Daily Current Affairs : 6th December

Daily Current Affairs for UPSC CSE

Topics Covered

  1. RBI bimonthly Policy review
  2. Kalia and PM Kisan Yojana
  3. Fugitive Economic Offender
  4. Small Finance Banks
  5. NIIF
  6. Facts for Prelims : Zero FIR, Blue water Force, Sanctions on Members in Parliament

1 . RBI bimonthly  monetary policy review meeting 

Context– Reserve Bank of India(RBI)  keeps the policy interest rate unchanged at 5.15% at the fifth bimonthly monetary policy review meeting.

About the News

  • As per the Monetary Policy Committee there is a monetary policy space for future action. However, given the evolving growth-inflation dynamics it was appropriate to tkeep the rates unchanged
  • Monetary Policy Committee has decided to continue with the accommodative stance as long as it is necessary to revive growth, while ensuring that inflation remains within the target, the central bank says

Background of Monetary Policy Committee

  • The history of suggestions for setting up a MPC traces back to 2002 when the Y. V. Reddy Committee recommended for a MPC to decide policy actions.
  • Subsequently, suggestions were made to set up a MPC in 2006 by the Tarapore Committee, in 2007 by the Percy Mistry Committee, in 2009 by the Raghuram Rajan Committee and then in 2013, both in the report of the Financial Sector Legislative Reforms Commission (FSLRC) and the Dr. Urjit R. Patel (URP) Committee.  
  • MPC was set up consequent to the agreement reached between Government and RBIg. The Reserve Bank of India and Government of India signed the Monetary Policy Framework Agreement in 2015.
  • Subsequently Reserve Bank of India Act, 1934 (RBI Act) was amended by the Finance Act, 2016,  to provide for a statutory and institutionalised framework for a Monetary Policy Committee

About Monetary Policy Committee

  • The Monetary Policy Committee (MPC) is a committee of the Central Bank in India (Reserve Bank of India), headed by its Governor, which is entrusted with the task of fixing the benchmark policy interest rate (repo rate) to contain inflation within the specified target level. In short Fixing repo rates as well as inflation targeting are main functions
  • Under the amended RBI Act, the MPC is required to meet at least four times in a year.
  • The decision of the Monetary Policy Committee is binding on the RBI and the RBI shall publish a document explaining the steps to be taken by it to implement the decisions of the Monetary Policy Committee


  • Amended RBI Act, 1934 provides for an empowered six-member Monetary Policy Committee (MPC) to be constituted by the Central Government .
  • The Monetary Policy Committee shall consist of :
    • the Governor of the RBI;
    • Deputy Governor of the RBI in charge of Monetary Policy;
    • one officer of the RBI to be nominated by the Central Board; 
    • three persons to be appointed by the Central Government  on the recommendations of a Search-cum-Selection Committee, which will be headed by the Cabinet Secretary. These three Members of MPC will be experts in the field of economics or banking or finance or Monetary policy 
  • The quorum for the meeting of the MPC is four members. Each member of the MPC has one vote, and in the event of an equality of votes, the Governor of the RBI has a second or casting vote.


  • The Members of the Monetary Policy Committee appointed by the Central Government shall hold office for a period of four years, with immediate effect or until further orders, whichever is earlier.

Inflation Targeting

  • Under the Monetary Policy Framework Agreement, the RBI will be responsible for containing inflation targets at 4% (with a standard deviation of 2%) in the medium term
  • Under Section 45ZA(1) of the RBI Act, 1934, the Central Government determines the inflation target in terms of the Consumer Price Index, once in every five years in consultation with the RBI.
  • RBI would have to give an explanation in the form of a report to the Central Government, if it failed to reach the specified inflation targets. It shall give reasons for failure, remedial actions as well as estimated time within which the inflation target shall be achieved.
  • RBI is also mandated to publish a Monetary Policy Report every six months, explaining the sources of inflation and the forecasts of inflation for the coming period of six to eighteen months.


  • Committee-based approach for determining the Monetary Policy will add lot of value and transparency to monetary policy decisions.
  • It will impart diversity of views, specialised experience and independence of opinion in the monetary policy decisions which could help in improving the representativeness in the overall decision-making process.
  • With the introduction of the monetary policy committee, the RBI will follow a system similar to the one followed by most global central banks. For example US Federal Reserve sets its benchmark fund rate through the Federal Open Market Committee

2 . Odisha govt. scheme to merge with ‘PM-Kisan’ yojana

Context:- The Odisha government has decided to merge its flagship scheme to pro­vide assistance to farm­ers with the Centre’s Pradhan Mantri Kisan Samman Nidhi (PM­-Ki san) yojana, apparently due to financial con­strain.

What is PM-KISAN Yojana?

  • To provide an assured income support to the small and marginal farmers, the Government launched the Pradhan Mantri Kisan Samman Nidhi(PM-KISAN). 
  • It would also meet farmers emergent needs especially before the harvest season.
  • Under this programme, vulnerable landholding farmer families, having cultivable land upto 2 hectares, will be provided direct income support at the rate of Rs. 6,000 per year. This income support will be transferred directly into the bank accounts of beneficiary farmers, in three equal instalments of Rs. 2,000 each. 
  • This programme will be funded by Government of India. 

What is KALIA scheme?

  • The Krushak Assistance for Livelihood and Income Augmentation(KALIA) is an income support scheme of Odisha whose primary targets are small farmers, cultivators and landless agricultural labourers. The scheme involves payments to encourage cultivation and associated activities.

 Features of the Scheme

  • All farmers will be provided Rs 10,000 per family as assistance for cultivation. Each family will get Rs 5,000 separately in the kharif and rabi seasons, for five cropping seasons between 2018-19 and 2021-22.
  • Under the scheme, Rs 10,180 crore will be spent over three years until 2020-21 in providing financial assistance to cultivators and landless agricultural labourers.
  • Scheme targets all farmers ie. whether you own one acre or five acres financial assistance will be provided.
  • Scheme also targets 10 lakh landless households, and specifically SC and ST families. They will be supported with a unit cost of Rs 12,500 for activities like goat rearing, mushroom cultivation, beekeeping, poultry farming and fishery. The beneficiary is encouraged to choose an activity with which he is familiar because these trades require some skill and network. The idea is to identify an existing capacity and build on it
  • Note : Dairy production, has deliberately been kept out because keeping a cow is more expensive, while milk production needs to have a collection route or agency that processes and refines this low shelf-life product
  • KALIA scheme includes a life insurance cover of Rs 2 lakh and additional personal accident coverage of the same amount for 57 lakh households. Crop loans up to Rs 50,000 are interest-free.
  • Scheme also has provisions to assist the elderly, sick and differently-abled population who are unable to take up cultivation, by providing Rs 10,000 per household per year. This is meant to be used for sustenance but it will not be implemented immediately

3 . Fugitive Economic Offender

Context:-A special Prevention of Mo­ney Laundering Act court declared diamond trader Nirav Modi, an accused in the Punjab National Bank scam case, a fug­itive economic off ender. 


  • The Act was introduced to deter fugitive economic of­fenders from evading the process of law in India by staying outside the jurisdic­tion of Indian courts.
  • Nirav Modi is the second person to be declared a fugi­tive economic off ender, un­der the new Fugitive Eco­nomic Off enders Act, after liquor baron Vijay Mallya.

About Fugitive Economic Offender Act

  • The Act allows for a person to be declared as a fugitive economic offender (FEO) if:
    • An arrest warrant has been issued against him for any specified offences where the value involved is over Rs 100 crore
    • He has left the country and refuses to return to face prosecution.     
  • To declare a person an FEO, an application will be filed in a Special Court (designated under the Prevention of Money-Laundering Act, 2002) containing details of the properties to be confiscated, and any information about the person’s whereabouts.  The Special Court will require the person to appear at a specified place at least six weeks from issue of notice.  Proceedings will be terminated if the person appears. 
  • The Act allows authorities to provisionally attach properties of an accused, while the application is pending before the Special Court. 
  • Upon declaration as an FEO, properties of a person may be confiscated and vested in the central government, free of encumbrances (rights and claims in the property).  Further, the FEO or any company associated with him may be barred from filing or defending civil claims.   

 4 . Small Finance Banks

  Context :- RBI lays down guidelines for payments banks’ SFB licence.

Details of the Guidelines

  • Payments banks willing to convert themselves into small finance banks (SFBs) can apply for such a licence only after five years of operations
  • “Existing payments banks (PBs), which are controlled by residents and have completed five years of operations, are also eligible for conversion into small finance banks after complying with all legal and regulatory requirements of various authorities and if they conform to these guidelines
  • The minimum capital for setting up an SFB has been mandated at ₹200 crore, the RBI said, adding for primary (urban) co-operative banks (UCBs), which wish to become SFBs, the initial requirement of net worth will be ₹100 crore, which will have to be increased to ₹200 crore within five years from the date of commencement of business.

About Small Finance Banks

  • The Small Finance Bank (SFB) is a private financial institution intended to further the objective of financial inclusion by primarily undertaking basic banking activities of acceptance of deposits and lending to un-served and underserved sections including small business units, small and marginal farmers, micro and small industries and unorganised sector entities, but without any restriction in the area of operations, unlike Regional Rural Banks or Local Area Banks.
  • Concept of small finance banks was also one of the recommendations in the 2009 Report – A Hundred Small Steps – of the Committee on Financial Sector Reforms headed by Dr. Raghu Ram Rajan.

Eligible promoters

  • Resident individuals/professionals with 10 years of experience in banking and finance;
  • Companies and societies owned and controlled by residents will be eligible to set up small finance banks.
  • Existing Non-Banking Finance Companies (NBFCs), Micro Finance Institutions (MFIs), and Local Area Banks (LABs) that are owned and controlled by residents can also opt for conversion into small finance banks.
  • Promoter/promoter groups should be ‘fit and proper’ with a sound track record of professional experience or of running their businesses for at least a period of five years in order to be eligible to promote small finance banks.

Minimum Capital & Regulatory Requirements

  • The minimum capital for SFBs is prescribed at Rs. 200 crore. Promoter should hold a minimum of 40% of the paid-up voting equity capital for five years. If the initial promoter shareholding is above 40%, it should be brought down to 40% within a period of five years, 30% within 10 years, and 15% in 15 years.
  • After the small finance bank reaches the net worth of Rs.500 crore, listing of its shares on a stock exchange will be mandatory within three years of reaching that net worth.
  • SFBs are full fledged banks in contrast to payments banks hence, they are subject to all norms and regulations of RBI as applicable to existing commercial banks like maintenance of Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR).
  • The target group of SFBs are similar to that of Local Area Banks. They are required to extend 75 per cent of its Adjusted Net Bank Credit (ANBC) to the sectors eligible for classification as priority sector lending (PSL) by the Reserve Bank. At least 50 per cent of its loan portfolio should constitute loans and advances of upto Rs. 25 lakh.
  • A fundamental requirement is that it must have 25% of its branches set up in unbanked areas.

Activities which can be undertaken by Small Finance Banks

  • Small finance banks will be allowed to take deposits from customers it can also lend money to people. 
  • Small banks can also undertake financial services like distribution of mutual fund units, insurance products, pension products, and so on, but not without prior approval from the RBI.

Payment Banks

  • A payments bank is like any other bank, but operating on a smaller scale without involving any credit risk.
  • In simple words, it can carry out most banking operations but can’t advance loans or issue credit cards.
  • These banks currently offer interest rates similar to that being offered by regular banks. As per RBI guidelines, payments banks can’t accept fixed or recurring deposits.
  • It can accept demand deposits (up to Rs 1 lakh), offer remittance services, mobile payments/transfers/purchases and other banking services like ATM/debit cards, net banking and third party fund transfers.
  • The main objective of payments bank is to widen the spread of payment and financial services to small business, low-income households, migrant labour workforce in secured technology-driven environment.
  • With payments banks, RBI seeks to increase the penetration level of financial services to the remote areas of the country.

5 . National Investment and Infrastructure Fund (NIIF)

Context:-National Investment and In­frastructure Fund (NIIF) of India and Canada Pension Plan Investment Board (CPPIB) have agreed for CPPIB to invest up to $600 million through the NIIF Master Fund.

About NIIF

  • National Investment and Infrastructure Fund, is an Indian-government backed entity established to provide long-term capital to the country’s infrastructure sector.
  • The Indian government has 49 per cent stake in NIIF with the rest held by marquee foreign and domestic investors such as Abu Dhabi Investment Authority, Temasek and HDFC Group. With the Centre’s significant stake, NIIF is considered India’s quasi sovereign wealth fund.
  • Across its three funds — Master Fund, Fund of Funds, and Strategic Fund — NIIF manages $3 billion of capital.

Types of Funds

  • Master Fund: The Master Fund is an infrastructure fund focuses mainly on core infrastructure and operating assets
  • Fund of Funds: NIIF Fund of Funds invests in funds managed by third-party managers in the infrastructure and associated sectors
  • Strategic Investment Fund: The objective of National Investment and Infrastructure Fund II (“Strategic Fund”) is to invest largely in equity and equity-linked instruments. The Strategic Fund will focus on green field and brown field investments in the core infrastructure sectors.


  • There is a need for big money to finance infrastructure sector in the country.
  • Given the sector’s long-gestation periods, these projects need long-term patient money. NIIF can play a key role in this.
  • NIIF, with government backing, professional fund managers with wide experience in infrastructure financing, and renowned international investors, is in a good position to raise funds and bridge the financing gap.
  • It can also bankroll other financiers such as IRFC and NHB, thus helping capital outlays grow manifold.


  • The objective of NIIF would be to maximize economic impact mainly through infrastructure development in commercially viable projects, both greenfield and brownfield, including stalled projects. It could also consider other nationally important projects, for example, in manufacturing, if commercially viable.

Functions of NIIF

  • Fund raising through suitable instruments including off-shore credit enhanced bonds, and attracting anchor investors to participate as partners in NIIF;
  • Servicing of the investors of NIIF.
  • Considering and approving candidate companies/institutions/ projects (including state entities) for investments and periodic monitoring of investments.
  • Investing in the corpus created by Asset Management Companies (AMCs) for investing in private equity.
  • Preparing a shelf of infrastructure projects and providing advisory services.


  • provides equity / quasi-equity support to those Non Banking Financial Companies (NBFCs)/Financial Institutions (FIs) that are engaged mainly in infrastructure financing. These institutions will be able to leverage this equity support and provide debt to the projects selected.
  • Invest in funds engaged mainly in infrastructure sectors and managed by Asset Management Companies (AMCs) for equity / quasi-equity funding of listed / unlisted companies.
  • provides Equity/ quasi-equity support / debt to projects, to commercially viable projects, both greenfield and brownfield, including stalled projects.

6 . Facts for Prelims

Zero FIR

  • Normally, an FIR is registered by a serial number in the police station having territorial jurisdiction to investigate the Crime.
  • A Zero FIR can be registered in the Police station where the information about a Cognizable Offence is received, irrespective of whether it has got territorial jurisdiction or not.
  • Zero FIR can only be registered but not numbered. Such unnumbered FIR is then forwarded to the concerned police station where it gets numbered and then proceeded for investigation.
  • Justice Verma Committee Report recommended the provision of Zero FIR, after the December 2012 gang rape of a 23- year old girl in Delhi.

Sanctions on Members in Parliament

  • In cases of misconduct or contempt committed by its members, the House can impose a punishment in the form of admonition, reprimand, withdrawal from the House, suspension from the service of the House, imprisonment and expulsion from the House.”
  •  Mild offences are punished by admonition or reprimand (reprimand being the more serious of the two). 
  • Withdrawal from the House is demanded in the case of gross misconduct. ‘Persistent and wilful obstructions’ lead the Chairman to name and subsequently move a motion for suspension of the member. 
  • A member can be suspended, at the maximum, for the remainder of the session only.
  • In an extreme case of misconduct, the House may expel a member from the House.

Blue water force

  • Navies are classified in terms of colours. A navy whose operations are restricted close to the shore, where the water is muddy, is called a Brown Water Force. A navy that can go farther out is called a Green Water Force. And then there is a Blue Water Force.
  • A Blue Water Navy is one that has the capacity to project itself over a much bigger maritime area than its maritime borders.
  • While most navies have the capacity to send ships into the deep oceans, a Blue Water Force is able to carry out operations far from its borders, without being required to return to its home port to refuel or re-stock.
  • Blue Water navies belong to the most powerful nations, there is no one internationally agreed upon definition. Owning one or more aircraft carriers is sometimes seen as a marker.
  • According to the Indian Maritime Doctrine, 2015, “The ability to undertake distant operations distinguishes a blue-water navy from a brown-water force. It requires strong integral capacity, including logistics, surveillance, networked operations, etc., and enabling capability, including equipment design, training, doctrine and organisation.” It states “distant operations rely upon the attributes of access, mobility, sustenance and reach in order to show presence, project power and/or accomplish other national objectives in the area of interest”.
  • As the Indian Navy has the capacity to carry distant operations “at or from the sea, up to considerable distance from national shore bases”, it qualifies as a Blue Water Force.
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