Why in news ?

• According to ‘Annual Bank Statistics of 2020’ released by Swiss National Bank (SNB), the Central Bank of Switzerland.
• India with Swiss Francs (CHF) 2.55 billion (INR 20,706 Crore) has been placed at 51st place in the list of foreign clients’ money in Swiss Banks during 2020. The United Kingdom (UK) topped the list with CHF 377 billion, followed by the US (152 billion).
• India was ahead of countries like New Zealand, Norway, Sweden, Denmark, Hungary, Mauritius, Pakistan, Bangladesh and Sri Lanka in terms of foreign clients’ money in Swiss banks.
• Funds held by Indian individuals and firms in Swiss banks raised over 2.55 billion Swiss francs (over Rs 20,700 crore) in 2020 marking the highest level in 13 years.
• The figures stood at a record high of nearly CHF 6.5 billion in 2006, after which it has been mostly on a downward path, except for a few years including in 2011, 2013, and 2017, as per the Swiss National Bank (SNB) data.

Why in news?

• Bengaluru has been named as the most liveable city of India, in the Ease of Living Index 2020, released by the Centre for Science and Environment (CSE).
• The Ease of Living Index 2020 is part of the report titled State of India’s Environment 2021. Bengaluru is followed by Chennai, Shimla, Bhubaneshwar, and Mumbai, as the top five best cities respectively.
• The report focused on four parameters to determine the ease of living index score of each city, which are: quality of life, economic ability, sustainability and citizens’ perceptions.
• Each city was rated out of 100 in all parameters.
• The Ease of Living Index 2020 is the second edition of the index after the first one was launched in 2018.

Why in news ?

• Former Deputy Chairman of the Planning Commission, Montek Singh Ahluwalia was named a member of a high-level Advisory Group formed by the World Bank and IMF.
• The group will be jointly led by Mari Pangestu, Ceyla Pazarbasioglu and Lord Nicholas Stern. The group was formed by the World Bank and IMF in the face of the dual crisis posed by the Covid-19 pandemic and climate change.
• Mari Pangestu is Managing Director for Development Policy and Partnerships, World Bank. Ceyla Pazarbasioglu is Director, Strategy, Policy and Review Department, International Monetary Fund. The group will also include Gita Gopinath. Gita Gopinath as an Economic Counsellor and Director of the Research Department at the IMF.

Syllabus:

Context:

• Government has announced the setting up of a new dfi. The new dfi is expected to build a portfolio of ₹5 trillion in the next three years.

Introduction:

• The development finance institutions (dfi) are usually owned by the government or public institutions. Dfis provide funds for infrastructure and large-scale projects. Large scale banks are often not interested in lending for such projects due to viability issues.
• The prime objective of dfi is the economic development of the country via financing infrastructure activities.
• Their cost of borrowings also reduces because of the attached government guarantees.

Background:

• In india, the first dfi was operationalized in 1948 with the setting up of the industrial finance corporation (ifc).
• Dfis in india like industrial development bank of india (idbi), industrial credit and investment corporation of india (icici) and ifci did play a significant role in aiding industrial development in the past with the best of the resources made available to them.
• However, after 1991 reforms, the concessional funding they were getting from reserve bank of india (rbi)and the government was no longer available in the subsequent years.
  • As a consequence, idbi and icici had to convert themselves into universal banks.
• While these dfis disappeared, a new set of institutions like idfc (1997), iifcl (2006) and more recently, national investment and infrastructure fund (niif) (2015)emerged to focus on funding infrastructure.
• In budget 2021, with the initial capital base of ₹20,000 crore as committed by the government, the new dfi, assuming a leverage of around 7 times, can lend up to ₹1.4 trillion

Need for dfi:

• Infrastructure building:inadequate and inefficient infrastructure leads to high transaction costs, which in turn stunts an economy’s growth potential.
  • Therefore, dfis makes sense as the centre government envisages mobilizing nearly ₹100 lakh crore for the ambitious national infrastructure pipeline.
• International precedent:irrespective of the level of development, countries across the world have set up development banks to finance key infrastructure and manufacturing projects.
  • For instance, the european investment bank (eib) acts like a dfi for europe.
• Lack of finance for infrastructure:although india has a long-term debt market for the government securities and corporate bonds cut, it is still out of reach of retail investors and unable to meet the large infrastructure financing needs.
• Economic crisis triggered by covid-19 pandemic:the covid-19 pandemic has exacerbated inequality, the poverty gap, unemployment, and the economy’s slowing down.
  • Thus, infrastructure building through dfis can help in quick economic recovery.

Way forward

• Mobilizing capital for dfi:to lend for the long term, dfi requires correspondingly long-term sources of finance.
  • In this context, the government may allow equity investment by institutions having a long term horizon like insurance companies, pension funds to augment the capital.
  • Further, dfi can be adequately capitalized by the sovereign-backed funds, alternative routes such as capital gains/tax-free bond issues, external borrowings, and loans from multilateral agencies.
• Administration of dfi:the ownership and organisation structure are critical and require greater clarity as this would have bearing on the functioning, flexibility, governance of the institution and its long-term sustainability.
• Functionality of dfi:it is critical to hire experts with a good understanding of infrastructure, policies, financing and risk management to work with the institution by offering market-driven lending packages.
• Reaching out retail investors:the government needs to set up institutions and network platforms to reach retail investors and incentivise and structure the bonds/instruments so that they are attracted to invest long-term in those instruments.
• Periodic review of dfi:periodic reviews are necessary to ensure that the dfi remains relevant by taking into account changing priorities of the economy and making consequential adjustments in the role.

https://www.thehindubusinessline.com/opinion/why-dfis-have-regained-relevance-today/article34913371.ece

Question-development financial institutions (dfis) are important intermediaries for finance required and economic growth. Discuss.

Why in news ?

• Jamaican sprinter Shelly-Ann Fraser-Pryce became the second-fastest woman of all-time behind 100 metres world record holder Florence Griffith-Joyner when she clocked 10.63 seconds at a meet in Kingston.
• American Griffith-Joyner still holds the women’s 100m world record of 10.49 seconds, set in Indianapolis in 1988, as well as the three fastest times ever, with 10.61 and 10.62, also in 1988.

Why in news ?

• The Central European University (CEU) Open Society Prize for 2021 has been awarded to KK Shailaja, the former Health Minister of Kerala. The award was presented to her in recognition of “her determined leadership and community-based public health work, saving lives during the pandemic”.
• She demonstrates to the world that determined leadership, community-based public health and effective communication can save lives. CEU was founded in 1991 by George Soros, a Hungarian-born political activist and billionaire philanthropist based on his vision of a unique institution that would train future generations of scholars, professionals, politicians, and civil society leaders “to contribute to building open and democratic societies that respect human rights and adhere to the rule of law”.

Why in news ?

• The Minority Affairs Minister, Mukhtar Abbas Naqvi launched nationwide “Jaan Hai To Jahaan Hai” awareness campaign on Corona vaccination for rural and remote areas.
• The aim of this campaign is to aware people of the Corona vaccination and to crush rumours and apprehensions related to Corona vaccination. It has been launched by the Ministry of Minority Affairs in association with various socio-educational organizations, NGOs, and Women Self Help Groups.
• Mukhtar Abbas Naqvi urged members of Central Waqf Council, Maulana Azad Education Foundation, and other social and educational institutions to take part in this awareness campaign. India is running the world’s largest Corona vaccination drive.

Why in news ?

An international group of archaeologists have discovered new human species in Israel which is being considered as a missing piece in the history of human evolution.

About:

• Excavations were done at Israeli site of Nesher Ramla.
• Archaeologists have recovered a skull which might represent a late-surviving example of a distinct Homo population.
• It is expected that, they lived about 420,000 to 120,000 years ago.

Why in news ?

• New Zealand defeated India to win the first ICC World Test Championship. New Zealand chased down the target of 139 to win the first-ever World Test Championship final with eight wickets in hand.
• The last day of the match was played on June 23, 2021. The match saw 6 days play in place of the regular 5 days due to the rain factor. Kyle Jamieson (NZ) has been adjudged as the “Player of the match”, while Kane Williamson (NZ) is the “Player of the series”.
• The first test championship began in 2019 with the finals being played in 2021.
• The top three teams, as a result, are: First: New Zealand; Second- India; Third- Australia.
• The final match was played at Ageas Bowl Stadium (Rose Bowl Stadium) in Southampton, England.
• The next Test Championship will be held between 2021-2023

Why in news ?

• For the first time, NTPC won recognition as India’s Best Employers among Nation-Builders 2021. It has been recognized as the ‘Great Place to Work’ for the 15th straight year by the Great Places to Work Institute. It has been ranked at 38th. It was ranked 47 last year.
• It also won it’s first-ever recognition of India’s Best Employers among Nation-Builders 2021. NTPC, a Maharatna Community and Public Sector Unit work under the Ministry of Power.
• The PSU has also won the CII HR Excellence Role model award in March 2021. It is the highest award in the field of people management in the country.
• The ‘Great Place to Work’ certification is recognised worldwide and is considered the gold standard in identifying and recognizing great workplaces with high trust and high-performance cultures. It is the most definitive ‘Employer of Choice’ recognition certification that the organization aims to achieve.