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Insights Daily Current Affairs, 18 September 2018

Insights Daily Current Affairs, 18 September 2018


Paper 2:

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


Govt proposes to merge Dena Bank, Vijaya Bank and Bank of Baroda

What to study?

  • For Prelims: Which three banks are being merged?
  • For Mains: Merger- Significance, pros and cons, concerns.


Context: The Centre has proposed the amalgamation of state-owned Bank of Baroda, Dena Bank and Vijaya Bank to create India’s third largest bank as parts of reforms in the public sector banking segment.

  • The proposal will now need the approval of the boards of these individual banks. The banks’ boards will shortly meet and take up the decision.



The merger of these three state-owned banks is a part of the government’s agenda of consolidation of public sector banks. The consolidation was proposed by the Alternative Mechanism.

The Union Cabinet in August 2017 approved amalgamation of Public Sector Banks through Alternative Mechanism (AM) with an aim to facilitate consolidation among the Nationalised Banks to create strong and competitive banks.


Why merger is good?

  • The merger benefits include getting economies of scale and reduction in the cost of doing business.
  • Technical inefficiency is one of the main factors responsible for banking crisis. The scale of inefficiency is more in case of small banks. Hence, merger would be good.
  • Mergers help small banks to gear up to international standards with innovative products and services with the accepted level of efficiency.
  • Mergers help many PSBs, which are geographically concentrated, to expand their coverage beyond their outreach.
  • A better and optimum size of the organization would help PSBs offer more and more products and services and help in integrated growth of the sector.
  • The size of each business entity after merger is expected to add strength to the Indian Banking System in general and Public Sector Banks in particular.
  • This will also end the unhealthy and intense competition going on even among public sector banks as of now. In the global market, the Indian banks will gain greater recognition and higher rating.
  • The volume of inter-bank transactions will come down, resulting in saving of considerable time in clearing and reconciliation of accounts.
  • The burden on the central government to recapitalize the public sector banks again and again will come down substantially. This will also help in meeting more stringent norms under BASEL III, especially capital adequacy ratio.
  • A great number of posts of CMD, ED, GM and Zonal Managers will be abolished, resulting in savings of crores of Rupee. This will also reduce unnecessary interference by board members in day to day affairs of the banks.
  • After mergers, bargaining strength of bank staff will become more and visible. Bank staff may look forward to better wages and service conditions in future. The wide disparities between the staff of various banks in their service conditions and monetary benefits will narrow down.
  • Customers will have access to fewer banks offering them wider range of products at a lower cost. From regulatory perspective, monitoring and control of less number of banks will be easier after mergers. This is at the macro level.


Concerns associated with merger:

  • Immediate negative impact would be from pension liability provisions (due to different employee benefit structures) and harmonisation of accounting policies for bad loans recognition.
  • There are many problems to adjust top leadership in institutions and the unions.
  • Mergers will result in shifting/closure of many ATMs, Branches and controlling offices, as it is not prudent and economical to keep so many banks concentrated in several pockets, notably in urban and metropolitan centres.
  • Mergers will result in immediate job losses on account of large number of people taking VRS on one side and slow down or stoppage of further recruitment on the other. This will worsen the unemployment situation further and may create law and order problems and social disturbances.
  • The weaknesses of the small banks may get transferred to the bigger bank also. New power centres will emerge in the changed environment. Mergers will result in clash of different organizational cultures. Conflicts will arise in the area of systems and processes too.
  • When a big bank books huge loss or crumbles, there will be a big jolt in the entire banking industry. Its repercussions will be felt everywhere.
  • Also, India right now needs more banking competition rather than more banking consolidation. In other words, it needs more banks rather than fewer banks. This does not mean that there should be a fetish about small-scale lending operations, but to know that large banks are not necessarily better banks.


Way ahead:

Merger is a good idea. However, this should be carried out with right banks for the right reasons. Merger is also tricky given the huge challenges banks face, including the bad loan problem that has plunged many public sector banks in an unprecedented crisis. Since mergers are also about people, a huge amount of planning would be required to make the consolidation process smoother. Piecemeal consolidation will not provide a lasting solution and what is required is an integrated approach from all stakeholders including the government.


Sources: pib.


Paper 3:

Topic: Major crops cropping patterns in various parts of the country.


Policy on ‘jhum’ cultivation

What to study?

  • For Prelims: Meaning, benefits and effects of Jhum cultivation, different names of it.
  • For Mains: Concerns, issues associated, need for a policy on this.


Context: A recent NITI Aayog report has recommended that the Ministry of Agriculture should take up a “mission on jhum cultivation” to ensure inter-ministerial convergence.


Need of the hour:

  • Various authorities often have divergent approaches towards shifting cultivation. This creates confusion among grass-roots level workers and jhum farmers said the report.
  • Therefore, shifting cultivation fallows must be legally perceived and categorised as ‘regenerating fallows’ and credit facilities must be extended to those who practise shifting cultivation.
  • Land for shifting cultivation should be recognised as “agricultural land” where farmers practise agro-forestry for the production of food rather than as forestland.


What is Jhum cultivation?

Jhum cultivation, also known as the slash and burn agriculture, is the process of growing crops by first clearing the land of trees and vegetation and burning them thereafter. The burnt soil contains potash which increases the nutrient content of the soil.

This practice is considered as an important mainstay of food production for a considerable population in North-East India.


Issues with Jhum Cultivation:

The report notes that between 2000 and 2010, the land under shifting cultivation dropped by 70 %. People are returning to fallow land left after shifting in a shorter span. Earlier the cultivators returned to fallows after 10-12 years, now they are returning in three to five years which has impacted on the quality of the soil.


Sources: the hindu.

Topic: Money laundering and associated issues.


Asia/Pacific Group on Money Laundering


What to study?

  • For Prelims: APG- objectives, composition and functions, FATF, grey list.
  • For Mains: Performance of various countries including Pakistan, Money laundering- global concerns.


Context: Almost three months after Pakistan was placed on the Financial Action Task Force (FATF) grey list for failing to curb terror funding, Pakistan’s recent action against terror financing, particularly on the “legal” front, was found to be “unsatisfactory”, according to a review by the Asia Pacific Policy Group (APPG).


Reasons for the poor performance:

Not much has been achieved by Pakistan, especially on the legal side (like freezing of assets, attachment of funds, militant groups infrastructures etc).


What next?

Another review for Pakistan will be held in December this year following which a final evaluation report will be prepared. For Pakistan, the first deadline is January 2019 failing which they may face more heat. By then, Pakistan will have to publish updated lists of persons and entities proscribed under the Anti-Terrorism Act and the UN-designated entities.


About APG:

It is the FATF-style regional body for the Asia-Pacific region. It is an inter-governmental organisation founded in 1997 in Bangkok, Thailand.



  • The APG consists of 41 member jurisdictions and a number of observer jurisdictions and international/regional observer organisations.
  • Under the APG’s Terms of Reference (updated 2012) membership is available for jurisdictions with a presence in the Asia-Pacific region who commit to the policy objectives of the organisation including undergoing a mutual evaluation (peer review) to determine the level of compliance of the member with the international standards against money laundering and terrorist financing.
  • Observer status is available to any jurisdiction in the Asia-Pacific region interested in becoming a member or any other jurisdiction which supports the goals and work of the APG.
  • International organisations which support the work of the APG may also join as supporting observers.


Role of members:

Jurisdictions that join the APG, either as members or as observers, must commit to implement the international standards against money laundering, the financing of terrorism and proliferation financing (WMD), in particular the Recommendations of the Financial Action Task Force (FATF). These standards were substantially updated in 2012 and are supplemented by a complex assessment methodology in 2013 which forms the benchmark for mutual evaluations.


The APG has five primary functions:

Mutual evaluations:   The APG assesses the levels of compliance by its member jurisdictions with the global AML/CFT standards through a mutual evaluation (peer review) programme;

Technical assistance and training:  The APG Secretariat coordinates bi-lateral and donor-agency technical assistance and training in the Asia/Pacific region for its member jurisdictions in order to improve compliance with the global standards;

Typologies research:  Research and analysis into money laundering and terrorist financing methods and trends is a key function of the APG to assist policy and law makers as well as law enforcement agencies and the general public to identify and respond to new and emerging trends, methods, risks and vulnerabilities;

Global engagement:  The APG contributes to international AML/CFT policy development and actively engages with the global network of FSRBs. The APG also participates in a number of FATF working groups and in its plenary meetings; and

Private sector engagement:  Private sector engagment is critical to the APG’s overall objectives. The APG actively engages with financial and non-financial institutions, NPOs, training centres and universities in the Asia-Pacific to better inform the general public and specialists about global issues relating to money laundering, terrorist financing and proliferation financing.


Sources: toi.

Topic: Conservation and pollution related issues.


India Cooling Action Plan (ICAP)

What to study?

For Prelims and Mains: Highlights and significance of ICAP.


Context: MoEFCC has released the draft India Cooling Action Plan (ICAP). ICAP has been prepared by the ministry after extensive deliberations and multi-stakeholders engagement in public domain for receiving comments.



  • India is the first country in world to develop such a document (ICAP), which addresses cooling requirement across sectors and lists out actions which can help reduce the cooling demand.
  • The overarching goal is to provide sustainable cooling and thermal comfort for all while securing environmental and socio-economic benefits for the society.


The goals emerging from the suggested interventions stated in ICAP are:

  • Reduction of cooling demand across sectors by 20% to 25 % by year 2037-38.
  • Reduction of refrigerant demand by 25% to 30% by year 2037-38.
  • Reduction of cooling energy requirements by 25% to 40% by year 2037-38.
  • Training and certification of 100,000 servicing sector technicians by the year 2022-23, in synergy with Skill India Mission.


The broad objectives of the India Cooling Action Plan include:

  • Assessment of cooling requirements across sectors in next 20 years and the associated refrigerant demand and energy use.
  • Map the technologies available to cater the cooling requirement including passive interventions, refrigerant-based technologies and alternative technologies such as not-in-kind technologies.
  • Suggest interventions in each sector to provide for sustainable cooling and thermal comfort for all.
  • Focus on skilling of RAC service technicians.
  • Develop an R&D innovation ecosystem for indigenous development of alternative technologies.


Sources: pib.

Topic: Security challenges and their management in border areas; linkages of organized crime with terrorism.


‘Smart fence’ pilot project

Context: India’s first ‘smart fence’ pilot project has been launched along the India-Pakistan International Border in Ploura, Jammu and Kashmir.


Key facts:

  • The pilot project involves deploying of laser-activated fences and technology-enabled barriers to plug vulnerable gaps along the frontiers.
  • The smart fencing uses a number of devices for surveillance, communication and data storage.
  • The innovative system provides for round-the-clock surveillance on the border, even in different weather conditions be it dust storm, fog or rain.
  • It also reportedly comprises automated surveillance technology and alarm detection systems.



The smart fence pilot project is expected to be a massive boon for monitoring security situations in border areas. It is a technological solution devised to make the security system at the borders more strong and effective. The system will virtually make it impossible for terrorists to infiltrate into the Indian side of the border.


Sources: the hindu.


Facts for Prelims:


World’s first hydrogen train:

Germany has rolled out the world’s first hydrogen-powered train, signalling the start of a push to challenge the might of polluting diesel trains with costlier but eco-friendly technology.

How they operate? Hydrogen trains are equipped with fuel cells that produce electricity through a combination of hydrogen and oxygen, a process that leaves steam and water as the only emissions. Excess energy is stored in ion lithium batteries on board the train.


Maharashtra to set up cyber varsity:

The Maharashtra Government has taken the first step towards setting up a varsity dedicated to mitigating cyber threats. It has set aside ₹80 crore for the first round of its funding and the proposal for the project will be tabled in the State cabinet’s consideration in the first week of October.

Role and functions:

  • The new Cyber University will train 3,000 professionals to fight online space cyber attacks, internet crimes, and conduct cyber forensics. It will also impart training in 15 other Internet of Things (IoT) areas such as Data Analytics and Artificial Intelligence (AI).
  • The varsity will provide for and prepare internet professionals on the lines of the Microsoft Certified Professional Program. The courses will cost less than ₹5 lakh for courses in data analytics, cloud computing, blockchain, AI, cyber forensics and cyber investigations.