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RBI Highlights Deposit Challenges and Tightens HFC Liquidity Norms

Source: IE

Why in News?

Recently, the Reserve Bank of India (RBI) Governor has urged banks to develop innovative product offerings to boost deposit growth. 

• This comes in response to a slower deposit growth rate compared to the surge in credit demand, which poses potential risks to the banking sector's liquidity.
• In another development, the RBI has tightened liquidity norms for housing finance companies (HFCs), aligning them with regulations for non-banking financial companies (NBFCs), to strengthen the financial stability of these institutions.

What are the Concerns Regarding Deposit Growth?

• Lending vs. Deposit Growth: The credit-deposit ratio has reached its highest in 20 years, with bank deposits growing at 11.1% year-on-year compared to credit growth of 17.4%. 

  • The growth of bank deposits has not kept pace with the surge in loan demand, creating a widening gap between credit and deposit growth.

• Reliance on Short-Term Deposits: Banks are increasingly using short-term deposits and other liability instruments to meet credit demand, potentially leading to structural liquidity challenges.

• Shift to Alternative Investments: Households are moving their savings from bank deposits to mutual funds, stocks, insurance, and pension funds. This shift, along with declining net financial assets (from 11.5% of GDP in 2020-21 to 5.1% in 2022-23) and surging inflation, contributes to slower deposit growth.

  • The strong performance of the Indian stock markets has led investors to favour equities over traditional bank deposits.
    This shift has contributed to the slower growth in deposits, as evidenced by the doubling of the mutual fund industry's assets under management (AUM) from Rs 24.79 lakh crore in April 2019 to Rs 57.26 lakh crore in April 2024.
• Regulatory Requirements: A portion of mobilised deposits is tied up in regulatory requirements like the Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR), leaving banks with fewer lendable funds and increasing competition for deposits.

  • The growing mismatch between deposit and credit growth could threaten the banking system's stability if not addressed with proactive measures.

• Increased Competition: Banks face competition not only from each other but also from high-return equity-linked products. Investors are increasingly shifting to equity markets due to strong performance and rising financial literacy.

• Impact on Liquidity Risk Management: Banks have attempted to bridge the credit-deposit gap by relying more on Certificates of Deposit (CDs). However, this increases their sensitivity to interest rate movements and complicates liquidity risk management, making the system more vulnerable to market fluctuations.

• Need for Prudent Liquidity Management: Proactive liquidity management is essential. The RBI is reviewing the Liquidity Coverage Ratio (LCR) framework to address these emerging challenges, with plans for public consultations to refine the approach.

What Strategies Can Banks Use to Increase Deposit Growth?

• Focus on Core Business: The Finance Minister of India emphasised that banks should concentrate on their primary functions of deposit mobilisation and lending, stressing that these activities are the "bread and butter" of banking.
  • Expanding branch networks, especially in underserved or rural areas, can help banks tap into new customer segments, increasing overall deposit inflows.
• Innovative Deposit Mobilisation: Banks were encouraged to be aggressive in deposit mobilisation by offering attractive and innovative products, leveraging the liberty given by the RBI to manage interest rates.
  • The Finance Minister urged banks to avoid relying heavily on bulk deposits and instead focus on small savers, which are critical for sustainable banking operations.
• Flexible Products:  Banks can consider reducing the lock-in period for tax-saving fixed deposits from five years to three years, making them more competitive with alternative investment options like mutual funds and equity-linked savings schemes (ELSS).

• Incentives and Promotions: Offer attractive interest rates, bonuses, or cash incentives for new deposits to attract customers.

  • Offering higher interest rates on savings accounts and fixed deposits can attract more deposits, especially from risk-averse customers who prefer stable returns over potentially higher, but uncertain, returns from equities.
• Technology: Banks can use data analytics to offer personalised savings and deposit products, making it easier for customers to manage and grow their savings.

  • Mobile banking apps with user-friendly interfaces and financial planning tools can encourage more deposits. 

• Customer Engagement: Strengthening customer relationships through targeted marketing campaigns, and loyalty programs can encourage existing customers to increase their deposits and attract new customers.

  • Conducting financial literacy programs that educate customers about the importance of savings and the safety of bank deposits can help in increasing deposit growth.

What are the RBI's New Liquidity Norms for HFCs?

• New Liquidity Requirements: HFCs that raise public deposits will now need to maintain higher liquid assets to ensure financial stability.
  • The liquid asset requirement has been increased from 13% to 15% in stages: HFCs must raise liquid assets to 14% by 1st January 2025. This percentage must be further increased to 15% by July 2025.
  • HFCs will now be required to obtain a minimum investment-grade credit rating at least once a year to continue accepting public deposits. 
    • If an HFC's credit rating falls below the required grade, it will not be permitted to renew existing deposits or accept new ones until the rating improves. 
    • This measure ensures that only financially sound HFCs can accept public deposits, reducing the risk to depositors.
  • The maximum tenure for public deposits at HFCs has been reduced from ten years to five years. 
    • Existing deposits with maturities beyond five years will be allowed to mature according to their original terms, but new deposits cannot exceed the five-year limit. 
    • This reduction in tenure helps mitigate long-term liquidity risks.
  • The RBI has lowered the ceiling on the quantum of public deposits that an HFC can hold, from three times to 1.5 times its net owned funds (NoF). HFCs holding deposits above this new limit will not be allowed to accept new deposits or renew existing ones until they comply with the revised ceiling.
    • This measure aims to prevent over-leveraging by HFCs, ensuring they maintain a healthy balance between their liabilities and assets.
• Alignment with NBFC Regulations: Previously, HFCs operated under more relaxed prudential norms compared to NBFCs, particularly in terms of deposit acceptance.

  • The RBI's new guidelines aim to eliminate these discrepancies, treating HFCs similarly to deposit-taking NBFCs. This alignment addresses the uniform regulatory concerns associated with deposit acceptance across all NBFC categories.

Drishti Mains Question: Q. Evaluate the impact of the shift from traditional bank deposits to alternative investment avenues on the Indian financial system. What measures can banks take to retain and attract deposits?

Chinese Technicians for Indian Manufacturing

Source: IE

Why in News?

Recently, a portal to facilitate the approval of short-term business visas for Chinese technicians has begun functioning.

• It is essential for operationalising production units and boosting output in sectors under the government’s flagship Production Linked Incentive (PLI) scheme.

Why does India Need Chinese Technicians?

• Delay in Operationalisation of Machines: Domestic manufacturing firms have been raising concerns about delays in obtaining visas for Chinese technicians essential for tasks such as machine installation, repair and training of Indian workers.
  • Chinese technicians are sought after by Indian manufacturers as they are more affordable than technicians from other Western or even Southeast Asian countries.
• Delay in Fulfilling Global Orders: Escalating tensions with China have reportedly cost Indian electronics manufacturers USD 15 billion in production losses and 100,000 jobs since 2020.
  • The electronics manufacturing industry highlighted that India has also missed out on a USD 10 billion export opportunity and suffered a USD 2 billion loss in value addition. 
• Achievement of Atmanirbhar Bharat: Ensuring the availability of necessary expertise will help domestic manufacturing units enhance production capabilities, reduce dependence on imports, and maintain competitiveness in the global market.
• Delay in Commencement of Production: The slow visa approval process has led to delays in the start of production across multiple industries. 
  • In sectors like textiles and leather, where there is significant potential, machinery has remained unused for months because Chinese vendors demand that only their personnel activate it.

Why was India Hesitant to Grant Visas to Chinese Technicians?

• The border standoff after the Galwan clash in 2020 led to several government measures aimed at limiting Chinese influence on the Indian economy. 
  • In 2019, Chinese nationals received 2,00,000 visas, but in 2023, the number of visas to Chinese personnel was down to 2000.
• The government also amended the FDI policy under Press Note 3 (PN3), 2020 bringing investments from land-bordering countries under the government route.
  • India approved only a quarter of the total 435 FDI applications from China up to June 2023 since the modification in Press Note 3.
• A security-driven mindset has emerged among Indian policymakers. In 2024, even the meagre 1000 visas for Chinese electronics professionals are stuck in a “pipeline”, undergoing “intensive screening”.

How can India Utilise China’s Expertise for its Advantage?

• Increase Chinese FDI Inflow: The Economic Survey 2023-24 advocated attracting investments from Chinese companies to boost exports. 
  • Currently, China stands at the 20th position with only a 0.43% share or USD 2.45 billion in total FDI equity inflow reported in India from April 2000 to December 2021.
• China Plus One Strategy: The Economic Survey 2023-24 noted that countries such as Mexico, Vietnam, Taiwan, and South Korea are benefiting from the China-plus-one strategy pursued by Western firms. 
  • India can greatly benefit from the China Plus One strategy due to its large domestic market, competitive labour costs and supportive government policies.
• Integration with Global Market: China is the world’s second-largest economy, a manufacturing giant and a significant scientific and technological player. 
  • To boost Indian manufacturing, it is essential for India to integrate itself into the global supply chain, like China.

What is the Issue Associated with the Indian Industrial Workers?

• Low Productivity: Chinese professionals are “highly productive.” According to Indian industry leaders, Chinese can help produce 150 items with the same resources with which Indians produce 100.
• Skill Gap: There exists “a significant skill gap” between Chinese and Indian factory supervisors and workers. 
  • Indian businesses have acquired machines from China but struggle to use them effectively without assistance from Chinese technicians, as the local workforce lacks the necessary skills to operate them.
• Poor Industrial Training Programs: Industrial organisations fail to provide on-job training to their workers focused on helping employees acquire knowledge to meet current industrial skill demand.
• Irrelevant Curriculum: Educational and skill programs often do not align with current industry needs, leading to a gap between what students learn and what employers require. 
  • Without vastly upgraded domestic education, job-rich prosperity will remain a cruel mirage. 

How can India Improve the Skill Development in the Industrial Sector?

• Foreign Knowledge as a Catalyst: East Asian development story shows that foreign knowledge is crucial for economic growth. In the 1980s, Korean businesses bought foreign machines to dismantle and reverse engineer them.
• Continuous Training: Providing continuous training within an organisation gives current employees an opportunity to develop their skills and abilities. It helps in adoption of new technologies and methods more streamlined.
• Partner with Colleges: Reaching out to college students by opportunities for internships and apprenticeships give them an idea of relevant skills in demand.
• Industrial Visit: It allows workers to understand the procedures, processes, work environment, and management practices in other industries, as well as to learn about the latest technologies.
• Educational Foundation: China began its explosive growth in the early 1980s. The quality of primary education in China established during the Communist era prepared the country for rapid development. 
  • Under National Education Policy, 2020, India should provide a robust educational foundation to its children.
• World Class Levels of Learning: Since 2018, Chinese school students have bettered the world’s best in the Programme for International Student Assessment (PISA) conducted by the Organisation for Economic Co-operation and Development (OECD). 
  • India should upgrade its education system to ensure children achieve world-class learning standards.    

Conclusion

Despite the forecast of India becoming a global economic superpower, its prospects are dimmed by its failing education system and inability to provide dignified jobs. While it is important to address national security concerns, a balanced approach that encourages foreign expertise and simultaneously enhances domestic education and technical skills is essential. 

To compete in the intensifying global economy, India must urgently address its human capital deficiencies and realistic economic strategies to avoid worsening unemployment and underdevelopment.

Drishti Mains Question: Q. Discuss the importance of foreign expertise and knowledge in the development of the Indian manufacturing industry.

India's EAM Visit to Maldives

Source: TH

Why in News?

India's External Affairs Minister (EAM) S. Jaishankar concluded a crucial visit to the Maldives.

• He asserted that the Maldives remains an important partner of India in maintaining peace, stability and prosperity in the Indian Ocean region.

What are the Key Outcomes of the Visit?

• Water and Sewerage Network: Mr Jaishankar and the Maldivian Foreign Minister jointly inaugurated India’s Line of Credit (LoC) assisted project of water and sewerage network in 28 islands of Maldives.
• Capacity Building:  A memorandum of Understanding on capacity building of additional 1,000 Maldivian civil servants in India was signed.
• Launch of UPI: Both countries agreed to the introduction of UPI in Maldives.
• Community Development Projects: Six High Impact Community Development Projects (HICDPs) under grant assistance by India in the areas of mental health, special education, speech therapy and street lighting were jointly inaugurated.
• ‘Ek Ped Maa ke Naam’ Initiative: Indian EAM planted a sapling at the Lonuziyaaraiy Park as part of Prime Minister Modi’s ‘Ek Ped Maa ke Naam’ initiative and President Muizzu’s 5 Million Tree Project.
• Greater Male Connectivity Project: EAM visited the India-assisted Greater Male Connectivity Project (GMCP) site and announced India’s commitment to the progress of this flagship development project.
  • It will connect Male with the adjoining islands of Villingili, Gulhifalhu and Thilafushi.
• Addu Reclamation and Shore Protection Project: EAM inaugurated the Addu Reclamation and Shore Protection Project and Addu Detour Link Bridge Project.

What is the Significance of EAM’s Visit to Maldives?

• Reaffirmation of Strategic Partnership: The visit signifies a "significant milestone" in India-Maldives relations, especially with President Mohamed Muizzu, seen as pro-China. 
  • It reaffirms India's commitment to strengthening its strategic partnership with the Maldives despite issues like the Maldives’ cancellation of the hydrology agreement.
  • It signals a thaw in bilateral relations after initial strains due to Muizzu's call for Indian military withdrawal and his perceived ties to China.
• Easing of Bilateral Tensions: The visit has eased bilateral tensions, especially after Maldivian President's India-Out campaign and derogatory remarks made by Maldivian ministers about Indian interest.
• Economic and Social Ties: Despite the political and military disagreements, economic and social ties between the two nations remain strong, with India being a major source of tourists to the Maldives. 
  • This visit could further bolster these ties, ensuring continued cooperation in areas like trade, tourism, and cultural exchange.
• Regional Stability: As the Maldives faces economic challenges and potential debt crises like Sri Lanka, India's support can provide regional stability. This positions India as a reliable partner during economic distress, essential for maintaining stability in the region.
• Infrastructure and Development Projects: The handover of water supply and sewerage facilities on 28 islands in the Maldives, funded by India, demonstrates India's ongoing support for the country's development. 
  • These projects enhance the local economy and highlight India's role in the Maldives' prosperity, marking key milestones in their bilateral relationship.
• Diplomatic Signalling: The visit signals the strength of India-Maldives relations, highlighting a mutual commitment to cooperation despite leadership changes and challenges. It reflects a shared vision for the future between the two nations.

How are Both India and Maldives Significant to Each Other?

• Maldives' Significance for India:
  • Strategic Location: Located south of India, the Maldives holds immense strategic importance in the Indian Ocean, acting as a gateway to the Arabian Sea and beyond.
    • This allows India to monitor maritime traffic and enhance regional security.
  • Cultural Link: India and Maldives share a deep cultural and historical connection dating back centuries. Until the first half of the 12th century, Buddhism was the principal religion in the Maldivian islands.
    • There is an inscription of Vajrayana Buddhism, that had existed in the Maldives in ancient times.
  • Regional Stability: A stable and prosperous Maldives aligns with India's "Neighbourhood First" policy, promoting peace and security in the Indian Ocean region.
• India’s Significance for Maldives:
  
  • Essential Supplies: India is a crucial supplier of everyday essentials, including rice, spices, fruits, vegetables, and medicines. India also aids in building Maldivian infrastructure by providing materials like cement and rock boulders.
  • Education: India serves as the primary education provider for Maldivian students who pursue higher education in Indian institutions, including scholarships for deserving students.
  • Disaster Assistance: India has been a consistent source of aid during crises, such as tsunamis and drinking water shortages.
    • The provision of essential items and support during the Covid-19 pandemic showcases India's role as a reliable partner.
  • Security Provider: India has a history of providing security assistance, intervening during a coup attempt in 1988 through Operation Cactus and conducting joint naval exercises for the protection of the Maldives.
    • Joint Exercises include “Ekuverin”, “Dosti” and “Ekatha”.
  • India's Dominance in Maldives Tourism: Indian tourists have become the leading source market for the Maldives since the Covid-19 pandemic.
    • In 2023, they accounted for a significant 11.2% of total tourist arrivals, amounting to 18.42 lakh visitors.

What are the Major Challenges Related to India Maldives Relations?

• India-Out Campaign: The campaign portrayed India's presence in the Maldives as overbearing, which created a perception of India interfering in Maldivian sovereignty.
  • India was forced to withdraw Indian military personnel manning three aviation platforms gifted by India to the Maldives. 
• Tourism Strain: The Maldives tourism sector has come under scrutiny following a diplomatic dispute over undiplomatic comments about the Indian leaders and Indian territory (Lakshadweep islands). 
  • This has sparked a "boycott Maldives" trend on social media due to public outrage.       
• China’s Rising Influence in Maldives: Chinese is becoming increasingly visible in the Maldives. The Maldives' proximity to key shipping lanes and India makes it strategically important for China, potentially fueling its interest in deeper engagement.
  • It has caused unease in India and could lead to a regional geopolitical contest.

Conclusion

The evolving relationship between India and the Maldives underscores a strategic partnership rooted in mutual interests and shared goals. Despite challenges and shifts in leadership, both nations remain committed to enhancing cooperation in areas such as security, economic development, and regional stability. Together, both nations can foster a stronger alliance that not only benefits their bilateral ties but also contributes to a stable and prosperous Indian Ocean region.

Read More: India Maldives Relations

Drishti Mains Question: Q. Discuss the role of Maldives in the stable and prosperous Indian Ocean region. How can a healthy relationship between India and Maldives be mutually beneficial for each other?

Nobel Laureates Transitioned to National Leaders

Source: IE

Why in News? 

The recent news of Muhammad Yunus, the Nobel Peace Prize laureate of 2006, set to assume leadership of Bangladesh's interim government has reignited interest in the history of Nobel laureates who have served as heads of state. 

• Yunus is known for his work in microfinance and poverty alleviation. His expertise in economics and social entrepreneurship may shape the interim government's focus on poverty reduction and economic development.

Who are the Other Nobel Laureates Who Led Their Countries?

• Lester B. Pearson: Served as the Canadian prime minister from 1963 to 1968, and a leader of the Liberal Party. 
  • He introduced a national pension plan, and a family assistance program, broadened old-age security benefits, and laid the groundwork for universal healthcare in Canada. 
  • Nobel Peace Prize: Awarded in 1957 for his role in resolving the Suez Crisis, where he came up with the idea of the UN's first large-scale peacekeeping force after hostilities commenced, allowing the aggressors to withdraw their forces appear to have been defeated.

• Lech Wałęsa: He was a Polish activist who opposed communism and the first democratically elected president of Poland from 1990-95. 
  • He founded and led the Solidarity trade union, which in 1989 brought an end to communist rule in Poland. 
  • Nobel Peace Prize: Won in 1983 for his non-violent struggle for free trade unions and human rights in Poland.

• Aung San Suu Kyi: She was the State Counsellor of Myanmar, the de-facto head of the government equivalent to a prime minister, from 2016 to 2021 after leading Myanmar's transition from military rule to partial democracy in the 2010s. 
  • Suu Kyi rose to prominence during the uprising of 1988 when she founded the anti-junta National League for Democracy (NLD). 
    • She led Myanmar’s transition to partial democracy, although her tenure has been marred by controversy.
  • Nobel Peace Prize: Awarded in 1991 "for her non-violent struggle for democracy and human rights" in Myanmar.

• Nelson Mandela: He was the first Black president of South Africa, elected in 1994 after the peaceful termination of the apartheid system, for which he and President Frederik Willem de Klerk were awarded the Nobel Peace Prize in 1993. 
  • Mandela joined the African National Congress in 1943 and was repeatedly arrested for his anti-apartheid activities, eventually being sentenced to life in prison in 1962. After 27 years in prison, he was released in 1990 and over the next four years negotiated a peaceful end to apartheid with de Klerk.

• José Ramos-Horta: He has been the president of East Timor since 2022. He was a leader of the resistance movement that led to East Timor's independence from Indonesia in 2002, the first new sovereign state of the 21st century.
  • Nobel Peace Prize: Won in 1996 for advocating for a peaceful resolution to the conflict in East Timor.

Why is it Significant to have Nobel Laureates in Leadership Roles?

• Symbol of Hope: Their recognition often brings international attention and credibility to their leadership.
• Advocacy for Peace and Justice: Nobel laureates are frequently associated with ideals of peace, democracy, and human rights, setting a moral precedent for governance.
• Inspiration for Future Leaders: Their journeys can inspire emerging leaders to pursue significant social and political change.
  • However, it's important to acknowledge that not all Nobel laureates have been successful in translating their esteemed recognition into effective governance, as evidenced by the challenges faced by leaders like Ethiopia's Abiy Ahmed (Nobel Peace Prize in 2019) and Myanmar's Aung San Suu Kyi.

Ground-Level Ozone Pollution in India

Source: HT

Why in News? 

A recent study by the Centre for Science and Environment (CSE) has brought attention to the alarming levels of ground-level ozone (O3) in major cities across India. 

• The findings raise serious concerns about public health, particularly for vulnerable populations such as those with respiratory issues.

What are the Key Findings of the Study?

• High Ozone Exceedance in Major Cities: Delhi-NCR recorded 176 days of ground-level ozone exceedance between 1st January and 18th July 2023, leading the list. Mumbai and Pune followed with 138 days each, while Jaipur had 126 days. 
  • Contrary to expectations, ozone levels remained high after sunset in several cities, with Mumbai logging 171 nights of exceedance, and Delhi-NCR 161 nights. 
  • Compared to last year, seven out of ten cities saw increased ozone exceedances, with Ahmedabad's rising by 4,000%, followed by Pune, with a 500% rise and Jaipur, with a 152% rise.
• Standards and Measurement Issues: The 8-hourly standard for ozone is set at 100 µg/m³. The one-hour standard is 180 µg/m³. 
  • The study highlights that the Central Pollution Control Board caps data at 200 µg/m³, making it difficult to fully assess the severity of exceedances.
• Health Risks: Exposure to ground-level ozone can cause respiratory problems, including chest pain, coughing, bronchitis, emphysema, and asthma, and can also inflame and damage the lining of the lungs, leading to long-term health issues.
• Green Areas Worst Affected: High-end, green neighbourhoods were found to be hotspots for ground-level ozone, challenging the assumption that these areas are safer in terms of air quality. 
  • Ozone tends to accumulate in cleaner areas where fewer gaseous pollutants are available to react with it.
• Inverse Spatial Distribution: The study found that the spatial distribution of ozone is inversely related to nitrogen dioxide (NO₂) and particulate matter (PM2.5). While ozone is created in polluted areas, it tends to drift and accumulate in areas with less NO2, making these areas more vulnerable to higher ozone concentrations.

What is Ground-Level Ozone?

• About: Ground-level ozone, or tropospheric ozone, is a secondary pollutant formed when nitrogen oxides (NOx) and volatile organic compounds (VOCs) from vehicles, industries, and power plants react in the presence of sunlight, with levels rising especially during summer.  It is a colourless gas forming just above the Earth’s surface.
  • Unlike the beneficial ozone layer in the stratosphere, which protects the Earth from harmful ultraviolet (UV) radiation, ground-level ozone is a harmful air pollutant it is often referred to as "bad ozone".
  • Rising temperatures, especially during heatwaves, worsen ground-level ozone formation, leading to dangerous air quality in cities like New Delhi when ozone levels exceed permissible limits.
• Impact: A significant increase in ozone-attributable deaths has been observed globally, with South Asia, including India, showing the highest rise. Projections suggest that by 2050, more than a million deaths in India could be linked to ozone exposure if emissions of its precursor gases are not adequately controlled.
  • Ground-level ozone is detrimental to crop health, reducing yields and seed quality. Essential crops like wheat and rice, which are staples in India, are particularly vulnerable to ozone pollution, threatening food security.
• Concerns for India: India is home to 10 of the world's 15 most polluted cities, with air quality far exceeding World Health Organization (WHO) guidelines. 

  • The poor air quality, rising temperatures, and frequent heat waves make India vulnerable to the harmful effects of ground-level ozone.

  • The country's growing and ageing population is increasingly at risk from the health impacts of ozone pollution, and the public health burden is likely to increase as more people are exposed to this pollutant.
• Challenge in Reducing Ground-Level Ozone: Unlike other air pollutants, ground-level ozone is part of a cyclical chemical reaction. Reducing precursor gases (NOx and VOCs) does not necessarily reduce ozone levels, and if conditions are not carefully managed, ozone can linger in the atmosphere, leading to prolonged exposure.
  • Expanding air quality monitoring and implementing alerts like Delhi can help mitigate ozone pollution by informing the public and industries when to take preventive actions.

Vikram Sarabhai’s 105th Birth Anniversary

Recently, India celebrated Dr. Vikram Sarabhai’s 105th birth anniversary on 12th August, who pioneered India's space program and founded key institutions across various fields.

• Dr. Vikram Sarabhai, born in Ahmedabad in 1919, is the father of India’s space program and mentor to A.P.J. Abdul Kalam.
• He established the Physical Research Laboratory at age 28 and conducted pioneering research on cosmic rays.
• Sarabhai's efforts led to the creation of INCOSPAR in 1962, which later became ISRO, and facilitated the transfer of Viking engine technology from France to India.
• His contact with NASA paved the way for the Satellite Instructional T.V. Experiment (SITE) in 1975, introducing cable TV to India.
• Sarabhai was honoured with the Padma Bhushan in 1966 and the Padma Vibhushan posthumously in 1972.

Read More: Vikram Sarabhai Centenary Programme, Padma Awards 2024, Upgraded Vikas Engine to Boost ISRO’s Rockets

Neelakurinji Declared as a Threatened Species

Source: TH

Neelakurinji (Strobilanthes kunthiana), a flowering shrub that blooms once every 12 years, is now classified as Vulnerable (Criteria A2c) on the IUCN Red List.

• The species was not previously evaluated under IUCN standards due to its unique blooming cycle and ecological challenges.
• Strobilanthes kunthiana is an endemic shrub of three-metre height, seen only in the high-altitude shola grassland ecosystems of five mountain landscapes of southwest India at an elevation of 1,340–2,600 m.
  
  • The scientific name of the Neelakurinji is named after the Kunthi River in Kerala's Silent Valley National Park where it is abundantly found.
  • They are semelparous (reproducing only once in a lifetime) with showy synchronous blooming and fruiting every 12 years at the end of the life cycle.
  • Known for their massive blooming, they impart purplish-blue colours to the mountain grasslands and are popularly known as Neelakurinji (Blue Strobilanthes) blooms.
  • The species has 34 subpopulations within 14 ecoregions of the high-altitude mountain ranges of southwest India, with 33 subpopulations in the Western Ghats and one in the Eastern Ghats (Yercaud, Shevaroy Hills).
    
    • Most subpopulations are in the Nilgiris of Tamil Nadu, followed by Munnar, Palani-Kodaikanal, and Anamalai mountains.
• Main Threats: Major threats include habitat loss from tea and softwood plantations, urbanisation, invasive species, and climate change. Approximately 40% of its habitat has been lost.

Read more: New Varieties of Neelakurinji Flowers

Somanathan Appointed as India's New Cabinet Secretary

Source: IE

The Indian government has appointed TV Somanathan as the new Cabinet Secretary, succeeding Rajiv Gauba.

• Earlier as Finance Secretary, Somanathan was noted for his careful management of finances and contributed to Production Linked Incentive Schemes and initiatives like PM Garib Kalyan and Atmanirbhar Bharat.
• The Cabinet Secretary is the highest-ranking civil servant in the Government of India, ex-officio chairman of the Civil Services Board, the Cabinet Secretariat. 
  • Appointed for a fixed two-year term, the Cabinet Secretary ranks eleventh in the Indian order of precedence and is directly accountable to the Prime Minister.
  • The Cabinet Secretary's tenure can be extended up to four years, with an additional extension of up to three months possible, as per the amended All India Services (Death-Cum-Retirement-Benefits) Rules, 1958.
  • Facilitates government operations, provides secretarial support to Cabinet, coordinates inter-ministerial efforts, and resolves conflicts through committees.

Premature Repayment Guidelines for NBFC Depositors

Source: BL

In a significant move to assist non-banking finance company (NBFC) depositors facing urgent financial needs, the Reserve Bank of India (RBI) has introduced guidelines allowing premature repayment of deposits under specific conditions.

• Premature repayment of deposits within three months is now permitted without interest, addressing emergencies like medical expenses or natural disasters  as notified by the concerned government or authority.
  • Tiny deposits (up to Rs 10,000) can be fully repaid at the depositor's request, while for other public deposits, up to 50% or Rs 5 lakh (whichever is lower) can be withdrawn.
  • In cases of critical illness, 100% of the principal can be withdrawn prematurely without interest.
• NBFCs must establish a system for acknowledging nomination requests, ensuring all customers are informed about their nomination status.
  • The notice period for deposit maturity has been reduced from two months to 14 days, enhancing communication with depositors.
• A NBFC is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of securities, insurance business, chit business. 
  • The key differences between banks and NBFCs are that NBFCs cannot accept demand deposits, do not form part of the payment and settlement system, and deposit insurance facility is not available to depositors of NBFCs.

Read more: RBI to Review NBFCs