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Reserve Bank of India Governor raised concerns over banks adopting over-aggressive growth strategies and using innovative methods for evergreening of loans — reviving a loan on the verge of default by extending more loans to the same borrower.
Das, who was addressing bank board, red-flagged corporate governance issues and said that during the supervisory process, certain instances of concealing the real status of stressed loans have come to the notice of the RBI.
To mention a few, such methods include bringing two lenders together to evergreen each other’s loans by sale and buyback of loans or debt instruments; good borrowers being persuaded to enter into structured deals with a stressed borrower to conceal the stress; use of Internal or Office accounts to adjust borrower’s repayment obligations; renewal of loans or disbursement of new/additional loans to the stressed borrower or related entities closer to the repayment date of the earlier loans,” Das said without mentioning the name of any bank.
The process of evergreening of loans is typically a temporary fix for a bank. If an account turns NPA, banks are required to make higher provisions which will impact their profitability. To avoid classifying a loan as non-performing asset (NPAs), banks adopt evergreening.
The City
Citizens can’t be forced to choose between right to education, right to exercise reproductive autonomy: HC (Page no. 8)
(GS Paper 2, Judiciary)
Granting relief to a university student who was denied maternity leave, the Delhi High Court has said that citizens could not be forced to choose between their right to education and their right to exercise reproductive autonomy.
The observation came in a plea by a student seeking relaxation of attendance to complete her Master of Education (M Ed) course at Chaudhary Charan Singh University, Meerut.
A single-judge bench of Justice Purushaindra Kumar Kaurav, in its May 23 order, said, “The Constitution envisaged an egalitarian society where citizens could exercise their rights, and the society as well as the State would allow the manifestation of their rights.
A compromise was then not sought in the Constitutional scheme. The citizens could not be forced to choose between their right to education and their right to exercise reproductive autonomy.
The court observed that while a man can “enjoy parenthood while pursuing his higher education”, a woman “necessarily has to undergo pre- and post-pregnancy care” as it is not her choice but the “will of nature”.
Express Network
ISRO launches first of five second gen navigation satellites (Page no. 10)
(GS Paper 3, Science and Technology)
The Indian Space Research Organisation successfully launched the first of the five second-generation satellites for the Navigation by Indian Constellation (NavIC), with Isro chairperson S Somanath saying they will make the constellation fully operational.
The 2,232 kg satellite, launched using a Geosynchronous Satellite Launch Vehicle or GSLV rocket, will add to India’s regional navigation system and provide accurate and real-time navigation.
The satellite took off from the second launch pad at 10.42 am aboard GSLV-F12 and was inserted just over 18 minutes later into a geosynchronous transfer orbit of 173 km *40,700 km that will be circularised over the next couple of days to bring the satellite to its final position.
The constellation has been plagued by failing atomic clocks and satellites nearing the end of their mission life. “We are going to make this NavIC system fully functional and operational for the benefit of the nation. There is a huge amount of opportunity waiting for us,” Somanath said after the launch.
“This is a very good orbit and will give a better life to the satellite,” said Mission Director N P Giri after the launch. The satellite has a mission life of over 12 years, which in itself is longer than the 10-year life of the first-generation satellites in the constellation.
Odisha launches new credit linked housing scheme for the rural poor (Page no. 10)
(GS Paper 3, Economy)
The Naveen Patnaik-led Odisha government announced a new initiative, Mo Ghara (My Home) – a credit-linked housing scheme for rural poor in the state with an aim to convert all kutcha houses into pucca ones – a promise made by the ruling Biju Janata Dal (BJD) in its 2019 election manifesto.
The announcement, following a meeting of the state cabinet, marked the completion of the fourth year of the fifth term of the BJD government. The scheme is set to benefit around four lakh families.
The announcement of the scheme a year before the 2024 general elections assumes significance politically as the BJP-led NDA government at the Centre has already sanctioned around 9.5 lakh houses under Pradhan Mantri Awas Yojana-Gramin (PMAY-G).
State Panchayati Raj Minister Pradip Kumar Amat said the new scheme will cover families that were left out of the existing PMAY-G scheme owing to stringent eligibility criteria or insufficient allocation.
It will also help those who had received housing assistance of a smaller amount in the past and now want to upgrade or expand their houses.
The scheme will have a financial implication of around Rs 2,150 crore over a period of two years and it will be fully funded from the state budget, said the panchayati raj minister.
Under the Mo Ghara scheme, a beneficiary can avail housing loan of up to Rs 3 lakh that can be repaid in 10 years in easy instalments excluding one year moratorium period. The state government will release capital subsidy to the loan account of the beneficiaries on completion of the house.
Editorial
The challenge of change (Page no. 12)
(GS Paper 2, Governance)
Prime Minister Narendra Modi often says, we have not come here to enjoy power, but to bring about fundamental changes in critical areas of governance. Nine years is enough time to prove that he walked the talk.
The new Parliament built in record time, abrogation of Article 370, pushing up the economy into the world’s top five despite Covid, amalgamation of 10 state-owned banks to four and getting them into prime health, the Goods and Services Tax, the Insolvency and Bankruptcy Code, digital public infrastructure yielding six billion payment transactions in a month, 74 airports built and operationalised, delivery of six notoriously delayed infrastructure projects (one delayed by over five decades), repeal of 1,400 archaic laws and 39,000 compliances, permanent commission for women in the armed forces, highest ever defence exports, becoming the third largest producer of renewable energy — these are but a few outcomes of the fundamental changes made in the way we are governed.
The need for fundamental change in the way we are governed was not a cliché. The lethargy, the stasis in governance, were deep-rooted and, dare I say, a result of unstable governments or dynastic rule.
It must be recognised that there have been attempts to break away from this even earlier. However, they didn’t make much progress.
Prime Minister Modi’s political will and stability, vision, relentless pursuit of set goals and putting nation above self are yielding results.
The role of the Opposition has, sadly, been less in Parliament. It has been more to disrupt and delay through filing petitions in the courts of law rather than debate and discuss in the House.
Over 15 cases, including on the GST, Article 370, vaccination, triple talaq, Central Vista, were vigorously argued only for them to lose in each one of them.
In each of these cases, if the time spent in the courts is reconciled, then we have perhaps delivered outcomes in less than nine years’ time.
World
Uganda enacts harsh anti-LGBTQ law that carries death penalty (Page no. 15)
(GS Paper 1, Social Issues)
Uganda’s President Yoweri Museveni has signed one of the world’s toughest anti-LGBTQ laws, including the death penalty for “aggravated homosexuality”, in defiance of Western condemnations and potential sanctions from aid donors.
Same-sex relations were already illegal in Uganda, as in more than 30 African countries, but the new law goes much further.
It imposes capital punishment for some behaviour including transmitting a terminal illness like HIV/AIDS through gay sex, and stipulates a 20-year sentence for “promoting” homosexuality.
“The Ugandan president has today legalised state-sponsored homophobia and transphobia,” said Clare Byarugaba, a Ugandan rights activist. “It’s a very dark and sad day for the LGBTIQ community, our allies and all of Uganda.”
She and other activists have vowed a legal challenge to the law, which Museveni was shown signing at his desk with a golden pen in a photo tweeted by Uganda’s presidency.
The 78-year-old leader has called homosexuality a “deviation from normal” and urged lawmakers to resist “imperialist” pressure.
S Korea hosts first summit with Pacific islands leaders (Page no. 15)
(GS Paper 2, International Relation)
South Korean President Yoon Suk Yeol begins the country’s first summit with leaders of Pacific islands on Monday, as Seoul seeks to increase its influence in a region that has become the focus of intense geopolitical rivalry.
Yoon launched his administration’s Indo-Pacific strategy last year, pledging to foster a “free, peaceful and prosperous” region built on a rules-based order, amid concerns over China’s security ambitions for the strategic waters and economic leverage among the small island states.
The South Korean president held bilateral talks with some of the visiting Pacific leaders over the weekend including Kiribati President Taneti Maamau and Papua New Guinean Prime Minister James Marape.
The president discussed expanding reciprocal cooperation in development, marine and fisheries as well as building health infrastructure and responding to climate change in bilateral meetings with each of the Pacific islands.
South Korea’s Indo-Pacific strategy also sees greater scope for trilateral cooperation with the United States and Australia to tackle regional challenges such as supply chains, critical minerals and climate change.
Still, while the Yoon government’s strategy indicates closer alignment with the U.S, “South Korea must still move cautiously between the two great power rivals given Seoul’s larger economic and geopolitical stakes in China relative to other U.S. allies,” said Andrew Yeo, a Senior Fellow at U.S. think tank Brookings Institution.
Explained
Many groups, deep faultlines: History of insurgency in Manipur (Page no. 16)
(GS Paper 3, Internal Security)
Amid fresh violence in Manipur, Chief Minister N Biren Singh told the media that 40 insurgents had been killed by security forces. The Kuki National Organisation (KNO) has countered his claims.
Manipur has been in the cross-currents of India’s oldest insurgent movements. The Naga national movement in the 1950s and the fight for an independent Nagalim touched parts of Manipur. The NSCN-IM entered a ceasefire agreement with the Indian government only in 1997.
While this movement was raging, the Meiteis in Manipur were also opposing the merger agreement between the Manipuri king, Maharaja Bodhachandra, and the Indian government.
In 1964, the United National Liberation Front (UNLF) was formed, demanding secession from India. Subsequently, numerous Meitei insurgent groups, or Valley Insurgent Groups, came into being, such as the People’s Revolutionary Party of Kangleipak (PREPAK) and the People’s Liberation Army (PLA), which received arms and training from China.
These valley groups operated with a dual purpose – independence from India, and warding off Naga insurgent groups.
The Kuki-Zomi groups were in fact a reaction to Naga aggression against the Kukis. In 1993, a massacre of Kukis by the NSCN-IM left thousands of Kukis homeless. The Kuki-Zomi tribes organised various armed groups after this.
At around the same time, similar clashes were taking place between the Meiteis and Meitei Pangals (Muslims). This led to the formation of the Islamist group People’s United Liberation Front, alongside several others. These groups are no longer active in the region.
Economy
Privatisation of PSBs to happen as per schedule (Page no. 17)
(GS Paper 3, Economy)
Finance Minister Nirmala Sitharaman on Monday said privatisation of public sector banks (PSBs) will happen as per the government’ schedule, indicating that those may be taken up after general elections in 2024.
It (privatisation) will go on as per the schedule and there is no change in it,” Sitharaman said while responding to a question on progress of her earlier announcement to privatise two PSBs.
She was speaking at a press conference in Mumbai on the achievements of the Narendra Modi government in the last nine years.
In the Budget for 2021-22, Sitharaman announced the government’s intent to take up the privatisation of two PSBs.
As per the new Public Sector Enterprises (PSE) policy, the government would minimise the number of state-run firms in five strategic sectors, including banking while fully exiting from non-strategic sectors.
The government must either amend or repeal the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980, usually called Nationalisation Acts, to remove the hurdle to privatisation. However, the relevant Bills are yet to be introduced in Parliament.
The government may delay processes for the proposed privatisation of some PSBs until the coming general elections are completed in May 2024, officials reckon.
In the meantime, the strategic disinvestment of IDBI Bank (technically a private bank) by promoter LIC and the government (a significant shareholder) later in the current fiscal would provide a template for the privatisation of PSBs.
Speaking at the event, Sitharaman also said that the government was monitoring retail inflation and would not let the guard down on it to insulate consumers from price shocks.