• Prime Minister Narendra Modi will flag off the world’s longest river voyage — ‘Ganga Vilas Epic’ cruise from Varanasi to Dibrugarh on January 13.
• The longest river cruise in the world will commence its first journey on January 13, 2023 from PM’s parliamentary constituency.
• According reports, Ganga Vilas Cruise will travel from Kashi to Dibrugarh. It will reach Dibrugarh, Assam via Bangladesh, Patna and Kolkata from Varanasi.
• The river cruise will cover a total of 3200 kilometres through the river route and will reach Dibrugarh on March 1, after a 48-day journey.
• Around 32 Swiss nationals will be onboarding the cruise.

What are the major National waterways in India?

• The Inland Waterways Authority of India Act, 1985 empowers the Government to declare waterways with potential for development of shipping and navigation as National Waterways and develop such waterways for efficient shipping and navigation. 5 National waterways declared under it are as follows.

National Waterway-1

• Allahabad-Haldia
• Ganga-Bhagirathi-Hooghly River system
• 1620 km

National Waterway-2

• Dhubri-Sadiya
• River Brahmaputra
• 891 km

National Waterway-3

• Kottapuram-Kollam
• West Coast canal along with Udyogmandal and Champakara Canals.
• 205 km

National Waterway-4

• Kakinada-Puducherry
• Rivers Godavari and Krishna
• 1078 km
• National Waterway-5
• East Coast canal integrated with Brahmani and Mahanadi delta rivers.
• 588 km
• Besides these five waterways, National Waterway Act, 2016 declared 106 additional national waterways in India.

Inland Waterways Authority of India:

• It came into existence on 27th October 1986 for development and regulation of inland waterways for shipping and navigation.
• It primarily undertakes projects for development and maintenance of IWT infrastructure on national waterways through grants received from the Ministry of Shipping.
• It is headquartered at Noida with regional offices at Patna (Bihar), Kolkata (West Bengal), Guwahati (Assam) and Kochi (Kerala) and sub-offices at other places throughout India.

Why in news?

• The Supreme Court upheld the government’s 2016 decision to demonetise currency notes of Rs 500 and Rs 1,000 by a 4:1 majority.

What is demonetisation?

• Demonetization is the process through which a nation’s economic unit of exchange loses its legally enforceable validity.
• It is a drastic intervention into the economy that involves removing the legal tender status of a currency.
• It arises whenever the official currency is changed. The existing kind or types of currency are withdrawn through circulation and supplanted with new currency.

Why countries opt for demonetisation?

• To address issues like hyperinflation and to stabilize the currency
• To eliminate negative situations or actions like counterfeit currency, terror, and tax fraud
• To introduce a new monetary system in some circumstances
• To facilitate trade and access to markets
• To push informal economic activity into more transparency

Demonetisation in India

• Previous demonetisation – Demonetisation has been implemented twice:
• In 1946, RBI demonetized 1000- and 10000-rupee notes.
• In 1978, the government demonetized 1000-, 5000-, and 10000-rupee notes in order to curb the menace of black money.
• 2016 demonetisation
• On November 8, 2016, PM Modi announced the decision of the government to demonetise currency notes of Rs 500 and Rs 1,000 in a bid to tackle corruption.

Why was demonetisation challenged?

• 58 petitions challenging various aspects of the government’s note ban decision was filed in the SC.
• These petitioners contended that the procedure prescribed in Section 26(2) of RBI Act, 1934, was not followed.
• Section 26(2) of the RBI Act states that on recommendation of the Central Board of the RBI, the Central Government may declare that any seriesof bank notes of any denomination shall cease to be legal tender.
• The petitioners argued that the word “any” would have to be given a restricted meaning.
  • e., RBI has power only to recommend “a particular series” of notes. It does not have powers to demonetise “all series” of a particular denomination.
• They also argued that the demonetisation notification is liable to be struck down applying the test of proportionality.
• The four ingredients of the proportionality test to be satisfied are:
  • legitimate purpose; rational connection with the purpose; necessity; whether the action taken is proportional or balanced.
• They also contended that the entire decision-making process was flawed in law as the proposal should have been emanated from RBI Board, not from the Centre.

What is the Supreme Court’s verdict on demonetisation?

• In its majority 4:1 judgment, it was held that the Centre’s notification dated November 8, 2016, was valid and satisfied the test of proportionality.
• The court held that the central government’s decision was after RBI board’s approval which shows in-built safeguard against centre’s powers.
• The Centre is required to take the action after the consultation with the Central Board and there is an inbuilt safeguard.
• Decision-making process cannot be faulted merely because the proposal emanated from the centre.
• The hardships faced by citizens following demonetisation six years ago cannot be a ground to reverse the decision.
• The individual interests must yield to the larger public interest sought to be achieved by the impugned notification.
• On creating a fresh window for return of demonetised currency, the majority verdict said it did not have the expertise to frame such a scheme.

• The Pravasi Bharatiya Samman Award (PBSA) is the highest honor conferred on overseas Indians during the Pravasi Bharatiya Divas Convention, which will be held from January 8 to 10 in Indore this year.
• The award is presented by the President of India as part of the Pravasi Bharatiya Divas Convention to Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), or organizations established and run by NRIs or PIOs in recognition of their outstanding achievements both in India and abroad. A jury-cum-awards committee, with the Vice President as the chairman and the External Affairs Minister as the vice-chair, considered the nominations and unanimously selected the awardees.

Notable Recipients

• Guyana’s President Mohamed Irfaan Ali: Ali, who was sworn in as the ninth President of Guyana in August 2020, belongs to an Indo-Guyanese Muslim family. He will also be the chief guest at the convention.
• US-based businessman Darshan Singh Dhaliwal: Dhaliwal, a US-based Non-Resident Indian, was sent back from Delhi’s IGI Airport on the night of October 23-24, 2021, over his alleged involvement in organizing a langar (community meal) for protesting farmers at Delhi borders against the three farm laws, which have since been withdrawn. Dhaliwal is the younger brother of Surjit Singh Rakhra, who was a minister in the previous Akali Dal government in Punjab.
• DSB Group CEO Piyush Gupta: Gupta is the CEO of DSB Group, a leading business group in India.
• Poland-based businessman Amit Kailash Chandra Lath: Lath assisted Indian authorities during the evacuation of students during Russia’s invasion of Ukraine.
• FedEx Corporation CEO Rajesh Subramaniam: Subramaniam is the CEO of FedEx Corporation, a global courier delivery services company.
• Indian-Australian economist Chennupati Jagadish: Jagadish is a renowned economist with a focus on technology and innovation.
• Kannam Ambalam, associate professor in Ethiopia-based Wolega University: Ambalam is credited with building water springs and small bridges in Ethiopia.
• Reena Vinod Pushkarna, an Israel-based chef: Pushkarna was part of the team that prepared dishes for Indian Prime Minister Narendra Modi during his visit to Israel in 2017.

Importance of the PBSA

• The PBSA recognizes the contributions and achievements of NRIs and PIOs to their respective fields, as well as their efforts in maintaining a strong connection with their homeland. It is an important event for the Indian diaspora, as it provides a platform for NRIs and PIOs to connect with their roots and contribute to the development of India.

The PBSA also serves as a way for the government of India to engage with the Indian diaspora and strengthen its ties with NRIs and PIOs. The chief guest at this year’s convention, President Mohamed Irfaan Ali, is a testament to the importance of the PBSA and the role of the Indian diaspora in the development of their home country.

Why in News?

• Recently, the Ministry of Rural Development under the Deendayal Antyodaya Yojana – National Rural Livelihoods Mission (DAY-NRLM) has launched the Prajjwala Challenge.

About:

• Aim:To invite ideas, solutions and actions that can transform the rural economy. This Mission is looking for ideas which are broadly categorised into
• Focus on Women and the Marginalized section of the community
• Localised Models
• Sustainability
• Cost Effective solutions
• Multi-sectoral ideas and solutions
• Shortlisted ideas will be acknowledged by the Mission and will be provided mentorship support from an expert panel and incubation support to scale up. The top 5 ideas will be rewarded with Rs. 2 Lakh each.

What is DAY-NRLM?

• It is one of the flagship poverty alleviation programs which aims at creating efficient and effective institutional platforms for the rural poor, enabling them to increase household income through sustainable livelihood enhancements and improved access to financial services.
• Key Features:
• Universal Social Mobilisation: At least one woman member from each identified rural poor household, is to be brought under the Self Help Group (SHG) network in a time bound manner.
• Participatory Identification of Poor (PIP):All households identified as poor through the PIP process is the NRLM Target Group and is eligible for all the benefits under the programme.
• Community Funds as Resources in Perpetuity: NRLM provides Revolving Fund (RF) and Community Investment Fund (CIF) as resources in perpetuity to the institutions of the poor, to strengthen their institutional and financial management capacity.

Why in News?

• India and Austria will sign a migration and mobility agreement.

Major Highlights

• India will sign a “Comprehensive Migration and Mobility Partnership Agreement” (MMPA)with Austria.
• It has similar mobility agreements with France, the United Kingdom, Germany, and Finland.
• Relevance: India has been keen to finalise these agreements with European countries as a stepping stone to resolving issues over the long-pending India-European Union (EU) Free Trade Agreement and facilitating Indian professionals working in these countries, the European countries also see them as a way to curb illegal immigration from India.
• This is a much-needed agreement, especially in view of the sharp increase in illegal migration Austria was confronted with last year, including over 15,000 illegal migrants from India with practically no chance of asylum.
• The agreement is now a useful tool to combat illegal migration together, as it enables the swift return of illegal migrants.
• It will regulate multiple entry visas for professionals and student exchange programmes, and will be reviewed regularly by a Joint Working Group (JWG).

Diplomatic relations between India and Austria

• They were established in 1949. Traditionally India-Austria relations have been warm and friendly.
• There has been a regular exchange of high-level visits between the two countries
• Austria, a member of the European Union since 1995 is an important link for India in its relationship with Europe, especially with countries of central and Eastern Europe.
• India’s main exports to Austria are Footwear, Textiles, Articles Of Leather, Articles Of Apparel And Clothing Accessories, Vehicles, Rolling Stock (And Parts And Accessories Thereof), Machinery And Mechanical Appliances (And Parts Thereof), Electrical Machinery And Equipment, Organic Chemicals and Pharmaceutical Products.

• According to data from the Centre for Monitoring Indian Economy (CMIE), India’s unemployment rate reached 8.30% in December, the highest level in 16 months. This marks an increase from the 8.00% recorded in November. The urban unemployment rate also saw a rise, going from 8.96% in November to 10.09% in December. However, the rural unemployment rate saw a slight decrease, going from 7.55% in November to 7.44% in December.
• Haryana recorded the highest unemployment rate at 37.4%, while Odisha had the lowest at 9%. In addition to Haryana, seven other states saw double-digit unemployment rates, including the national capital.

Top 5 States with Highest Unemployment Rates in December:

• Haryana: 37.4%
• Rajasthan: 28.5%
• Delhi: 20.8%
• Bihar: 19.1%
• Jharkhand: 18%

Top 5 States with Lowest Unemployment Rates in December:

• Odisha: 0.9%
• Gujarat: 2.3%
• Karnataka: 2.5%
• Meghalaya: 2.7%
• Maharashtra: 3.1%
• Despite the increase in unemployment, Mahesh Vyas, Managing Director of CMIE, noted that the rise in the unemployment rate was “not as bad as it may seem,” as it came alongside a significant increase in the labor participation rate, which reached 40.48% in December, the highest in 12 months. Vyas also pointed out that the employment rate had increased to 37.1% in December, the highest since January 2022.
• According to data from the National Statistical Office (NSO), the unemployment rate had actually declined to 7.2% in the July-September quarter, compared to 7.6% in the same period the previous year.
• While the unemployment rate in India reached a 16-month high in December, there are still some positive indicators in the labor market. The increase in the labor participation rate and the employment rate suggest that more people are actively seeking and finding work. It will be important to continue monitoring these trends in the coming months to see if the unemployment rate begins to improve.

• The Reserve Bank of India (RBI) has named the top three lenders in India – State Bank of India (SBI), ICICI Bank, and HDFC Bank – as Domestic Systemically Important Banks (D-SIBs), or banks that are too big to fail. In other words, these banks are interconnected entities whose failure could potentially impact the entire financial system and cause instability. As a result, they are subject to closer supervision and regulation by the RBI.

What is a D-SIB?

• A D-SIB is a bank that is considered to be so important to the financial system that its failure could cause significant disruption. As a result, these banks are required to maintain higher capital buffers to protect against potential losses and ensure their stability. In India, the RBI has established a framework for dealing with D-SIBs, which requires the central bank to disclose the names of designated banks starting from 2015 and place them in appropriate buckets based on their systemic importance.

How are D-SIBs regulated?

• In addition to the usual capital conservation buffer, D-SIBs in India are required to maintain additional Common Equity Tier 1 (CET1) capital. According to the RBI’s latest press release, SBI must maintain an additional 0.60% CET1 as a percentage of its risk-weighted assets, while ICICI Bank and HDFC Bank must maintain an additional 0.20% each.
• Foreign banks with a branch presence in India that are designated as Global Systemically Important Banks (G-SIBs) must also maintain additional CET1 capital surcharges in India as required by the rules for G-SIBs.

Why were only three banks designated as D-SIBs?

• The RBI announced SBI and ICICI Bank as D-SIBs in 2015 and 2016, respectively. Based on data from banks as of March 31, 2017, HDFC Bank was also classified as a D-SIB, along with SBI and ICICI Bank. The current update is based on data from banks as of March 31, 2022.
• In 2015, global rating agency Moody’s questioned the RBI’s decision to initially designate only two banks as D-SIBs, stating that the central bank’s approach was “less stringent” than in other jurisdictions and was therefore credit negative.
• The RBI’s designation of SBI, ICICI Bank, and HDFC Bank as D-SIBs highlights the importance of these banks to the financial system in India. As a result, they are subject to additional regulatory requirements and closer supervision to ensure their stability and protect against potential losses.

Why in News?

• Recently, the Parliament has been informed by the finance minister that banks had written off bad loans worth 10,09,511 crore during the last five financial years.

More about the news

• Out of the total 10.1 lakh crore, only 1.32 lakh crore has been recovered.
• This comes to only about 13% as a percentage of write-offs.

Background 

• 2009: The RBI brought out norms that set out categories of NPAs and what banks must do as these bad loans age.
• The RBI’s master circular in 2009 started off the journey on NPA recognition.
• It states that if an asset has been ‘doubtful’ for a certain period, the value of that asset must be provided for in parts, as the asset ages.
• 2014-15:India became more stringent in recognising loans as ‘bad’ in the 2014 to 2015 period.
• The periodic asset quality review was introduced.
• RBI stepped in to prevent evergreening of loans.
• It means lending more to an already stressed asset in the hope that it could be brought back to its feet.
• 2021: There was a revision in 2021 which made recognition far more stringent.
• Even if the asset is standard and there is no problem with it, banks are expected to make provisions depending on the risk element for that sector.
• Like home loans with teaser rates are at greater risk than those that are not. Hence provisions have to be made for such loans.
• A National Asset Reconstruction Company Ltd. (NARCL) was announced in the Union Budget for 2021-2022 to resolve stressed loans amounting to about 2 lakh crore in phases.

What is a Bad loan and NPA?

• What is a Bad Loan?
• A bad loan is that which has not been ‘serviced’ for a certain period.
• Servicing a loan is paying back the interest and a small part of the principal depending on the agreement between bank and borrower.
• Bad loans are where there is less certainty that the loan would be paid back in full.
• What is NPA?
• A non performing asset (NPA) is a loan or advance for which the principal or interest payment remained overdue for a period of 90 days.
• Types of NPA:
• Sub Standard:  A sub-standard asset is one that is classified as an NPA for a period not exceeding twelve months.
• Doubtful:A doubtful asset is one that has remained as an NPA for a period exceeding twelve months.
• Loss: A loss asset is one where loss has already been identified by the bank or an external institution, but it is not yet completely written off, due to its recovery value, however little it may be.

What is the need to recognise NPAs?

• Health of the financial system: In the banking system, the government and regulatory authorities need to have a good view of how healthy the financial system is.

• • A weak financial system can eventually ruin lives and livelihoods.

Causes and challenges related to Non-Performing Assets (NPA)

• Lack of SWOT analysis: The bank lends to the corporations/persons etc. whose creditworthiness is not guaranteed and thus taking a lot of high risks.
• Lack of understandability:The banks are not able to diminish their losses by a complete understanding of the sufficiency of the bank in terms of the loan or capital loss at a specific time frame.
• Redirection of funds: The funds are being redirected elsewhere by the promoters of the companies.
• Investing in non viable projects: The banks that try to fund projects that are not viable results in high NPAs.
• Lack of information:Not enough means to collect as well as distribute credit information in between the commercial banks.
• Non-efficient recovery of the debts from the overdue borrowers.
• Delay in legal procedures: Even if an NPA is fully recognised in a particular year, the fastest of legal processes may not resolve for full repayment.
• Delays in post-haircut payments: Not only do banks take significant haircuts when it comes to recovery but the amount to be repaid post-haircut may be delayed.
• Provisioning:The bad loans lead to banks having to save a part of their operating revenue to account for bad loans which is called Provisioning.
• Downfall in the share markets: Any reduction in the perceived valuation of the banks might lead to loss of share value of the banks, leading to general downfall in the share markets. This could result in wiping out shareholders’ wealth from the financial markets.

Impact of NPAs on Financial Operations 

• This reduces the profits of the banks.
• This reduces a bank or financial institution’s capital adequacy. 
• The banks have become averse to giving loans and taking risks of zero percent. Thus, the creation of fresh credit is debarred. 

The banks start concentrating on the management of credit risk instead of the bank becoming profitable.

• Prabodh Saxena, a 1990-batch IAS officer, has been appointed as the Chief Secretary of Himachal Pradesh. He replaces RD Dhiman, who retired on 31st December 2022 and has been appointed as the State Chief Information Commissioner.
• Born in 1965 in Uttar Pradesh, Saxena is a graduate in economics and law. He was holding the charge of Additional Chief Secretary (Finance, Planning, Economics and Statistics).
• Saxena has been elevated ahead of five officers senior to him — Ram Subhag Singh (a 1987-batch officer), Nisha Singh (1987), Ali Raza Rizvi (1988), Sanjay Gupta (1988) and K Sanjay Murthy (1989).

• The Himachal Pradesh government has set up a fund of Rs 101 crore to sponsor their higher education, vocational education and overall financial wellbeing.
• The Government has set up the Chief Minister’s Sukhashray Sahayata Kosh with an outlay of Rs 101 crore with immediate effect.
• It will safeguard their right to live a dignified and cared-for life like any other individual.
• The scheme is broadly aimed at taking care of the financial needs of the orphan children and destitute women till they start earning.
• Apart from funding their higher education after Plus II in any stream or institution of their choice, the fund will take care of their daily needs as well.
• It’s going to be like a parent-child relation between the government and the beneficiaries of this scheme.
• The government will even provide pocket money to the beneficiaries, pay for the vacation if the child wants to have one.
• As per the officials, around 6,000 children and destitute women have been identified who would benefit from the scheme.
• Sukhu had visited the Balika Ashram at Tutikandi in Shimla immediately after swearing-in as the Chief Minister. “When I was in school, a boy would come from an orphanage. I struck friendship with him and would often invite him home. It was then I realized that how deprived are they of love and affection and how they need to be look after,” said Sukhu.
• Apart from the government’s contribution, the government will go for the CSR
• 40 Congress MLAs will donate one lakh each to the fund. The government will also request the BJP MLAs to Contribute.