News: June 06, 2020

Sub: Science And Technology
Topic: Research and Technology
Category: Prelims & Mains


News: 1/5

Civil Aviation


Aircraft (Amendment) Bill, 2020

  • The Bill converts three existing bodies under the Ministry of Civil Aviation into statutory bodies under the Act.  These three authorities are:
    1. Directorate General of Civil Aviation (DGCA) - DGCA carries out safety oversight and regulatory functions 
      • For regulatory functions, DGCA co-ordinates with the International Civil Aviation Organisation (ICAO).
    2. Bureau of Civil Aviation Security (BCAS) - BCAS carries out regulatory oversight functions related to civil aviation security
    3. Aircraft Accidents Investigation Bureau (AAIB) - AAIB to carry out investigations related to aircraft accidents and incidents
  • Each of these bodies will be headed by a Director General who will be appointed by the centre.  


  • As per DGCA requirements, drone pilot training organisations must have at least three serviceable remotely piloted aircraft (RPA) of one type at any given time. RPAs are drones that can be flown beyond the visual line of sight. Once an institution fulfils these requirements, the DGCA will approve them as an  Remote pilot training organisations (RPTOs), initially for a period of five years
  • Students will be awarded course completion certificates on clearing the exam with a minimum of 70% marks.

draft Unmanned Aircraft System (UAS) Rules, 2020

  • Unmanned Aircraft (UA) classified based upon the Maximum All-Up-Weight (including payload) of the UA: Nano- (250g), micro (upto 2kg), small (upto 25kg), medium (upto 150kg), large (more than 150kg)
  • No UAS or part or component thereof shall be imported or manufactured in India unless Certificate of Manufacture is obtained
  • All flights of an unmanned aircraft need permission through online platform
  • No person other than a ‗Qualified Remote Pilot‘ under these rules shall operate a UAS in India except the Nano class of UA.
  • An imagery may be captured by an unmanned aircraft except in the non permissible area
  • No Unmanned Aircraft shall carry or drop any payload, unless as specified by the Director-General.
  • Third party insurance compulsory for all UAs

[In News]

  • June, 20
    • DGCA to decide about middle seat occupancy
    • Directorate General of Civil Aviation (DGCA) has brought out a draft circular that proposes to allow interested organisations under the Central and State governments. Currently only few organisations are permitted to operate as RPTOs with primary focus on training fixed wing aircrafts pilots. Now, entities selected by the DGCA will be able to train drone pilots and grant commercial pilots licences and private pilot licences.
    • Food delivery apps seeking permissions for drone delivery
  • Aug, 20
    • Directorate General of Civil Aviation allows operations to resume in Karipur airport, Kerala after crash

Sub: Economics
Topic: Banking, Finance and Tax System Finance and Banking - India
Category: Prelims & Mains


News: 2/5

Reserve Bank of India (RBI)

Established under Reserve Bank of India Act, 1934, RBI controls monetary and other banking policies of the government.

RBI has four subsidiaries, earlier National Housing Bank(NHB) was also a subsidiary of RBI

  1. Deposit Insurance and Credit Guarantee Corporation of India(DICGC)
  2. Bharatiya Reserve Bank Note Mudran Private Limited(BRBNMPL)
  3. Reserve Bank Information Technology Private Limited (ReBIT)
  4. Indian Financial Technology and Allied Services (IFTAS)

Initiatives in focus

Payments Infrastructure Development Fund (PIDF)

  • To encourage acquirers to deploy Points of Sale (PoS) infrastructure - both physical and digital modes - in tier-3 to tier-6 centres and north eastern states.
  • RBI will make an initial contribution of ₹250 crore to the PIDF, covering half of the fund, while the remaining contribution will be from card-issuing banks and card networks operating in the country
  • PIDF will be governed through an Advisory Council and managed and administered by RBI.
  • RBI will also contribute to yearly shortfalls, if necessary.

RBI loan moratorium scheme

  • As per the RBI circular, banks and other financial institutions are permitted to provide a moratorium of three months for all term loan installments which are due for payment between 1 March and 31 May.
    • It has been extended till August
    • Banks can restructure loans from large corporates, MSMEs, and individuals to help stem the rising stress on incomes and balance sheets. Individual borrower's loan can be extended by 2 years by year end.
  • Term loans will include all kinds of retail loans such as vehicle loan, home loan, and personal loan, agricultural term loans as well as crop loans. It will also include credit card dues
  • The RBI has asked all banks, financial institutions including housing finance companies, non-banking finance companies, small finance banks, regional rural banks, small finance banks, local area banks to provide moratorium.
  • Interest will continue to be charged during the moratorium


  • All urban and multi-State cooperative banks to come under the direct supervision of the RBI
    • Currently cooperative banks are regulated by their respective states under Registrar of Cooperative Societies
  • RBI has asked all banks / NBFCs to disclose names of all digital lending platforms on their websites. Also immediately, after sanction but before execution of the loan agreement, the sanction letter shall be issued to the borrower on the letter head of the bank/ NBFC concerned


  • MFIs - MFI are small lending institutions that give tiny loans to low-income borrowers typically at an interest rate of 22-25 percent. They mainly source money from banks.
  • Moratorium  - A moratorium period is a time during the loan term when the borrower is not required to make any repayment.


RBI uses many tools to regulate credit and monetary policy in country.

  • Repo Rate -The rate of interest at which RBI lends money to banks, RBI buys government bonds and agrees to sell them back to banks at a fixed rate.
    • Repo Linked Lending Rate (RLLR) = Repo Rate + Margin charged by the bank.
    • Repo Rate is used for controlling inflation, and Reverse Repo Rate is used for controlling money supply. 
  • Reverse Repo Rate: The interest rate at which RBI borrows funds from banks for the short term, often for one day. Reverse Repo Rate is always lower than Repo Rate. An increase in Reverse Repo Rate provides incentive to banks to park their surplus funds in RBI and buy government bonds in return. thus decrease liquidity in market.
  • Open Market Operations (OMO): Open Market Operations is the sale and purchase of government securities and treasury bills by RBI to regulate money supply in economy
  • Long Term Repo Operations (LTRO): Under LTRO, RBI provides longer term (one to three year) loans to banks at the prevailing Repo Rate. As banks get long-term funds at lower rates, their cost of funds falls. In turn, they reduce interest rates for borrowers.
    • Targeted LTRO / TLRTO: Under Targeted LRTO funds are to be deployed in investment grade bonds, commercial paper (CPs) and non-convertible debentures (NCDs) of Non-Banking Financial Companies (NBFCs) and Micro Finance Institutions (MFIs)
  • Operation Twist
    • Operation twist involves the simultaneous purchase and sale of government securities to bring down long-term interest rates, and push up short-term rates. Business investment and housing demand are primarily determined by longer-term interest rates, so this is done to reduce long term interest rates,
    • RBI will sell short term bonds and use the funds to buy long term bonds. This raises their demand and hence prices., and this inflated price reduces the yield (interest) of the borrower, thus lowering the interest on long term bonds.
      • Bond yields and prices are inversely correlated.

Fund lending

  • Base Rate
    • Base Rate is the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI.
    • It varied from bank to bank.
    • Base rate calculation is based on cost of funds, margin or profit, operating expenses and cost of maintaining cash reserve ratio
  • MCLR (Marginal Cost of funds based Lending Rate) - From financial year 2016-17 banks in country shifted from base rate to MCLR to compute their lending rate, as banks were reluctant to change their base rates to reflect Repo Rate.
    • MCLR refers to the minimum interest rate of a bank below which it cannot lend
    • MCLR is a tenor linked internal benchmark. The actual lending rates are determined by adding the components of spread to the MCLR. Banks will review and publish their MCLR of different maturities, every month, on a pre-announced date. 
      • Tenor means the amount of time left for the repayment of a loan
    • MCLR is based on marginal cost of funds, tenor premium, operating expenses and cost of maintaining cash reserve ratio.
      • Marginal cost of funds = (92% x Marginal cost of borrowings) + (8% x Return on net worth) 
      • Marginal cost of borrowing refers to - average rates at which deposits of a similar maturity were raised in the specified period preceding the date of review, weighed by their outstanding balance in the bank’s books. It is based on  interest rate which banks pay to depositors.
    •  MCLR is largely determined by marginal cost of funds and especially by deposit rates and Repo Rates
    • Banks were still lethargic to lower their rates, and usually offered home loans linked to six month or one-year MCLR, So RBI, in October 2019 announced that all new floating rate personal or retail loans (housing, auto etc.) shall be linked to an external benchmark. 
  • External benchmark rate (EBR): Lending rate based on an external benchmark.
    • Banks are free to choose from any of the external benchmark mentioned below:
      • RBI's Repo Rate
      • Government of India 3-Months Treasury Bill yield published by the Financial Benchmark India Private Ltd (FBIL)
      • Government of India 6-Months Treasury Bill yield published by the FBIL
      • Any other benchmark market interest rate published by the FBIL
    • Interest rate applicable on home loans = external benchmark + bank's spread (margin) + risk premium

[In News]

  • June, 20
    • A supreme court bench asked RBI, whether the moratorium would eventually lead to payment of interest on interest deferred for six months. Solicitor-General said that moratorium is a deferment and not a waiver, and waiving the interest completely will not be easy for banks and MFIs as they have to pay interest to their depositors.
    • In wake of PMC scam, and to bring more transparency, all urban and multi-State cooperative banks under the direct supervision of the RBI. CPI(M) is opposing the move
    • RBI comes heavily on banks/NBFCs as it found violations of fair practices (high interest, low transparency) by digital platforms that were acting as agency of theses lenders.
  • July, 20
    • RBI says it deployed several tools to maintain abundant liquidity in market.
  • Aug, 20
    • RBI allows loan restructuring but has not extended the moratorium in its third review of the monetary policy since the COVID-19 pandemic

Sub: Politics
Topic: Governance Agencies and Bodies
Category: Prelims & Mains


News: 3/5

Pressure Groups In Focus


  • Centre for Aviation (CAPA) : Analyses aviation and travel industry


  • Centre for Science and Environment (CSE) : Not-for-profit organization in environment protect domain
  • The Energy and Resources (TERI) : Research institute in New Delhi that specializes in the fields of energy, environment and sustainable development
  • South Asia Network on Dams, Rivers and People (SANDRP) : SANDRP is a network of researchers and experts working on water and environmental issues.
  • TRAFFIC, a leading wildlife trade monitoring network.
    • It recorded a significant increase in poaching in India during the over two month lockdown period.


  • Indian Medical Association - voluntary organization of doctors

Human Rights

  • People's Union for Civil Liberties (PUCL) : formed in India in 1976 by socialist leader Jayaprakash Narayan


  • Centre for Holistic Development - For homeless citizens


  • TRAFFIC: TRAFFIC is a leading non-governmental organisation working globally on trade in wild animals and plants in the context of both biodiversity conservation and sustainable development. Recent paper called 'SPOTTED' by TRAFFIC India, revealed that of the total of 747 leopard deaths between 2015-2019 in India, 596 were linked to illegal wildlife trade and activities related to poaching. Leopard poaching was highest in Uttarakhand, Maharashtra


  • Pinjra Tod - autonomous collective effort to ensure secure, affordable and not gender-discriminatory accommodation for women students across Delhi.
    • Activists booked under UAPA in relation to communal violence

[In News: Latest]

  • July, 20
    • CAPA estimated that the second quarter beginning July too will be a washout. It reiterated that the market may only be left with 2-3 airlines if there is a delay in recapitalisation for the sector.
    • Antibiotics are extensively misused in the dairy sector and its residues remain largely untested in milk, noted a recently published survey report by the Centre for Science and Environment (CSE).
  • Aug, 20
    • Leopard poaching highest in Uttarakhand, Maharashtra

Sub: Economics
Topic: Banking, Finance and Tax System Finance and Banking - India
Category: Prelims & Mains


News: 4/5

Twin Balance Sheet

Twin balance sheet problem

  1. High non-performing assets (NPAs) of Public Sector Banks (PSBs)
  2. Highly stressed balance sheet of the private corporate sector

Insolvency And Bankruptcy 2016 (IBC)

The Code offers a uniform, comprehensive insolvency legislation encompassing all companies, partnerships and individuals (other than financial firms). 

  • Insolvency Resolution Process for Corporate debtors: To initiate an insolvency process, the default amount should be at least 1 lakh. The code proposes two steps
    • Insolvency Resolution Process
      • financial creditors assess whether the debtor's business is viable to continue and the options for its rescue and revival.
      • For this financial creditor can go to National Company Law Tribunal (NCLT).
    • Liquidation - a corporate debtor may be put into liquidation in the following scenarios
      • 75% majority of the creditor's committee resolves to liquidate the corporate debtor at any time during the insolvency resolution process
      • The creditor's committee does not approve a resolution plan within 180 days (or within the extended 90 days)
      • The NCLT rejects the resolution plan submitted to it on technical grounds
      • The debtor contravenes the agreed resolution plan and an affected person makes an application to the NCLT to liquidate the corporate debtor
  • Insolvency Resolution Process for Individuals and Partnerships - To initiate an insolvency process, the default amount should be at least 1 lakh. The code proposes two steps
    • Automatic fresh start - Under the automatic fresh start process, eligible debtors (basis gross income) can apply to the Debt Recovery Tribunal (DRT) for discharge from certain debts not exceeding a specified threshold, allowing them to start afresh.
    • insolvency resolution - The insolvency resolution process consists of preparation of a repayment plan by the debtor, for approval of creditors. If approved, the DRT passes an order binding the debtor and creditors to the repayment plan. If the plan is rejected or fails, the debtor or creditors may apply for a bankruptcy order.
  • The Code provides for the constitution of a new insolvency regulator i.e., the Insolvency and Bankruptcy Board of India (Board).
  • Insolvency And Bankruptcy (Amendment) Ordinance 2020 - Application for corporate insolvency resolution process for a corporate debtor, shall not be filed after March, 2020 for a period of six months

Partial Credit Guarantee Scheme (PCGS)

  • Sovereign portfolio guarantee of up to 20% of first loss for purchase of Bonds or Commercial Papers (CPs) with a rating of AA and below issued by NBFCs/ MFCs/Micro Finance Institutions (MFIs) by Public Sector Banks (PSBs) 
  • The window for one-time partial credit guarantee offered by the government will remain open till March 31, 2021, for purchase of pooled assets and for the period as specified under the scheme for purchase of bonds/CPs, or till such date by which Rs. 10,000 crore worth of guarantees, including both guarantees toward the purchase of pooled assets and bonds/ CPs, are provided by the Government, whichever is earlier

[In News]

  • June, 20
    • IBC amendment in wake of pandemic
    • Govt. suspends all new insolvency proceedings for six months

Sub: Economics
Topic: Development Companies and Industries
Category: Prelims & Mains


News: 5/5

Public Sector Undertakings (PSU)


  • Export Credit Guarantee Corporation of India Limited (ECGC)
    • Promotes exports by providing credit risk insurance and related services for exports
    • Set up in 1957, under Ministry of Commerce and Industry
  • Indian Railways Construction Ltd / Ircon International Limited  (IRCON)
    • A category 1 Miniratna company, incorporated by Ministry of Railways in 1976
    • Focuses mainly on railways and highway construction in India and abroad

[In News]

  • IRCON had signed MoU with Iranian railways in 2016 during Prime Minister's visit for development of railway project from Chabahar port to Zahedan, along the border with Afghanistan. Iran government has decided to construct the project on their own, because of delay in funding



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