DNA (Daily News Analysis) – 21 Sept 2022

News 1: Issues with the FinTech Industry

• Reserve Bank of India (RBI) Governor Shaktikanta Das on Tuesday flagged concerns related to digital lending including a spate of complaints regarding usurious interest rates, unethical recovery practices and data privacy issues and emphasized the need for the fintech industry to focus on governance, business conduct, regulatory compliance and risk mitigation to ensure that customers were protected even as their needs were served.

Digital lending and privacy:

• RBI mandated digital lending platforms to disclose the names of the banks/ NBFCs upfront on whose behalf they were providing credit.
• The regulatory norms aim to balance customer protection and business conduct on the one hand and support innovation on the other
• Innovations must be responsible, enhances the efficiency and resiliency of the financial system while benefitting the consumers.
• Robust internal product and service assurance frameworks, together with fair and transparent governance, would go a long way to safeguard the interests of customers and ensure long-term sustainability of the fintech entities themselves.

Fintech:

• The term Fintech (Financial Technology) refers to technology-enabled innovation in financial services that could result in new business models, applications, processes or products with an associated material effect on the provision of financial services.
• As per EY Fintech Adoption Index, 2017, India ranks 2nd in terms of fintech adoption.

Benefits of Fintech:

• Designing suitable financial products that cater to specific needs of the financially excluded population
• Digital onboarding and boosting the quantum of investments
• Improves the quality of traditional financial institutions by increasing efficiency and productivity
• Ease of convenience and reduced costs is the power of fintech

Risks related to fintech:

• Systemic risks may arise due to unsustainable credit growth, increased interconnectedness, Development of new activities beyond the supervisory framework
• Data confidentiality and customer protection
• Financial risks manifested by lower profitability
• Cross border legal and regulatory issues might affect the performance

News 2: RBI lifts PCA restriction on Central Bank of India

Background:

• The Reserve Bank of India (RBI) has decided to take Central Bank of India out of the Prompt Corrective Action (PCA) restrictions subject to certain conditions and continuous monitoring.

Prompt Corrective Action:

• Prompt Corrective Action or PCA is a framework under which financial institutions with weak financial metrics are put under watch by the RBI.
• It can be applied to both RBI and NBFCs
• The central bank will track three indicators
  • Capital To Risk-Weighted Assets Ratio (CRAR) – It is bank’s available capital expressed as a percentage of a bank’s risk-weighted credit exposures.
  • Tier I leverage ratio – It is the relationship between a banking organization’s core capital and its total assets.
  • Net Non-Performing Assets (NNPAS) Including Non-Performing Investments (NPIS). NPA are loans for which the principal or interest payment remained overdue for a period of over 90 days

News 3: Southwest monsoon begins early withdrawal in Rajasthan

Background:

• September 30 is considered the final day of the season for the entire country; while India has recorded 7% more rainfall than normal, the southern peninsula and central parts have had the bulk of the excess at 29% and 33%, respectively.
• The withdrawal of the monsoon was based on meteorological conditions such as an anti-cyclonic circulation (dry air that is the opposite of a cyclone), the absence of rain in the past five days and the water vapour imagery indicating dry weather conditions over the region.

News 4: China remains formidable challenge, says Navy chief

Background:

• China remains a formidable challenge and has increased its presence not only along India’s land borders, but also in the maritime domain by leveraging anti-piracy operations to normalise its naval presence in the Indian Ocean Region (IOR)

Presence of Chinese Navy:

• The Navy chief noted that China had maintained continuous presence in the IOR since 2008 using anti-piracy operations “as the reason”.
• China now had a base in Djibouti and was also involved in the development of various ports in the IOR, Sri Lanka, Myanmar, Pakistan and many other countries.

News 5: The ‘triple dip’ La Niña, and its likely impact in India

Background:

• La Niña refers to the ENSO phase in which sea-surface temperatures are cooler than normal. Continuance of La Niña into 2023 is not bad news from the Indian standpoint, but it is not the same for other regions.
• The ongoing La Niña phase of the equatorial Pacific Ocean has just been predicted to persist for at least another six months, making it one of the longest ever La Niña episodes in recorded history. It is also only the third episode since 1950 to stretch into a third year.

La Nina and El Nino:

• The periodic warming and cooling of surface waters in the equatorial Pacific Ocean — a phenomenon described as El Niño Southern Oscillations, or ENSO — is known to trigger widespread changes in atmospheric conditions, and has a major influence on global weather patterns, including the Indian monsoon.
• La Niña refers to the ENSO phase in which sea-surface temperatures are cooler than normal. The warmer phase is known as El Niño. 
• El Niño and La Niña episodes typically last for about nine months to a year.
• They usually develop in the March-June period and are the strongest during winter (November-January in the northern hemisphere), before weakening or dissipating by March or April of next year.
• The current La Niña episode has already surpassed that in length. Having started in September 2020, it has prevailed for the last 24 months, and looks set to continue for another six months, and has thus been classified as a ‘triple dip’ La Niña.
• El Niño episodes occur more frequently and are usually associated with more impactful weather events. La Niña, on the other hand, has a longer run.
• That is why multi-year La Niña events, those that continue for more than 12 months, are quite common. An El Niño is more likely to be a single-year event.
• Prolonged La Niña events in those instances could be explained by the fact that the amount of accumulated heat in the oceans was higher, and therefore took a longer time to dissipate.

Likely impact:

• In the Indian context, La Niña is associated with good rainfall during the monsoon season. This is the opposite of El Niño which is known to suppress monsoon rainfall. Thus, a continued spell of La Niña could lead to expectation of another year of good, or normal, rainfall during the monsoon.
• But, even though powerful, ENSO condition is only one of the several factors affecting monsoon rainfall in India. There is no one-on-one correlation between the ENSO condition and the amount of rainfall. Also, the influence of ENSO is at a macro level. There are wide variations in rainfall at the local level, which are getting exacerbated by climate change. The continuance of La Niña further into 2023 is not bad news from the Indian standpoint.
• In most parts of the United States, for example, La Niña is associated with very dry winters. In Australia and Indonesia, and generally in the tropical region, La Niña is expected to bring more rainfall.
• The widespread drought in the United States and flooding in eastern Australia this year could have been a result of the prolonged La Niña. The excessive rainfall in Pakistan, which is experiencing its worst flooding disaster, can also be blamed in part on La Niña.
• In its latest bulletin, the World Meteorological Organization (WMO) said the worsening drought in the Horn of Africa and southern United States carried the “hallmarks of La Niña”, as did the “above average rainfall in southeast Asia and Australasia”. It said that the persistence of La Niña was most likely to result in a worsening of the drought in Africa.

Climate change link:

• The occurrences of El Niño or La Niña are not very regular. Sometimes they emerge every two years, at other times there has been a gap of even seven years. Historical records do not go very far in the past.
• As a result, the natural variability of ENSO is not understood very clearly. And when the natural variability itself is not clear, the influence of global warming is difficult to quantify.
• There have been suggestions that climate change is increasing the frequency and intensity of El Niño and La Niña episodes, but the question is not entirely settled.
• A part of the reason is the fact that trade winds play a very important role in triggering ENSO events. And the changes in the strength of trade winds are not easily explained by global warming.
• During La Niña years, the colder surfaces allow the oceans to absorb more heat from the atmosphere. Consequently, the air temperatures tend to go down, producing a cooling effect.
• However, as pointed out by the WMO, this is not enough to reverse or neutralize the impacts of global warming.

News 6: Nutrition rating stars set to appear soon on food pack labels

Background:

• The Food Safety and Standards Authority of India (FSSAI), the country’s apex food regulator, has released draft notification for front-of-pack labelling to discourage consumers from buying packaged food high in sugar, salt, and fat, which will require pre-packaged food to carry a star graphic — ranging for 0 to 5 — next to the brand name.
• Like the star-rating system for energy efficiency of electronic products, the ‘Indian Nutrition Rating (INR)’ will see the unhealthiest food items carry a 0-star rating and the healthiest carry a 5-star rating.

Draft notification:

• As per the draft notification, items will be given scores based on contribution of energy and content of saturated fat, sugar, sodium, fruit and vegetables (FV), nuts, legumes, and millets (NLM), dietary fibre, and protein per 100 gm of solid or 100 ml liquid foods. Solid food with a score of more than 25 will be given 0.5 stars, and those with a score less than – (minus)11 will get 5 stars.
• Although not mandatory, the notification stated that food businesses may add interpretive information next to the star-rating logo, giving details of energy, sugar, saturated fat, and salt content.
• To generate the star-rating logo for the product, food businesses have to submit nutritional profiles of the products concerned on FSSAI’s FoSCoS (Food Safety Compliance System) portal.
• Food such as milk and milk products, whey, butter oil, ghee, vegetable oil and fat, fresh and frozen fruit and vegetables, fresh and frozen meat, egg, fish, flour, and sweeteners will not have to display the star rating.
• Carbonated beverages without any energy or sugar will also not be eligible for declaring the rating, according to the notification.

FSSAI:

• Ministry: Ministry of Health and Family Welfare
• Type: Statutory body established under the Food Safety and Standards Act, 2006
• FSSAI is responsible for protecting and promoting public health through the regulation and supervision of food safety.

Objective:

•  Lay down science-based standards for articles on food
• To regulate the manufacture, storage, distribution, import, and sale of food
• To facilitate the safety of food

Powers of FSSAI:

•  Framing of regulations to lay down food safety standards
• Laying down guidelines for accreditation of laboratories for food testing
• Providing scientific advice and technical support to the Central Government
• Contributing to the development of international technical standards in food
• Collecting and collating data regarding food consumption, contamination, emerging risks, etc.
• Disseminating information and promoting awareness about food safety and nutrition in India.

The FSS Act took 7 older acts into one umbrella.

• Prevention of Food Adulteration Act, 1954
• Fruit Products Order, 1955
• Meat Food Products Order, 1973
• Vegetable Oil Products (Control) Order, 1947
•  Edible Oils Packaging (Regulation) Order 1988
• Solvent Extracted Oil, De- Oiled Meal and Edible Flour (Control) Order, 1967
• Milk and Milk Products Order, 1992

Eat Right India movement:

• FSSAI has embarked on a large-scale effort to transform the country’s food system in order to ensure safe, healthy and sustainable food for all Indians through the ‘Eat Right India’ movement.
• The tagline ‘Sahi Bhojan. Behtar Jeevan’, thus, forms the foundation of this movement.
• Eat Right India adopts a judicious mix of regulatory, capacity building, collaborative and empowerment approaches to ensure that our food is good both for the people and the planet. Further, it builds on the collective action of all stakeholders – the government, food businesses, civil society organizations, experts and professionals, development agencies and citizens at large.
• Eat Right India is aligned to the National Health Policy 2017 with its focus on preventive and promotive healthcare and flagship programmes like Ayushman Bharat, POSHAN Abhiyaan, Anemia Mukt Bharat and Swacch Bharat Mission. 

Other important news

Sambar deer

• Conservation status: Vulnerable
• Distribution: Native to Indian subcontinent and southeast asia but has been introduced in Australia, New Zealand and United States
• Decline in population: Populations have declined substantially due to severe hunting, local insurgency, and industrial exploitation of habitat.
• State animal: Sambar is state animal of Odisha

Chital deer:

• Conservation status: Least concern
• Distribution: Native to Indian subcontinent
• Males are larger than females, and antlers are present only on males