Daily Current Affairs Quiz
4 October, 2025
National Affairs
1. Cyclone Shakthi
Source: TH
Context:
The India Meteorological Department (IMD) has officially confirmed the formation of Cyclone Shakthi over the northeast Arabian Sea, marking one of the early post-monsoon cyclonic events of 2025.
About Cyclone Shakthi
- A tropical cyclonic storm that developed in the northeast Arabian Sea, around 340 km west of Dwarka, Gujarat.
- Named “Shakhti” under the World Meteorological Organisation (WMO) regional naming system for the North Indian Ocean.
Origin and Development:
- Emerged from a low-pressure area formed over the warm Arabian Sea waters in early October 2025.
- Intensified into a Cyclonic Storm (CS) on October 3, and is forecast to strengthen into a Severe Cyclonic Storm (SCS) as it moves west-southwestwards.
Why the Bay of Bengal Gets More Cyclones than the Arabian Sea?
| Factor | Bay of Bengal | Arabian Sea |
|---|---|---|
| Sea Surface Temperature | Warmer (29–30°C) throughout the year | Cooler due to strong winds and high evaporation |
| Moisture Availability | High moisture from river inflows and monsoon winds | Dry winds from Oman and Yemen reduce moisture |
| External Atmospheric Triggers | Frequently receives remnants of Pacific typhoons that re-intensify | Rarely influenced by external low-pressure systems, leading to fewer cyclones |
2. Snow Leopards
Context:
The Himachal Pradesh Forest Department has recorded 83 snow leopards in its latest 2025 survey, showing a significant rise from 51 individuals reported in 2021. The increase reflects ongoing conservation success under India’s Project Snow Leopard and improved habitat monitoring through scientific tracking methods.
About the Snow Leopard (Panthera uncia)
- A large, elusive wild cat native to the high-altitude regions of Asia.
- Often called the “ghost of the mountains” for its remarkable camouflage and stealthy movement.
- Declared the State Animal of Himachal Pradesh.
Conservation Status
- IUCN Red List: Vulnerable (VU)
- CITES Appendix I: Trade strictly prohibited.
- Indian Wildlife (Protection) Act, 1972: Listed in Schedule I, offering the highest level of protection.
Key Conservation Initiatives in India
- Project Snow Leopard (2009):
- A central government initiative promoting landscape-level conservation across five Himalayan states.
- SECURE Himalaya Project:
- Jointly implemented by the Government of India and UNDP, focusing on sustainable livelihoods and biodiversity conservation in snow leopard habitats.
- Himalayan Wildlife Surveys:
- Use of camera traps, genetic sampling, and AI-based tracking for accurate population assessments.
Banking/Finance
1. External Commercial Borrowings (ECBs)
Context:
The Reserve Bank of India (RBI) has announced that it will soon release a draft framework to simplify and rationalise rules governing External Commercial Borrowings (ECBs). The new framework aims to expand the scope of eligible borrowers and recognised lenders, relax borrowing and maturity limits, remove cost restrictions, and simplify reporting procedures to enhance ease of doing business and promote capital inflows.
About External Commercial Borrowings (ECBs)
External Commercial Borrowings (ECBs) are commercial loans raised by eligible Indian entities from recognised non-resident entities in foreign currency or Indian Rupees (INR).
They are governed under the Foreign Exchange Management Act (FEMA), 1999, and related RBI regulations.
Organisations Involved
- Reserve Bank of India (RBI): Regulates and issues guidelines for ECBs.
- Borrowers: Indian corporates, Public Sector Undertakings (PSUs), Non-Banking Financial Companies (NBFCs), trusts, and institutions.
- Lenders: International banks, multilateral financial institutions, export credit agencies, foreign equity holders, and other recognised entities.
Aim of ECBs
- To provide Indian entities access to foreign capital at competitive interest rates.
- To diversify funding sources beyond domestic markets.
- To facilitate financing of infrastructure, capacity expansion, and other long-term projects.
Key Features of External Commercial Borrowings
Routes of Borrowing
- Automatic Route: Borrowing permitted directly if it meets standard conditions; processed through Authorised Dealer (AD) Category-I banks.
- Approval Route: Borrowing proposals that do not meet automatic route conditions require specific RBI approval.
Basic Conditions
- Minimum Maturity Period: ECBs must have a defined tenure (e.g., 3–5 years or more depending on end-use).
- All-in-Cost Ceiling: A cap on total borrowing costs, including interest, fees, and other charges.
- End-Use Restrictions: Rules defining permitted and prohibited uses of ECB funds.
- Mandatory Reporting: Borrowers must obtain a Loan Registration Number (LRN) and report transactions via Form ECB to the RBI.
Permitted Uses
- Financing capital expenditure, infrastructure, or expansion projects.
- Refinancing existing loans or replacing costlier debt.
Prohibited Uses
- Real estate business (except affordable housing and township projects).
- Investment in capital markets or speculative purposes.
- Working capital or general corporate purposes (unless specifically allowed).
2. Basic Savings Bank Deposit (BSBD) Accounts
Source: BS
Context:
The Reserve Bank of India (RBI) has issued a draft circular updating guidelines for Basic Savings Bank Deposit (BSBD) accounts, aiming to enhance customer service, promote digitisation, and deepen financial inclusion. BSBD accounts include those opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY).
What Is a BSBD Account?
- A Basic Savings Bank Deposit (BSBD) account is a no-frills savings account designed to provide basic banking facilities to every individual without requiring a minimum balance.
- Accounts opened under the Pradhan Mantri Jan Dhan Yojana (PMJDY) are treated as BSBD accounts.
- Over 566 million PMJDY accounts have been opened, holding deposits of approximately ₹2.67 trillion.
Key Features of BSBD Accounts
| Feature | Description |
|---|---|
| 1. Zero Minimum Balance | No minimum balance requirement. All basic facilities are provided free of charge. |
| 2. Unlimited Deposits | Deposits allowed through cash, ATMs, cash deposit machines, and electronic channels without any limit. |
| 3. Free Core Services | • Minimum four free withdrawals per month (including ATM & fund transfers) • Free debit card and ATM facilities • Cheque book with at least 25 leaves per year • Free passbook or monthly statement • Free internet and mobile banking access |
| 4. Unlimited Digital Transactions | No cap or charge on UPI, NEFT, RTGS, IMPS, or PoS transactions. |
| 5. Optional Paid Services | Banks may offer additional services with or without charges, but must follow transparent and non-discriminatory practices with prior disclosure to customers. |
| 6. Single Account Restriction | • Only one BSBD account allowed per customer across all banks. • Customers must declare they do not hold another BSBD account. • If another savings account exists, it must be closed within 30 days of opening a BSBD account. • BSBD holders may also open term deposit accounts. |
| 7. Conversion and Switching | Existing savings account holders can convert their accounts to BSBD within seven days upon request. |
Significance
- Promotes financial inclusion for unbanked and underbanked populations.
- Aligns with the digitisation of banking services.
- Provides a standardised, cost-free, and accessible account for low-income and first-time bank users.
3. Scale-Based Regulation (SBR) Framework
Source: ET
Context:
The Reserve Bank of India (RBI) has directed 15 Upper Layer Non-Banking Financial Companies (NBFCs), including Tata Sons (a Core Investment Company – CIC), to list on stock exchanges by 30 September 2025.
This mandate stems from the Scale-Based Regulation (SBR) Framework, which classifies NBFCs based on their size, activity, and systemic importance to ensure proportionate regulation and stronger governance in the shadow banking sector.
About the Scale-Based Regulation (SBR) Framework
Introduced by the RBI in October 2021, the Scale-Based Regulation (SBR) framework is a risk-based regulatory structure for NBFCs.
It aims to align regulatory intensity with the size, complexity, and risk profile of NBFCs—similar to the tiered approach used for banks.
Objective
- To strengthen financial stability and regulatory oversight in the NBFC sector.
- To prevent systemic risks from large, interconnected NBFCs.
- To improve transparency, governance, and accountability through stricter compliance norms.
Four-Layer Structure Under the SBR Framework
| Layer | Category Name | Description / Entities Covered | Regulatory Intensity |
|---|---|---|---|
| 1. Base Layer (NBFC-BL) | Smaller NBFCs | Non-systemically important NBFCs (e.g., small loan companies, investment firms) | Light |
| 2. Middle Layer (NBFC-ML) | Larger systemically important NBFCs | Includes deposit-taking NBFCs, large housing finance companies, infrastructure debt funds, etc. | Moderate |
| 3. Upper Layer (NBFC-UL) | Top 10–15 large and systemically critical NBFCs | Identified by RBI based on size, leverage, interconnectedness, complexity, and risk profile | High |
| 4. Top Layer (NBFC-TL) | Possible future category | To be used if RBI observes extreme risk concentration in certain NBFCs | Very High |
Key Features of the SBR Framework
- Proportionate Regulation
- Regulatory requirements increase with the size and risk of the NBFC.
- Governance and Board Oversight
- Upper Layer NBFCs must adopt enhanced corporate governance, independent board composition, and risk management frameworks comparable to banks.
- Listing Requirement (for Upper Layer NBFCs)
- RBI mandates that NBFCs identified in the Upper Layer must be listed on a recognised stock exchange within three years of classification.
- This enhances market discipline and transparency.
- Capital Adequacy Norms
- Stricter minimum capital requirements, liquidity coverage ratio (LCR), and exposure norms apply to Upper Layer NBFCs.
- Disclosure and Supervision
- Regular stress testing, public disclosures, and supervisory reporting to RBI.
- Dynamic Classification
- RBI can reclassify NBFCs across layers annually based on changes in their balance sheet size, systemic importance, or risk profile.
4. RBI Proposes Overhaul of ECB Framework
Source: IE
Context:
The Reserve Bank of India (RBI) has released a draft framework to reform External Commercial Borrowing (ECB) regulations, aiming to enhance access to foreign capital while ensuring prudent risk management. The proposal seeks to link borrowing limits to company financial strength, remove cost caps, and simplify end-use and maturity rules to align with global standards.
Key Proposals:
- Borrowing Limits Linked to Net Worth:
- Companies may raise funds up to the higher of $1 billion in outstanding ECBs or total external and domestic borrowings up to 300% of net worth, based on the latest audited balance sheet.
- The move ties borrowing capacity to the borrower’s financial resilience rather than a uniform cap.
- Market-Determined Interest Rates:
- The RBI proposes to remove the all-in-cost ceiling (currently capped at 450 bps over benchmark).
- Borrowing costs will instead be aligned with prevailing market conditions, improving pricing efficiency and flexibility.
- Simplified End-Use and Maturity Norms:
- End-use restrictions and minimum average maturity (MAM) requirements will be eased.
- This change will benefit large corporates in infrastructure and capital-intensive sectors that need flexible long-term funding.
- Broadened Borrower and Lender Base:
- The framework expands the pool of eligible borrowers and lenders, facilitating greater participation and capital inflow.
- Operational Guidelines:
- ECB proceeds must be repatriated immediately and credited to an INR account with a bank in India.
- Pending deployment, funds can be held in fixed deposits for up to 12 months.
- Funds meant for permissible foreign currency expenditure can be held in foreign currency accounts in India or invested in high-quality overseas deposits until use.
- Restructuring or insolvency cases may raise ECBs only if permitted under their resolution plan.
- Reporting Simplification:
- ECB reporting and compliance requirements will be streamlined to reduce administrative friction.
5. Multi-Asset Allocation Funds
Source: BS
Context:
Multi-asset allocation funds (MAAFs) have emerged as strong performers among mutual funds (MFs), rivalling medium-term returns from traditional equity categories while maintaining a lower risk profile.
What Are Multi-Asset Allocation Funds (MAAFs)?
Multi-Asset Allocation Funds are hybrid mutual fund schemes that invest in at least three different asset classes, such as:
- Equity and equity-related instruments
- Debt and money market instruments
- Commodities (primarily gold or silver)
Regulatory Mandate (SEBI Rule):
As per the Securities and Exchange Board of India (SEBI), MAAFs must invest a minimum of 10% in each of at least three asset classes at all times.
Key Features of MAAFs
- Diversified Asset Mix
- Allocation across equity, debt, and commodities reduces portfolio concentration risk.
- Lower Volatility
- Since returns come from multiple asset classes, MAAFs exhibit lower drawdowns during equity market corrections.
- Dynamic Rebalancing
- Fund managers periodically rebalance the portfolio to capture opportunities across asset classes depending on market conditions.
- Inflation Hedge
- Exposure to gold and commodities provides a natural hedge against inflation and currency depreciation.
- Tax Efficiency
- If equity allocation exceeds 35%, the fund is taxed as a hybrid-debt fund (post-April 2023 norms).
- Earlier, some funds maintained >65% equity to avail equity taxation benefits, but SEBI’s latest rules ensure clearer classification.
Why MAAFs Are Performing Well
- Equity markets have delivered solid long-term gains, boosting fund returns.
- Debt instruments have provided stability amid fluctuating interest rates.
- Gold exposure has contributed positively amid global inflation and geopolitical uncertainty.
- This tri-asset structure has resulted in steady, risk-adjusted returns over the past three years.
Comparison: MAAFs vs. Traditional Equity Funds
| Feature | MAAFs | Equity Funds |
|---|---|---|
| Asset Mix | Equity + Debt + Commodities | Primarily Equity |
| Volatility | Moderate | High |
| Return Potential (3–5 yrs) | 9–12% (approx.) | 11–14% (approx.) |
| Downside Protection | High (diversified assets) | Low |
| Best Suited For | Moderate-risk, long-term investors | High-risk, growth-focused investors |
6. Kiwi Launches Interest-Backed EMI Option on UPI
Source: BS
Context:
Fintech firm Kiwi has announced the launch of India’s first-ever interest-backed EMI option on UPI payments, enabling users to convert high-value transactions into instalments while earning cashback equivalent to the interest paid. The move comes amid a broader push to expand credit accessibility via real-time payment systems.
Key Highlights
Unique Model: Users can split big-ticket UPI payments into EMIs with cashback on interest — a first-of-its-kind feature in India’s fintech ecosystem.
Objective: To promote credit-based UPI transactions while reducing the effective cost of borrowing for consumers.
7. RBI Tightens Related Party Lending Rules, Introduces Unified Framework
Source: ET
Context:
The Reserve Bank of India (RBI) has issued a draft circular expanding the definition and scope of related party transactions for commercial banks and NBFCs. This reform aims to strengthen corporate governance, prevent conflicts of interest, and ensure greater transparency in lending practices. The new norms will come into effect from April 1, 2026.
Key Highlights:
Broader Definition of Related Parties
The updated framework brings under its ambit:
- Promoters and Key Managerial Personnel (KMPs)
- Shareholders holding over 5% equity
- Entities with significant influence and their relatives
- Earlier, the restrictions were limited only to directors and entities in which they held interests.
Unified Governance Framework
- The new circular consolidates over a dozen legacy circulars, ensuring a single, harmonised rulebook for related party lending.
- The goal is to minimise regulatory arbitrage and create uniform compliance standards across all banks and NBFCs.
Scale-Based Approval Thresholds
Board approval is now mandatory for loans beyond specified limits:
| Bank Asset Size | Maximum Loan to Related Party (Before Board Approval) |
|---|---|
| Over ₹10 lakh crore | ₹50 crore |
| ₹1–10 lakh crore | ₹10 crore |
| Below ₹1 lakh crore | ₹5 crore |
Governance Safeguards
- Mandatory recusal of interested directors or executives from approval processes.
- Quarterly internal audits and statutory auditor reviews of all related party exposures.
- Public disclosures of top exposures and provisioning details in financial statements.
Exemptions and Allowances
- Loans to public trusts allowed if a trustee is also a bank director.
- Loans to directors backed by government securities, life insurance, or FDs are permitted (LTV ≤ 100%).
- Employee-directors can receive personal loans if they qualify under employee schemes.
- Non-fund-based facilities (e.g., guarantees) allowed if fully cash-collateralised.
Restrictions on Foreign Bank Branches
- Foreign bank branches in India are prohibited from lending to Indian firms where a director of the parent foreign bank abroad has an interest.
8. RBI Recognises FIDC as Self-Regulatory Organisation (SRO) for NBFCs
Source: TOI
Context:
The Reserve Bank of India (RBI) has officially recognised the Finance Industry Development Council (FIDC) as the Self-Regulatory Organisation (SRO) for the Non-Banking Financial Companies (NBFC) sector, marking a significant step toward structured self-governance, enhanced compliance, and sector-wide coordination.
About the Finance Industry Development Council (FIDC)
- Established: 2004
- Nature: A representative body for NBFCs registered with the RBI.
- Scope: FIDC primarily represents asset financing, loan, and investment NBFCs, advocating for fair practices, policy dialogue, and professional standards.
- Objective: To promote best governance practices, industry ethics, and collaborative engagement between NBFCs and regulators.
Significance of RBI Recognition
- Formal Role in Self-Regulation
- As an SRO, FIDC will now play an official supervisory and coordination role for NBFCs.
- It will help bridge communication between the RBI and NBFCs on policy, compliance, and operational matters.
- Enhanced Industry Discipline
- The SRO mechanism ensures peer accountability, encouraging members to adhere to ethical lending, transparency, and fair customer practices.
- Strengthened Regulatory Ecosystem
- Recognition of FIDC will help streamline grievance redressal, monitor market conduct, and promote capacity building across NBFCs.
- Improved Compliance Framework
- FIDC, as an SRO, will issue guidelines, best practices, and codes of conduct, ensuring consistent compliance across the NBFC sector.
What Is a Self-Regulatory Organisation (SRO)?
A Self-Regulatory Organisation (SRO) is an industry body recognised by a regulatory authority (like the RBI or SEBI) to:
- Develop and enforce standards of conduct among its members.
- Promote ethical business practices.
- Support regulators in monitoring and supervision.
- Facilitate two-way communication between industry participants and regulators.
Examples:
- AMFI (Association of Mutual Funds in India) – for mutual funds.
- FIMMDA (Fixed Income Money Market and Derivatives Association of India) – for bond and derivatives markets.
- FIDC – now, for NBFCs.
Broader Regulatory Context
- The recognition aligns with the RBI’s push for a stronger, tiered NBFC regulatory framework under the Scale-Based Regulation (SBR) structure.
- It complements the RBI’s broader strategy of risk-based supervision and market-led governance, particularly for systemically important NBFCs.
9. NITI Aayog Moves to Simplify Tax for Foreign Firms
Source: News on Air
Context:
In a move aimed at reducing tax disputes and simplifying compliance for foreign businesses, NITI Aayog has proposed an optional presumptive tax regime for permanent establishments (PEs) operating in India. The proposal, outlined in the Aayog’s Tax Policy Working Paper Series-1, seeks to enhance certainty, transparency, and uniformity in India’s tax administration system.
What is a Permanent Establishment (PE)?
A Permanent Establishment (PE) refers to a significant and fixed business presence of a foreign entity within India. Such entities are typically liable to pay corporate income tax on income attributable to their Indian operations.
Key Proposal: Optional Presumptive Tax Scheme
NITI Aayog has suggested introducing a simplified, optional tax mechanism where a foreign company can be taxed based on a pre-defined percentage of gross revenue rather than undergoing a full-scale audit and profit attribution process.
Main Features of the Proposal:
- Optional Scheme: Foreign companies may opt in for simplicity or opt out to file a regular return if their actual profits are lower.
- Sector-Specific Rates: Different deemed profit margins would apply across industries.
- Certainty & Compliance Ease: Companies opting in would be exempt from maintaining detailed books in India for covered activities.
- Safe Harbour Protection: Tax authorities would not litigate the existence of a PE for opted-in entities, offering legal certainty.
- Alignment with Global Norms: The scheme would align with OECD principles and avoid retrospective amendments.
Expected Benefits:
- Reduction in tax litigation and administrative burden,
- Boost in investor confidence and ease of doing business,
- Improved tax revenue certainty for the government,
- Alignment with Make in India and FDI promotion goals,
- Strengthened India’s global investment competitiveness.
Facts to Remember
1. Veteran journalist T.J.S. George no more
T.J.S. George, veteran journalist, biographer and columnist, who left a mark on Indian English journalism through his incisive commentary and uncompromising independence, passed away from age-related complications. He was 97.
2. Former Rajasthan Speaker Girraj Tiwari passes away
Former Rajasthan Assembly Speaker Girraj Prasad Tiwari died in Bharatpur late on Thursday night at the age of 105 years.
3. Nishad, Simran make it a golden day for India
Nishad Kumar broke the jinx, winning his maiden world title after a series of second-placed finishes in style with a new Asian record of 2.14m, on a productive day seven of the World Para Athletics Championships.
4. Cyclone Shakti, season’s 1st over Arabian Sea
5. India Ratings Downgrades WAPCOS Bank Loans to BBB
India Ratings has downgraded the bank loan facilities of WAPCOS, a central public sector enterprise, from A to BBB. The move comes amid concerns over the company’s elongated working capital cycle and potential reliance on debt to manage temporary cash-flow mismatches.
6. Government Raises Wheat MSP for 2025-26 Amid Policy Concerns
The Narendra Modi government has announced a minimum support price (MSP) of Rs 2,585 per quintal for the 2025-26 wheat crop, up Rs 160 from last year. This marks a higher-than-usual hike, exceeding the Rs 150-per-quintal rise of the previous two years.
7. Digital Transformation in Cotton Procurement: Kapas Kisan App Empowers 16 Lakh Farmers
The Cotton Corporation of India (CCI) has launched the Kapas Kisan App to digitise and streamline the cotton procurement process across India, beginning with the 2025-26 procurement season. This marks a significant step toward transparent, efficient, and farmer-friendly operations under the Minimum Support Price (MSP) framework.
8. Amit Shah inaugurates ₹325 cr Sabar Dairy plant in Rohtak
Union Home Minister Amit Shah inaugurated the newly constructed Sabar Dairy Plant in Rohtak, as part of efforts to promote the cooperative sector.
