Small loans could turn bad: Rajan

Why in news?

Former RBI Governor Raghuram Rajan has cautioned that the next crisis in India’s banking sector could come from loans given to the unorganised micro and small businesses, called MUDRA loans, and credit extended through the Kisan credit card.

What Rajan said?

• In a note on bank non-performing assets (NPAs) prepared at the request of Murli Manohar Joshi, Chairman of the Parliament Estimates Committee, Dr. Rajan said the government should refrain from setting ambitious credit targets or from waiving loans.
• “Both MUDRA loans as well as the Kisan Credit Card, while popular, have to be examined more closely for potential credit risk,” Dr. Rajan wrote in his 17-page note.
• He also flagged the Credit Guarantee Scheme for MSMEs, run by the Small Industries Development Bank of India, calling it “a growing contingent liability” that needs to be examined with urgency.
• He pointed out that most of the bad loans were created during 2006-08, a period that coincides with the first term of the UPA. A large number of bad loans originated in the period 2006-2008 when economic growth was strong. it is at such times that banks make mistakes.
• The former RBI Governor also revealed that he had shared a list of high-profile fraud cases with the Prime Minister’s Office in order to “coordinate action to bring at least one or two to book” but he did not mention whether it was done during the UPA’s time or the NDA’s.

About MUDRA

• MUDRA loans are offered under the Prime Minister Mudra Yojana or PMMY, launched in 2015 by the NDA government.
• The primary product of MUDRA will be refinance for lending to micro businesses/units under the aegis of the Pradhan Mantri MUDRA Yojana.
• MUDRA Bank has been established by government with a Refinance corpus of Rs.20, 000 crore, and credit guarantee corpus of Rs.3000 crore.
• The products would be covered under three categories that are as follows:
• Shishu : covering loans up to Rs. 50,000/-
• Kishor : covering loans above Rs. 50,000/- and up to Rs. 5 Lakh
• Tarun : covering loans above Rs. 5 Lakh and up to Rs. 10 Lakh
• It is to be noted that at least 60% of loans shall be disbursed under Shishu category and remaining for Kishor and Tarun categories.
• All commercial banks (Private or Public), RRB, Cooperative Bank or other Micro Finance Institutions are eligible for refinance under PM Mudra Yojana.
• Collateral Security: Banks have been mandated not to insist for collateral security in the case of loans up to 10 Lakh extended to the units in the Micro Small Enterprises sector.
• A total of Rs. 6.37 lakh crore has been disbursed under the scheme by public and private sector banks, regional rural banks and micro-finance institutions till date, as per data from the Micro Units Development and Refinance Agency (MUDRA) website.

India’s first missile tracking ship is readying for sea trials

Why in news?

Hindustan Shipyard Limited (HSL) is gearing up to undertake sea trials of India’s first missile tracking ship by the first week of October. Once ready, it will be India’s first, a force multiplier and cruise the country into a global elite club.

Details

• The keel of the ship, which was laid on June 30, 2014, is being built for the National Technical Research Organisation, the technical intelligence agency working directly under the supervision of the Prime Minister’s Office and the National Security Adviser.
• Considered a “topmost secret project”, a lot of confidentiality is being maintained in executing the project costing about Rs. 750 crore. It will be named after its induction into the Indian Navy. For now, it is simply referred as VC 11184.
• This will be the first of its kind ocean surveillance ship being built as part of the efforts under the NDA government to strengthen the country’s strategic weapons programme.
• The ship was built inside the covered dry dock. It has the capacity to carry 300-strong crew with hi-tech gadgets and communication equipment, powered by two diesel engines, and a large deck capable of helicopter landing.
• Visakhapatnam is considered a strategic location on the East Coast for the Indian defence forces as it is home for Ship Building Centre to build nuclear powered submarine INS Arihant class, Naval Alternate Operational Base at Rambilli, the second naval base after Eastern Naval Command headquarters, training centre for Marine Commandos and headquarters of the submarine arm.

About  HSL

• Hindustan Shipyard Ltd., strategically located on the East Coast of the Indian peninsula, at Visakhapatnam, Andhra Pradesh, is the nation’s premier shipbuilding organization catering to the needs of shipbuilding, ship repairs, submarine construction and refits as well as design and construction of sophisticated state-of-the-art offshore and onshore structures.
• Direct sea access, excellent infrastructure, skilled work force, rich expertise garnered over the years in building 181 vessels and repairing 1965 vessels of various types enable HSL to offer competent services for the defence and maritime sectors.
• Considering the strategic requirements, the yard was brought under the administrative control of the Ministry of Defence on 22 Feb 2010. The Registered Office of the company is located in Visakhapatnam and has regional office at New Delhi.
• It is poised to get orders for construction of five fleet support ships costing Rs. 9,000 crore and finalise request for proposal for design collaborator for construction of two Special Operation Vessels called mini submarines.
• It is also banking on the order for medium refit of Russia-made third Sindhughosh class submarine INS Sindhuratnafor which it has submitted technical bids.

AAI shelves water aerodrome project in Chilika Lake

Why in news?

The Airports Authority of India (AAI) has dropped the proposed water aerodrome project at Chilika Lake in Odisha.

Why project dropped?

• AAI has cancelled the seaplane project in the lake which, if implemented, would have negatively impacted the ecosystem and the surrounding human population at the world’s second largest brackish water lake.
• The AAI has decided to shelve the project following stiff opposition from environmentalists and the CDA, according to Nanda.
• Earlier, the CDA in its report to the state government had said that the water aerodrome project would seriously jeopardise the habitat of Chilika’s nearly one million avian visitors which come from the Arctic and Eurasian regions.
• “The cost involved in the operation of seaplane seems to outweigh the benefits likely to accrue from it. Besides, legally the project is not feasible,” the CDA chief executive had stated in the report.

Health Ministry issues notification to bring HIV/AIDS Act, 2017, into force

Safeguarding the rights of people living with and affected by HIV, the Union Health Ministry has issued a notification to bring in force the Human Immunodeficiency Virus and Acquired Immune Deficiency Syndrome (Prevention and Control) Act, 2017.

Salient features of the act

• Provisions of the Act address HIV-related discrimination, strengthen existing programme by bringing in legal accountability, and establish formal mechanisms for inquiring into complaints and redressing grievances.
• Act seeks to prevent and control the spread of HIV and AIDS, and prohibits discrimination against affected persons. The Act lists various grounds on which discrimination against HIV positive persons and those living with the condition is prohibited.
• These include the denial, termination, discontinuation or unfair treatment with regard to: employment, educational establishments, health care services, residing or renting property, standing for public or private office, and provision of insurance (unless based on actuarial studies). The requirement for HIV testing as a prerequisite for obtaining employment or accessing health care or education is also prohibited.
• “Every HIV infected or affected person below the age of 18 years has the right to reside in a shared household and enjoy the facilities of the household. The Act also prohibits any individual from publishing information or advocating feelings of hatred against HIV positive persons and those living with them,” noted the Ministry release.
• Provisions of the Act state that a person between the age of 12 and 18 years who has sufficient maturity in understanding and managing the affairs of his/her HIV or AIDS-affected family shall be competent to act as guardian of another sibling below 18 years of age to be applicable in matters relating to admission to educational establishments, operating bank accounts, managing property, and care and treatment, among others.
• Provisions of the Act state that every person in the care and custody of the State shall have the right to HIV prevention, testing, treatment and counselling services.

Criticism

• Provisions only protect infected individuals from prejudiced behaviour and attitudes.
• Communities that are vulnerable to infection, individuals who are yet to be tested and kin of those infected are still subjected to stigma and biased perspectives.

Conclusion

The need is to adopt a holistic approach to successfully combat discrimination against the infected and the vulnerable, and create safe spaces for them.

UN sees 70% chance of El Nino event this year

Why in news?

The World Meteorological Organisation forecast a 70% chance of an El Nino developing by the end of this year. The organisation sees increased odds of higher surface temperatures in most of Asia-Pacific, Europe, North America, Africa and along much of South America’s coastline. Interior parts of South America, Greenland, many south Pacific islands and some in the Caribbean were identified as possible exceptions.

What is ENSO?

ENSO is nothing but El Nino Southern Oscillation. As the name suggests, it is an irregular periodic variation of wind and sea surface temperature that occurs over the tropical eastern Pacific Ocean. The warming phase of ENSO is called El Nino, while the cooling phase is known as La Nina.

What is El Nino?

• El Nino is a climatic cycle characterised by high air pressure in the Western Pacific and low air pressure in the eastern.
• In normal conditions, strong trade winds travel from east to west across the tropical Pacific, pushing the warm surface waters towards the western Pacific.
• The surface temperature could witness an increase of 8 degrees Celsius in Asian waters. At the same time, cooler waters rise up towards the surface in the eastern Pacific on the coasts of Ecuador, Peru, and Chile. This process called upwelling aids in the development of a rich ecosystem.

Why is it a concern?

The rise in sea surface temperature may be intensified by global warming. From the current study, we learn that El Nino can exacerbate global warming and hence the process could become a vicious circle.

Indo – Mongolian Joint Exercise: Nomadic Elephant: INDO-MONGOLIA joint exercise Nomadic Elephant-2018 is being held in Ullanbaatar, Mongolia.Exercise Nomadic Elephant is an annual, bilateral exercise since 2006 which is designed to strengthen the partnership between Indian Army and Mongolian Armed Forces. The exercise will see them improve their tactical and technical skills in joint counter insurgency and counter terrorist operations in rural and urban scenario under United Nations mandate.

BIMSTEC Military Exercise

Why in news?

The first BIMSTEC field training exercise is being held at Foreign Training Node at Aundh in Pune, Maharashtra. Armies of BIMSTEC members including India, Bangladesh, Bhutan, Sri Lanka, Myanmar, Thailand and Nepal will participate in it.

Details

• The theme of exercise includes counter-terrorism in semi-urban terrain and cordon and search.
• The main aim of this military exercise is to promote strategic alignment among the member-states and to share best practices in the area of counter-terrorism.
• Nepal is not participating in the exercise.

About BIMSTEC

• The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is a regional organization comprising of seven member states in South Asia and Southeast Asia lying in littoral and adjacent areas of Bay of Bengal constituting a contiguous regional unity.
• This sub-regional organisation came into being on June 6, 1997, through the Bangkok Declaration. It is headquartered in Dhaka, Bangladesh.
• It comprises of seven member countries: five deriving from South Asia — including Bangladesh, Bhutan, India, Nepal, Sri Lanka — and two from Southeast Asia, including Myanmar and Thailand.

India, Bangladesh jointly inaugurate three projects

• Prime Minister Narendra Modi, his Bangladesh counterpart Sheikh Hasina, and Chief Ministers of West Bengal Mamata Banerjee and Tripura Biplab Kumar Deb jointly inaugurated three projects in Bangladesh via video conferencing. These include:
• The first project — Supply of 500 MW additional power supply from India to Bangladesh through Baharampur – Bheramara interconnection was unveiled.
• The second project — construction work of the Bangladesh part of Akhaura-Agartala railway link was inaugurated by Indian and Bangladeshi Prime Ministers, and Tripura Chief Minister Biplab Deb.
• The third project on the rehabilitation of Kulaura-Shahbazpur section of Bangladesh Railways was jointly inaugurated by the Prime Minister of both the countries.