Daily Current Affairs for UPSC CSE
Topics Covered
- Prompt Corrective Action Framework
- Reservation in Private Sector
- Aurorae
- Facts for Prelims
- Places in News
1. Prompt Corrective Action Framework
Context: The RBI issued a notification on November 2 revising norms for commercial banks to be placed under the regulator’s Prompt Corrective Action (PCA) framework should any of their key metrics fall out of line. The revision takes effect from January 1, 2022.
What is PCR?
- Prompt Corrective Action or PCA is a framework under which banks with weak financial metrics are put under watch by the RBI.
- The PCA framework deems banks as risky if they slip below certain norms on three parameters — capital ratios, asset quality and profitability.
- It has three risk threshold levels (1 being the lowest and 3 the highest) based on where a bank stands on these ratios.
- Banks with a capital to risk-weighted assets ratio (CRAR) of less than 10.25 per cent but more than 7.75 per cent fall under threshold 1.
- Those with CRAR of more than 6.25 per cent but less than 7.75 per cent fall in the second threshold.
- In case a bank’s common equity Tier 1 (the bare minimum capital under CRAR) falls below 3.625 per cent, it gets categorised under the third threshold level.
- Banks that have a net NPA of 6 per cent or more but less than 9 per cent fall under threshold 1, and those with 12 per cent or more fall under the third threshold level.
- On profitability, banks with negative return on assets for two, three and four consecutive years fall under threshold 1, threshold 2 and threshold 3, respectively.
Why is it important?
- As most bank activities are funded by deposits which need to be repaid, it is imperative that a bank carries a sufficient amount of capital to continue its activities. PCA is intended to help alert the regulator as well as investors and depositors if a bank is heading for trouble.
- Essentially PCA helps RBI monitor key performance indicators of banks, and taking corrective measures, to restore the financial health of a bank.
- On breach of any of the risk thresholds mentioned above, the RBI can invoke a corrective action plan. Depending on the threshold levels, the RBI can place restrictions on dividend distribution, branch expansion, and management compensation.
- Only in an extreme situation, breach of the third threshold, would identify a bank as a likely candidate for resolution through amalgamation, reconstruction or winding up.
When was PCA introduced?
- The RBI’s PCA Framework was introduced in December 2002 as a structured early intervention mechanism along the lines of the US Federal Deposit Insurance Corporation’s PCA framework.
- Subsequently, the RBI reviewed the framework and the revised PCA Framework was issued by the RBI on April 13, 2017, and implemented with respect to banks’ financials as of March 31, 2017
- In the last almost two decades several banks have been placed under the framework, with their operations restricted.
- In 2021, UCO Bank, IDBI Bank and Indian Overseas Bank exited the framework on improved performance. Only Central Bank of India remains under it now.
What curbs do bank face under the PCA?
- Banks move from risk thresholds 1 through 3 with increasing restrictions if they are unable to arrest deterioration.
- First, banks face curbs on dividend distribution/remittance of profits. For foreign banks promoters are to bring in capital.
- In the second category, banks additionally face curbs on branch expansion.
- In the final category, the bank additionally faces restrictions on capital expenditure with some exemptions.
- The RBI also has the option of discretionary actions across strategy, governance, credit risk, market risk and human resources.
What has changed?
- The notification has removed return on assets as an indicator to qualify for PCA.
- Further, the 2017 notification applied to scheduled commercial banks but excluded Regional Rural Banks from its purview, while the 2021 version excludes Small Finance Banks and Payment Banks too.
- In the latest set of rules, the RBI has clearly spelt out that exit from the PCA would be based on four continuous quarterly results, with one being Audited Annual Financial Statement as per the new framework apart from Supervisory Comfort of RBI, assessment on sustainability of profitability.
- The risk threshold 3 has been further refined for capital adequacy conditions.
- It is unclear why the RBI chose to remove the RoA metric. One view in the financial sector is that RoA ought to have been retained as it indicates business performance. Another view is that the RBI oughtn’t to monitor RoA — and that profitability is the bank’s and its shareholders’ lookout. Controls over capital adequacy indirectly include profitability.
2. Reservation in Private Sector
Context : The Haryana Government’s law to reserve 75% jobs for locals, notified on Saturday, could trigger an exodus of large domestic and multinational investors across sectors that rely on highly skilled manpower, Indian industry has warned. The law that kicks in from January 15 requires firms with 10 or more employees to adhere to it.
Background
- In November 2020, the state Assembly passed the Haryana State Employment of Local Candidates Bill, 2020 paving way for more employment opportunities for locals in the private sector.
About the law
- According to the law, 75 per cent of private sector jobs in the state, till a certain salary slab will be reserved for local candidates.
- The Act will cover jobs that pay up to Rs 30,000 as gross monthly salary. In the draft Bill, the salary limit had been set at Rs 50,000, according to NDTV.
- The law apply to companies, societies, trusts, limited liability partnership firms, partnership firms located across Haryana.
- Those who are domiciled in Haryana will be able to avail the benefits of the act. To have domicile status, a person should be born in the state or should have lived in there for at least 15 years.
- Companies have the option to hire people from outside if they cannot find suitable candidates in Haryana. But they would have to inform the government about this decision.
Constitutional provisions on reservation
- Article 14 of the Constitution guarantees equality before law and equal protection of laws to everyone.
- Article 16(1) and 16(2) assure citizens equality of opportunity in employment or appointment to any government office.
- Article 15(1) generally prohibits any discrimination against any citizen on the grounds of religion, caste, sex or place of birth.
- Article 29(2) bars discrimination against any citizen with regard to admission to educational institutions maintained by the government or receiving aid out of government funds on grounds of religion, race, caste etc.
- Articles 15(4) and 16(4) state that these equality provisions do not prevent the government from making special provisions in matters of admission to educational institutions or jobs in favour of backward classes, particularly the Scheduled Castes (SCs) and the Scheduled Tribes (STs).
- Article 16(4A) allows reservations to SCs and STs in promotions, as long as the government believes that they are not adequately represented in government services.
Is this reservation Bill violative of Article 16 of the Constitution of India?
- Andhra Pradesh’s decision of introducing 75 per cent reservation for local candidates was challenged in the Andhra Pradesh High Court which observed that “it may be unconstitutional”.
- The Andhra Pradesh High Court had asked state government to inform if the quota-law was enacted as per the Constitution.
- For mandating reservation in public employment, the state draws its power from Article 16(4) of the Constitution.
- It says that the right to equality in public employment does not prevent the state from “making any provision for the reservation of appointments or posts in favour of any backward class of citizens which is not adequately represented in the services under the State.
- The Constitution has no manifest provision for private employment from which the state draws the power to make laws mandating reservation.
- Haryana government claims that while Article 16 talks about the “public employment”, the Bill only pertains to “private sector employment”.
Arguments in favor of reservation in private sector
- This will fulfill the main purpose of reservation to allow unemployed locals or backward classes to be employed.
- Reservation in private secor can help get rid of the problem of joblessness.
- Many private sector firms get government aid and tax benefits. Then why not they have a provision for quota in their jobs?
- In metros, the hiring rate of scheduled castes and scheduled tribes by multi-national companies (MNCs) is almost negligible because of concerns over technical skills and English-speaking abilities. If reservation is introduced in the sector, they will get a fair chance of representation and learning.
Arguments against reservation in private sector
- Private sector runs on talent and abilities. And it is a bitter fact that talent will be compromised in the reservation system.
- Private sector is about profit making enterprises. The new law states that if locals with the necessary skills are not there, companies will have to train local workers in conjunction with the state government and then hire them, which could lead to more hassles and expenses for businesses.
- This policy will set a bad national precedent. Now those states can cite this law as a precedent and have their own. Karnataka and Maharashtra, which have plenty of workers from Andhra Pradesh, have been thinking of making similar laws. This might lead to extreme regionalism.
- Reservation policy has not yielded the desired results in the past and implementing a backfired policy is disastrous for the country.
- This might become a disincentive for industries. Now with the ‘mandatory’ local labour that puts a cap on ‘competing outside labour’, the bulk of workers can work less and demand higher remunerations.
- People from other states may not get adequate employment opportunities. As in the 2014 case—Charu Khurana vs. Union of India—when a trade union had declined membership to a make-up artist because she had not lived in Maharashtra for at least five years, as per the union’s rules. Though the trade union lost the case but the said person was discriminated against.
- Such provision of reservation could hinder the state’s economic growth by affecting the ease of doing business. Ease of recruiting talent is a major aspect that influences the index. The end result can be loss of confidence in the industry and business moving elsewhere.
Concerns
- The law could trigger an exodus of large domestic and multinational investors across sectors such as auto, IT that rely on highly skilled manpower.
- The 75% reservation will result in moving out of tech and automotive companies, especially MNCs as these are highly skilled manpowerbased companies.
- The law is already tilting the scales for large firms, particularly in ecommerce, IT & ITeS and new manufacturing sectors, who had chosen Gurugram as a hub for their businesses.
- Moreover, imposing the reservations on gig and platform companies could create a crippling talent crunch.
- If other States take Haryana’s cue and follow suit, there would surely be an extreme level of talent crunch across industries and across the country.
States in favour of reservation in private sector for locals
- Andhra Pradesh Employment of Local Candidates in the Industries/Factories Bill, 2019 passed by the Andhra Pradesh government. As per this law, 75% of jobs in industries are to be reserved for locals.
- Even the Madhya Pradesh government had announced 70% reservation for locals in industries.
- The Karnataka government has also insisted that private companies provide 80% reservation in jobs for locals (Kannada-speaking people) in all categories and for this the government has already amended the Karnataka Industrial Employment (Standing Orders) Rules, 1961, to reserve 100% for group ‘C’ and group ‘D’ jobs for locals in the private sector.
3 . Aurorae
Context: A solar flare that occurred on the Sun triggered a magnetic storm which scientists from
Center of Excellence in Space Sciences India (CESSI), in Indian Institutes for Science Education and Research, Kolkata, had predicted will arrive at the Earth in the early hours of November
4, and they said that the magnitude of this storm would be such as to trigger spectacular
displays of aurora. This prediction, which was based on models built by them and data from NASA’s observatories, seems to have come true, as people from several countries were tweeting pictures of aurorae.
About Aurorae
- Aurorae also known as the polar lights or aurora polaris, is a natural light display in Earth’s sky, predominantly seen in high-latitude regions (around the Arctic and Antarctic).
- Auroras display dynamic patterns of brilliant lights that appear as curtains, rays, spirals or dynamic flickers covering the entire sky
- Aurorae are considered to be one of the seven natural wonders of the world.
- Occurring at high latitudes, these highly dynamical light shows, typically red and green in colour, are an electrical phenomenon visible in the night sky.
What causes Aurorae?
- Aurorae are caused when energetic protons and electrons from solar flares enter our atmosphere and spiral along the Earth’s magnetic field lines.
- These particles can collide with electrically neutral atmospheric atoms such as oxygen and nitrogen, imparting energy and ‘exciting’ the outer valence electrons of these atoms.
- When these excited electrons subsequently drop back down into their initial more stable configuration, there is an associated emission of a photon of light.
- Each particular colour of light depends on the gas emitting the photon and the energy difference between the excited and stable configuration of the atom involved.
- The light from oxygen atoms may be either red (at a wavelength of 630 nm) or green (at 558 nm), depending on the energy levels the ‘excited’ electron dropped between, and is the cause of two of the main colours seen in aurorae.
Where does it occur?
- Generally located between latitudes of 60-70 degrees north and south of the equator – because the interaction of magnetic fields and charged particles is greatest near the Earth’s magnetic poles – and at an altitude of 100 to several hundred kilometers, this phenomenon migrates towards the equator at times of heightened solar activity.
- Aurora are also known as the northern lights (aurora borealis) and the southern lights (aurora australis).
- Due to the channelling of the charged solar particles along the Earth’s magnetic field lines to the magnetic poles, the lower regions of the ionosphere (below 100 km) near the poles become heavily ionised, resulting in the eerie glow in the twilight sky known as the aurora.
- These variable atmospheric currents also induce fluctuating magnetic fields, or geomagnetic storms.
Solar flare
- Solar flares are large eruptions of electromagnetic radiation from the Sun lasting from minutes to hours.
- The sudden outburst of electromagnetic energy travels at the speed of light, therefore any effect upon the sunlit side of Earth’s exposed outer atmosphere occurs at the same time the event is observed.
- The increased level of X-ray and extreme ultraviolet (EUV) radiation results in ionization in the lower layers of the ionosphere on the sunlit side of Earth.
- Harmful radiation from a flare cannot pass through Earth’s atmosphere to physically affect humans on the ground, however — when intense enough — they can disturb the atmosphere in the layer where GPS and communications signals travel.
How does solar flare causes radio blackout?
- Under normal conditions, high frequency (HF) radio waves are able to support communication over long distances by refraction via the upper layers of the ionosphere.
- When a strong enough solar flare occurs, ionization is produced in the lower, more dense layers of the ionosphere (the D-layer), and radio waves that interact with electrons in layers lose energy due to the more frequent collisions that occur in the higher density environment of the D-layer. This can cause HF radio signals to become degraded or completely absorbed.
- This results in a radio blackout – the absence of HF communication, primarily impacting the 3 to 30 MHz band.
- The D-RAP (D-Region Absorption Prediction) product correlates flare intensity to D-layer absorption strength and spread.
Region of occurrence
- Solar flares usually take place in active regions, which are areas on the Sun marked by the presence of strong magnetic fields; typically associated with sunspot groups.
- As these magnetic fields evolve, they can reach a point of instability and release energy in a variety of forms. These include electromagnetic radiation, which are observed as solar flares.
Coronal Mass ejection
- Coronal Mass Ejections (CMEs) are large expulsions of plasma and magnetic field from the Sun’s corona.
- They can eject billions of tons of coronal material and carry an embedded magnetic field (frozen in flux) that is stronger than the background solar wind interplanetary magnetic field (IMF) strength.
- CMEs travel outward from the Sun at speeds ranging from slower than 250 kilometers per second (km/s) to as fast as near 3000 km/s.
- They expand in size as they propagate away from the Sun and larger CMEs can reach a size comprising nearly a quarter of the space between Earth and the Sun by the time it reaches our planet.
- Important CME parameters used in analysis are size, speed, and direction.
How does CME occur?
- The more explosive CMEs generally begin when highly twisted magnetic field structures (flux ropes) contained in the Sun’s lower corona become too stressed and realign into a less tense configuration – a process called magnetic reconnection.
- This can result in the sudden release of electromagnetic energy in the form of a solar flare; which typically accompanies the explosive acceleration of plasma away from the Sun – the CME.
- These types of CMEs usually take place from areas of the Sun with localized fields of strong and stressed magnetic flux; such as active regions associated with sunspot groups.
- CMEs can also occur from locations where relatively cool and denser plasma is trapped and suspended by magnetic flux extending up to the inner corona – filaments and prominences.
- When these flux ropes reconfigure, the denser filament or prominence can collapse back to the solar surface and be quietly reabsorbed, or a CME may result.
Sunspots
- Sunspots provide the first indications of the possibility of solar eruptions that may precede geomagnetic storms on the Earth.
- Sunspots are regions on the Sun’s photosphere that appear darker than the surrounding areas on the visible solar disk due to reduced surface temperature associated with concentrations of magnetic field flux and intense magnetic activity on the Sun.
- They usually appear in pairs of opposite magnetic polarity.
- An individual sunspot consists of a very dark central umbra, surrounded by a brighter, radially striated penumbra.
- The darkness of sunspots is attributed to the inhibition of convective transport of heat, emitting only about 20% of the average solar heat flux in the umbra and being significantly cooler (∼4500 K) than the surroundings (∼6000 K).
- The number of sunspots has a cyclical increase and decrease over an approximately 11-year period known as the solar cycle. Individual sunspots may persist from a few days to months.
- Sunspots are accompanied by secondary phenomena including coronal loops, prominences and reconnection events.
- Most solar flares and coronal mass ejections originate in the magnetically active regions associated with sunspot groups.
- The solar rotation period as determined from the observation of sunspots is 27.27 days as seen from the Earth.
- Sunspot numbers are not to be confused with eruptive solar activity, since solar flares and other activity on the solar surface may occur at any time, and not all sunspots give rise to eruptive solar activity.
4. Fact for Prelims
AUKUS
- It is a new three-way strategic defence alliance between Australia, the UK and US, initially to build a class of nuclear-propelled submarines, but also to work together in the Indo-Pacific region, where the rise of China is seen as an increasing threat, and develop wider technologies.
- It means Australia will end the contract given to France in 2016 to build 12 diesel electric-powered submarines to replace its existing Collins submarine fleet.
- The deal marks the first time the US has shared nuclear propulsion technology with an ally apart from the UK.
- Geopolitical significance :
- It means China faces a powerful new defence alliance in the Indo-Pacific, one that has been welcomed by regional partners such as Japan.
- It also reaffirms that, after Brexit, the US still wants the UK, and not the EU, engaged as its key military partner.
- It also gives Biden focus for his post-Afghanistan tilt to Asia.
Messier 87 (M87)
- M87, in full Messier 87 (also called Virgo A or NGC4486) is a giant elliptical galaxy in the constellation Virgo whose nucleus contains a black hole, the first ever to be directly imaged.
- M87 is the most powerful known source of radio energy among the thousands of galactic systems constituting the so-called Virgo Cluster.
- It is also a powerful X-ray source, which suggests the presence of very hot gas in the galaxy.
Thalamic Reticular Nucleus (TRN)
- The thalamic reticular nucleus is a relatively narrow sheet of cells wrapped around the rostral, lateral, and dorsal aspects of the thalamus.
- The thalamic reticular nucleus is made up of nerve cells that lie in a complex meshwork of intertwining thalamocortical and corticothalamic axons.
- Multiple studies in humans and mouse models indicate that sleep disruptions raise the risk of Alzheimer’s disease (AD) by increasing the accumulation of disease-relevant proteins such as amyloid-beta (A-beta) in the brain.
- In the current study, a team led by researchers at Baylor College of Medicine discovered that, in an animal model of Alzheimer’s disease, restoring normal sleep by returning to normal the activity of the thalamic reticular nucleus (TRN), a brain region involved in maintaining stable sleep, reduced the accumulation of A-beta plaques in the brain.
Radiocarbon
- Radiocarbon (carbon 14) is an isotope of the element carbon that is unstable and weakly radioactive.
- The stable isotopes are carbon 12 and carbon 13.
- Carbon 14 is continually being formed in the upper atmosphere by the effect of cosmic ray neutrons on nitrogen 14 atoms.
- It is rapidly oxidized in air to form carbon dioxide and enters the global carbon cycle.
- Plants and animals assimilate carbon 14 from carbon dioxide throughout their lifetimes.
- When they die, they stop exchanging carbon with the biosphere and their carbon 14 content then starts to decrease at a rate determined by the law of radioactive decay.
- Radiocarbon holds fingerprints of solar storms, which can today destroy much of our communications network.
- Radiocarbon dating
- It is a method that provides objective age estimates for carbon-based materials that originated from living organisms.
- An age could be estimated by measuring the amount of carbon-14 present in the sample and comparing this against an internationally used reference standard.
- Radiocarbon dating is a method designed to measure residual radioactivity.
Nagula Chavithi
- Nagula Chavithi is a widely celebrated Hindu festival in Andhra Pradesh and Telangana.
- The Hindu festival dedicated to serpents and Naags, Nagula Chavithi 2021 falls on November 8, this year. Married women observe Naag Puja, and also fast to seek blessings for their children.
Major airports in India (Srinagar Airport)
- The Union Ministry of Civil Aviation recently declared the Srinagar airport a “major airport” under the Airports Economic Regulatory Authority Act, 2008 (AERA).
- The Centre designates an airport as a major airport if it crosses a particular volume of annual passenger traffic.
- Previously, the Airports Authority of India, a body under the Ministry of Civil Aviation, would determine the tariff for the Srinagar airport. With this move, the Airports Economic Regulatory Authority (AERA) will determine tariff for aeronautical services at Srinagar airport.
5 . Places in News
Chumbi Valley
- Chumbi Valley is a valley in the eastern Great Himalaya Range of the southern Tibet Autonomous Region, China.
- It is situated on a small south-pointing protuberance of territory between Bhutan (east) and Sikkim state, India (west).
- Formed by the passage of the Amo (Torsa) River, which rises below Tang Pass and flows south into Bhutan, the valley has an average elevation of 9,500 feet (2,900 metres), forested slopes, and a pleasant climate most of the year.
- Formerly in Sikkim, Chumbi Valley became part of Tibet in 1792.
- The inhabitants of the valley are called Promowa and are of Tibetan descent.
- Extensive trade in wool, yak tails, and borax passed through the valley after British negotiations resulted in the establishment of a trade agency at Xarsingma (Yadong) and a treaty between the British and Tibet in 1904.
- Since 1951 the valley has been under the control of China, which continued trade with India until 1962, when a 1954 treaty between China and India over the status of Tibet expired, and a border dispute between the two countries erupted.
Kaho Village
- As a part of the year-long and nationwide celebrations of the 75th year of Indian independence “Azadi Ka Amrit Mahotsav”, the state’s government is organising a programme at Kaho in Anjaw district to publicise the village.
- Kaho is a small village on the banks of Lohit River at an elevation of 1,240 metres (4,070 ft) on the India-China LAC in Anjaw district of Arunachal Pradesh state in India.
- Kaho is one of the seven villages of Kibithoo block.
- The place also assumes significance as several locals had taken part in the freedom movement.
Pobitora Wildlife Sanctuary
- Pobitora Wildlife Sanctuary is nestled in the grasslands of Assam which is the dwelling place of the Greater Indian One-Horned Rhinoceroses with its highest population in the whole world.
- Pobitora Wildlife Sanctuary has the highest density of one-horned rhinos in the world and second highest concentration in Assam after Kaziranga National Park.
- Pobitora Wildlife Sanctuary, situated in the flood plains of River Brahmaputra in the district of morigaon.
- Pobitora originally was a grazing reserve of erstwhile nagaon district, came into limelight during the year 1961-62 for sighting of One Horned Rhino (Rhinoceros unicornis).
- Assam’s Pobitora Wildlife Sanctuary is also home to more than 2000 migratory birds and various reptiles. It is also an Important Bird Area.