. No.	Topic Name	Prelims/Mains
1.	Digital Lending	Prelims & Mains
2.	Lumpy Skin Disease	Prelims & Mains
3.	La Nina	Prelims & Mains
4.	E – Sim Technology	Prelims Specific Topic

 

1 – Digital Lending:

 GS III

 Topic à Economy related issues

 ·       Context:

 ·       The governor of India’s Reserve Bank (RBI), Shaktikanta Das, expressed alarm about digital lending on Tuesday, citing a number of complaints regarding exorbitant interest rates, unethical collection methods, and data privacy concerns. In order to ensure that clients were protected while having their requirements satisfied, he emphasised the necessity for the FinTech sector to focus on governance, corporate conduct, regulatory compliance, and risk reduction.

 ·       About:

 ·       The loan sector has lately changed as a result of digital technology. The lending landscape has changed as a result of the desire for a better client experience, quicker response times, and the application of modern technology like artificial intelligence (AI) and machine learning (ML). But there are several problems with the current lending landscape in the digital age. In an effort to soothe these concerns, the Reserve Bank of India (RBI) has produced guidelines designed to enhance the regulatory environment for such activities. The Working Group on “Digital Lending, including Lending through Online Platforms and Mobile Apps” (WGDL), which was founded in January 2021, produced recommendations that influenced the creation of the most current rules.

 ·       What is the makeup of the online lending market?

 ·       Lending made feasible by technology on websites or mobile applications is referred to as “digital lending.” Automated technologies and algorithms are utilised for client acquisition, credit assessment, decision making, authentication, disbursements, and recovery. In addition to lowering costs, it also guarantees fast payment.

·       Since Lending Service Providers (LSPs) and Non-Banking Financial Companies (NBFCs) work together to provide loans (or lines of credit) to clients, the platform of the former has several sides.

 ·       How far advanced is the digital lending market in India?

 ·       Digital lending is one of the fintech industries in India that is growing the fastest. It has grown significantly from a volume of US$ 9 billion in 2012 to almost US$ 110 billion in 2019. In addition, it is predicted that the market for digital financing will have increased to a size of roughly US$350 billion by 2023.

·       The main players in this industry are neo-banks, non-banking financial organisations, and fintech startups (NBFCs).

·       Its consumers include, in particular, small borrowers without credit histories who aren’t served by traditional financial institutions. Short-term loans, especially those with terms of fewer than 30 days, are their main area of expertise.

·       The role of financial intermediaries is being rapidly occupied by commercial banks as well. These banks either work independently with NBFCs or jointly with them to create synergies through digital lending.

 ·       Why has digital lending grown so swiftly in popularity?

 ·       First, the rapid development of blockchain, cloud computing, artificial intelligence, and other technologies, as well as faster and less expensive internet connectivity, has contributed to the rise of FinTech start-ups. Additionally, lending has evolved and “gone digital.”

·       Second, thanks to the August 2015 launch of the Pradhan Mantri Jan Dhan Yojana (PMJDY) programme, lenders now have access to the synergy of the sizable client base that banks have created over the previous ten years.

·       Third, the sector has a large opportunity that is attracting substantial investment. Digital lending platforms have shown a 19.6% compound annual growth rate over the past seven years.

·       Fourth, according to KPMG, the rapid digitization of the economy and services has substantially improved financial inclusion and digital lending.

 ·       Which benefits of digital lending are more notable?

 ·       Easy loan disbursement: Digital lending platforms have made it possible for borrowers to apply for loans immediately by removing geographic barriers. They have straightforward data entry, a personalised user interface, and quick loan application procedures.

·       Less Errors: There are fewer chances of human error when using digital lending because it is easier to get an applicant’s information. Digital scanning of documents can be used to quickly and accurately verify their authenticity.

·       increases effectiveness A digital lending platform can increase effectiveness while cutting costs by half. Digital financing improves the relationship between lenders and borrowers, generates more money and growth, and saves time.

·       improved client experience Digital lending has a quick reaction time and spares borrowers from having to wait a lengthy time for a loan decision. Additionally, as a result of this, banks spend less time and money managing loans. Banks can handle more loans and products and give borrowers a better experience if they have quick loan approval and money.

 ·       What concerns exist with regard to online lending?

 ·       First, in order to establish their position in a market with many other peers, LSPs usually participate in hazardous lending operations by making loans to borrowers who are unable to pay them back. The risk is decreased by spreading it out across all customers and imposing higher interest rates.

·       It was difficult to assess a participant’s operational legitimacy in the absence of regulatory requirements for disclosure and openness, which brings us to our second point. Between January and February 2021, there were over 1,100 loan apps accessible for Indian Android users, 600 of which were illegal. They were either exempt from RBI regulation or had NBFC partners with assets under INR 1,000 crore.

·       Mis selling, privacy violations, unfair business practises, the imposition of exorbitant interest rates, and unethical recovery techniques are some other problems with digital lending.

 ·       What are the new RBI regulations, and how do they address the problems?

 ·       The RBI has separated the digital lenders into three categories: (1) those that fall under its regulation and are permitted to conduct lending business; (2) those that fall under other statutory or regulatory provisions but are not subject to the RBI’s regulation; and (3) those that are lending outside the purview of any such statutory or regulatory provision.

·       For the first class of entities that the RBI has control over, certain regulations apply. The RBI has requested recommendations be created for more organisations falling under the second and third categories from the competent regulator, controlling authority, or the Union Government.

·       The basic principle of the new regulations is transparency.

·       Loans may only be made by regulated entities, which must either be governed by the RBI or have legal licence to do so. Given the industry’s substantial outsourcing, this would also help in combating regulatory arbitrage.

·       The RBI mandated that all loan disbursements and repayments be made directly between the borrower’s and the company’s bank accounts in order to avoid using the LSP’s nodal pass-through account.

·       Costs of borrowing are disclosed: The total cost of digital loans represented as an annual percentage rate, along with all fees and levies, would have to be disclosed by lenders to borrowers in a uniform manner (APR). The annual percentage rate, which includes all fees, is used to express the cost of borrowing money (APR).

·       Before the contract is signed, they must provide the borrower with a key fact statement (KFS) in a standard manner for all digital lending products. Furthermore, this would make it simpler for borrowers to assess their offers against those of rivals in the industry.

·       Automatic Increase of Credit Limit: The RBI states that automatic credit limit increases are not allowed unless the borrower expressly agrees in writing and on file. These regulated businesses must publish a list of the LSPs and DLAs (Digital Lending Apps) they have used on their website in addition to details about the responsibilities they have been given.

·       They must also go through a stricter due diligence process before partnering with an LSP for digital lending. They ought to take into account, among other things, its technical prowess, data privacy laws, and storage techniques.

·       To meet the criteria for a specialised resolution structure, entities would need to create a grievance redressal officer. Should the complaint not be resolved within 30 days of receipt, the RBI’s Integrated Ombudsman Scheme (RB-IOS) would also be in charge of the ecosystem.

·       Data Collection and Sharing: All information collected by the apps must be “need-based” and must have the express, prior consent of the borrower. The option to revoke previously granted permission is available to users. The privacy policy needs to outline the information that will be collected during enrolment. The RBI states that user approval is necessary before sharing any personal information with a third party.

·       The proposals state that all lending carried out through DLAs, regardless of its nature or length, must be disclosed to credit information firms (CICs). Additionally, CICs must be informed about the Buy Now Pay Later (BNPL) manner of lending.

 ·       Way Forward:

 ·       First, according to the RBI, some of the working group’s recommendations, such writing legislation to outlaw unregulated lending practises, require additional government input. The government must act immediately to rectify this.

·       Second, the second-highest percentage of people without bank accounts is still found in India. Over 190 million adult Indians do not have any type of bank account, which creates a significant opportunity. Banking correspondents for the Jan Dhan Yojana must receive incentives in order to improve financial inclusion.

 ·       Conclusion:

 ·       Given its scalability, digital lenders may soon surpass traditional lenders in importance, despite the fact that their share of the market may be minuscule at the moment. How the new limitations will impact the operational frameworks employed by digital lenders is still unknown. Without undue burden on lending organisations or platform operators, the regulations have done a decent job of protecting the interests of consumers (borrowers). The ecosystem of digital lending has a lot of promise to achieve the government’s objective of financial inclusion. The ecosystem must therefore be appropriately nurtured and supported.

 ·       Source à The Hindu

 

2 – Lumpy Skin Disease:

 GS II

 Topic à Health related issues

 

·       Context: 

·       The Mumbai Police have outlawed the transportation of cattle in an effort to curb the disease that results in lumpy skin from spreading around the city. According to this, cattle cannot be moved from the place where they are being raised or transported to markets. The order went into force on September 14 and is valid until October 13. 127 animals have perished in Maharashtra, where the illness has now reached 25 districts. Currently, cattle infected with the contagious viral virus are found in more than 10 States and Union Territories. According to Prime Minister Narendra Modi’s announcement from last week, the Center and States are managing the disease’s spread, which has become a challenge for the dairy industry.

 ·       What Is Lumpy Skin Disease?

 ·       Causes:

 ·       Cattle or water buffalo get infected with the Lumpy Skin Disease Virus, which causes LSD (LSDV).

·       The Food and Agriculture Organization reports that the death rate is less than 10%. (FAO).

·       Zambia reported an epidemic of lumpy skin disease in 1929. It was formerly thought to be the result of poisoning or a reaction to insect bites.

 ·       Transmission: 

·       The primary biting insects (vectors) that spread lumpy skin disease between animals are mosquitoes and biting flies.

·       Fever, fluid flow from the eyes and nose, saliva streaming from the lips, and body blisters are the major symptoms.

·       When an animal has trouble chewing or eating, it stops eating, which reduces milk production.

 ·       Prevention and treatment:

 ·       The Indian Livestock Health and Disease Control Programme covers the cost of several disease vaccinations.

·       There are no specific antiviral drugs available to treat lumpy skin conditions. The only available treatment for cattle is supportive care. This may entail using drugs to prevent recurrent skin infections and pneumonia as well as wound care sprays to treat skin blemishes.

·       Anti-inflammatory drugs can be administered to animals under discomfort to keep them from losing their appetite.

 ·       Source à The Hindu

 

3 – La Nina:

 GS I

 Topic à Geography

 

·       Context: 

·       The current La Nia phase of the equatorial Pacific Ocean is anticipated to endure for at least another six months, making it one of the longest La Nia occurrences in recorded history. It is also unprecedented that it has extended into a third year since 1950. This is projected to have significant implications on global weather events in the following months and could exacerbate floods and droughts in various locations.

 ·       About:

 ·       The Little Girl is known in Spanish as La Nina. It has also been referred to as El Viejo, anti-El Nino, and simply “a frosty event.”

·       During La Nina events, there may be times when sea surface temperatures in the east-central Equatorial Pacific are below average.

·       It is significant that the sea surface temperature has decreased by more than 0.9°F for at least five consecutive three-month seasons.

·       When there is a La Nina episode, the water temperature in the Eastern Pacific becomes noticeably cooler than usual, resulting in a strong high pressure over the eastern equatorial Pacific.

 ·       The effects of La Nina: 

·       Cooler-than-average waters build up in the tropical Pacific, the area of the Pacific Ocean between the Tropics of Cancer and Capricorn, which causes La Nina.

·       La Nina is distinguished by lower-than-average air pressure over the western Pacific. These low-pressure zones bring more rain.

·       Another consequence of la Nina events is rainfall that is above average over northern Brazil and southeast Africa.

·       Devastating floods in northern Australia, however, are associated with strong La Nina occurrences.

·       Another trait of La Nina is higher-than-average pressure over the central and eastern Pacific.

·       There are consequently less clouds and rains in that region.

·       Drier-than-normal conditions have been reported throughout the Gulf Coast of the United States, the pampas region of southern South America, and the west coast of tropical South America.

 ·       La Nina’s effects include:

 ·       El Nino reduces the frequency of hurricanes in Europe throughout the fall.

·       La Nina often provides milder winters in northern Europe and colder winters in southern/western Europe, which causes snow in the Mediterranean region (particularly the UK).

·       Most of these conditions are present in continental North America. One of the more widespread effects is stronger winds along the equatorial zone, particularly in the Pacific.

·       The middle Atlantic and Caribbean are experiencing favourable storm conditions.

·       increased tornado activity in many US states.

·       Ecuador and Peru both experience drought as a result of La Nina.

·       The fishing business in western South America often reaps the benefits of it.

·       Western Pacific: La Nina increases the likelihood of landfall in the western Pacific, notably into China and continental Asia, which are the areas most vulnerable to its effects.

·       It also significantly increases flooding in Australia.

·       Temperatures have increased in the western Pacific, Indian Ocean, and along the Somalian coast.

 ·       Source à The Hindu

 

4 – E – Sim Technology:

 Prelims Specific Topic

 ·       Context: 

·       The eSIM, commonly referred to as an embedded SIM, isn’t really a new technological advancement. However, it is quickly gaining popularity because to fitness-focused wearables and smartphones like the Google Pixel series, Samsung Galaxy S and Z-series, and Apple iPhones, particularly the iPhone 14, which only supports eSIMs in the US.

 ·       About:

 ·       The first eSIMs were developed in 2012.

·       A standard SIM card chip is irreversibly incorporated into the same physical structure as the embedded SIM in this instance.

·       An eSIM can be found inside of a phone and is made up of many components that are similar to those in a regular SIM card. Additionally, they perform the same function, acting as a unique identification that enables telecom operators and other users to locate your individual smartphone when they call or text you.

·       But since the motherboard is attached, reprogramming is also possible, allowing users to transfer carriers without having to replace any physical SIM cards.

 ·       What Advantages Exist?

 ·       Security: 

·       An eSIM provides security against sim theft because there is no physical component to remove and use in another device.

·       An attacker cannot use your phone after it has been stolen to log into your bank or social media accounts.

·       the number of phone openings being reduced:

·       The frame of your phone has fewer apertures, which reduces the possibility that dust and other impurities will get inside.

·       It also makes some interior phone space available for other purposes.

 ·       What negative aspects exist?

 ·       In times of emergency:

 ·       If your phone malfunctions, runs out of battery, or just falls and cracks its screen, all contact will be cut off. While this is happening, standard SIM cards can be readily taken out of the damaged phone and inserted into a backup device or different phone.

 ·       Unusable in countries without eSIM support: 

·       eSIM phones cannot be utilised in a country where the telecom operators do not currently accept the technology.

·       This isn’t an issue if your phone works with both eSIM and regular SIM cards, but it is with devices like the iPhone 14 US model, which only works with eSIM.

 ·       Telcos are more powerful: 

·       With an eSIM, the first trip to the telecom operator’s store to buy a SIM card may be avoided, but switching phones still needs the operator’s help.

·       Operators may impose additional fees in the future for eSIM subscriptions or phone swapping.

 ·       Source à The Hindu