Print Friendly, PDF & Email

Insights SECURE SYNOPSIS: 2 January 2021

NOTE: Please remember that following ‘answers’ are NOT ‘model answers’. They are NOT synopsis too if we go by definition of the term. What we are providing is content that both meets demand of the question and at the same time gives you extra points in the form of background information.

General Studies – 1


1. Explain the reasons as to why some of the major hot deserts of the world are located on the western margins of the continents? (250 words)

Reference: Certificate of Human and Physical Geography by G.C Leong.


A desert is a barren area of landscape where little precipitation occurs and consequently living conditions are hostile to plant and animal life. In other words, it is extremely dry area of land with sparse vegetation. Deserts are created due to arid and semi-arid conditions because of the lack of moisture. It is accelerated by intense heating.

Between 20-30-degree north latitude the insulation is relatively direct and less scattered and reflected by the atmosphere. Intense heating takes place in this zone. The hot deserts lie along the Horse Latitudes or the Sub-Tropical High Pressure Belts where the air is descending, a condition least favourable for precipitation of any kind to take place.


Hot Deserts of the World

  • Arabian Desert in Arabian Peninsula
  • Great Sandy, Victoria, Simpson, Gibson and Sturt deserts in Australia
  • Chihuahua Desert in north central Mexico
  • Kalahari Desert in south-western Africa
  • Mojave Desert in USA
  • Monte Desert in Argentina
  • Sahara Desert in North Africa
  • Sonoran Desert in North and Central America
  • Thar Desert in India and Pakistan


  • Offshore trade winds in the region and location in rain shadow zone:
    • Trade winds that blow in the region, shed their moisture on the eastern part and by the time they reach the western margin, they become dry.
  • Anti-cyclonic conditions:
    • Areas between 20–30 degree latitudes on western margins of continents are the regions of descending air.
    • It means the air gets compressed and warm as it descends and thus the moisture holding capacity keeps decreasing.
  • Leeward sides of mountains/Parallel mountain ranges:
    • In the case of few deserts, mountains are situated as a barrier which prevents orographic rainfall. For instance, the presence of Rockies on the western coast of North America does not let moisture bearing winds do rainfall in leeward sides.
    • In the case of Thar desert in India, Aravalli are situated parallel to the region. Therefore, the moisture holding winds pass away from the region because there is absence of mountain barriers.
  • Presence of cold ocean currents along the western coast of continents:
    • These tend to stabilize the air over the coast by having a desiccating effect on the land.
    • This prevents cloud formation and rainfall.


Thus, major hot deserts in northern hemisphere such as Thar desert, Rajasthan in Indian sub-continent, Sahara Desert in Africa, Great Basin Desert in North America, Arabian desert in Arabian Peninsula are all located between 20-30-degree north and on the western side of the continents.


General Studies – 2


2. Improved sanitation and hygiene, which have been the primary weapons to fight covid-19, need further strengthening so that we remain resilient in the emerging uncertain world. Comment (250 words)

Reference: Live Mint


The Covid-19 pandemic was declared a global health emergency by the World Health Organisation (WHO) on March 11 this year. Since then, various national and international organisations have been emphasizing on maintaining personal hygiene and sanitation, of which, washing hands multiple times a day is of utmost importance. But in Mumbai, the financial capital of the country, washing hands regularly and personal hygiene are privileges for close to 20 lakh people living in the slums.


Situation in India:

  • According to a recent report released by Mumbai-based Pani Haq Samiti (PHS) and the Centre for Promoting Democracy (CPD), of the 292 households they surveyed in the city, only 9.25% had personal toilet facilities, while 18.15% resorted to open defecation owing to lack of access and 75.34% were dependent on shared toilet facilities despite the fear of the infection.
  • The report, “A ground assessment of Wash realities of Mumbai’s informal settlements during Covid-19” released in November, further revealed that 24.4% of the households did not receive daily water supply, while 19.31% could not access safe potable water during the lockdown.

Need of Sanitation system:

  • Everyone must have sustainable sanitation, alongside clean water and handwashing facilities, to help protect and maintain our health security and stop the spread of deadly infectious diseases such as COVID-19, cholera, and typhoid.
  • Toilets can help us to fight climate change too! Wastewater and sludge from toilets contain valuable water, nutrients, and energy. Sustainable sanitation systems make productive use of waste to safely boost agriculture and reduce and capture emissions for greener energy.
  • Open defecation and women security issues, privacy for women.
  • Girls drop out in rural due to lack of toilets suffering health issues during menstruation.
  • Down to Earthreported 210 million people lack access to improved basic sanitation in India.
  • India confronted a grim situation, access to the household toilets was limited to under 40% of the overall population.


  • TheComptroller and Auditor General of India (CAG) has flagged irregularities in the construction of toilets in schools by Central Public Sector Enterprises (CPSEs).
  • Theobjective of providing separate toilets for boys and girls was not fulfilled in 27% of the schools.
  • Maintenance and Sanitation:
    • 75%of toilets did not follow the norm for daily cleaning at least once a day.
  • Construction Issues:
    • almost 40% of toilets werenon-existent, partially completed or unused.
    • Construction of toilets is considered still a taboo in some sections of society.
  • Lack of dedicated funds, poor maintenance, poor water availability is some of the challenges.

Government Initiatives:

  • Through SBM, India received a new thrust, with focus shifting from sewerage networks to sanitation, putting in place a time-bound plan to improve access to toilets across the country.
  • Department of Drinking Water and Sanitation (DDWS) under the Ministry of Jal Shakti has launched the 10-year Rural Sanitation Strategy starting from 2019 up to 2029.
  • It lays down a framework to guide local governments, policy-makers, implementers and other relevant stakeholders in their planning forOpen Defecation Free (ODF) Plus status, where everyone uses a toilet, and every village has access to solid and liquid waste management.
  • The strategy aims tosustain the behavioral change regarding sanitation
    • ODF:An area can be notified or declared as ODF if at any point of the day, not even a single person is found defecating in the open.
    • ODF+:This status is given if at any point of the day, not a single person is found defecating and/or urinating in the open, and all community and public toilets are functional and well maintained.
    • ODF++:This status is given if the area is already ODF+ and the faecal sludge/septage and sewage are safely managed and treated, with no discharging or dumping of untreated faecal sludge and sewage into the open drains, water bodies or areas.
  • Ministry of Housing and Urban Affairs (MoHUA) launched various initiatives to make SBM-U a successful project. Some of them include,

ODF, ODF+ and ODF++ Protocol:

  • Norms under ODF:No visible faeces shall found in the environment and every household, as well as public/community institutions, should be using safe technology option for disposal of faeces.
  • Norms under ODF+:Not a single person should be defecating and/or urinating in open. All community and public toilets should be properly maintained and cleaned.
  • Norms under ODF++:Proper treatment and management of faecal sludge/septage and sewage is safely managed and treated. There should be no discharge or dumping of untreated faecal sludge/septage and sewage in drains, water bodies or open areas.
  • Water + Protocol:It is designed to ensure that no untreated wastewater is discharged into the open environment or water bodies.
  • Star rating protocol for Garbage free cities:It is based on 12 parameters which follow a SMART framework – Single metric, Measurable, Achievable, Rigorous verification mechanism and Targeted towards outcomes.
  • As on date,4 cities namely, Indore (Madhya Pradesh), Ambikapur (Chattisgarh), Navi Mumbai (Maharashtra) and Mysuru (Karnataka) have been certified as 5-star cities.
  • Material Recovery Facilities (MRFs):MoHUA has also partnered with National Highways Authority of India(NHAI) to use the plastic waste for road construction.
  • Additionally, cities have been asked to set up adequateMaterial Recovery Facilities (MRFs) to handle the segregation, processing and recycle of plastic waste.
  • Swachh Survekshan:MoHUA launched the Swachh Survekshan 2020 (SS 2020) league, a quarterly cleanliness assessment of cities and towns in India.
  • Safai karamcharis getting protective gears by SC orders.
  • Mechanising cleaning of sewers and drains under prohibition of employment as manual scavengers act, 2013 provides dignified life to manual scavengers.

Way forward:

  • Sustain the gains: 
    • The massive hygiene awareness and behavior change that accompanied covid-19, has had a surprising positive consequence on the burden on communicable diseases.
    • There are several innovative and sustainable ‘Made in India’ models to serve the bottom of pyramid in this regard, and rapid scaling of these is urgently warranted.
  • Fill the gaps: 
    • Situations in which large groups of populations mingle for long durations day in and day out, remain highly vulnerable and could kickstart infections that can rapidly assume epidemic proportions.
  • Accelerate adoption of decentralized and circular economy models for waste & waste water treatment: 
    • For decades India’s metropolises have pursued centralized waste and waste-water treatment models.
    • Technological developments over the last decade has opened up several options for decentralized systems that are high efficiency and also offer additional benefits in terms of energy or compost generation, which can build a revenue or a value stream, while addressing climate change and pollution threats
  • Set up a national infection control task force:
    • Working with science, technology, medical and global health fraternity, keeping an eye on upcoming threats, ecosystem perturbations and sectoral interdependencies, such a task force will help respond swiftly with knowledge & insights, and shape national, state, district and community level responses, to ensure that new epidemics are contained quickly and effectively
    • With its talent, start-up ecosystem, digital prowess and science & technology leadership, India has a unique health-cum-economic opportunity to emerge as a pioneer in tackling future pandemic threats.


Water and sanitation must be considered a public good and its basic universal access must be ensured by the state. Universal access to water and sanitation is an imperative step on the way forward to collective health and recovery.


3. India should aim to further strengthen relationship with Bangladesh as Chinese communist party meddling intensifies amidst instability. Analyze. (250 words)

Reference: The Hindu


India and Bangladesh share the fifth-longest land boundary in the world. It has long been important for India to maintain a positive working relationship with Bangladesh to bolster security and border management. It has also been pertinent for China as well to maintain a welcoming relationship with Bangladesh – both to ensure trade benefits by using Bangladesh’s ports and to keep a check on India as well. India was the first country to recognize the sovereignty of Bangladesh and establish diplomatic ties in 1971.

The ongoing China-India conflict could reverberate in the geopolitical dimensions of South Asia, leading to new relations in the region. Contrary to beliefs that rivalry between China and India makes the relations with other neighbours vulnerable, Bangladesh emerges as a curious case.


Chinese relations with Bangladesh:

  • Beijing began its diplomatic relations with Dhaka in 1976. China-Bangladesh relations began as a process of comprehensive cooperation for trade, economic cooperation, and technology exchange.
  • China was deepening relations with South Asian countries to form and maintain its hegemony in South Asia. That meshed well with Bangladesh’s “Look East” policy, which is essentially designed to lessen Dhaka’s dependence on India and open up new avenues of cooperation with China and Southeast Asia.
  • China replaced India as the top trade partner in Bangladesh in 2015.
  • As a member of China’s Belt and Road Initiative (BRI), Bangladesh has received Beijing’s support, including through 27 agreements signed when President Xi Jinping visited Bangladesh in 2016.
  • With the sole exception of Bhutan, which does not have diplomatic relations with China, all of India’s other neighbours have joined the BRI.
  • Meanwhile, India’s otherwise solid relationship with Bangladesh turned sour after August 2019, when Indian government completed the NRC in the north eastern state of Assam.
  • NRC is meant to verify citizenship and rule out illegal migrants from Bangladesh. Over 1.9 million people were left out of the Assam NRC, creating concern for Bangladesh over the possibility of a sudden influx of people forced out of the Indian state.
  • When the Indian home minister mentioned a plan for an all-India NRC in the Indian parliament, it caused waves of anxiety for Bangladesh. More subjectively, conflating the terms “illegal migrant” and “infiltrator” with “Bangladeshi” hurt the sentiments of Bangladesh.
  • A new citizenship law, the Citizenship (Amendment) Act (CAA), 2019 brought a new concern for Bangladesh, as India indirectly implied the poor treatment of religious minorities in Bangladesh and brought negative publicity for Dhaka. A feeling of detachment formed between India and Bangladesh.
  • Recently, Beijing granted duty free access to 97 percent of Bangladeshi products effective from July 1.
  • Bangladesh has also recently requested from China an infrastructure fund worth $64 billion. This request was made through the Investment Cooperation Working Group with China, which was established last year.
  • China has offered help and much-needed medical supplies to Bangladesh in order to deal with the COVID-19 pandemic on the condition that Bangladesh will agree to form sister city alliances with Chinese cities.
  • These alliances are considered a tool to develop people-to-people relations across borders by promoting commercial and cultural relationships.
  • China has also stated that Dhaka will be a priority should Chinese researchers develop a vaccine against the new coronavirus. This was reiterated by Hualong Yan, the deputy chief of mission at the Chinese Embassy in Dhaka, who said, “Of course, Bangladesh is our important friend and Bangladesh will surely get priority.”

Measures to be taken:

  • It is imperative for India to bolster ties with this all-weather friend, and there may not be a better time to do so than when Bangladesh is to celebrate the golden jubilee of its independence.
  • The two countries also see themselves converging around a lot of commonalities, not just as neighbours battling the scourge of terrorism, but as leading economic partners.
  • India should support Bangladesh’s fight against radical elements. India should also not allow the ideological inclinations of the ruling party to spoil the historic relationship between the two countries.
  • The industry in India needs to look for opportunities for collaboration in defence, such as in military hardware, space technology, technical assistance, exchange of experience, and development of sea infrastructure.
  • New Delhi should take a broader view of the changing scenario and growing competition in South Asia, and reach out to Dhaka with an open mind.
  • Connectivity offers a game-changing opportunity for India and Bangladesh. This is pivotal to India’s connectivity with its north-eastern region and with countries of ASEAN.
  • There is much room for course correction in Delhi and to shift the focus from legacy issues to future possibilities.



General Studies – 3


4.  In the farm laws debate, the focus should be on the exchequer-farm subsidies issue and the spending on farm subsidies. Critically Analyze. (250 words)

Reference: The Hindu


In the on-going debates around the 3 new pieces of agricultural legislations and the farmers’ demand for continuation of MSP questions have often been raised whether the government should be using the taxpayers’ money to provide subsidies to the farming community in this country.

The Government through the new legislations believes that many private markets will be establishedmiddlemen would disappear, farmers would be free to sell to any buyer and farm gate prices would rise.

  • THE FARMERS’ PRODUCE TRADE AND COMMERCE (PROMOTION AND FACILITATION) BILL, 2020: It allows farmers to sell their harvest outside the notified Agricultural Produce Market Committee (APMC) mandis without paying any State taxes or fees.
  • THE ESSENTIAL COMMODITIES (AMENDMENT) BILL, 2020: It deregulates the production, storage, movement and saleof several major foodstuffs, including cereals, pulses, edible oils and onion, except in the case of extraordinary circumstances.


However, logically, two further questions must be asked, but none of them has been, in any significant manner. First, why have successive governments used the exchequer to provide farm subsidies? And second, how large is India’s spending on farm subsidies as compared to those of other countries having substantial interests in agriculture.

  • Workforce involved: It should be obvious to any keen observer of the Indian economy that the country’s agriculture, which also supports the remaining rural workforce, was, forever, living beyond its means.
  • Agricultural share 1950: In 1950-51, agriculture’s share in the country’s GDP was 45%, the share of the workforce dependent on the sector was close to 70%.
  • Agricultural share 2020: Seven decades later, agriculture’s share in GDP is below 16%, but almost 50% of the country’s workforce depends on this sector.
  • Potential competitors: The squeeze on the agricultural sector becomes even more evident from its terms of trade vis-à-vis the non-agricultural sectors.
  • The ups and downs: Agriculture has been facingadverse terms of trade over extended periods since the 1980s.


  • Net yields: A quick comparison of the yields of the major crops in India with those of other countries confirms the dismal state of agriculturein this country.
  • Major crops and worldwide comparison: If one ranks countries in terms of their yields in wheat and rice — India’s two major crops — the country’s ranks were 45 and 59, respectively, in 2019.
  • Battle for survival: The above ranking would go down sharply if the areas recording high yields, such as Punjab and Haryana, are excluded.
  • Middle men and APMC: The existing marketing system dominated by the Agricultural Produce Market Committeeshas long been proved to be against the interests of the small farmers.
  • The two major providers of farm subsidies, namely, the U.S. and the members of the European Union (EU) gave much larger magnitudes of supportthan India did. America provided $131 billion in 2017 and the EU, nearly €80 billion (or $93 billion) in 2017-18. Thus, for 2017, India’s farm subsidies were 12.4% of agricultural value addition, while for the U.S. and the EU, the figures were 90.8% and 45.3%, respectively.

Economically weak farmers

  • India’s latest notification, for 2018-19, shows that the subsidies provided were slightly more than $56 billion.
  • In most of the recent years, the largest component of India’s subsidies ($24.2 billion, or 43% of the total) are provided to “low income or resource poor farmers”.
  • According to the agricultural census conducted in 2015-16, these are the farmers whose holdings are 10 hectares or less.

Need for a policy:

  • A comprehensive decision making body: Country needs an agricultural policythat addresses the challenges facing this sector in a comprehensive manner.
  • Policy making: The lack of a coherent policyfor agriculture must surely be regarded among the most remarkable failures of the governments in post-Independence India.

Issue of farm subsidies

  • Subsidy is a compensation: The state’s dole out is a price that the country pays for the failure of the policy makersto comprehensively address the problems of the farm sector.
  • Idea of subsidy: Instead of a comprehensive set of policies, successive governments have chosen to dole out subsidiesin order to ensure domestic food security and protecting rural livelihoods.
  • Distorted production: At the same time, wanton distribution of subsidieswithout a proper policy framework has distorted the structure of production and, consequently, undesirable outcomes in terms of excessive food stockpiling.
  • Survival kit: When subsidies have virtually been made the survival kit for Indian farmers, there is possibly a need to understand the magnitude of the government dole out, also by comparing it with those granted by other countries.

Way forward:

  • Farmers protest in India is an indication of larger complex issue. Pressure groups play a vital role in generating awareness and reaching a consensus and sustainable solutions to farmer’s problems.
  • NITI Aayog has suggested that all subsidies for agriculture, including fertilizer, electricity, crop insurance, irrigation and interest subvention be replaced by income transferwhich will give them the freedom to choose the best crop. Also, it will help in lifting farmers out of poverty and prevent misuse of resources and leakages in the system.
  • States have to be taken on board along with land records that will identify the beneficiaries. It has also suggested that supplementing the farm incomeis the best way forward.
  • Loan waiversbenefit only a small fraction of farmers thus Ministry of Agriculture must link allocations to states to reform measures undertaken by them in the farm sector. This will generate accountability and responsibility on part of states.


5.  The recent run-up in crypto values seems to be driven by the possibility that major corporations will start adding them to their balance sheets. Hence, we should tread carefully when it comes to crypto currencies. Examine. (250 words)

Reference: Live Mint


A cryptocurrency is a digital or virtual currency that uses cryptography for security. Cryptocurrencies use decentralized technology to let users make secure payments and store money without the need to use their name or go through a bank. They run on a distributed public ledger called blockchain, which is a record of all transactions updated and held by currency holders. The most common cryptocurrencies are Bitcoin, Ethereum, Ripple, and Litecoin.


Cryptocurrencies impacting economies and corporations:

  • A currency that is not based on any real economic activity, unlike a sovereign currency whose value is based on the relative value of a tradable basket of goods and services, cannot prima facie inspire much comfort.
  • Bitcoin’s value, astronomical even now at about $8,300 but much below January 2018’s stratospheric levels, is based on demand for a fixed supply of Bitcoins in the future it cannot exceed 21 million in number, of which 18 million has already been mined.
  • The security offered by encryption of cryptocurrency may be breached by hackers who are always lurking for any point of weakness. This may end up costing investors huge amounts of money because prices are attached to the currencies.
  • Cryptocurrency exists only in essence such that there are no physical coins and notes. As a result, there is, therefore, no central place where the currency can be deposited for safe keeping.
  • Lack of regulation of cryptocurrency means it is not under any control or supervision. This attracts more investors thereby increasing their chances of investing in this technology.
  • Cryptos are feared not just for their sheer speculative propensities, but also for their capacity to undermine sovereign currencies (the latter is an exaggerated apprehension).
  • Virtual currency is being traded anonymously over the Internet and used for a host of antinational and illegal activities, from terror funding to illicit trade of arms and drugs and so on.
  • The online use of this currency, was without any border restrictions or geographical constraints, resulting in danger to the integrity and sovereignty of the nation.
  • However, it does not make sense to go overboard and criminalise merely adventurous crypto speculators. There are no official or other data available that point towards misuse of cryptocurrencies for illegal ends
  • Crypto assets can be either useful hedges or useful forms of payment.
  • Institutions building dollar-linked stable coins is riskier, less transparent and more difficult to deal with than the dollar-based system itself, including the surrounding banks.
  • Stable coin peg to the dollar is unstable.
  • The extent stable coins and other crypto assets become a major part of the financial system, they will attract more regulatory interest. That in turn will limit many of their advantages over the traditional bank sector
  • Cryptocurrency regulation will provide legitimacy to “what is currently ambiguous,” and may lead to further rise in its valuation and end up contributing “to the investment bubble”.
  • Crypto transactions are not transparent to governments, allowing buyers and sellers to live outside the tax system.
  • There potential that big companies shall resort to crypto tax evasions and possibility that major corporations will start adding them to their balance sheets
  • Current black- and grey-market uses of crypto (for instance, getting funds out of China) is prevalent throughout.

Measures needed:

  • Governments the world over have banned cryptocurrencies as a medium of exchange, and India is no exception.
  • Yet in India, an estimated 30 lakh Bitcoins are reportedly in circulation. From a value of a little over ₹60,000 at the start of 2017, the Bitcoin now commands a value of nearly ₹6 lakhs, with a global market cap of $10.2 trillion. Cryptos are recognised in the US as an asset class.
  • Firms like Paypal, Uber, Visa and Mastercard have all signed up as part of the consortium to control it. Each has invested $10 million.
  • Criminalising possession of cryptocurrencies will impact such investments.
  • Bankers and investors now consider the cryptocurrency market at par with derivatives. The NYSE plans Bitcoin futures through a platform called Bakkt.


Legalising the crypto market can help beneficiaries emerge from the shadows and make productive investments in an economy witnessing a digital transformation. Crypto conduct calls for regulation, but not outright criminalization.


6. Not one co-operative bank placed under the RBI’s watchlist in the last decade has been revived. The regulator has neither the manpower nor the powers or a blueprint to revive the co-operative banks. Comment. Suggest measures to improve the conditions of co-operative banks. (250 words)

Reference: Indian Express  


Cooperative Banks continue to be important and the ideal organisations even in the changing economic environment, as participation and inclusion are central to poverty reduction. Cooperative organisations in many countries have exhibited greater resilience during global crises, underscoring their importance in macroeconomic and financial stability.


Current situation in India:

  • Reserve Bank of India (RBI) committee, in 2015, suggested that multi-state urban cooperative bankswith a business size of Rs. 20,000 crore or more be converted into full-fledged commercial bank, if the lender has no special need to remain a cooperative bank.
  • Co-operative banks in India are registered under the States Cooperative Societies Act.
  • The Co-operative banks are also regulated by the Reserve Bank of India (RBI)and governed by the Banking Regulations Act 1949 and Banking Laws (Co-operative Societies) Act, 1955.
  • In most countries, they are supervised and controlled by banking authorities and have to respect prudential banking regulations, which put them at a level playing field with stockholder’s banks.

How are cooperatives overseen?

  • Cooperative banks came directly under the RBI’s radar in 1966 but faced the problem of dual regulation.
  • The Registrar of Cooperative Societies (RCS) is in control of management elections and many administrative issues as well as auditing.
  • And the RBI brought them under the Banking Regulation Act as applicable to cooperative societies, which included all the regulatory aspects, namely, the granting of the licence, maintaining cash reserve, statutory liquidity and capital adequacy ratios, and inspection of these banks.
  • So, in a sense, urban cooperative banks have been under the radar of the RBI, but because of dual regulation, one always had a feeling that one did not have as much control over these banks in terms of super cession of boards or removal of directors, as the RBI has over private sector banks.
  • There was a proliferation of licences issued between 1991 and 1998. RBI to deal with the problems of cooperative banks issued a vision document in 2004-05 and stopped all licences of new branches and new bank entities.

Problems with Cooperative Banking in India:

  • Politicians in local as well as in state use them to increase their vote bank and usually get their representatives elected over the board of director in order to gain undue advantages.
  • The cooperatives in northeast states and in states like West Bengal, Bihar, and Odisha are not as well developed as the ones in Maharashtra and Gujarat. There is a lot of friction due to competition between different states, this friction affects the working of cooperatives.
  • A serious problem of the cooperative credit is the overdue loans of the cooperative banks which have been continuously increasing over the years.
  • Large amounts of overdue restrict the recycling of the funds and adversely affect the lending and borrowing capacity of the cooperative.
  • The cooperatives have resource constraints as their owned funds hardly make a sizeable portfolio of the working capital.
  • Raising working capital has been a major hurdle in their effective functioning.
  • What can the government and the regulator do to restore Bank customer’s faith?
  • Many depositors opt for cooperative banks because they give a higher interest rate.
  • The confidence comes from governance and regulation.
  • RBI has been urging cooperative lenders to act professionally. We need confidence-building for all banks, not just for cooperatives, but even NBFCs.
  • A recent study showed that small cooperatives are doing better in terms of non-performing assets and other aspects, while large urban cooperatives are not doing well.
  • Under the vision document, a Memorandum of Agreement was entered into by the RBI with each of the States, where the State accepted an audit by professional auditors, and constituted a Task Force for urban cooperative banks.

Way forward:

To look at how to supervise large cooperatives better:

  • The RBI has announced a scheme for voluntary transition of urban cooperative banks into small finance banks, in line with the recommendationsof a high-powered committee chaired by former Deputy Governor of the RBI, R. Gandhi.
  • RBI has given the choice to urban cooperative banks to convert to small finance banks.
  • That option is there for those players with more than Rs.50 crore capital and 15% capital adequacy. This is an incentive as they will then be able to grow their capital by issuing shares at a premium.
  • Malegam recommended having a board of management in actual control of operations as opposed to elected directors.
  • There must be a push for a fit and proper management, otherwise the elected director can get away with fraud.
  • RBI has also said that for urban cooperative banks there could be an umbrella organisation promoted by the banks themselves to raise capital as a joint stock company can from the markets.


7. Define the following terms in your own words with examples:

    1. Moral muteness
    2. Fortitude
    3. Probity
    4. Conflict of interest
  1. Moral muteness:

Moral muteness occurs when people witness unethical behavior and choose not to say anything. It can also occur when people communicate in ways that obscure their moral beliefs and commitments.

People are morally mute if they fail forthrightly to voice moral concern regarding issues about which they possess moral convictions. Hypocrites act deceptively, claiming moral convictions that they do not in fact hold. People who are morally mute are deceptive as well, but in a quite different way, because they fail to disclose and communicate overtly moral convictions that they in fact hold.

For example, in one study, psychologist Harold Takooshian planted fur coats, cameras, and TVs inside 310 locked cars in New York City. He sent a team of volunteers to break into the cars and steal the valuables, asking the “thieves” to act in an obviously suspicious manner. About 3,500 people witnessed the break-ins, but only 9 people took any kind of action. Of those who spoke up, five were policemen.

Indeed, only a relatively small percentage of people who see wrongdoing speak up. But, if we wish to be ethical people, we must strive to combat moral muteness in all areas of our lives.

  1. Fortitude:

It refers to the strength of mind that gives one the capacity to endure adversity with courage. Any individual engaged in public service will face multiple challenges in the fulfilment of their goals. A person with fortitude will not give up easily, and despite disappointing results or setbacks, will continually fight to improve the system.  adversities could be in form of “dilemmas”, “conflicts of interests”, “sound decision making”, “to face fake cases against an honest officer”, “time management”, “striking a balance between personal and professional life”, “to fight corruption”

E.g.: A situation where a disaster like an earthquake has taken place requires immense fortitude. This attitude ensures peace and attracts positivity. It leads to courageous people coming out to face the truth.

  1. Probity:

 Probity is “the quality or condition of having strong moral principles, integrity, good character, honesty, decency”. It is the act of adhering to the highest principles and ideals rather than avoiding corrupt or dishonest conduct. It balances service to the community against the self-interest of individuals

Probity has been described as a risk management approach ensuring procedural integrity. It is concerned with procedures, processes and systems rather than outcomes. The principles of probity, ethics and good governance operate on many levels – from, the individual, to the organization and on to the ‘watch-dog’.

According to Second Administrative Reforms Commission, apart from the traditional civil service values of efficiency, integrity, accountability and patriotism, it is necessary for civil servants to inculcate and adopt ethical and moral values including probity in public life, respect for human rights and compassion for the downtrodden and commitment to their welfare.

Probity in governance is the antithesis of corruption in public life. Probity is emphasized by the UN Convention against corruption. Probity is the evidence of ethical behaviour in a particular process. For Government employees and agencies, maintaining probity involves more than simply avoiding corrupt or dishonest conduct. It involves applying public sector values such as impartiality, accountability and transparency.

 Conflict of interest:

A “conflict of interest” involves a conflict between the public duty and private interests of a public official, in which the public official has private-capacity interests which could improperly influence the performance of their official duties and responsibilities.

In such a situation, judgement of an individual could be impaired. A conflict of interest can exist in many different situations. Conflict of interest is seen as a moral issue and not strictly a legal one accompanied by criminal culpability in India so it is hardly surprising that blatant violations are virtually seen every day.

Example: a public official whose personal interests conflict with his/her professional position. Instances of the largest shareholder appointing himself as CEO, deciding his salary and then appointing his son to a key post and higher royalties to the parent company are some of the serious conflict of interest issues in India which don’t receive necessary attention.

Another instance is that of a judge giving judgement in a case involving his own family member is a case of conflict of interest.

  • Join our Official Telegram Channel HERE for Motivation and Fast Updates
  • Subscribe to our YouTube Channel HERE to watch Motivational and New analysis videos