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SYNOPSIS: Insights Secure Q&A May 30, 2016

SYNOPSIS: Insights Secure Q&A May 30, 2016


This is a new feature. As feedback from our side on your answers is missing, we thought of providing detailed synopsis of important Secure questions on daily basis so that you could revise our synopsis and compare it with your answers. We intend to post synopsis of Secure questions every next day of posting questions on website. 

You must write answers on your own and compare them with these synopses. If you depend on these synopses blindly, be sure of facing disaster in Mains. Until and unless you practice answer writing on your own, you will not improve in speed, content and writing skills. Keep separate notebooks for all GS papers and write your answers in them regularly. Now and then keep posting your answer on website too (Optional).  Some people have the tendency of copying content from others answers and pasting them in a document for each and every question. This might help in revision, but if you do not write on your own,  you can’t write a good answer in real exam. This is our experience at offline classes. We have seen many students who think they were regularly following Secure, yet fail to clear Mains. So, never give up writing. 

Also never give up reviewing others answers. You should review others answers to know different perspectives put forth by them, especially to opinion based questions. This effort by us should not lead to dependency on these synopses. This effort should be treated as complimentary to your ongoing writing practice and answer reviewing process. 

These synopses will be exhaustive – covering all the points demanded by question. We will not stick to word limit. You need to identify most important points and make sure these points are covered in your answer. Please remember that these are not ‘Model Answers’. These are just pointers for you to add extra points and to stick to demand of the question – which you might have missed while answering. 

As you might be aware of, this exercise requires lots of time and energy (10 Hours), that to do it on daily basis! Your cooperation is needed to sustain this feature.

Please provide your valuable feedback in the comment section to improve and sustain this initiative successfully. 

General Studies – 1;

Topic: Changes in critical geographical features (including waterbodies and ice-caps) and in flora and fauna and the effects of such changes

1) It is said that, in the face of rising climate and disaster risk, investments in nature-based solutions can protect lives and safeguard prosperity in a cost-effective manner. Examine what these nature based solutions are and their significance. (200 Words)



What are nature based solutions and their significance?

  • In nature-based climate change mitigation, ecosystem services are used to reduce greenhouse gas emissions and to conserve and expand carbon sinks.
  • In nature-based climate adaptation, the goal is to preserve ecosystem services that are necessary for human life in the face of climate change and to reduce the impact of anticipated negative effects
  • Both approaches seek to increase the resilience of ecosystems and thereby to stabilize the provisioning of important services including for example coastal and flood protection, soil fertility, air quality, carbon storage, and aesthetically beautiful landscapes.
  • Coastal and marine ecosystems:-
    • have considerable potential to mitigate the effects of storms and other risks, especially when combined with traditional built infrastructure.
    • A 100m belt of mangroves, for example, can reduce wave height by up to 66% and lower peak water levels during floods.
    • A healthy coral reef can reduce wave force by 97%, lessening the impact of storms and preventing erosion.
    • These and other coastal ecosystems are the first line of defence for many cities around the world,
  • Even the Paris agreement explicitly affirmed that ecosystems play a role in capturing greenhouse gases and helping communities adapt to the effects of climate change.
  • Some case studies:
    • Seychelles announced a first-of-its-kind “debt for nature” swap .
      • The swap will allow the country to redirect $21.6 million of its debt towards investment in a comprehensive approach to ocean conservation that will bolster its resilience to climate change.
    • Zukunft Wald foundation:
      • In the project “Zukunftswald” (“Future Forest”), the Foundation “Zukunft Wald” brings owners of unforested land together with schoolchildren.
      • The landowners offer their land to the schoolchildren free of charge so that they can plant, maintain, and use a school-run forest.
      • A 30-year-long use contract enables reliable, sustainable environmental and conservation work to be carried out by many generations of pupils.
      • In their “own” forest, pupils learn how they can personally become active in the areas of environmental and climate protection
    • The projects that fall under the umbrella of “Growing with the Sea“ aim to protect the Wadden Sea from destruction by sea level rise and thereby to protect the integrity of this world heritage site in its entirety. 
    • Restored peatlands, for example, not only create habitats for endangered species and improve the water balances of entire landscapes, but also significantly contribute to greenhouse gas emission reductions
  • For example, tidal flats that are intact or are recreated via the relocation of dikes can sequester up to 2.2 t CO2/hectare. Through the restoration of peatlands, emissions of 10–20t CO2/hectare can be reduced
  • Nature can also help to protect livelihoods.
    • A Red Cross-led mangrove restoration project in Vietnam not only reduced damage to dykes and other built infrastructure, but also resulted in higher aquaculture yields and thus more income for the local communities.
    • A mangrove and coral restoration project in Grenada has also shown great potential to increase resilience. Just 30m of reef and coral have been shown to increase substantially the population of lobster, conch, octopus and urchins.
  • Natural farming in Japan lead to greater yields despite climate change impacts
  • Nature-based solutions are often lower cost, longer lasting, and have multiple synergistic benefits for a variety of sectors and political goals.
  • Often, a single measure such as the renaturation of rivers reduces greenhouse gas emissions as well as increases the adaptive capacity of ecosystems and ability to protect against damages from floods
  • In this context, it is also clear that water management, coastal protection, flood control, forestry, agriculture, fisheries, tourism, nature conservation and urban and regional planning pursue many shared objectives. The wide range of benefits generated from nature-based approaches thus has the potential to bring a range of actors together from different fields.
  • In contrast to purely technical solutions, nature-based approaches often create (additional) recreation opportunities for locals and tourists and can therefore contribute to long-term gains in employment and income.
  • An additional advantage is the flexibility of these approaches to react to the constantly changing climate and the resultant impacts.
    • Through dike relocation,for example,it is easier to react to rising sea levels than with a permanent, solid dike.
    • Through dike relocation on the North Sea, salt marshes could be naturally generated through succession, which absorb wave energy and simultaneously act as valuable conservation areas.
    • A dynamic coastline together with multifunctional use is therefore a sensible option. Sustainable use concepts can be identified together with the affected land users. For example, coastal protection can be combined with sustainable tourism and use as extensive grassland.

General Studies – 2

TopicIssues relating to development and management of Social Sector/Services relating to Health,

2) Between the potential catastrophes of big out-of-pocket costs for healthcare and the current weaknesses of the public healthcare system, the private insurance markets offer what looks like a way out. Critically comment on the role of private insurance companies in India’s healthcare sector. (200 Words)

The Hindu


Fact :

  • More than 75 per cent on average of all health expenditure is out of pocket, whilst investment in public healthcare is even lower than some countries of Sub-Saharan Africa (less than 2 per cent on average)

Role of private insurance companies in India’s healthcare sector:-


  • Private insurance companies add bureaucracy, inequality and regulatory trickery without contributing any value to the healthcare system.

Private insurance works if you are unconcerned with inequality and efficiency, or work for an insurance company.

  • Instability:
    • Private, competitive insurance companies fragment risk pools. Each company competes for the most lucrative risk pool, which means the richest and healthiest people. The result is a natural state of instability in private insurance markets.
    • Private insurance companies achieve stability by making healthcare less accessible to the people who need it most.
  • Even the healthy people who benefit will not continue to benefit, since insurance rates would spike after a diagnosis of cancer or diabetes, or just go up with age.
  • The evidence that insurance companies improve health or healthcare just isn’t there.
  • In India only tertiary healthcare needs (hospitalization) are covered under any kind of health insurance. A visit to the physician, or a sonography – primary and secondary outpatient healthcare services are not covered under most health insurance options.
    • according to a study published in 2014, in the year 2012 14.2% of rural households reported out of pocket expenditure on in patient services and nearly 78.76% of households reported out of pocket expenditure on out patient services.
  • Case study of US:-
    • Even in U.S. these companies know startlingly little about their clients’ real needs.
    • Their ability to deny care without resistance from doctors and their clients (whether patients or employers) is limited because they have neither knowledge nor legitimacy.
    • The U.S. tried to rely on private insurance, and the result was a politically empowered industry dedicated to preserving its business at the expense of better risk pooling, equality, more efficiency, and simpler administration
  • The countries that rely heavily on private insurance companies the U.S., the Netherlands, and Switzerland are among the worst value health systems in the world, with very high costs for average, or in the U.S. below average, quality. 
  • Third Party Administrators (TPAs)
    • The most important problem associated with them is the long turnaround time (TAT).
    • The TAT for the payment of an insured patient’s treatment in an affiliated hospital is 20 days for cashless treatment.
    • Most TPAs fail to meet the deadline even if the insurance company has made the payment to them.This delays the processing of claims. 
    • Some hospitals become disgruntled with the delay and do not offer cashless treatment facilities.
  • Higher tariffs for insured patients lead to a higher payout for the insurance companies which, in turn, leads to higher premiums. The increase is more than the rise in the cost of medical care.
  • To ward off pressure from their superiors and get incentives, salesmen mis-sell products. Sometimes, a wrong product is sold for a higher commission. As company Websites and brochures do not reveal all the terms of the plans, clients fall prey to the salesperson and do not buy the right policy. 
  • Low penetration of healthcare services and insurance is owed to various difficulties such as reach and accessibility, literacy levels and information penetration, and mindset and cultural practices.
  • Rural areas:
    • Indians not only have to deal with escalating costs of healthcare services but the rural also, have to deal with unavailability of competent medical professionals, equipment, infrastructure and medicines besides the inaccessibility to clinics from their remote locations of residence.


  • Early treatment of an ailment can prevent hospitalization, not only does it save the patient emotional stress and pain but benefits the ecosystem of healthcare socially and economically too.This can be achieved by access to health insurance
  • As healthcare insurance penetration is very low in India and out of pocket expenditure is rampant private health insurance companies can fill the gap and reduce the burden for the insured.
  • Due to their more efficient operating models, highly capable talent pool, and significantly higher usage of IT private players would drive the focus on operational effectiveness, channel productivity, enhanced pricing approaches in order to drive profitable growth.

Topic: Government policies and interventions for development in various sectors and issues arising out of their design and implementation

3) India require of its banking system stability, efficient service delivery,  inclusion and monetary policy transmission. But in recent months there has been concern in all these areas. What urgent reforms are needed in banking sector? Examine. (200 Words)

Business Standard

The Hindu

Background :-

On all the four counts banking system stability,efficient service delivery ,inclusion and monetary policy transmission there are complications in the recent months as seen from the following.

  • The size of the hole in today’s banking crisis appears to be roughly 10 per cent of GDP. 
  • Occasional bank failure is necessary and healthy, but the banking system as a whole should not get into trouble. In India Individual banks essentially never fail (a cover-up or a bailout is always organised), but systemic crises (which are too large to cover up or bail out) seem to recur.
  • Most public-sector banks other than State Bank of India have difficulties in management and are in a solvency crisis.
  • Most private banks other than HDFC Bankand Kotak Mahindra Bank are also facing difficulties. Foreign banks have been blocked off. New private banks are coming in at roughly two banks a decade, which is inadequate. The entry of “payments banks” or “small finance banks” will not completely help in financial inclusion.
  • Mobile penetration is more than the number of the banking accounts showing inadequate financial inclusion yet.
  • When banks and the bond market work well, monetary policy transmission works. As banks and the bond market work badly, at present the RBI is ineffectual. 

All these show that there is a very significant need for banking reforms:-

  • In India, too much bank lending is based on bureaucratic procedure, and too little is based on a forward-looking assessment about the prospects of a firm.This needs to change.
  • Modernising the monetary policy framework with formal inflation like inflation targeting.
  • An autonomous Banks Board Bureau tasked with the specific brief of ensuring that state-owned lenders will hereafter be free from political interference in the selection of top management and on business strategy.
  • Separately, a Bankruptcy Code intended to improve the legal framework for assisting creditors in taking defaulters’ assets through a liquidation and recovery process could soon be in operation.
  • Addressing sector-specific issues like is imperative to deal with the problems concerning the increasing NPAs on the books of public sector banks.
  • Bank consolidation 
  • Completing the infusion of 70, 000 crore rupees as additional government equity in an attempt to improve PSB capital adequacy levels and implement the remaining agenda of the Indradhanush package of PSB governance reforms. 
  • Divestment to maximise revenues
  • create an institutional intermediate agency between the government and PSBs to operationalise the arms-length governance and completely professionalise the boards.
  • The government has to withdraw itself from the board of the bank which should be run by professionals, the board appointing the CEOs in public sector banks rather than the government, bring down its stake below 51 per cent, are some of things that are required to make reforms more meaningful.
  • Effective implementation of marginal cost of funds method:-
    • The RBI issued guidelines for the computation of the benchmark lending rate using the marginal cost of funds method.
    • Banks will have to implement the new Marginal Cost of Funds based Lending Rate (MCLR) with effect from April 1, 2016.

TopicGovernment policies and interventions for development in various sectors and issues arising out of their design and implementation

4) It is argued by town planning experts that smart laws are needed to implement smart cities project effectively and efficiently. Discuss. (200 Words)

Business Standard

Smart laws are needed because:

  • Town planning and legal experts are more in favour of tweaking and strengthening the current municipal and state laws, rather than any over-arching legislative framework to govern these changed cities.
  • The practical approach is to make amendments to individual statutes, depending on a city’s vision, the smart city plan, and the implementation framework.
    • The current IT Act might not give adequate protection to the citizen data that smart cities will generate
    • cyber-criminal activities can knock on the IT platform of a smart city project. Stricter data protection and privacy laws to safeguard citizen from cyber-attacks and unauthorised use of data are not present as of now.
  • Existing urban local bodies do not have the sources of revenue to manage the multiple stakeholders within a smart city system. These would necessitate amendments to the existing law on municipalities and municipal corporations
    • Any change in the system can be brought about by changing the relevant clauses in various Acts, such as those that relate to property tax, rent control, licences, user charges.
  • To facilitate quicker decisions in a smart city system, the officers managing an SPV and the local bodies would need additional powers. This would need amendments in existing laws.
  • Also, under the current regulatory framework in most cities, the same government agency combines the roles of a regulator, service provider and policy maker. Separation of ownership, regulation and service provisions is necessary to bring in better efficiency, governance and sustainability in a smart city.
  • Under the Smart Cities Mission,cities could transition to being ‘smart’ through improvement in existing infrastructure,a city renewal plan or through city extensions. So these would necessitate changes in the existing urban town planning laws and regulations, including land use plans and building bye-laws.
  • As most projects in a smart city are going to be run on a public-private partnership mode, there are questions over access to citizen data and its security under current laws. There is confusion over their ambit with in the Right to Information Act.
  • Considering the number of sub-sectors that are involved in creating smart cities, it is not possible to bring in an exclusive statute for smart cities.

Topic: Important aspects of governance, transparency and accountability

5) “Each section of the act defines the duty and accountability of the taxpayer. However, there is not a single provision under the Income Tax Act, which holds a tax officer accountable for misuse of tax provisions or passing unfair orders against a taxpayer.” What issues does the lack of provision in IT act vis a vis tax officer give rise to? Critically discuss. (200 Words)

The Hindu

The income tax law nowhere provides any penal provisions against the tax officer for passing unfair or legally untenable orders or orders passed on the basis of manipulation of facts. There is always room for misuse of various tax provisions in the law as its subjective nature makes it easy for tax officers to twist facts as they desire


  • Delay in justice:
    • In such cases, the only remedy available to the taxpayer is to go in appeal and wait for years to get justice. Until the time he gets a fair order from the appellate authority, he is subjected to interest, penalties and recovery proceedings.
    • A tax officer can even attach a taxpayer’s bank accounts for recoveries, irrespective of whether the legitimacy of the demand.
  • Can lead to not filing of taxes by even honest taxpayers fearing harassment by the tax officers.
  • This would lead to further reduction of Indias tax base.
  • It would become difficult for the government to handle economic crimes like money laundering black money.
  • Affects transparency :-
    • In Global Energy Ltd. vs Central Electricity Regulatory Commission,                               the Supreme Court observed that the law sometimes can be written in such subjective manner that it affects the efficiency and transparent functioning of the government.
    • If the statute provides for discretion to tax agencies ,it is demolishing the accountability within the administrative process, as the agency is not under obligation from an objective norm, which can enforce accountability in the decision-making process. 
    • The fundamental tenets (of transparency, openness, responsiveness and accountability) are flowing from due process requirement under Article 21, equal protection clause embodied in Article 14, and fundamental freedoms ingrained in Article 19.These constitutional validation is neglected.
  • There are about 3 lakh cases pending with the first appellate authority with disputed tax liability of Rs 5.50 lakh crore. Among them could be very many cases which involve honest taxpayers who are victims of wrong or illegal orders passed by tax officers.

What needs to be done ?

  • This year’s budget had a proposal to address taxation issues. Among the proposed amendments were:
    • No penalty in respect of income tax cases with disputed tax liability up to 10 lakh and exceeding that will be subject to minimum 25 per cent penalty under the disputes resolution scheme.
    • A new dispute resolution scheme,which will reduce litigation and the cost of litigation.
    • No discretion to tax officer for imposing penalty of 100 to 300 per cent of the tax sought to be evaded, instead a penalty of 50 per cent in cases of income underreporting and 200 per cent in cases of misreporting of facts
    • rationalising disallowances under section 14A of expenses incurred to earn exempt income
    • limitation of one year to dispose of a taxpayer’s petition seeking waiver of interest and penalty.

General Studies – 3

Topic: Awareness in biotechnology, S&T

6) Examine why the discovery of mcr-1 gene in bacteria such as E.coli in more countries and settings has sounded alarm bell across the globe. (200 Words)

The Hindu


  • Recently a woman in the U.S. was detected with bacteria resistant to a last-resort antibiotic. She was carrying  colibearing a new gene, mcr-1, which is resistant to even colistin, the last available antibiotic that works against strains that have acquired protection against all other medication. 
  • Though resistance to colistin has been detected for about 10 years in several countries, the danger from this has been played down since such resistance was brought about by gene mutations that cannot spread easily between bacteria. But mcr-1 poses a threat of an entirely different order
  • In this case a small piece of DNA (plasmid) found outside the chromosome carries a gene responsible for antibiotic resistance. Since the gene is found outside the chromosome, it can spread easily among different types of bacteria, as well as among patients.
  • In the case of coli, the colistin resistance is not insurmountable as it is still treatable by other known drugs. But were the gene to spread to bugs treatable by only last-resort antibiotics, world could be facing the dreaded and indeed, long-anticipated superbug.
  • Thus, the discovery of mcr-1 in more countries and settings increases the chances of the emergence and spread of resistance against all available antibiotics. It could well lead to an era without effective drugs to treat bacterial infections the post-antibiotic age.
  • The unchecked use of antibiotics in livestock is a major reason for the development of drug resistance. Indeed, given the widespread use of colistin in animals, the connection to the drug-resistant mcr-1 gene appears quite clear. 


  • A number of tips are recommended for people to help fight off the spread of resistant bacteria like
    • hand washing to reduce the spread of diarrheal and respiratory illnesses
    • staying up-to-date with vaccines
    • cooking food at the right temperatures and
    • being mindful of raw meat consumption.

Topic: Security challenges and their management in border areas

7) North Kashmir, which had remained quiescent for quite some time has, of late, become the main locus of violent activity. Critically comment on the causes of, and challenges faced by both state and union governments in dealing with rise in violence and anti -India sentiment. (200 Words)

The Hindu


  • Government’s approach:-
    • There is no change in the centre government’s approach to waves of protests taking place in the state as it sees these agitations as similar in nature. This ignores both ground realities and the region’s history of violence and turbulence.
    • Governments feel these agitations will subside over time but without government’s action situation would get worse. For instance there have been periods in Kashmir’s recent history when the State appeared to be on the brink, and only deft handling helped retrieve the situation.
    • The centre’s manifesto during elections propagated for abolition of article 370 .This raised insecurity in the state that there might be erosion of Jammu and Kashmir’s “special status”.
  • Militant problem:
    • Released militants have become a serious bane for the maintenance of order in Kashmir. They have been active in mobilising crowds for agitations and swelling the ranks of anti-India protesters.
    • They are also encouraging young people to resort to tactics such as pelting stones to provoke security forces to retaliate and create a strong adverse public reaction.
    • The Hizbul Mujahideen has, meanwhile, re-emerged as the most important underground militant outfit.
  • Unemployment:
    • The “youth bulge” in Kashmir, with vast numbers of educated unemployed, is providing ready manpower for the growing numbers of protesters. 
  • Dissatisfaction:
    • The degree of resentment against the Indian state is probably at one of its highest points ever.
    • A feeling has been deliberately generated that Delhi currently shows even less understanding of the concerns of locals than many of its predecessors..
  • Technology:
    • A major difference between what is happening today and what occurred during previous “waves” is the impact of radical Islamist propaganda which is being pushed via the Internet.
    • Underground outfits utilise and exploit the social network to generate further unrest
  • Absence of decisive leadership:
    • Death of the CM lead to a political vacuum in Srinagar, is also an important factor.
    • It is encouraging militants and anti-India elements to demonstrate their open defiance of the Indian state.

However blaming government entirely for the situation of the state is not right because of the following reasons:

  • Indian government has been laboriously working for the enhancement of development agenda in the state with the implementation of Udaan that provides employment to the youth in corporate sector.
    • There was also an improvement to the scheme, which involves taking companies beyond Srinagar to other towns and even remote locations in the state for organising employment camps and hiring locals.
    • The government will pay local people salaries to bring unemployed graduates to the placement camps to make a success of this initiative.
  • Another programme to enhance the skills of the youth and provide employment is Himayat


  • The Valley has been facing its gravest crisis since 2008 and 2010. The intrinsic nature of the protests and the atmospherics surrounding them, make the current situation highly incendiary.
  • Infiltration of militants:
    • Infiltration of Pakistan-based terrorists has gone up substantially since the beginning of this year.
    • More attacks are taking place and gun battles are lasting for much longer for days rather than hours.
    • What is most disturbing is that many of the infiltrators are finding shelter and refuge with Kashmiri families, reminiscent of and reverting to the situation that existed in the 1980s and 1990s.
  • Strong control of the militants:-
    • Once the security forces intervened saw slogans favouring Pakistan and “denigrating” India were being raised.
    • Militant control was proved beyond doubt once students belonging to other universities in Kashmir joined the violent protests and began raising similar anti-national slogans.
  • Locals against security operations:
    • Perhaps for the first time after the 1990s, local citizens are openly confronting and preventing the security forces from carrying out anti-terror operations.
    • For instance the Special Operations Group of the Jammu and Kashmir Police has been thwarted on more than one occasion when trying to arrest or deal with a suspected militant.
    • At the same time, accusations of genocide are once again being levelled against the police and the security forces.
    • Clashes between the security forces and the people lead to deaths causing further hatred towards the governments and the security forces.
  • Ideological challenges:
    • The tendency on the part of thousands of Kashmiri youth to attend “funerals” of militants and hold cricket matches for trophies named after prominent militants has grave connotations for peace and tranquillity in the State.
  • In short, the state today confronts a grave situation at a time when neither centre or the state government has adequate political resource or enough comprehension to effectively deal with it. 

TopicInclusive growth and issues arising from it.

8) What is wrong with the payments bank idea? Why this idea is failing? Examine. (200 Words)

Business Standard

In the context that Tech Mahindra announced that it was dropping its plan to start a payments bank,it is necessary to analyse the payments bank idea.Tech Mahindra became the third licence holder, out of 11, to do so.


What is wrong with Payments bank idea?

  • Experts feel that the RBI has created a stunted business model by which payment banks are supposed to shoulder the noble objective of financial inclusion without being able to make much money.
  • They also forgot that collecting deposits is only one half of “financial inclusion”. The other half is lending to those who do not have access to formal credit. But payment banks cannot lend.
  • the limited scope of business activity, is proving to be the biggest deterrent.
  • Competition:
    • Those who have backed out have cited competitive pressure on the margins as the main reason. Experts believe that it will take a minimum of three to five years to break even.
  • Strict rules :-
    • RBI’s restrictions and rules are so tough that it is difficult for a standalone payments bank to make money
    • These banks are required to invest 75 per cent in government securities, which will crimp their earnings.
  • Technological Advancements :-
    • The evolution in technology over the past ten months, after the licences were issued, is another reason that has forced the players to rethink their plans
    • And with the new payments solutions (Unified Payments Interface) provided by the National Payments Corporation of India, it is going to be extremely competitive.It is set to completely revolutionise digital money transfer by making sending money as simple as a text message
    • The margins and fee structures are going to be low, it gets difficult for these banks to make money
    • At the same time, competition in the digital banking space has intensified with banks entering the fray.
      • With their captive customer base and deep pockets, they have an edge over other payments banks and digital wallet players.
    • Structure of payment banks :
      • Payments banks are not allowed to lend and they cannot issue credit cards. This will limit their earning potential as their main source of income will be fee income and not the net interest income as in the case of  universal banks.
      • Given that  in order to woo customers, payments banks may initially have to offer a higher rate compared to the 4 per cent offered by most commercial banks,  their net interest margins will come under pressure
      • As income channels are limited, payments banks will be under pressure to generate volume
    • Challenges by Government initiatives:
      • Government initiatives aimed at the unbanked population have considerably reduced the scope of doing business for payments banks
      • Pradhan Mantri Jan Dhan Yojana that was also aimed at bringing the un-banked population under the established financial system. Since its inception, banks have opened 21.87 million accounts.
    • Other challenges:
      • challenges in terms of their making any commercial sense of the transactions of procuring customers, having a balance, using that only for the purpose of parking in government securities, passing on incentives on payments from vendors back to the customer.


  • Analysts believe that it is mainly the telecom companies that will be able to survive the heat. The Nachiket Mor Committee on these niche banks had stated that the telecom companies that have wide reach and also have a connect with the un-banked population will be able to establish themselves quickly.
    • Out of the remaining eight players, three are telecom companies: Aditya Birla Nuvo, Bharti Airtel and Vodafone.
    • they can give extra payment options to their customers and therefore stay relevant to them.
  • Still, the payments banks remain hopeful, given that in urban areas consumers have more than one bank and therefore there is still scope to reach out to these players.



General Studies – 4

Topic: Moral thinkers

9) “It is the mark of an educated mind to be able to entertain a thought without accepting it.” Discuss the relevance of meaning of this quote for a public servant. (200 Words)