Today's Headlines

Loan write-off by banks

GS Paper - 3 (Economy)

Banks wrote off more than Rs 10 lakh crore in loans over the last five years, according to RBI data under the Right to Information (RTI) Act. While public sector banks reported the lion’s share of write-offs at Rs 734,738 crore, private sector banks were not far behind in bringing down their non-performing assets (NPAs).

What is a loan write-off?

1. Writing off a loan essentially means it will no longer be counted as an asset.
2. By writing off loans, a bank can reduce the level of non-performing assets (NPAs) on its books.
3. An additional benefit is that the amount so written off reduces the bank’s tax liability.

Why do banks resort to write-offs?

1. The bank writes off a loan after the borrower has defaulted on the loan repayment and there is a very low chance of recovery.
2. The lender then moves the defaulted loan, or NPA, out of the assets side and reports the amount as a loss.
3. After the write-off, banks are supposed to continue their efforts to recover the loan using various options. They have to make provisioning as well.
4. The tax liability will also come down as the written-off amount is reduced from the profit.
5. However, the chances of recovery from written-off loans are very low — as the RTI reply shows — which raises questions about the assets or collateral against which the banks lent funds to these defaulters.

MHA engages MEA on the influx of Kuki-Chins

(GS 1- Human migration)

Since India does not have a legislation on refugees, the more than 270 members of the Kuki-Chin minority from Bangladesh who entered Mizoram on 20 November 2022 are referred to in State government documents as "officially displaced persons."

What

1. The issue was being reviewed with the Ministry of External Affairs (MEA).
2. Foreign nationals who enter the country without legitimate travel documents are regarded by the MHA as unlawful immigrants.
3. On 20 November 2022, the Group — which included 25 infants and 60 women—came up to a Border Security Force (BSF) patrol base on the Bangladesh–Mizoram border and were permitted to cross.
4. According to the official, "they were permitted to enter India on humanitarian grounds."
5. More of these refugees are anticipated in the coming days, according to a different official. According to the first official, four schools have been converted into shelters per the State government's directive.

FLASHBACK:

1. The Mizo Hills (formerly Lushai), a mountainous region in the southeast of Mizoram and Manipur in India, is home to the Kuki people, an ethnic group.
2. One of the hill tribes of India, Bangladesh, and Myanmar is the Kuki. They exist in every state in Northeast India, with the exception of Arunachal Pradesh.
3. According to the Kuki community's dialect and geographic background, almost fifty Kuki tribes in India are recognised as scheduled tribes.
4. The Kukis are related to the Chin people of Myanmar and the Mizo people of Mizoram. They are referred to as the Zo people as a whole.

ECTA is a landmark in bilateral relations

GS-2 (International Relations)

The ratification of the India-Australia Economic Cooperation and Trade Agreement (ECTA) by the Australian parliament, demonstrates India’s skill in trade negotiations. The deal sailed smoothly through the Australian parliament, despite the fact that it was negotiated when the Liberal Party was in power in April 2022 and labour party came in May 2022.

Significance of the deal:

1. Most free trade deals New Delhi has negotiated and entered into have been mostly with South Asian countries and hardly served India’s trade interests. Rather, they became counterproductive.
2. Both the Indian and Australian government need to be complemented for striking the first trade deal with a developed country in a decade.
3. It provides an opportunity for Australian exporters to tap the vast Indian market of 1.4 billion consumers;on the other hand, it provides an opportunity for Indian exporters to market their value-added products.

Salient features of the deal:

1. India manages to get exclusions for the most sensitive sectors, and dairy and agriculture. These provide employment in rural areas to about 50-55 per cent of its population with small landholdings and 1-2 cattle per farmer. This is in sharp contrast to Australian agriculture and dairying. This bone of contention had stood in the way of a free trade deal.
2. India and Australia both are Commonwealth countries and parliamentary democracies with similar legal systems.
3. Besides, India and Australia also are members of the Quad, a trilateral Supply Chain Resilience Initiative (SCRI) and the Indo-Pacific Economic Framework (IPEF).
4. The Ind-Aus ECTA will lead to duty elimination on 100 per cent tariff lines with no restrictions and benefit India’s labour-intensive exports such as textiles and apparel, agriculture and fish products, leather, footwear and furniture, several engineering products, jewellery, select pharmaceutical and medical devices, furniture and sports goods. These now fetch 4-5 per cent import duty in the Australian market.
5. The agreement would provide duty-free access to over 6,000 broad categories of Indian products in the Australian market.
6. The trade deal will boost exports of pharmaceuticals, India’s second-largest export after petroleum products, to Australia, as medicaments that have already been approved in the US and the UK will get expeditious regulatory approval from Australian authorities.
7. The trade deal will prove to be a milestone in India-Australia relations that will not only increase mutual cooperation, but also significantly contribute to boosting economic growth and the strategic partnership between the two countries.

Israel’s best guard against enemy rockets

GS-3 (Defence)

Iron Dome air defence system, developed by Israel Aerospace Industries and Rafael Advanced Defence Systems, has intercepted over 3,000 projectiles in the last 10 years.

More about the news:

1. A typical Iron Dome battery or unit comprises three missile launchers, each with 20 interceptors.
2. It (the Iron Dome) scans Gaza five times a second and the moment a projectile is fired, the radar picks it up a second and half later, figures out its trajectory, and the place it’s going to hit.
3. Based on the radar findings, the Iron Dome fires its own missiles that intercept the enemy rockets. Each interceptor hits the rocket mid-air and destroys it.
4. It isexpensive, costing each intercepting missile 50000$, but has a success rate of around 96 per cent.
5. As per a 1951 civil defence law, all homes and offices in Israel are required to have bomb shelters.

Why it is significant:

1. Hamas and Hezbollah both are developing long range capability; 3.5 million Israelis are vulnerable to such attacks.
2. Intelligence inputs have shown that Hamas has amassed 30,000 rockets, while Hezbollah has more than a lakh.

Flashback:

1. Iron Domeis a mobile all-weather air defence system designed to intercept and destroy short-range rockets and artillery shells fired from distances of 4 kilometres (2.5 mi) to 70 kilometres (43 mi) away and whose trajectory would take them to an Israeli populated area.
2. From 2011 to 2021, the United States contributed a total of US$1.6 billion to the Iron Dome defence system, with another US$1 billion approved by the US Congress in 2022.