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Current Affairs > English > 2019-01-04 > Editorial



Capital requirements for banks

Why in news?

A parliamentary panel asked the central bank to ease its rules on capital requirements for banks so that they can increase lending.

·         Such stringent norms stipulated by the RBI (Reserve Bank of India) for our banks is unrealistic and unwarranted, said a report tabled in parliament by the Parliamentary Committee on Finance.

·         The report comes after the government and some of the board members of the RBI have put pressure on the central bank to relax capital requirements for banks as they seek to boost credit and economic growth.

·         Former RBI governor Urjit Patel opposed the government’s demand for lowering capital requirements and warned about the need for a cushion to offset unexpected risks.

·         Indian banks are required to maintain a minimum capital to risk weighted asset ratio (CRAR) at 9%, against the global Basel-III requirement of 8%.

·         On top of that, they have to keep a capital conservation buffer that is supposed to climb to 2.5% by March 2019.

·         The rollback of additional capital requirements could release about ₹5.34 trillion ($76 billion) into the economy by releasing capital for lending.

Keywords: Parliamentary Committee, RBI, Basel-III, capital to risk weighted asset ratio (CRAR).


Science and Tech

Ultima Thule

Why in news?

The New Horizons spacecraft flew past Ultima Thule, which was discovered via telescope in 2014 and is the farthest and potentially oldest cosmic body ever observed by a spacecraft.

About Ultima Thule

Ultima Thule, an icy celestial body, is aptly shaped like a giant snowman, NASA scientists have announced.

Faint light

Ultima Thule’s surface reflects light about as much as garden variety dirt, as the sun’s rays are 1,600 times fainter there than on the earth.

The body completes its own rotation in about 15 hours. NASA dubbed the larger lobe Ultima, and the other, which is about three times smaller, Thule.

This is the first object that we can clearly tell was born this way, instead of evolving as a sort of “bi-lobe.”

This really puts the nail on the coffin now. This is how these kinds of objects in many cases form.

Some 4.5 billion years ago a cloud of frozen pebbles began to join forces, gradually forming two bodies — Ultima and Thule.

Slowing turning, they eventually touched at each other at an extremely slow speed — maybe just one to a few kilometres per hour.

Keywords: Ultima thule, NASA, new horizons.

Andhra Pradesh

A.P No.1 in Ease of Doing Business

Why in news?

Andhra Pradesh stood first in the 2018 Ease-of-Doing Business (EDB) Index-Attractiveness to Investors, Business Friendliness and Competitiveness Policies (EDB Index ABC) rankings.

·         The State was in the sixth position last year and it reached the top in 2018 due to a slew of reforms initiated by the government under the guidance of the Asia Competitiveness Institute (ACI).

·         The rankings were announced by Tan Khee Giap, Co-Director of Asia Competitiveness Institute (ACI) in Singapore.

·         AP is followed by Maharashtra and Delhi.

The EDB Index ABC

·         The EDB Index ABC was a bottom-up approach that took into account the business perspectives at the micro-level with the help of survey data and combining it with the publicly available hard data.

·         The index captured the business environment at the sub-national level on the basis of 72 hard and soft indicators.

·         Unlike the World Bank-Department of Industrial Policy and Promotion rankings, the EDB Index ABC employed both de facto and de jure factors to measure the EDB in 21 sub-national economies of India.

Keywords: Ease of doing business (EDB), Tan Khee Giap, Asia Competitiveness Institute (ACI).