Daily Current Affairs (DCA) 26&27 May, 2025

Daily Current Affairs Quiz
26&27 May, 2025

National Affairs

1. U.S. DIA Report 2025: India’s Strategic Posture and Security Outlook

Context:

The US Defense Intelligence Agency (DIA), in its 2025 worldwide threat assessment, has stated that India views China as its primary adversary, while treating Pakistan more as an ancillary security problem to be managed, despite the recent escalation of cross-border hostilities.

India’s Key Security Assessments

• China is viewed as India’s primary adversary
• Pakistan is considered an ancillary threat to be managed, despite recent border skirmishes
• Pakistan’s view: India seen as an existential threat

Recent Conflict Highlights

• Cross-border hostilities in mid-May between India and Pakistan
• Pahalgam terror attack (April 22, 2025) led to:
  • Indian military response under Operation Sindoor
  • Follow-up military confrontations lasting three days

India’s Defence and Foreign Policy Priorities

• Under PM Narendra Modi:
  • Focus on global leadership, countering China, and strengthening military capabilities
• Defence Industrial Focus:
  • Continued promotion of “Made in India” initiative
  • Aims: Build domestic defence production, modernise forces, and address supply chain vulnerabilities

Military Modernisation Highlights

• Successful tests of:
  • Agni-I Prime MRBM (nuclear-capable)
  • Agni-V MIRV (Multiple Independently targetable Reentry Vehicle)
• Commissioning of India’s second nuclear-powered submarine
  • Enhances nuclear triad and deterrence capability

Geostrategic Engagement

• Boosting bilateral defence partnerships in the Indian Ocean Region (IOR) via:
  • Joint exercises
  • Training and information sharing
  • Arms sales
• Active role in multilateral and trilateral fora:
  • Quad, BRICS, SCO, and ASEAN

India–China Relations

• October 2024 disengagement from Depsang and Demchok
  • Reduced tensions but border demarcation dispute remains unresolved
  • Context: Lingering fallout from 2020 Galwan clash

India-Russia RelationsIndia–Russia Relations

• India to maintain ties with Russia for:
  • Economic and defence strategic needs
  • Balancing growing Russia-China cooperation
• Procurement trends:
  • Declining Russian-origin purchases under Modi
  • Continued reliance on Russian spare parts for:
    • Tanks
    • Fighter aircraft

Pakistan’s Strategic Posture

• Focused on:
  • Military modernisation
  • Development of battlefield nuclear weapons
  • Offset India’s conventional superiority
• DIA suspects Pakistan procured WMD-relevant goods via foreign intermediaries

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2. Bharat Forecasting System (BFS)

Context:

The Bharat Forecast System (BFS) is an indigenously developed high-precision weather forecasting model, officially launched by the Ministry of Science and Technology in May 2025. Developed by the Indian Institute of Tropical Meteorology (IITM), Pune, BFS is now operational after three years of rigorous testing since its inception in 2022.

Core Features and Technology

• Powered by ‘Arka’ Supercomputer:
  • Processing capacity: 11.77 petaflops
  • Storage: 33 petabytes
• Uses data from a network of 40 Doppler Weather Radars, expanding to 100 radars for all-India coverage.
• Capable of providing nowcasts—short-term forecasts for the next two hours.
• Forecasting Resolution: 6 km × 6 km — highest operational resolution in the world.
• Developed by the Indian Institute of Tropical Meteorology (IITM), Pune.
• Tested since 2002; significant advances in predicting heavy rainfall events.
• Short- and medium-range forecasts (3-day and 7-day) expected to improve substantially.
• Long-range forecasts (monthly or seasonal) will remain unchanged for now.

What Makes BFS Superior?

Speed:

• Previous models took 12–14 hours to generate forecasts.
• BFS delivers predictions in 4–6 hours, thanks to advanced high-performance computing under ‘Mission Mausam’.

Accuracy:

• Offers 30% improvement in forecasting extreme rainfall events.
• Significantly improves cyclone path prediction.
• Forecasts accurate down to village and panchayat levels.

Granular Localised Predictions:

• Previous grid resolution: 12 km
• BFS grid resolution: 6 km
• Results in a 64% improvement in prediction precision.

Strategic Impact

• Enhances preparedness for disaster risk reduction, especially during monsoons and cyclones.
• Supports key sectors like agriculture, water resource management, and public safety.
• Marks a leap in India’s meteorological self-reliance and technological advancement.

3. Centre-State Relations in Focus at 10th NITI Aayog Governing Council Meeting

Overview

• Event: 10th Governing Council Meeting of NITI Aayog
• Location: New Delhi
• Date: Weekend preceding May 27, 2025
• Key Theme: PM Modi urged for a collaborative “Team India” approach between Centre and States

Current Challenges in Centre-State Relations

• One-way Coordination: States allege limited say in national-level decision-making
• Infrequent Meetings:
  • NITI Aayog Council meets only once a year
  • GST Council has not met for over five months (against the mandated quarterly schedule)
• Federal Deficit: States often use rare forums to raise individual issues rather than collaborate on national goals

Notable State Interventions

• Andhra Pradesh CM N. Chandrababu Naidu:
  • Proposed three sub-groups of States to focus on:
    • GDP growth and investments
    • Demographic dividend
    • Governance through technology
• Tamil Nadu CM M.K. Stalin:
  • Proposed increasing States’ share in central taxes from 41% to 50%
  • Highlighted inadequacy of current devolution formula in post-GST era

Fiscal Concerns Raised by States

• GST Shortcomings:
  • GST revenue performance below expectations
  • Net collections only recently exceeding pre-GST indirect tax levels
• States’ Revenue Improvement:
  • Own tax revenue-to-GSDP ratio improved from 6.6% in 2017–18 to 7.2% in 2024–25
  • Uneven performance across States, but progress noted
• GST Compensation Issue:
  • Compensation ceased after 5 years as per initial agreement
  • Many States still adjusting to post-GST fiscal constraints

Implications

• Highlights the need for:
  • More frequent and structured inter-governmental dialogue
  • Revisiting tax devolution and fiscal federalism
  • Collaborative mechanisms like sub-groups for targeted national outcomes

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4. Government Restores RodTEP Benefits for SEZs and EOUs

Context:

The Government of India has reinstated the benefits under the Remission of Duties and Taxes on Exported Products (RodTEP) scheme for goods manufactured in:

• Special Economic Zones (SEZs)
• Export-Oriented Units (EOUs)

The restoration will be effective from June 1, 2025.

Background

• The Commerce Ministry had earlier withdrawn RodTEP benefits for SEZs and EOUs starting February 6, 2025.
• RodTEP refunds various central and state duties, taxes, and levies on input products to exporters.
• The scheme supports zero-rating of exports, thereby enhancing export competitiveness.

Special Economic Zones (SEZs)

The main objectives of the SEZ Scheme is generation of additional economic activity, promotion of exports of goods and services, promotion of investment from domestic and foreign sources, creation of employment opportunities along with the development of infrastructure facilities. All laws of India are applicable in SEZs unless specifically exempted as per the SEZ Act/ Rules.

Each Zone is headed by a Development Commissioner and is administered as per the SEZ Act, 2005 and SEZ Rules, 2006. Units may be set up in the SEZ for manufacturing, trading or for service activity.

Export-Oriented Units (EOUs)

The Export Oriented Unit (EOU) Scheme started in 1981 to promote exports and thus increase net foreign exchange earnings.

What is the EOU or export-oriented units scheme?

EOUs are those units that undertake to export their entire goods and services. Any entity engaged in the below-mentioned activities can obtain the status of EOU:

• Manufacturing, 
• Providing service,
• Software development, 
• Repair, reconditioning and re-engineering of jewellery and articles, 
• Units engaged in agriculture, animal husbandry, poultry, biotechnology, floriculture, horticulture, 
• Other similar activities 

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5. NITI Aayog Proposes Support Measures to Transform Medium Enterprises into Global Businesses

Key Recommendations

• Working Capital Support: Up to ₹25 crore at concessional interest rates via a dedicated financing scheme under the Ministry of MSME.
• Credit Card Facility: Preapproved credit cards with limits up to ₹5 crore for medium enterprises.
• Technology & Skilling: Introduction of various technology adoption initiatives and skill development measures tailored for medium enterprises.

Background and Rationale

• Medium enterprises currently lack dedicated schemes addressing their higher capital needs, often being grouped with MSMEs (micro, small, and medium enterprises).
• Revised FY26 Budget classification defines medium enterprises as those with:
  • Investment up to ₹125 crore.
  • Turnover up to ₹500 crore.
• Medium enterprises are viewed as potential major employment generators if given focused support.

Proposed Financing Scheme Details

• Loans available through local retail banks.
• Fast-track loan decisions.
• Loan cap of ₹25 crore, with ₹5 crore per request limit.
• Loan size linked to sector-specific revenue thresholds (manufacturing/services).

Global Best Practices

• The report cites skill development and enterprise promotion programs from countries like Türkiye, Canada, Singapore, and Australia as models for India’s medium enterprise policy framework.

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6. Kerala Oil Spill Incident: MSC ELSA 3 Capsizes off Kochi Coast

Context:

A Liberian-flagged cargo vessel, MSC ELSA 3, sank 38 nautical miles off the Kochi coast, raising concerns of a hazardous oil spill and environmental threat.

What Happened?

• Vessel: MSC ELSA 3 (Liberian-flagged)
• Route: Vizhinjam to Kochi
• Incident: Flooding in one hold led to capsizing and sinking
• Cargo Details:
  • 640 containers onboard
  • 13 classified as hazardous cargo
  • 84.44 MT diesel
  • 367.1 MT furnace oil
  • Chemicals include calcium carbide, which is highly reactive with water

What is an Oil Spill?

• Definition: Accidental discharge of petroleum or oil-based products into marine or coastal waters.
• Environmental Impact:
  • Forms a toxic surface film, blocks sunlight
  • Reduces oxygen levels in water, harming marine biodiversity

Impacts of Oil Spills

Marine Life Damage

• Oil coats birds and mammals → disrupts thermoregulation and buoyancy
• Fish suffer from toxic exposure → affects growth, reproduction

Ecosystem Disruption

• Destroys phytoplankton, coral reefs, and mangroves
• Contaminates food chains and estuarine ecosystems for years

Economic Impact

• Hits fisheries, tourism, and marine transport
• Cleanup and environmental remediation are cost-intensive

Legal & Regulatory Framework

International Conventions

• MARPOL (1973/78): International treaty by IMO to prevent marine pollution
• OPRC Convention (1990): Coordinates international response to oil pollution

Indian Regulations

• Merchant Shipping Act, 1958: Governs maritime safety and pollution control
• National Oil Spill Disaster Contingency Plan (NOS-DCP):
  • Managed by Indian Coast Guard
  • Provides monitoring, response, and emergency coordination

Oil Spill Management Techniques

• Skimmers: Collect floating oil from the water surface
• Dispersants: Break oil into micro-droplets for faster degradation
• Oil Booms: Floating barriers that prevent oil from spreading
• In-situ Burning: Controlled burning of oil slicks
• Bioremediation: Use of oil-degrading microbes (e.g., TERI’s Oil Zapper)

7. NITI Aayog Report: Designing a Policy for Medium Enterprises

Context:

NITI Aayog has launched a visionary policy report focused on medium enterprises as a key pillar for achieving Viksit Bharat @2047, proposing targeted reforms to unlock their industrial potential.

What Are Medium Enterprises?

• Definition (as of April 2025):
  • Investment: Up to ₹125 crore
  • Turnover: Up to ₹500 crore
• Economic Significance:
  • Only 0.3% of all MSMEs
  • Contribute 40% of MSME exports
  • Act as growth drivers, innovation hubs, and employment generators

Sectoral Overview

Indicator	Value/Impact
GDP Contribution	MSMEs contribute 29%, with medium enterprises as the manufacturing core
Job Creation	89 jobs/unit (vs. 5.7 in micro, 19.1 in small)
Export Income	~₹50,562 crore annually
R&D Spend	81% of MSME R&D comes from medium enterprises

Positive Insights from the Report

• High Productivity & Employment: Stronger ROI and job creation per enterprise
• Export Powerhouses: Contribute disproportionately to India’s export earnings
• Innovation-Driven: Higher per-unit R&D spending than micro and small firms
• Growth Potential:
  • 20% growth in medium enterprises could yield:
    • ₹5.4 lakh crore in additional forex
    • 12 lakh new jobs
• Need for Policy Realignment:
  • Current policies skewed towards micro/small enterprises
  • Medium enterprises lack tailored support

Key Challenges Identified

• Low Scheme Awareness: Only 10% use government portals for support
• Financing Gaps:
  • No dedicated working capital facility
  • Over-reliance on personal funds
• Tech Lag: 82% lack Industry 4.0 tools (AI, IoT, robotics)
• Skill Mismatch: Generic training fails to meet enterprise-specific needs
• R&D Neglect: No central innovation support mechanism
• Complex Compliance: Burdensome paperwork and fragmented information

Strategic Recommendations (Way Forward)

Finance Support

• ₹5 crore credit card facility at market-linked rates
• Turnover-linked working capital scheme

Tech & Industry 4.0 Adoption

• Upgrade Technology Centres to SME 4.0 Competence Centres
• Sector-specific testing labs under MSE-CDP scheme

Skilling & Talent Reform

• Localised, custom training based on region, sector, and scale

R&D Infrastructure

• Establish 3-tier R&D framework with national-level funding support

Digital Governance

• Create AI-enabled sub-portal on Udyam
  • For scheme discovery, compliance help, and centralised support

Banking/Finance

1. Loans Against Property (LAP)

Context:

Banks and Non-Banking Financial Companies (NBFCs) are increasingly promoting Loans Against Property (LAP), a secured retail lending product, due to rising stress in unsecured loan segments.

Key Highlights:

• MSME LAP Growth: The LAP portfolio, especially for micro, medium, and small enterprises (MSMEs), has seen significant expansion.
  • MSME LAP market size grew over 50% in two years to ₹11.3 trillion.
  • Micro-LAP lending surged 60% to ₹1.6 trillion in the same period.
• Mortgage Loan Growth: Mortgage loans (which include LAP) recorded a year-on-year growth of 19%, highlighting strong portfolio potential.

What is a Loan Against Property?

A Loan Against Property (LAP) lets you tap into your property’s value by using it as collateral to secure funds. With benefits like low-interest rates and flexible repayment options, LAP can be a suitable financial solution. To qualify, lenders typically assess factors like property value, your income and credit score.

Why LAP is Preferred

• LAP is secured by property collateral, reducing risk for lenders.
• Protects banks’ Net Interest Margin (NIM) better than unsecured products.
• Less competitive and less risky compared to unsecured retail loans and home loans.
• Banks prefer LAP over home loans due to intense competition and policy push for affordable housing in the housing loan segment.

Challenges in the Unsecured Loan Segment

• High Delinquencies: Unsecured personal loans have a delinquency rate of 3.5%–3.6%, indicating rising defaults.
• Slowdown in Growth: Credit card dues and unsecured personal loans growth rates have declined sharply in recent years.
• Selective Lending: Post increase in risk weights on unsecured loans, banks are becoming selective and shifting focus to secured products backed by robust collateral.

2. Complaint Filed Against IndusInd Bank Over Accounting Lapses

Context:

The National Financial Reporting Authority (NFRA) has received a complaint via the CPGRAMS portal regarding alleged accounting lapses at IndusInd Bank. The issue centers on accounting discrepancies in IndusInd Bank’s derivatives portfolio, which the bank disclosed on March 10, 2025.

RBI-NFRA Coordination

• Avoiding Duplication: NFRA is currently consulting with the RBI to verify if the central bank has already conducted a forensic audit or investigation to avoid redundant inquiries.
• RBI’s Jurisdiction: Since RBI is the primary regulator for banks, NFRA may defer action if the matter is already being addressed by RBI.

SEBI’s Involvement

• SEBI’s Parallel Check: SEBI Chairman Tuhin Kanta Pandey recently stated that SEBI is examining the matter for any securities law violations or egregious misconduct.

Implications

• Multi-agency Oversight: With NFRA, RBI, and SEBI all showing interest, this case could become a high-profile financial probe.
• Auditor Accountability: If NFRA proceeds, it could scrutinize the role and diligence of the statutory auditors.
• Governance Concerns: The suspected fraud and revenue misstatements raise serious corporate governance red flags at IndusInd Bank.

3. Finance Ministry’s Directives for RRB Integration and Expansion

IT Integration Deadline

• All 28 Regional Rural Banks (RRBs) must complete IT system integration by September 30, 2025.
• Responsibility assigned to sponsor banks to ensure seamless implementation.

Profitability & Road Map for Loss-Making RRBs

• Sponsor banks to handhold and support loss-making RRBs.
• Directed to prepare a profitability roadmap to improve financial health.

Post-Amalgamation Support

• Sponsor banks to assist RRBs in:
  • Leveraging amalgamation benefits
  • Strengthening core banking operations
  • Enhancing operational efficiency

Human Resource & Customer-Centric Measures

HR Sensitivity

• Staff-related issues must be handled with empathy and care.
• Employee grievances should be addressed promptly and sensitively.

Jan Dhan Account Re-Activation

• RRBs must:
  • Reactivate inoperative Jan Dhan accounts
  • Complete eKYC formalities for dormant accounts

Strategic Operational Guidance

Product and Branch Differentiation

• RRBs advised to:
  • Differentiate product offerings
  • Ensure geographic separation of branches to:
    • Minimize intra-bank competition
    • Maximize customer outreach

Background: RRB Restructuring

• Effective May 1, 2025, amalgamated RRBs now total:
  • 28 RRBs across 26 states and 2 Union Territories
  • With over 22,000 branches across 700 districts

Objective

To ensure that RRBs:

• Function as financially viable, tech-integrated institutions
• Continue playing a key role in rural credit delivery and financial inclusion

One State-One RRB

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4. Revised Economic Capital Framework (ECF) of RBI

Context:

To provide the Reserve Bank of India (RBI) with greater flexibility in determining surplus transfers to the government. Aimed at smoothing transfers across years without distorting the government’s fiscal math.

Contingency Risk Buffer (CRB): Revised Range

Increasing the Contingency Risk Buffer (CRB) provides the RBI with greater flexibility, enabling it to smoothen surplus transfers to the government and prevent significant volatility in fiscal calculations

Period	CRB (%)
FY19–FY22	5.5
FY23	6.0
FY24	6.5
FY25	7.5 (max of revised range)

• The revised CRB range is now 4.5% to 7.5% (earlier 5.5%–6.5%).
• This allows the RBI to:
  • Retain higher reserves in boom years
  • Support higher transfers in low-earning years

Record Surplus Transfer in FY25

• RBI transferred ₹2.69 trillion to the government in FY2024–25, highest ever.
• This was done despite maintaining CRB at 7.5%.
• Supported by:
  • Surge in forex transaction income (gross dollar sales jumped from $153 bn in FY24 to $399 bn in FY25)
  • Higher interest from government securities
  • Reduced provisioning for asset revaluation losses

Objective of Revised ECF

• To align risk buffers with emerging risks.
• Ensure intertemporal smoothing of surplus transfers to avoid sharp fiscal impacts.
• Maintains the RBI’s resilience and credibility amid global financial volatility.

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5. Liberalised Remittance Scheme (LRS)

The Liberalised Remittance Scheme (LRS) is an initiative by the Reserve Bank of India (RBI) that allows Indian residents to remit (send) money abroad for various purposes such as education, travel, medical expenses, investments, and more. Since its introduction in 2004, LRS has played a crucial role in facilitating seamless international transactions for individuals.

What is the Liberalised Remittance Scheme (LRS)?

The Liberalised Remittance Scheme (LRS) was introduced by the RBI in 2004 to simplify foreign remittances for Indian residents. Under this scheme, individuals can send up to USD 250,000 per financial year (April–March) outside India for permissible transactions without requiring prior approval from the RBI.

This means that Indian residents can freely remit funds for purposes like foreign travel, overseas education, investments, gifts, donations, medical treatment, and more—as long as they comply with RBI guidelines.

Objectives of the Liberalised Remittance Scheme (LRS)

The primary goals of LRS include:

1. Ease of Foreign Transactions –
   • Allow Indian residents to transfer money abroad conveniently.
2. Supporting Global Education –
   • Enable students to pay for tuition, accommodation, and living expenses abroad.
3. Encouraging Investments –
   • Allow individuals to invest in foreign stocks, bonds, mutual funds, real estate, and startups.
4. Facilitating International Travel & Medical Treatment –
   • Help Indian citizens meet expenses for foreign travel and medical emergencies.
5. Boosting Global Business Interactions –
   • Support business travel, foreign partnerships, and knowledge-sharing opportunities.

6. RBI Forms Six-Member Payments Regulatory Board (PRB)

Context:

The Payments Regulatory Board (PRB) is established to regulate and supervise payment systems in India. Formed under the Payments Regulatory Board Regulations, 2025, the PRB replaces the earlier Board for Regulation and Supervision of Payment and Settlement Systems (BPSS).

Composition of the PRB

Position	Designation	Remarks
RBI Governor	Chairperson (Ex-officio)	Holds casting vote
RBI Deputy Governor (Payments)	Member (Ex-officio)	Steps in if Governor absent
RBI-nominated official	Member (Ex-officio)	Nominated by RBI’s Central Board
Three Government Nominees	Members	Central Government appointed

• Total Members: 6
• Decision-making: By majority vote; Chairperson/Deputy Governor holds casting vote in case of a tie

What is the Payments Regulatory Board (PRB)?

The Payments Regulatory Board (PRB) is a new six-member statutory board under the Reserve Bank of India (RBI), established in 2025. It is designed to regulate, supervise, and strengthen digital and electronic payment systems in India, including UPI, mobile wallets, and other platforms.

Composition of PRB

• Chairperson: RBI Governor (Ex-officio)
• Member: Deputy Governor (in charge of Payment & Settlement Systems)
• Member: One RBI officer nominated by the Central Board
• Three Members: Nominated by the Central Government

Note: RBI representatives are ex-officio, appointed based on their current posts.

Why Was the PRB Introduced?

• Earlier proposal: An independent regulator for payment systems separate from RBI was suggested by an inter-ministerial committee.
• RBI’s stance:
  • Opposed the proposal in 2018 with a ‘Dissent Note’
  • Argued payment regulation must remain with the RBI for continuity, expertise, and secure systems.
• PRB allows government representation while ensuring regulatory control stays with RBI.

PRB vs BPSS

Parameter	BPSS (Earlier Body)	PRB (New Body – 2025)
Status	Existing board under RBI	Replaces BPSS
Governing Authority	RBI	RBI
Chairperson	RBI Governor	RBI Governor (Ex-officio)
Members	5 (All from RBI)	6 (3 RBI + 3 Govt nominees)
Government Role	None	3 Central Govt nominees
Voting Process	Not clearly stated	Each member has 1 vote; casting vote with Chairperson
Meeting Frequency	As decided by RBI	At least twice a year
Expert Involvement	Not specified	Experts from law, IT, fintech can be invited; RBI Legal Adviser is permanent invitee

Benefits and Significance

• Strengthened Oversight: Dedicated board improves monitoring, compliance, and strategic oversight of payment systems.
• Balance of Power: Equal participation from RBI and Government encourages informed and balanced policymaking.
• RBI Control Retained: RBI’s leadership ensures coherence with monetary policy and regulatory experience.
• Enables Innovation: Expert involvement supports tech-led changes (e.g., tokenization, device-based payments).
• Consumer Protection: Enforces RBI-led norms on KYC, grievance redressal, and cybersecurity.
• International Alignment: Brings India in line with global best practices for digital payment regulation.

7. Partnership: Aditya Birla Sun Life Insurance & Equitas Small Finance Bank

Partnership Objective

• ABSLI, a subsidiary of Aditya Birla Capital, has partnered with Equitas Small Finance Bank.
• Aim: To provide ABSLI’s life insurance products through Equitas’ branch network.
• Goal: Enhance financial protection and inclusion by making insurance products more accessible to Equitas customers.

Product Portfolio Offered

• Protection Plans
• Savings Plans
• Retirement Solutions
• Endowment Plans
• Unit Linked Insurance Plans (ULIPs)
• New offerings: Salaried Term Plan, Nishchit Aayush Plan, Assured Savings Plan

8. SIDBI Report: MSME Loan Demand Up 11%, Supply Drops 11% in Jan-Mar 2025

Context:

Commercial loan demand in MSME sector rose 11% year-on-year (y-o-y) during January-March 2025 (Q4 FY24-25). Despite demand growth, MSME credit supply declined by 11% y-o-y in the same quarter. For full FY24-25, credit supply grew only 3% y-o-y by value.

Reasons for Credit Supply Decline

• Heightened credit risk concerns amid worsening external economic conditions.
• Private banks experienced the sharpest supply decline at -14% y-o-y.
• Drop in demand mainly from borrowers with exposure between ₹10 crore to ₹50 crore.
• Significant fall in medium to long-term loans (tenure >1 year) and overdraft facilities.

Areas of Strength & Opportunity

• New cash credit facility loans grew 7% y-o-y in Q4 FY24-25, indicating robust working capital financing.
• As of May 12, 2025, 6.35 crore Udyam-registered MSMEs exist, but only 3.68 crore have accessed credit at least once.
• Large untapped MSME credit market presents growth potential.
• Opportunity for lenders to focus on the New-to-Credit (NTC) segment to expand MSME loan portfolios.

9. RBI Imposes Fines on Union Bank of India and Lendbox for Regulatory Violations

Entities Penalized

• Union Bank of India: Fined ₹63.6 lakh
• Transactree Technologies Pvt Ltd (Lendbox): Fined ₹40 lakh

Reasons for Penalties

Union Bank of India:

• Violated provisions of the Banking Regulation Act, 1949.
• Non-compliance with RBI directions related to Credit Flow to Agriculture – Collateral Free Agricultural Loans.

Key Regulatory Violations by Lendbox

• Lendbox (Transactree Technologies Pvt Ltd):
  • Non-compliance with Non-Banking Financial Company – Peer to Peer Lending Platform (Reserve Bank) Directions, 2017.
  • Penalty Imposed Under Section of the RBI Act, 1934.
• Unauthorized Routing of Funds
  • Funds were routed through a co-lending escrow account, violating RBI’s prescribed fund transfer norms for P2P platforms.
• Lack of Transparency to Lenders
  • Failed to disclose credit assessments and borrower risk profiles to prospective lenders.
• Loan Disbursal Without Consent
  • Disbursed loans without obtaining specific approvals from individual lenders, breaching mandatory operational protocols.

10. New IBC Regulation Tightens Norms for Personal Guarantors

Context:

The Insolvency and Bankruptcy Board of India (IBBI) introduced Regulation 17B. Mandates Resolution Professionals (RPs) to notify the National Company Law Tribunal (NCLT) if a personal guarantor fails to submit a repayment plan.

Objective

• Enhance accountability of personal guarantors.
• Prevent delays in the insolvency resolution process.

Key Provisions under Regulation 17B

• If no repayment plan is submitted under Section 105 of the IBC:
  • RP must file an application with creditors’ approval before the NCLT.
  • RP must intimate the NCLT about the non-submission.
  • RP should seek appropriate directions from the tribunal.

Background & Significance

• Fills a critical gap where earlier IBC rules lacked directives for repayment plan non-submission.
• Personal guarantors have a distinct insolvency resolution process, which runs parallel and in coordination with the Corporate Insolvency Resolution Process (CIRP).
• NCLT can now issue time-bound directions or initiate bankruptcy proceedings against personal guarantors.

Legal Context

• The 2021 Supreme Court ruling validated inclusion of personal guarantors under IBC.
• Creditors can initiate insolvency actions against guarantors even during or after corporate debtor resolution.
• Personal guarantor framework effective since December 2019.
• Regulation 17A (2024) introduced presumption of repayment plan submission, requiring RP to present it at creditors’ meetings.

Agriculture

1. Genomic and Genetic Insights into Mendel’s Pea Genes

Background: Mendel’s Groundbreaking Work on Pea Plant Inheritance

• Gregor Johann Mendel (1856–1865), an Austrian monk, experimented with pea plants to study trait inheritance.
• Studied seven traits in peas (e.g., seed shape, seed color, flower color, pod shape, pod color, flower position, plant height).
• Discovered dominant-recessive inheritance patterns with predictable 3:1 ratios in second-generation offspring.
• Published results in 1866; work initially ignored, rediscovered in 1900.

The Genetics Behind Mendel’s Traits

• Mendel’s traits are controlled by genes with alleles — different versions inherited from each parent.
• One allele often masks another, explaining dominance.
• Mendel’s foundational work led to modern genetics, chromosome theory, and gene identification.

The Unresolved Mystery: Genetic Basis of Three Traits

• Despite progress by 1917, genetic causes of three traits (pod color, pod shape, flower position) remained unknown.
• Recent research published in Nature (Feng et al., 2025) used next-generation sequencing of 697 pea variants, analyzing ~60 terabases of DNA data.

Key Findings from the 2025 Study

• Complex population structure: Pea genus Pisum has four species but genetically divides into eight groups due to cross-breeding and admixture.
• Additional alleles discovered: More genetic variants influence four well-studied traits, e.g., a new variant causing white flowers to turn purple.
• Genes identified for the last three traits:
  • Pod color: DNA deletion near ChlG gene disrupts chlorophyll synthesis → yellow pods.
  • Pod shape: Variations near MYB gene and CLE-peptide-encoding genes → constricted pods.
  • Flower position: Deletion near CIK-like-coreceptor-kinase gene plus modifier locus → flowers at stem ends.
• Revealed 72 agriculturally relevant traits involving seed, pod, flower, leaf, root, and plant architecture.

Implications for Agriculture and Genetics

• Provides a comprehensive genetic map of pea plant traits.
• Offers potential to enhance crop yield, disease resistance, and environmental adaptation.
• Opens avenues for advanced research in plant genetics and breeding.

Economy

1. India Becomes the 4th Largest Economy in the World

Context:

India has overtaken Japan to become the 4th largest economy globally, as confirmed by NITI Aayog CEO B.V.R. Subrahmanyam, citing data from the IMF World Economic Outlook (April 2025).

What Has Happened?

• India’s Nominal GDP (2025): $4.19 trillion
• Japan’s Nominal GDP (2025): $4.18 trillion
• Source: IMF World Economic Outlook (April 2025)

India’s Updated Economic Status

• Current Global Rank (2025): 4th
• Previous Rank (2024): 5th (behind Japan)
• Top 5 Economies (2025):
  1. United States
  2. China
  3. Germany
  4. India
  5. Japan

Significance of the Achievement

Global Confidence & Investment

• Enhances India’s image as a global economic powerhouse
• Increases prospects for FDI and bilateral partnerships

Strong Domestic Growth

• GDP doubled from $2 trillion (2014) to $4.19 trillion (2025)
• Per capita income rose from $1,438 (2014) to $2,880 (2025)

Resilient Manufacturing Hub

• India remains a cost-effective manufacturing destination
• Attracts companies shifting from China amid global reshoring, e.g., Apple’s diversification plans

Policy Reforms & Governance

• Growth driven by:
  • Digital India, Atmanirbhar Bharat
  • Infrastructure expansion
  • Focused policy reforms and fiscal consolidation

Future Economic Potential

• Set to overtake Germany within 2.5–3 years
• Likely to become the 3rd largest economy globally, as per NITI Aayog projections

Why This Matters

• Repositions India in geoeconomic leadership
• Reinforces commitment to inclusive, innovation-driven growth
• Establishes India as a voice for the Global South in international economic forums

Science & Tech

1. Google’s AI Matryoshka

Context:

At its 2025 I/O Developer Conference, Google unveiled a sweeping AI-first transformation across its entire product suite, anchored by powerful foundational models and new privacy-challenging functionalities. 

Key Announcements

• Foundation Models: Launch of Gemini 2.5 Pro with “Deep Think” mode and Gemini 2.5 Flash as the new default model
• Hardware Backbone: Introduction of TPU v7 Ironwood with 42.5 exaFLOPS per pod (10x performance boost)
• Generative Tools: Upgrades to Imagen 4 (visuals), Veo 3 (video), and Lyria 2 (music)
• Developer Tools: Enhanced Gemini API and Vertex AI with Model Context Protocol (MCP), “thought summaries,” and Project Mariner integration
• User Interfaces: Upgrades to Gemini app, Search with AI Mode, agentic commerce features, and Gemini-integrated Chrome

What is AI Matryoshka?

AI Matryoshka is a multi-layered artificial intelligence ecosystem launched by Google. Drawing inspiration from Russian nesting dolls (Matryoshka), the system positions Google’s core AI as the central “brain” powering all layers—from APIs and developer tools to user-facing applications.

Aim

• Deeply embed AI across Google’s platforms and services.
• Build agentic, intelligent, and autonomous systems for real-time interactions with users, developers, and enterprises.

Key Features of AI Matryoshka

1. Gemini 2.5 Models

• Pro Version:
  • Excels in complex reasoning and competitive coding.
  • Scored top marks in the USAMO (USA Mathematical Olympiad).
• Flash Version:
  • 20–30% more efficient, supports multi-speaker Text-to-Speech (TTS) in 24 languages.

2. Ironwood TPUs

• 7th-generation TPUs offering 5 exaFLOPS of computing power.
• Enables deep learning at hyperscale, advancing model performance and efficiency.

3. Advanced Media & Data Models

• Imagen 4 – High-resolution image generation.
• Veo 3 – Realistic, high-quality video synthesis.
• Lyria 2 – Professional-grade music creation.
• SynthID tools – Watermarks and verifies AI-generated content to protect copyright and ensure transparency.

4. Gemini API & Vertex AI Integration

• Uses the Model Context Protocol (MCP) for dynamic agent interactions.
• Thinking budgets optimize computing resources, enabling adaptive task execution.

5. User-Facing Integration

• AI Mode in Search:
  • Provides cited, in-depth answers in Google Search results.
• Gemini App:
  • Allows private data analysis, but raises privacy and surveillance concerns.

Significance of AI Matryoshka

1. Ethics & Governance

• Sparks debate on privacy, data rights, and AI transparency.
• Challenges existing frameworks on consent and user data control.

2. Digital Economy Impact

• Reshapes commerce, content creation, and automation.
• Empowers businesses with scalable, intelligent AI solutions.

3. Science & Technology Advancements

• Demonstrates scaling of AI systems and TPU innovation.
• Reinforces Google’s position in global AI competitiveness.

TH

2. New Cave-Dwelling Fish Species: Schistura densiclava

Discovery Highlights

• Species Name: Schistura densiclava
• Discovered in: Krem Mawjymbuin cave, East Khasi Hills, Meghalaya
• Researchers: Kangkan Sarma & team from Gauhati University
• Published in: Journal of Fish Biology

Taxonomy & Characteristics

• Family: Nemacheilidae (Loach family)
• Type: Troglophile loach
• Can live both in underground caves and aboveground streams
• Key Traits:
• Retains pigmentation and eyesight (unlike typical cave fishes)
• Pale yellow-green body with 14–20 greyish black bars
• Thick stripe near dorsal fin (Latin densiclava = “thick stripe”)
• Males: Slimmer, irregular patterns, puffier cheeks
• Females: Sturdier, consistent markings

Habitat Conditions

• Found 60 metres inside the cave
• Cool stream temperature: ~18°C
• Low oxygen environment

Facts To Remember

1. Indonesia, China agree to bolster relations ahead of ASEAN summit

Chinese Premier Li Qiang warned that the rise of “unilateralism and protectionism” could threaten the global economic and trade order, as he reaffirmed Beijing’s ties with Jakarta during his visit to Indonesia ahead of the ASEA regional summit in Kuala Lumpur.

2. Finland summons Russian envoy over suspected airspace violation

Finland’s Foreign Ministry said it had summoned Russia’s Ambassador over a suspected violation of Finnish airspace that took place last week.

3. Rupee appreciates beyond 85 per dollar but trims gains

The rupee appreciated beyond the 85 mark to 84.78 per dollar on the back of the fall in dollar index.

4. Containers from capsized ship spotted along Kerala coast, govt asks people to stay away

Containers from the Liberian-flagged cargo ship, MSC ELSA 3, which capsized off the Kerala coast on Sunday, have begun washing up ashore. Four coastal areas along Kollam and Alappuzha on Monday reported spotting containers.

5. MoS for Ayush, Prataprao Jadhav inaugurates Yoga Mahotsav 2025 in Puducherry

Marking the 25-day countdown to the 11th International Day of Yoga, the ‘Yoga Mahotsav 2025’ was organised today in Puducherry. Union Minister of State for Ayush, Prataprao Jadhav, inaugurated the event.

6. Govt wants to empower NE through technology & digital inclusion, says MeitY Secretary

Secretary, Ministry of Electronics and Information Technology (MeitY) S. Krishnan highlighted the ministry’s commitment to empowering the Northeast through technology and digital inclusion.

7. ISSF Junior World Cup: Indian shooter Tejaswani claims Gold in 25m pistol event

Indian shooter Tejaswani claimed the gold medal in the women’s 25m pistol event to continue the country’s domination in the ISSF Junior World Cup 2025 in Suhl, Germany, here on Monday. Tejaswani aggregated 31 after firing five shots in the eight-women final.

8. Panchayati Raj Ministry launches Panchayat Advancement Index 2.0 portal & booklet for FY 2023-24

Ministry of Panchayati Raj today organised a two-day national write-shop on rolling out of Panchayat Advancement Index (PAI) Version 2.0 for the financial year 2023-24 in New Delhi. 

9. FPI ₹13,835 crore in Indian equities in May, exit debt markets

Foreign investors have pumped in nearly 14,000 crore rupees into the Indian equities market so far in May. According to the depositories’ data, the Foreign Portfolio investors, or FPIs, invested 13,835 crore rupees into the equities market but pulled out 7,743 crore rupees from the debt markets so far in May.