comprises model owners.
2. The second line of defence is independent validation functions.
3. The third line of defence is provided by internal audit.
4. The Risk Management Committee of the Board (RMCB) is part of the first line of defence.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the RMCB is part of board-level oversight (above the three lines) — NOT part of the first line of defence, which comprises model owners.)

Q4. With reference to the AI risk dimensions identified in the draft, consider the following statements:

1. Hallucinations (AI generating false outputs presented as facts) are identified as a key AI risk.
2. Algorithmic bias is identified as a key AI risk dimension.
3. Concentration risk arising from dependence on a few global AI providers is identified.
4. The draft excludes adversarial attacks from AI risk considerations.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the draft explicitly includes adversarial attacks as one of the 7 AI risk dimensions and requires red-teaming to test models under adversarial conditions.)

Q5. With reference to the predecessor documents and context, consider the following statements:

1. The draft follows RBI’s August 2024 draft on Regulatory Principles for Management of Model Risks (in credit).
2. It also follows the August 2025 report of the Committee on FREE-AI (Framework for Responsible and Ethical Enablement of AI).
3. On finalisation, the new Guidance will supersede Chapter-3 (Credit Risk Models) of RBI’s Guidance Note on Credit Risk Management dated 12 October 2002.
4. The draft is aligned with the European Union’s AI Act and has been jointly drafted with the EU.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; while the draft aligns with global AI governance trends, it was drafted independently by RBI, NOT jointly with the EU.)

Q6. With reference to consumer protection provisions in the draft, consider the following statements:

1. The RBI states that regulated entities should not use any model that harms consumers.
2. Grievance-redress mechanisms must specifically address complaints arising from customer-facing AI.
3. Customer-facing AI systems must provide an option for customers to speak with a human at any point.
4. Customer-facing generative AI systems are exempted from additional cybersecurity requirements.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; generative AI systems interacting with customers or external users face ADDITIONAL cybersecurity requirements, NOT exemption.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because it applies to 11 RE categories.
2. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because accountability cannot be shifted to vendors.
3. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because RMCB is board-level, not first line.
4. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because adversarial attacks are included.
5. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because the draft is independent of the EU AI Act.
6. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because GenAI faces additional cybersecurity requirements.

3. RBI Drops Separate Onshore-Offshore Foreign Exchange Position Calculation

Source: Business Standard

Context

The Reserve Bank of India (RBI) on Wednesday, 24 June 2026 issued the final amendment directions on Net Open Position (NOP) for banks and All-India Financial Institutions (AIFIs), after examining feedback on the draft norms released in January 2026 (comments deadline: 3 February 2026). The revised framework, which comes into effect on 1 April 2027, aligns the calculation of foreign-exchange risk with Basel Committee on Banking Supervision (BCBS) standards and clarifies the treatment of overseas operations, structural foreign-currency investments, and derivative exposures. The most significant change: banks will no longer be required to separately calculate onshore and offshore foreign-exchange positions — all open positions from onshore and offshore operations will be captured under a single, unified NOP calculation. Banks can also exclude specified structural foreign-exchange positions from NOP calculations at both standalone and consolidated levels, including capital investments and accumulated or unremitted surplus in overseas subsidiaries, joint ventures, associates, overseas branches, IFSC Banking Units (IBUs), and Offshore Banking Units (OBUs) denominated in foreign currencies. Crucially, the draft requirement of prior regulatory approval for such exclusions has been dropped — banks can apply such exemptions on a case-by-case basis. The RBI accepted industry feedback on derivative positions, allowing banks to use current spot rates without present-value adjustment for measuring derivative exposures, and replaced the requirement to use Foreign Exchange Dealers Association of India (FEDAI) guidelines for spot rates with financial benchmarks administered by authorised benchmark administrators.

Key Changes

Change	Earlier Framework	Revised Framework (1 April 2027)
NOP Calculation	Separate onshore + offshore positions	Single unified NOP covering all operations
Structural FX Positions	Generally included in NOP	Can be excluded (case-by-case, no prior RBI approval)
Capital in Overseas Subsidiaries	Included in NOP	Can be excluded (in foreign currency)
Derivative Spot Rate	FEDAI guidelines	Financial benchmarks administered by authorised benchmark administrators
Derivative Measurement	With present-value adjustment	Without present-value adjustment (current spot rates)
Shorthand Method (Gold)	Combined with FX	Gold treated separately
Consolidated Capital Charge	Required	Retained; internal limits allowed as proxy for marginal overseas operations
Application of Exemptions	Required prior RBI approval (draft)	Case-by-case (no prior approval required)

Structural Foreign-Exchange Positions Excluded from NOP

The following can be excluded at both standalone and consolidated levels:

1. Capital investments in overseas subsidiaries (foreign currency).
2. Capital investments in joint ventures (JVs) and associates (foreign currency).
3. Capital investments in overseas branches (foreign currency).
4. Capital investments in IFSC Banking Units (IBUs) (foreign currency).
5. Capital investments in Offshore Banking Units (OBUs) (foreign currency).
6. Accumulated or unremitted surplus in any of the above.

Net Open Position (NOP)

• What: The difference between a bank’s total foreign currency assets and liabilities; reveals exposure to currency fluctuations or exchange rate risk; NOP is a single, easy-to-read domestic-currency exposure number that compresses the bank’s complete FX book; regulated by RBI under the FEMA, 1999 and RBI’s prudential framework; must be backed by capital charge for foreign-exchange risk.
• Where: Applies to all banks and AIFIs in India, including their overseas operations; monitored by RBI from Mumbai.

Shorthand Method

• What: A simplified methodology to calculate NOP under Basel standards for smaller or less complex banks; aggregates long and short positions across currencies into net long and net short positions; larger of the two is the NOP; gold treated as a separate position (under revised framework).
• Where: Applied globally under BCBS framework; in India, RBI prescribes the methodology.

Basel Committee on Banking Supervision (BCBS)

• What: The primary global standard setter for prudential regulation of banks; comprises 45 members from 28 jurisdictions; sets standards for capital adequacy (Basel I, II, III, IV), liquidity, market risk, operational risk, foreign-exchange risk.
• Where: HQ at Bank for International Settlements (BIS) in Basel, Switzerland; standards followed globally including by India through RBI.

Foreign Exchange Dealers Association of India (FEDAI)

• What: An association of authorised dealer banks in India that frames rules for foreign exchange business and publishes daily reference rates for forex transactions; established in 1958; regulated by RBI.
• Where: HQ in Mumbai; serves all RBI-authorised dealer (AD) banks in India.

International Financial Services Centre (IFSC)

• What: A special economic zone for financial services, established under the Special Economic Zones Act, 2005; allows deemed offshore jurisdiction within India; GIFT City IFSC in Gandhinagar, Gujarat is India’s first and only IFSC; IBUs (IFSC Banking Units) of Indian and foreign banks operate there.
• Where: GIFT City, Gandhinagar, Gujarat; regulated by the International Financial Services Centres Authority (IFSCA), established under the IFSCA Act, 2019, headquartered in GIFT City.

Offshore Banking Unit (OBU)

• What: A bank branch located in a special economic zone (SEZ) or IFSC that is permitted to undertake international banking business (USD or other foreign currency); deemed offshore for regulatory purposes.
• Where: Operates in SEZs and IFSCs; in India, primarily at GIFT City and other SEZs.

Capital Charge for Foreign-Exchange Risk

• What: A regulatory capital requirement that banks must maintain to cover potential losses from foreign-exchange rate movements; calculated as a percentage of NOP; under Basel III, typically 8% of net open position.
• Where: Mandated by RBI for all Indian banks and AIFIs at both standalone and consolidated levels.

Practice MCQs

Q1. With reference to the RBI’s final amendment directions on Net Open Position (NOP) issued on 24 June 2026, consider the following statements:

1. The revised framework will come into effect on 1 April 2027.
2. Banks will no longer be required to separately calculate onshore and offshore foreign-exchange positions.
3. The framework aligns NOP calculation with Basel Committee on Banking Supervision (BCBS) standards.
4. The directions abolish the capital charge for foreign-exchange risk at the consolidated level.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the capital charge for foreign-exchange risk is RETAINED at both standalone and consolidated levels, NOT abolished.)

Q2. With reference to the structural foreign-exchange positions that can be excluded from NOP, consider the following statements:

1. Capital investments in overseas subsidiaries, joint ventures, and associates can be excluded.
2. Capital investments in overseas branches, IFSC Banking Units (IBUs), and Offshore Banking Units (OBUs) can be excluded.
3. Banks can apply such exemptions on a case-by-case basis without prior regulatory approval.
4. Such exclusions are permitted only at the standalone level, not at the consolidated level.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the exclusions are permitted at BOTH standalone and consolidated levels, NOT only at the standalone level.)

Q3. With reference to the treatment of derivative positions under the revised framework, consider the following statements:

1. Banks shall use current spot rates, without present-value adjustment, for measuring derivative exposures.
2. The requirement to use Foreign Exchange Dealers Association of India (FEDAI) guidelines for spot rates has been replaced with financial benchmarks administered by authorised benchmark administrators.
3. The revised framework eliminates derivative positions entirely from NOP calculations.
4. Internal limits in individual currencies may be used as a proxy for actual positions in certain marginal overseas operations for consolidated NOP calculations.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 3 is wrong; the framework does NOT eliminate derivative positions from NOP; it modifies their measurement methodology.)

Q4. With reference to the modified shorthand method for NOP calculation, consider the following statements:

1. Banks will calculate the net position in gold independently from foreign-currency positions.
2. The net gold position will be added to the larger of aggregate net long or net short foreign-currency positions.
3. The modification aligns with Basel Committee on Banking Supervision (BCBS) standards.
4. Under the new method, gold positions are merged with other foreign-currency positions without separation.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; under the new method, gold positions are treated SEPARATELY from foreign-currency positions, NOT merged.)

Q5. With reference to the Basel Committee on Banking Supervision (BCBS) and India’s regulatory alignment, consider the following statements:

1. The BCBS is the primary global standard setter for prudential regulation of banks.
2. The BCBS is headquartered at the Bank for International Settlements (BIS) in Basel, Switzerland.
3. India follows BCBS standards through RBI’s regulatory and prudential framework.
4. The BCBS comprises members from only G7 countries.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; the BCBS comprises 45 members from 28 jurisdictions, including India and other emerging economies, NOT only G7 countries.)

Q6. With reference to the GIFT City IFSC and IFSC Banking Units (IBUs), consider the following statements:

1. GIFT City is India’s first International Financial Services Centre (IFSC), located in Gandhinagar, Gujarat.
2. IFSC Banking Units (IBUs) are branches of banks that operate in an IFSC and conduct international banking business.
3. The IFSC is regulated by the International Financial Services Centres Authority (IFSCA), established under the IFSCA Act, 2019.
4. IBUs are considered onshore for the purpose of foreign-exchange regulation in India.

How many of the above statements are correct?

(a) Only one (b) Only two (c) Only three (d) All four (e) None

(Statement 4 is wrong; IBUs are considered offshore (deemed offshore jurisdiction) for regulatory purposes, NOT onshore.)

Answer Key

1. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because capital charge is retained.
2. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because exclusions apply at both levels.
3. (c), Statements 1, 2, 4 are correct; Statement 3 is wrong because derivatives are not eliminated.
4. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because gold is treated separately.
5. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because BCBS has 28 jurisdictions.
6. (c), Statements 1, 2, 3 are correct; Statement 4 is wrong because IBUs are deemed offshore.

Facts To Remember

1. PM Narendra Modi Visits Odisha for Development Projects

Prime Minister Narendra Modi visited Odisha on 20 June 2026 to participate in major development and infrastructure events. Along with President Droupadi Murmu, he inaugurated and laid the foundation stone for projects worth over ₹47,600 crore.

2. PM Modi Visits West Bengal for Development Initiatives

Prime Minister Narendra Modi visited West Bengal from 20–21 June 2026 to attend Paschimbanga Divas celebrations and launch multiple development projects. He also released the 23rd installment of PM-KISAN.

3. DISHA 2.0 Scheme Approved to Strengthen Digital Justice Delivery

Union Minister Arjun Ram Meghwal approved DISHA 2.0 with an outlay of ₹255 crore for 2026–2031. The scheme aims to improve digital access to justice and benefit nearly 3 crore citizens across India.

4. DIBD and AISF Sign MoU for Multilingual AI Innovation

Digital India BHASHINI Division and Assam Innovation and Startup Foundation signed an MoU to promote language technology and multilingual AI solutions in Assam. The partnership will improve digital access through regional language services.

5. World Bank Approves USD 1.5 Billion for India’s Structural Reforms

World Bank approved USD 1.5 billion for India’s structural reforms to support private sector-led job creation and economic growth. The initiative aims to generate employment for nearly 11 million youth annually.

6. World Bank Approves ₹4,000 Crore Loan for Haryana Water Project

World Bank approved a ₹4,000 crore loan for the Jal Sanrakshit Haryana Project. The project aims to improve water management and conservation across 48.94 lakh acres in Haryana.

7. PFRDA Launches AI-Powered Pension Sahayak Portal

Pension Fund Regulatory and Development Authority launched the AI-powered Pension Sahayak portal to simplify grievance redressal for pension subscribers. The platform enables complaint filing, status tracking, and faster resolution through a unified digital system.

8. IFC Commits USD 371 Million to Sify for AI-Ready Data Centres

International Finance Corporation committed USD 371 million to Sify Technologies for building AI-ready, energy-efficient data centres in India. The new facilities will be developed in Navi Mumbai and Chennai.

9. NSE Partners with BME for Metal Derivatives Market Growth

National Stock Exchange of India signed an MoU with Bharat Metal Exchange to strengthen India’s non-ferrous metal derivatives market. The partnership will improve hedging tools and risk management.

10. GI Tags Granted to Four Products of Madhya Pradesh

The Geographical Indication Registry granted GI tags to Khurasani Imli, Garadu, Malwi Potato, and Balam Kakdi from Madhya Pradesh. These products received recognition for their unique regional identity and quality.

11. Harsh Vardhan Receives Global Prestige Award

Harsh Vardhan received the Global Prestige Award at the UK Parliament for contributions toward the Viksit Bharat 2047 vision. The recognition honoured leadership in development and innovation.

12. Kunal Shah Joins Meta to Lead WhatsApp Globally

Kunal Shah reportedly joined Meta to lead WhatsApp globally. He stepped away from operational responsibilities as CEO of CRED.

13. India Wins Gold in Women’s 4×100m Relay

India won gold in the women’s 4×100m relay at the Asian Relays Championships 2026 in China. The Indian team clocked 43.85 seconds to finish ahead of China and Thailand.

14. Book on India’s IIT Ecosystem Launched

Om Birla launched the book IIT: The Story of India’s Most Prestigious Educational Ecosystem, authored by Prabhat Kumar. The book highlights the 75-year journey of India’s IIT ecosystem.

15. International Day of the Celebration of Solstice Observed

The International Day of the Celebration of the Solstice was observed on 21 June 2026 to highlight the cultural and astronomical significance of solstices across civilizations worldwide.

16. World Music Day 2026 Observed

World Music Day was observed on 21 June 2026 with the theme “Music for Peace.” The day promotes unity, creativity, and peace through music.