14 Aug 2022: UPSC Exam Comprehensive News Analysis

CNA 14 Aug 2022:- Download PDF Here

TABLE OF CONTENTS

A. GS 1 Related
B. GS 2 Related
INTERNATIONAL RELATIONS
1. Colombo clears arrival of Chinese vessel
C. GS 3 Related
INDIAN ECONOMY
1. Why will airlines have to share PNR data?
D. GS 4 Related
E. Editorials
HEALTH
1. What is the threat from zoonotic diseases?
ECONOMY
1. Digital lending
ENVIRONMENT AND ECOLOGY
1. Have coastal ecosystem norms been violated?
F. Prelims Facts
G. Tidbits
1. India, Italy negotiate legal assistance treaty
H. UPSC Prelims Practice Questions
I. UPSC Mains Practice Questions

Category: ECONOMY

1. Digital lending

Syllabus: Indian Economy and issues relating to Planning, Mobilization of Resources, Growth, Development and Employment.

Mains: significance and concerns associated with digital lending in India

Context: Recently, the Reserve Bank of India (RBI) has come up with a framework for regulating the digital lending segment in the Indian economy. 

Digital lending:

• Digital Lending involves lending through web platforms or mobile apps, utilizing technology for authentication and credit evaluation.
• Under digital lending, Lending Service Providers (LSPs) act in partnership with Non-Banking Financial Companies (NBFCs) who disburse credit (or a line of credit) to the customer using the former’s platform.

Significance of digital lending segment:

• Given that digital lending utilizes automated technologies for most of its activities, it has the advantage of lower operating costs and can also help ensure speedy disbursal of loans.
• Small borrowers without a documented credit history and thus, not served by traditional financial institutions have found a credit avenue for their short term loan requirements through this segment.
• The digital lending segment can play a major role in supplementing the role being played the existing financial system dominated by banks in meeting the demand for loans across the credit ecosystem given their scalability.

Concerns with digital lending segment:

• A large number of the lending apps available for Indian android users happen to be illegal in that they are either unregulated by the RBI or have NBFC partners with an asset size of less than ₹1,000 crore. The absence of a standardised regulatory norm for this segment makes it all the more difficult to regulate this segment.
• The Lending Service Providers are found to be resorting to reckless lending practices due to high competitiveness in the segment. They are found to be lending credit beyond a borrower’s repayment capacity. This is resulting in higher interest rates for all users.
• There are also serious concerns of mis-selling, unfair business conduct, charging of exorbitant interest rates, and unethical recovery practices by the lending service providers.
• The unbridled engagement of third parties and the sharing of personal information of the borrowers with them amount to possible breach of data privacy of the borrowers. This is a major concern with respect to this segment.
• Considering the multi-sided nature of the business, the RBI has put forth that user consent would be mandatory for sharing any personal information with a third-party.

New regulations:

• Lending must be carried out by entities that are either regulated by the RBI or possess permission to operate under a relevant law. This will limit the operation of any illegal entities in the segment.
• All loan disbursals and repayments are to be executed directly between the bank accounts of the borrower and the entity. This will help eliminate the participation of third parties.
• Lenders would compulsorily have to inform the borrower in a standardised format about all fees and charges and LSPs will not be allowed to raise them without prior consent from customers. This would help address concerns of mis-selling, unfair business conduct, charging of exorbitant interest rates.
• The new regulations mandate a dedicated resolution framework which require the digital lending entity to appoint a grievance redressal officer. This would come under the purview of the RBI’s Integrated Ombudsman Scheme (RB-IOS) and all complaints have to be resolved within 30 days of lodging of the complaint.
• All the data collected by the digital lending apps should be “need-based” and must be with prior and explicit consent of the borrower. Users are also allowed to revoke previously granted consent. 

Nut Graf: The new RBI regulations for the digital lending segment will help address some of the serious concerns plaguing this niche segment in India.

Category: ENVIRONMENT AND ECOLOGY

1. Have coastal ecosystem norms been violated?

Syllabus: Conservation, Environmental Pollution and Degradation, Environmental Impact Assessment.

Prelims: Coastal Regulation Zone notification, 2019

Mains: Concerns pointed out in the audit report of the CAG

Context: 

• The Comptroller and Auditor General (CAG) of India has tabled a report based on the observations from an audit of ‘Conservation of Coastal Ecosystems from 2015-20’ in Parliament. The report evaluates the effectiveness of the conservation process being followed by Centre and States in coastal ecosystems.
  • The CAG has a constitutional mandate to undertake ‘performance audits’ of publicly funded programmes.

Background:

• The Union government is empowered under the Environment Protection Act, 1986 to regulate activities along India’s coasts. In this respect the Union government had come up with the Coastal Regulation Zone Notification (CRZ) 2019.
• Under this the coastal area is classified into different zones for regulation. The framework envisages an institutional mechanism for the implementation of the CRZ with an overall objective of Integrated Coastal Zone Management Programme (ICZMP).

For detailed information on this topic refer to the following article:

https://byjus.com/free-ias-prep/coastal-regulation-zone/

Observations made in the audit report:

• The “pre-audit studies” conducted by the CAG found large-scale Coastal Regulation Zone violations in the coastal areas. This included illegal construction activities, effluent discharges from local bodies, industries and aquaculture farms into the sensitive coastal ecosystems. In this context, the CAG undertook a detailed investigation.
• The National Coastal Zone Management Authority (NCZMA) envisaged as the apex institution for the implementation of the CRZ policy has been functioning as an ad-hoc body due to the failure of the Environment Ministry to notify NCZMA as a permanent body. It is being reconstituted every few years. This has had an adverse impact on its functioning and its effectiveness.
• The Expert Appraisal Committees —committee of scientific experts and senior bureaucrats designated to evaluate the feasibility of an infrastructure project and its environmental consequences — were found to be absent during some project deliberations in clear violations of the policy guidelines. Also in some instances, the members of the EAC participating in the deliberation were fewer than half of the total strength.
• In some states like Karnataka, State Coastal Zone Management Authority had not been reconstituted after the expiry of its term and there was delayed reconstitution in States like Goa, Odisha and West Bengal. This is in clear violation of the CRZ policy provision which mandates that every coastal State and Union Territory have a Coastal Zone Management Authority.
• The District Level Committees (DLCs) mandated for every district that has a coastal stretch and where the CRZ notification is applicable were not established in Andhra Pradesh and these important institutions lacked participation from local traditional communities in states like Tamil Nadu.
• There were serious concerns with respect to Environment Impact Assessment (EIA) report preparation. In some instances non-accredited consultants were preparing the EIA. The use of outdated data and the failure to undertake a comprehensive evaluation of the environmental impacts of the project and the failure to undertake an appraisal of the disasters which the project area was prone to give rise to serious concerns over the efficacy of these reports.
• Some projects were being approved despite serious concerns raised with respect to them in the EIA reports. 
• The report also takes note of the failure of states to have in place strategies to conserve sensitive coastal ecosystems in their jurisdiction. It points out to stranded programmes and initiatives announced by some state governments in the realm of coastal ecosystem conservation.

What next?:

• The audit report presented by the CAG will be placed before the related Standing Committee of Parliament. The Environment Ministry must seek to address the lacunae pointed out by the CAG.

Nut Graf: The Coastal Regulation Zone policy, though well intended and much necessary for the conservation of the critical and sensitive coastal ecosystem, the lax implementation of this policy remains a major cause of concern. 

Q1. With respect to Zoroastrianism, which of the following statements is/are 
correct? (Level – Medium)

Q3. Who among the following was convicted in the Titagarh conspiracy case? 
(Level - Difficult)

Q4. Consider the following statements:(Level- Difficult)

Q5. Which one of the following situations best reflects “Indirect Transfers”
 often talked about in media recently with reference to India? (Level - Easy)

I. UPSC Mains Practice Questions

1. The digital lending sector has come into spotlight because of the proliferation of extortionary lending practices. Discuss the RBI’s new digital lending rules to curb rampant malpractices in the digital lending ecosystem. (15 Marks, 250 Words)(GS-3, Economy)
2. What are the pros and cons of Customs wanting Passenger Name Record Information on international travelers? How will the process work? (10 Marks, 150 Words)(GS-2, Governance)

Read the previous CNA here.

CNA 14 Aug 2022:- Download PDF Here