Current Affairs for BANK, IBPS Exams 22 May 2017

:: National ::

Indian Railways will now carry out a cleanliness survey of tracks on busy routes

Widening its sanitation drive, the Indian Railways will now carry out a cleanliness survey of tracks on busy routes and rank its 16 zones based on performance.
The railways had recently released results of a similar survey of 407 stations, carried out by the Quality Council of India.
All-out efforts will be made to keep the tracks clean as part of the government’s ongoing cleanliness campaign, said a senior railway ministry official.
Railway tracks at many stretches resemble garbage dump with leftover food, plastic bottles and paper boxes strewn all over. Discharge of human waste from trains is also a cause for concern.
In fact, several railway divisions have pressed into service a mechanised system for cleaning of tracks near stations. Besides, installation of bio-toilets in several trains has reduced discharge of human waste on the tracks.
The Indian Railways is the third largest rail network in the world, covering 66,000 km and having more than 8,000 stations.
It was after the launch of the Swachh Bharat Abhiyan on October 2, 2014, by Prime Minister Narendra Modi that the railways launched ‘Swachh Rail, Swachh Bharat Abhiyan’.
The railways has also made operational a ‘Swachh Rail’ portal to showcase cleanliness rankings of various stations.

Scientists have developed sensor that can detect disease markers in one’s breath

Scientists have developed a low-cost, disposable sensor that can detect disease markers in one’s breath, giving patients an early warning sign to call the doctor.
The device is made of a thin square of an organic plastic. “We developed this method to directly print tiny pores into the device so we can expose these highly reactive sites,” said Ying Diao, professor at University of Illinois.
For example, monitoring the change in ammonia concentration in the breath could give patients a warning sign to go for a kidney function test.

Government is unlikely to meet its target of 175 GW of renewable energy by 2022

The government is unlikely to meet its much-publicised target of 175 GW of renewable energy by 2022 due to the poor progress of the rooftop solar programme.
The Ministry is also considering increasing the contribution of other sources like biogas and small hydro to make up the difference.
The policy issue is that the tariff structure right now is such that it is just not remunerative for people to set up rooftop solar. The cost of doing so higher than the money they stand to make.
Most roofs in India are flat, and people find several alternative uses for these such as drying clothes, and even hosting parties or meals. There are parts of India where people even sleep on their roofs.
The government is aware of these issues and is considering a new plan to incentivise rooftop solar, he said.
The government had a announced a target of 40 GW of rooftop solar by 2022, but had achieved only about 1.3 GW as of December 2016, which is a little more than 3% of the target.
The second issue, Mr Ghosh said, was the de-risking of investment in the rooftop space. While this has been done for commercial solar projects, it has not been done for rooftop solar.
The third problem is that there is no regulatory clarity on guaranteed payment by utilities on the net metering basis.

:: International ::

U.S. President called on Middle East to combat a Islamic extremism

U.S. President Donald Trump called on Middle Eastern leaders to combat a “crisis of Islamic extremism” emanating from the region, casting the fight against terrorism as a “battle between good and evil”, not a clash between the West and Islam.
Mr. Trump’s address was the centrepiece of his two-day visit to Saudi Arabia, his first stop overseas as President.
During a meeting of more than 50 Arab and Muslim leaders, he sought to chart a new course for America’s role in the region, one aimed squarely on rooting out terrorism, with less focus on promoting human rights and democratic reforms.
Even as the President pledged to work alongside Middle Eastern nations, he put the onus for combating terrorism on the region.
Bellowing into the microphone, he implored Muslim leaders to aggressively fight extremists — “Drive them out of your places of worship. Drive them out of your communities.”
Sitting alongside Mr. Trump, Saudi King Salman declared: “The Iranian regime has been the spearhead of global terrorism.”
Mr. Trump’s welcome in the region was also put on display during a series of individual meetings with Arab leaders.
Reinforcing his theme of U.S. economic deals, the U.S. President told Qatar’s Emir Sheikh Tamim Bin Hamad Al-Thani they would discuss “lots of beautiful military equipment because nobody makes it like the United States”.
For Mr. Trump the visit has been a welcome escape from the crush of controversies that have consumed his administration in recent weeks.
The President’s trip to Saudi Arabia also served as something of a reset with the region following his presidential campaign, which was frequently punctured by bouts of anti-Islamic rhetoric. He once mused that he thought “Islam hates us”.
That ban was blocked by the courts. A second order, which dropped Iraq from the list, is tied up in federal court and the federal government is appealing.
That speech was denounced by many Republicans and criticised by a number of the United States’ Middle East allies as being a sort of apology.

Swiss referendum to withdraw the country from nuclear power

Swiss voters are supporting a referendum to withdraw the country from nuclear power in favour of renewable energy.
A projection from referendum shows a majority of cantons (States) voted for the plan. Under Switzerland’s direct democracy system, initiatives need a majority of both cantons and votes to pass.
The projection for SRF public television showed 58% of voters in favour and 42% against the proposal.
The government wants to ban the construction of new nuclear power plants and decommission the country’s five existing ones at the end of their technically safe operating lives.

:: Business and Economy ::

RBI has revised the norms for prompt corrective action

As the financial health of banks had deteriorated over the last three years, the Reserve Bank of India (RBI) has revised the norms for prompt corrective action, and has promptly imposed those norms on a couple of public sector lenders.
PCA norms allow the regulator to place certain restrictions such as halting branch expansion and stopping dividend payment. It can even cap a bank’s lending limit to one entity or sector.
Other corrective action that can be imposed on banks include special audit, restructuring operations and activation of recovery plan. Banks’ promoters can be asked to bring in new management, too. The RBI can also supersede the bank’s board, under PCA.
The provisions of the revised PCA framework will be effective April 1, 2017 based on the financials of the banks for the year ended March 31, 2017. The framework will be reviewed after three years.
The PCA is invoked when certain risk thresholds are breached. There are three risk thresholds which are based on certain levels of asset quality, profitability, capital and the like.
The third such threshold, which is maximum tolerance limit, sets net NPA at over 12% and negative return on assets for four consecutive years.
There are two type of restrictions, mandatory and discretionary. Restrictions on dividend, branch expansion, directors compensation, are mandatory while discretionary restrictions could include curbs on lending and deposit.
In the cases of two banks where PCA was invoked after the revised guidelines were issued — IDBI Bank and UCO Bank — only mandatory restrictions were imposed. Both the banks breached risk threshold 2.
Some more lenders are expected to come under the corrective action framework as and when their asset quality worsens, putting profitability under pressure.
Some public sector banks have breached the net NPA parameter as well as the profitability parameter. These banks are comfortable on the capital parameter, thanks to the government’s commitment to ensure the PSU banks are not starved of capital.
However, as the government has its own commitment for maintaining fiscal discipline, it remains to been seen how long it can afford to infuse capital in these banks.

FM will discuss potential areas of boosting cooperation between India and Africa

Finance Minister will discuss potential areas of boosting cooperation between India and Africa. Mr. Jaitley will open the India-Africa Cooperation session being held in conjunction with the annual meeting of the African Development Bank (AfDB).
The sessions will cover areas such as trade and investment, agriculture, renewable energy and manufacturing among others.
Total trade between India and Africa increased almost fivefold between 2005-06 and 2015-16, and stood at $52 billion in March 2016-17.
This is the first time that the African Development Bank is holding its annual meeting outside of the African continent.

A solution for the NPA problem for PSU banks has proved elusive

A solution for the NPA problem for PSU banks has proved elusive so far. The authorities have been in denial mode for long and the problem’s depth and extent have been revealed only recently.
The efforts of RBI have not borne fruit: The 5/25 scheme which permitted extension of loan amortization period up to 25 years with interest reset every 5 years did not work as the higher interest burden due to tenor extension required additional borrowing which worsened the initial problem.
The sale of NPAs to Asset Reconstruction Companies (ARC) has so far been very low due to two main reasons: banks have been reluctant to sell NPA at a price reflecting their realisable economic value.
Banks received only 15% of the NPA sales consideration in cash, while the rest was given by way of security receipts (SR) which meant that the seller bank continued to be exposed to the risk of short recovery of the loan from the borrower.
The Strategic Debt Restructuring scheme (SDR), unveiled in June, 2015, involved banks taking over companies by converting debt into equity, replacing the promoters and thereafter selling their equity holdings to new investors.
However, as of December, 2016, only two such cases of sale had materialised.
The Scheme for Sustainable Structuring of Stressed Assets (S4A) was introduced in June, 2016, whereby the outstanding bank loan is required to be bifurcated into sustainable and unsustainable portions, enabling the borrower company to be revived and making it possible for the sustainable portion to be repaid.
Further, both resolution and bankruptcy will cause significant loss to banks. But the boards and senior management of PSU banks have all the incentive to prefer a much higher loss through resolution or bankruptcy vis-a-vis a commercially driven write-off decision.
Like all grand ideas, the proposition to set up a Public Sector Asset Rehabilitation Agency (PARA) a la what China did in the past catches attention.
The details are sketchy, untenable, and even confusing, though. By way of illustration, if PARA were to operate professionally and not on political principles, it will be required to buy NPAs at prices that will involve deep writedowns by banks.
More importantly, if the PSU banks are to cleanse their balance sheet within a year of PARA coming into existence, their aggregate credit loss of around Rs. 4 trillion will have to be funded upfront. Who will do this?
The accompanying table illustrates the debt of top ten stressed corporate groups aggregating Rs. 7.5 trillion, which needs to be written down to spur their revival. It is beyond the ability of the government to do this even over three years.
The RBI took a policy decision in 1997 to achieve and maintain a ratio of internal reserves to assets at 12% to ensure adequate risk capital for its balance sheet.
The ratio increased steadily thereafter, exceeding 12% in 2009-10 and remaining close to 12% in the following year. It fell subsequently and now it is at 7.5%.
Needless to say, the last three years have witnessed a sharp drop in the usable equity of RBI. By all indications, RBI is under-capitalised right now.
There is no magic solution. Nor is there any possibility of finding a solution within the extant political-bureaucratic paradigm that seeks to keep the PSU banks within a ‘command and control’ framework.
Such restructuring can be an eclectic combination of all the schemes launched so far, the guiding principle being loss-sharing: the promoters should shed their equity in favour of banks at realistic valuation to the extent the latter are reducing debt.