All questions of Current Affairs for BPSC (Bihar) Exam

AT-1 bonds are unsecured, perpetual, high-risk bonds that banks issue to shore up their core capital base to meet the Basel III norms. Banks can skip paying interest on these bonds if their capital ratios fall below a certain threshold level.

Banks Board Bureau (BBB) was set up in February 2016 as an autonomous body based on the RBI-appointed PJ Nayak Committee's recommendations to improve governance of Public Sector Banks (PSBs).

Zero-coupon bond:
A zero-coupon bond is a type of debt security that does not pay any interest to the bondholder. Instead, it is sold at a deep discount from its face value and the bondholder receives the full face value of the bond at maturity. This means that the bondholder earns a profit by purchasing the bond at a discount and receiving the full face value at maturity.

Statement 1: A zero-coupon bond is a debt security that does not pay interest but instead trades at a deep discount, rendering a profit at maturity, when the bond is redeemed for its full face value.
This statement is correct. As mentioned earlier, a zero-coupon bond does not pay any interest to the bondholder. Instead, it is sold at a discounted price, typically below its face value, and the bondholder receives the full face value of the bond at maturity. The difference between the discounted purchase price and the face value represents the profit earned by the bondholder.

Statement 2: These are special types of bonds issued only by the Central government specifically to a particular institution.
This statement is incorrect. Zero-coupon bonds can be issued by various entities including governments, corporations, and financial institutions. While it is true that governments may issue zero-coupon bonds, they are not exclusively issued by the central government and are not specifically issued to a particular institution. These bonds can be bought by individual investors, financial institutions, or any other entity interested in investing in fixed-income securities.

Conclusion:
In conclusion, the correct statement is statement 1. Zero-coupon bonds do not pay interest but are sold at a discount and redeemed for their full face value at maturity, resulting in a profit for the bondholder. Statement 2 is incorrect as zero-coupon bonds can be issued by various entities and are not exclusively issued by the central government or specifically issued to a particular institution.

Tax revenue for the Union Government includes the following:

1. Personal income tax: Personal income tax is a direct tax levied on the income earned by individuals. It is a significant source of revenue for the government. Individuals are required to pay taxes on their income, which includes salaries, wages, profits from businesses, rental income, and other sources. The tax rates vary based on the income slab, with higher rates applicable to higher income earners. Personal income tax contributes to the government's revenue pool and helps fund various public services and developmental projects.

2. Excise Duty: Excise duty is a form of indirect tax levied on the manufacture, sale, or use of certain goods. It is typically imposed on goods that are considered harmful or non-essential, such as tobacco, alcohol, petroleum products, and luxury items. The government collects excise duty from manufacturers or importers when these goods are produced or imported. Excise duty serves as a significant source of revenue for the government and helps control the consumption of certain goods by making them relatively more expensive.

3. Dividends on investments: Dividends received by the government from its investments in public sector undertakings (PSUs) and other entities also contribute to its tax revenue. PSUs are government-owned corporations that operate in various sectors of the economy. The government holds a significant stake in these entities and receives dividends based on their profitability. These dividends are considered as a part of the government's overall tax revenue.

4. Income through Spectrum Auctions: Spectrum refers to the radio frequencies used for wireless communication. The government auctions spectrum licenses to telecom companies allowing them to use specific frequency bands for providing mobile and other communication services. Telecom companies bid for these licenses, and the government earns revenue from the auction proceeds. This revenue is considered as part of the government's tax revenue and helps in funding various developmental initiatives.

In conclusion, personal income tax, excise duty, dividends on investments, and income through spectrum auctions are all considered as tax revenue for the Union Government. These revenue sources play a crucial role in financing various government expenditures and developmental projects.

Regional Rural Banks (RRBs) were formed under the RRB Act, 1976 with an objective to provide credit and other facilities to small farmers, agricultural labourers, and artisans in rural areas.

What is Government Security (G-Sec)?

Open Credit Enablement Network (OCEN), a credit protocol infrastructure built by the Indian Software Product Industry Roundtable (iSpirt), a think-tank of the software industry, will democratise the lending ecosystem.

Explanation:

Statement 1: India is the world's largest crude oil importer.
This statement is incorrect. As of 2021, the world's largest crude oil importer is China. India stands at the second position in terms of crude oil imports.

Statement 2: At present, OPEC countries meet 90% of India's crude oil demand.
This statement is incorrect. The Organization of Petroleum Exporting Countries (OPEC) is a group of oil-producing countries. While OPEC countries play a significant role in meeting India's crude oil demand, they do not account for 90% of it. The share of OPEC countries in India's crude oil imports has declined over the years. Currently, it is estimated that OPEC countries meet around 80% of India's crude oil demand.

Conclusion:
Neither Statement 1 nor Statement 2 is correct. India is not the world's largest crude oil importer, and OPEC countries do not meet 90% of India's crude oil demand.

Understanding Off-Budget Financing
Off-budget financing refers to expenditures that are not included in the official budget documents. This mechanism can significantly impact a country's fiscal management.
1. Non-Inclusion in Economic Metrics
- Off-budget spending is often excluded from calculations of fiscal deficit and other economic metrics.
- This non-inclusion can lead to a misleading representation of the government’s financial health.
2. Reduced Parliamentary Control
- Since off-budget expenditures are not part of the regular budget, parliamentary oversight is diminished.
- This lack of scrutiny raises concerns about transparency and accountability in government spending.
3. Role of the National Small Savings Fund
- The National Small Savings Fund (NSSF) is indeed one of the primary sources for off-budget financing.
- It allows the government to access funds without impacting the fiscal deficit directly, as these funds are not reflected in the main budget.
Conclusion
All three statements regarding off-budget financing are accurate:
- Off-budget spending is excluded from fiscal deficit calculations.
- Parliamentary control over such expenditures is indeed reduced.
- The NSSF serves as a significant source for off-budget financing.
Therefore, the correct answer is option 'D' (1, 2, 3). Understanding off-budget financing is crucial for comprehending the broader fiscal landscape and the implications for governance and economic policy.

Teaser Loan: An Explanation

Introduction:
Teaser loans, also known as introductory rate loans or hybrid adjustable-rate mortgages (ARMs), are a type of loan where the interest rate is initially set at a lower rate for a specified period, typically for the first few years. After this initial period, the interest rate is adjusted to the prevailing market rate. This type of loan structure is often seen in the news as it has implications for borrowers and the overall economy.

Explanation:
Teaser loans are structured in a way that allows borrowers to enjoy lower interest rates for an initial period, which is typically between one to five years. This introductory period is known as the teaser period. During this time, borrowers benefit from lower monthly payments as the interest rate is lower than the prevailing market rate.

Adjustment Period:
After the teaser period ends, the interest rate is adjusted to the prevailing market rate. This adjustment can result in an increase in the monthly payment amount as the interest rate may be higher than what the borrower was initially paying. The interest rate adjustment is typically based on an index, such as the prime rate or the London Interbank Offered Rate (LIBOR), plus a margin determined by the lender.

Advantages and Disadvantages:
Teaser loans can be advantageous for borrowers who plan to sell their property or refinance their mortgage before the teaser period ends. They can take advantage of the lower interest rate during the initial period and then move on to a different loan or sell the property. However, if borrowers are not able to sell or refinance within the teaser period, they may face higher monthly payments once the interest rate adjusts.

Impact on Borrowers and Economy:
Teaser loans can have both positive and negative effects on borrowers and the overall economy. Initially, borrowers may be attracted to the lower interest rates, which can make homeownership more affordable. However, if borrowers are unable to handle the increased monthly payments after the teaser period, they may face financial difficulties and potential foreclosure.

From an economic perspective, teaser loans played a significant role in the 2008 financial crisis. Many borrowers were attracted to the initial lower interest rates and took out loans they could not afford once the rates adjusted. This led to a significant number of defaults and foreclosures, which had a ripple effect on the housing market and the overall economy.

Conclusion:
Teaser loans are a type of loan where the interest rate is initially set at a lower rate for a specified period, after which it adjusts to the prevailing market rate. While they can be attractive to borrowers initially, it is important for borrowers to carefully consider their long-term financial stability and ability to handle the potential increase in monthly payments once the teaser period ends.

Repurchase or Buyback of Shares:

1. Reduces Number of Outstanding Shares:
- When a company repurchases its own shares, it reduces the number of outstanding shares in the market.
- This reduction in the number of shares can lead to an increase in the company's earnings per share (EPS) and improve financial ratios.

2. Increases Price of Remaining Shares:
- With a decrease in the number of outstanding shares, the demand for the remaining shares may increase.
- The increase in demand can lead to a rise in the price of the company's shares, benefiting existing shareholders.

3. Undertaken When Shares are Undervalued:
- Companies often repurchase shares when they believe that their shares are undervalued in the market.
- By buying back undervalued shares, the company can show confidence in its own stock and potentially increase shareholder value in the long run.
Therefore, a repurchase or buyback of shares can have multiple benefits for a company, including reducing outstanding shares, increasing share price, and signaling confidence in the company's valuation.

About ADB

The Reserve Bank relaxed the leverage ratio (LR) for banks to boost their lending activities.

The Roaring Twenties is a term used to describe a period of economic prosperity in the United States and Europe during the 1920s. This era was marked by a significant increase in consumer spending, driven by technological advancements, mass production, and urbanization.

Heading: Economic Prosperity
During this period, the economy experienced a rapid growth in production and consumption, leading to an increase in employment rates and higher wages for workers. The availability of new technologies, such as the automobile and radio, also led to new industries and job opportunities. The stock market reached new heights, and people invested heavily in stocks, leading to a stock market bubble.

Heading: Social Changes
The Roaring Twenties was also marked by a significant shift in social and cultural norms. Women gained more independence and freedom, leading to the emergence of flappers, who challenged traditional gender roles. The prohibition of alcohol also led to the rise of illegal speakeasies and bootlegging.

Heading: Literature and the Arts
The Roaring Twenties was a significant period for literature and the arts. Many famous authors, such as F. Scott Fitzgerald and Ernest Hemingway, emerged during this time and wrote about the changing social norms and the disillusionment of the era. Jazz music also became popular, and the Harlem Renaissance emerged as a significant cultural movement.

In conclusion, the Roaring Twenties was a period of economic prosperity, social change, and cultural innovation in the United States and Europe. It was a time of great change and transformation, which had a significant impact on the world's political and economic landscape.

A special economic zone (SEZ) is an area where the business and trade laws are different from the rest of the country. SEZs are located within a country's national borders, and their aims include increased trade balance, employment, increased investment, job creation and effective administration.

Explanation:

Statement 1: Commercial crops are not covered under minimum support prices (MSPs).
This statement is correct. The minimum support price (MSP) is a price set by the government to protect farmers from any sharp fall in crop prices. However, MSPs are generally announced only for major crops such as wheat, rice, maize, and pulses. Commercial crops like cotton, sugarcane, and oilseeds are not covered under the MSP system.

Statement 2: If MSP is legally binding, no crop can be bought by private buyers below the MSP.
This statement is correct. When the government announces an MSP, it becomes a legally binding price. Private buyers are not allowed to purchase crops from farmers below the MSP. However, this does not mean that private buyers are obligated to buy crops at the MSP. They can choose to buy at a higher price, but not below the MSP.

Statement 3: The marketed surplus for all the crops covered under MSP is more than 50%.
This statement is incorrect. The marketed surplus refers to the quantity of a crop that is sold in the market after meeting the farmer's own consumption needs. While it is difficult to provide an exact percentage, it is generally observed that the marketed surplus for crops covered under MSP is less than 50%. This means that a significant portion of the crop is consumed by the farmers themselves or used for other purposes like seed or animal feed.

Therefore, the correct statements are:
1. Commercial crops are not covered under minimum support prices (MSPs).
2. If MSP is legally binding, no crop can be bought by private buyers below the MSP.

According to the official data released recently, India's gross domestic product (GDP) contracted by 7.5% during the July, August, and September quarter. This means that in Q2 of 2020-21 India produced 7.5% fewer goods and services compared to what India produced in Q2 of 2019-20.

In layman's language, Monetisation of deficit means printing more money. In other words, Monetisation of deficit happens when RBI buys government securities directly from the primary market to fund the Government's expenses.

The Economic Survey 2019-20 backed the government's move to aggressively privatise central public sector enterprises (CPSEs) through divestment of government stake, which will have a multiplier effect on improving efficiency and profitability of the divested company while unlocking capital that can be used for building public infrastructure.

The International Plant Protection Convention (IPPC) is one of the "Three Sisters" recognised by the World Trade Organization's (WTO) Sanitary and Phytosanitary Measures (SPS) Agreement, along with the Codex Alimentarius Commission for food safety standards and the World Organization for Animal Health (OIE) for animal health standards.

The SDR is neither a currency nor a claim on the IMF. Rather, it is a potential claim on the freely usable currencies of IMF members. SDRs can be exchanged for these currencies. It cannot be used to fund infrastructure projects as it is not a currency. Same goes for settling domestic financial bills of the government.

Registered FPIs issue P-notes to overseas investors who wish to be part of the Indian stock market without registering themselves directly. They, however, need to go through a due diligence process.

About the International Financial Services Centres Authority

Special Drawing Right (SDR) is an international reserve asset generated by the International Monetary Fund (IMF) to supplement the existing official reserves of member countries. It was created in 1969 and is based on the basket of currencies, including the US dollar, euro, yen, pound sterling, and the Chinese renminbi.

Incorrect Statements:

2. The value of the SDR is not set by IMF, rather it is directly determined by supply and demand in the market.
3. It can be held and used by member countries, private entities or individuals.

Explanation:

2. The value of SDR is determined by the IMF's basket of currencies, and it is reviewed and adjusted every five years based on the relative importance of currencies in international trade and finance. The IMF also determines the interest rate on SDR holdings.

3. SDR is only allocated to member countries, and it cannot be held or used by private entities or individuals. However, member countries can use SDR to settle international payments or to obtain currencies of other member countries.

Correct Statements:

1. The Special Drawing Right (SDR) is an international reserve asset generated by the IMF that bears interest.

Explanation:

1. SDR is a financial instrument created by the IMF to supplement the official reserves of member countries. It is not a currency but a claim to currencies held by IMF member countries. SDR holdings earn interest and can be used by member countries to settle international payments or to obtain currencies of other member countries.

The Bank for International Settlements (BIS) is an international financial institution owned by central banks that "fosters international monetary and financial cooperation and serves as a bank for central banks". The BIS carries out its work through its meetings, programmes and through the Basel Process - hosting international groups pursuing global financial stability and facilitating their interaction.

Sectors in the Indian economy where FDI is not allowed are

The London Interbank Offered Rate (LIBOR) is a benchmark interest rate at which major global banks lend to one another in the international interbank market for short-term loans.

Explanation:

Disinvestment is the process of selling shares of a public sector enterprise to a private or public entity. The government can choose to sell minority or majority shares. Strategic disinvestment is a process where the government sells its majority shares in a public sector enterprise to a private or public entity. The process involves transferring ownership and control of the public sector enterprise.

The following statements are given:

1. Disinvestment involves selling minority shares of Public Enterprises, to a public or private entity.

This statement is correct. Disinvestment can involve selling minority shares of public sector enterprises to public or private entities. The government can choose to sell shares through the stock market or a strategic sale.

2. When the government sells majority shares in a public sector entity that is strategic disinvestment.

This statement is correct. Strategic disinvestment involves selling the majority shares of a public sector enterprise to a private or public entity. The government can choose to sell shares through the stock market or a strategic sale.

3. Under strategic disinvestment, the government transfers the ownership and control of a public sector entity to another public entity and the private sector is not involved here.

This statement is incorrect. Under strategic disinvestment, the government can transfer ownership and control of a public sector enterprise to a private or public entity. The private sector can be involved in the purchase of shares.

Therefore, the correct answer is option B, which states that statements 1 and 2 only are correct.

India is the leading exporter of Basmati Rice to the global market. India is also the largest producer of basmati rice in the world.

An anti-dumping duty is a protectionist tariff that a domestic government imposes on imports that it believes are priced below fair market value. Dumping is a process wherein a company exports a product at a significantly lower price than the price it normally charges in its home (or its domestic) market.

A municipal bond is a kind of debt instrument where investors offer loans to local governments. They are issued by civic bodies for specific projects and usually have a 10-year tenure. The ULB pays the annual interest on the bonds to the investor at the decided rate.

Recently China sold negative-yield debt for the first time, which saw high demand from investors across Europe. As yields in Europe are even lower, there was a huge demand for the 4-billion-euro bonds issued by China. China's 5-year bond was priced with a yield of -0.152%, and the 10-year and 15-year securities with positive yields of 0.318% and 0.664%.

National Security Exception laid out in Article XXI of the General Agreement on Tariffs and Trade (GATT) allows WTO members to breach their WTO obligations for national security purposes.

The New Development Bank (NDB), formerly referred to as the BRICS Development Bank, is a multilateral development bank established by the BRICS states. According to the Agreement on the NDB, "the Bank shall support public or private projects through loans, guarantees, equity participation and other financial instruments." Moreover, the NDB "shall cooperate with international organisations and other financial entities, and provide technical assistance for projects to be supported by the Bank."