Daily Current Affairs : 17th September 2020

Daily Current Affairs for UPSC CSE

Topics Covered

1. Banking Regulation (Amendment) Bill, 2020
2. Russia Direct Investment Fund (RDIF)
3. Sectors Identified for Import Substitution
4. Solar Cycle 25

1 . Banking Regulation (Amendment) Bill, 2020

Context: The Lok Sabha has passed an amendment to the Banking Regulation Act, 1949, which will bring cooperative banks under the direct supervision of the RBI and bring them under some of the same governance norms as commercial banks.

Background

• Banking Regulation (Amendment) Bill was passed by the Lok Sabha and will replace an ordinance that was promulgated in June amid the coronavirus pandemic.
• It is applicable to those cooperative banks which deal with “bank, banker and banking”

Why have the amendments been proposed?

• The Banking Regulation Act, 1949 is being amended due to the stress under which the cooperative banks are functioning
• As many as 430 cooperative banks have been delicensed and liquidated over the last two decades, while not a single commercial bank has gone into liquidation under the oversight of the RBI.
• The decision has also come against the backdrop of scams at cooperative banks, including at the Punjab and Maharashtra Cooperative (PMC) Bank that came to light last year in 2019

Key Features of the Bill

• The Bill allows the central bank to initiate a scheme for reconstruction or amalgamation of a bank without placing it under moratorium.
• If the central bank imposes moratorium on a bank, the lender can not grant any loans or make investments in any credit instruments during the moratorium tenure, according to the Bill.
• The co-operative banks will be allowed to issue equity, preference, or special shares on face value or at a premium to its members, or to any other person residing within their area of operations. The banks may also issue unsecured debentures or bonds or similar securities with maturity of ten or more years to such persons. However, a prior approval from RBI is mandatory for such issuance.
• No person will be entitled to demand payment towards surrender of shares issued to him by a co-operative bank, the Bill states.
• The Bill mentions that RBI may exempt a cooperative bank or a class of cooperative banks from certain provisions of the Act through notification. These provisions are related to employment, the qualification of the board of directors and, the appointment of a chairman.
• RBI may supersede the board of directors of a multi-state co-operative bank for up to five years under certain conditions. These conditions include cases where it is in the public interest for RBI to supersede the Board, and to protect depositors.
• The Bill discards the provision of Banking Regulation Act, 1949 that cooperative banks cannot open a new place of business or change the location of the banks outside of the village, town, or city in which it is currently located without permission from RBI
• The changes will not affect the existing powers of the state registrars of co-operative societies under state laws. “This Bill does not regulate cooperative banks.

The amendments will not apply to which of the following?

• The amendments will not affect existing powers of the State Registrars of Co-operative Societies under state co-operative laws.
• The amendments also do not apply to Primary Agricultural Credit Societies (PACS) or co-operative societies whose primary object and principal business is long-term finance for agricultural development, and which do not use the words “bank”, “banker” or “banking” and do not act as drawees of cheques, as per the statement. 

Benefits of the bill

• The amendment will help in protecting the interests of depositors and also strengthen cooperative banks by improving governance and oversight by extending powers already available with the RBI in respect of other banks to co-operative banks as well for sound banking regulation. 

Criticism

• The opposition has stated that the bill is an encroachment on federalism.

2 . Russia Direct Investment Fund (RDIF)

Context: The Russia Direct Investment Fund (RDIF), which is piloting Russia’s Sputnik V vaccine currently in Phase 3 trials, has partnered with the Hyderabad-based Dr. Reddy’s Laboratories to test, and subject to regulatory approvals in India, supply 100 million doses of the vaccine.

Sputnik V

• Sputnik V is the world’s first registered vaccine against COVID-19 based on the human adenoviral vectors platform
• It has been developed by Gamaleya National Research Institute of Epidemiology and Microbiology.

Russian Direct Investment Fund (RDIF)

• RDIF is Russia’s sovereign wealth fund.
• RDIF was created in 2011. RDIF makes investments in leading companies of high-growth sectors of the Russian economy. 
• Its mandate is to co-invest alongside the world’s largest institutional investors — direct investment funds, sovereign wealth funds and leading companies.
• RDIF, therefore, acts as a catalyst for direct investment in Russia.
• RDIF’s reserved capital under management equals $10 billion. 

3 . Sectors Identified for Import Substitution

Context : A study titled  ‘Self-Reliant India: Approach and Strategic Sectors to Focus’ by Export and Import Bank of India (Exim Bank) has identified certain sectors for import substitution and enhancing domestic production.

About the Study

• According to the study promoting self-reliance in sectors such as electronics and defence equipment can lead to import substitution of over $186 billion for India.
• Other sectors identified for import substitution and enhancing domestic production include machinery, chemicals and allied sectors, and select agricultural products.
• The study has also included sectors such as auto components, and iron and steel. In these sectors, though there is an overall trade surplus for the country, but in some sub-categories, there is trade deficit, particularly with China.
• The study has recommended several sector-specific strategies to reduce import dependence by enhancing domestic production, based on an assessment of the specific needs and issues faced by each of the sectors.

About EXIM Bank

• Export-Import Bank of India (EXIM Bank) is a specialized financial institution, wholly owned by Government of India.
• It was set up in 1982, for financing, facilitating and promoting foreign trade of India.
• The headquarters is in Mumbai.
• EXIM Bank extends Lines of Credit (LOCs) to overseas financial institutions, regional development banks, sovereign governments and other entities overseas, to enable buyers in those countries to import developmental and infrastructure projects, equipments, goods and services from India, on deferred credit terms. 

4 . Solar Cycle 25

Context : ASA and the National Oceanic and Atmospheric Administration (NOAA) jointly released a consensus statement announcing the commencement of solar cycle 25. As the star governing our solar system, Sun’s activities impact Earth and the overall space weather. The Indian Express explains how solar cycles are determined, and how they sometimes indicate a ‘quiet’ Sun.

What is a solar cycle?

• Like seasons on Earth, the Sun follows a cycle of 11 years, during which solar activities fluctuate between solar minima and maxima.
• Depending on the number of sunspots detected on the Sun, scientists term it is as solar maxima (highest number of sunspots) or solar minima (lowest number of sunspots).
• Sunspots are small and dark, yet cooler areas formed on the solar surface, where there are strong magnetic forces.
• They start appearing at Sun’s higher latitudes and later shift towards the equator as a cycle progresses. In short, when the Sun is active, there are more sunspots in comparison to fewer sunspots during the lesser active phase.
• Maxima or minima is not a specific time in the 11-year cycle, but is a period that can last for a few years.

How are solar cycles determined?

• One of the important elements researchers look out for on the Sun’s surface is the number of sunspots.
• A new cycle commences when the Sun has reached its lowest possible minima phase. Every time the cycle changes, the Sun’s magnetic poles reverse.
• Since the Sun is a highly variable star, data of sunspot formation and its progress need close monitoring. Data of six to eight months are required to confirm whether the star has undergone a minima phase.
• A Solar Cycle Prediction Panel comprising solar physicists, led by NASA and NOAA, along with an international community, release a consensus statement once a decade.
• The team predicts the number of sunspots, the year or period when the cycle would reach its peak, and maxima and minima after taking into consideration the forecasts from global scientific teams. But the panel does not undertake independent predictions.
• Traditionally, telescopes were used to record sunspots and recorded data since 1755 is available. With the advance in technology in the recent decades, satellites are also used to make real-time sunspot observations. On this basis, scientists announced the completion of solar cycle 24, which lasted between December 2008 and December 2019. With the Sun’s activities having reached its lowest minima between the two cycles, the new solar cycle 25 has now commenced.

What solar activities affect us on Earth?

• Solar activities include solar flares, solar energetic particles, high-speed solar wind and Coronal Mass Ejections (CME). These influence the space weather which originates from the Sun.
• Solar storms or flares can typically affect space-dependent operations like Global Positioning Systems (GPS), radio and satellite communications, besides hampering flight operations, power grids and space exploration programmes.
• Just like one checks the local weather before heading on a vacation, it is imperative to know the space weather. This will enable us to remain prepared, predict and plan mitigation measures ahead of space explorations, so as to build suitable hardware and critical systems
• CMEs pose danger to space weather. Ejections travelling at a speed of 500km/second are common during solar peaks and create disturbances in Earth’s magnetosphere, the protective shield surrounding the planet. At the time of spacewalks, astronauts face a great health risk posed by exposure to solar radiation outside Earth’s protective atmosphere. Such advance predictions are regularly sought out by countries who have made heavy investments in space missions. Besides, the life of functional satellites, and even those which have now turned into debris, depends a lot on the Sun’s activities