 A very good evening to all our friends and welcome to the Hindu News Analysis of Shankar IAS Academy for the date 20th September 2020. Before we begin our news analysis, we have an important announcement to make. As all of you know that Shankar IAS Academy is conducting two all India free online MOOC tests. And today we will be having our first free MOOC test. And all the aspirants who have already registered for the same are requested to take part in the test. And the second test will be conducted on 27th September 2020. The link for the registration is given in the description section and also in the comment section. And we request all the aspirants to make use of this opportunity for your upcoming problems 2020. With this we will start our news analysis for today. Here is the list of the news articles taken up for today's discussion along with the page numbers of five different editions. Let us take up our first news. Here is our first news article which says that a depth recovery tribunal in Chennai has set aside an auction which was held in 2018 for recovery of loans. As it was not in compliance with the provisions of surfecy act. Here the details of this case is not important for us. In this context, let us have a discussion on the important provisions of surfecy act 2002. Then the recovery procedure and about the depth recovery tribunals. The syllabus relevant for this analysis is highlighted here for your reference. Please go through it. See surfecy stands for Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act of 2002. It allows banks and financial institutions to recover their dues exceeding 1 lakh rupees. And this is done by proceeding against the secured assets of the borrower or guarantor without the intervention of courts or tribunals at the first stage. In other words, banks use this act as an effective tool for non-performing assets recovery. But this is possible only when the non-performing assets or NPS are backed by the securities charged to the bank by a mortgage or assignment. Now let us see how this works. Assume that an individual has mortgaged a property and availed loan from bank and assume that this loan has become an NPA. See an asset or a loan is considered as non-performing if any amount of interest principal instalments remains overdue for more than 90 days in respect of term loans. And upon default, banks can seize the securities without the intervention of the court at first stage. And for this, banks have to give a notice in writing to the defaulting borrower requiring it to discharge its liabilities within 60 days. And if the borrower fails to comply with the notice, then the bank may take recourse to one or more of the following measures. First one, it can take possession of the security for the loan. Second one, it can sell or release or assign the right over the security or manage the same or appoint any person to manage the same. The surfacing act also provides for the establishment of asset reconstruction companies regulated by RBA to acquire assets. Here asset reconstruction means acquisition by any securitisation or reconstruction company of any right or interest of any bank or financial institution to any financial assistance for the purpose of realisation of such financial assistance. Now coming to the valuation of the property, an authorized officer of the secured creditor that is bank or financial institution obtain the valuation of the property from an approved valuer in consultation with the secured creditor. Know that the surfacing act provides for a right to appear. Any agreed person, including the debtor or borrower, can appeal in the debt recovery tribunal or DRT. And if not satisfied, they can appeal against the DRT's decision in the debt recovery appellate tribunal. And it is very important to know that the provisions of the surfacing act does not apply in certain cases. Examples are if any security interest for securing repayment of any financial assets does not exceed 1 lakh rupees or when any security interest is created in agricultural land. Another example is a case in which the amount due is less than 20% of the principal amount and interest thereon. Now let us discuss in brief about the debt recovery tribunal or DRT. Know that the recovery of debts due to banks and financial institutions act of 1993 that is RDDBFI Act provides speedy redressal to lenders and borrowers through filing of original applications in the debt recovery tribunals. And if not satisfied, DRT's decision can be appealed in the debt recovery appellate tribunals or DRT's. And know that there are 39 debt recovery tribunals and five debt recovery appellate tribunals, which are single member tribunals. The five debt recovery appellate tribunals are located in Ilhabad, Chennai, Delhi, Kolkata and Mumbai. So this is all about the discussion of this news article. And in this discussion, we saw some of the important provisions of Surfacing Act of 2002, then the debt recovery procedure and also about the debt recovery tribunals. With this, we'll move on to the next news. Now let us take up this news article which talks about the sovereign debt and external debt. The news article says that India's total external debt is increased by 2.8% to 558.5 billion US dollars from 543 billion a year earlier. Now before trying to understand why this debt increased, let us see the basics of sovereign debt and external debt. So then what is sovereign debt? See, it is the central government's debt. It is the debt received by the national government in foreign currency to finance the country's growth and development. Here, all kinds of libraries of the government to foreign individuals and institutions are counted. In India's sovereign debt, the top two constituents are external assistance and foreign institutional investments in government securities. Here external assistance means the loans raised by the government from bilateral and multilateral institutions. It denotes multilateral and bilateral loans received under the agreements between government of India and other governments or international institutions and also the repayments of such loans by India. Here examples include loans from IMF, then Asian Development Bank etc. Now in this case, the foreign institutional investments in government securities are not counted. Now what is foreign institutional investment or FIA? See, it is a portfolio investment by foreign investors in shares and debentures. When this investment is made into the government's bonds or securities, the government is liable to pay back to the foreign investors at the time of maturity. So we should know that foreign institutional investments which are made into the government securities and bonds are counted in sovereign debt. Now talking about foreign institutional investments in government securities, they are dependent on the stability of the issuing government. The stability is assessed through the country's sovereign credit ratings. When the credit rating are good for a country, it means the loans given to that government are safe. Now today's news article says that the sovereign debt shank by 3% and the external assistance raised by 4.9%. Now foreign institutional investments to government securities which is the second largest constituent reduced by 23.3% and as a net, the sovereign debt reduced by 3%. On the other hand, the non-sovereign debt which means the debt of non-government entities raised by 4.2%. This is mainly due to an increase in the commercial borrowings. Now the top two constituents of non-sovereign debt are ECBs that is external commercial borrowings and outstanding NRA deposits. So what are external commercial borrowings? Know that they are the loans raised by the commercial enterprises. It refers to commercial loans in the form of bank loans, buyer's credits, supplier's credit etc. And they have a maturity more than three years. The external loans with maturity period less than three years are classified under short-term debts. Now according to the news, the non-resident deposits which is the second largest constituent under the non-sovereign debt didn't change much. The deposits received from non-resident Indians come under this head. So as of now NRAs can deposit money under different deposit schemes. Here it is important to know that NRAs can deposit either in Indian rupees or in foreign currencies. Here the total external debts which include both sovereign and non-sovereign debt increased by 2.8% by the end of March 2020. India's foreign debt is primarily denoted in US dollars as US dollars share in debt is more than 50%. To be precise it is 53.7%. So appreciation of US dollar in March 2020 is also a major reason for increase in foreign debt. So in our discussion of this news article we saw what are sovereign debts and external debts. With this we will move on to the next news. Now this FAQ article talks about the agreements that govern India and China's actions especially along the line of actual control or LAC. And these agreements are in spotlight since the India-China standoff in May 2020. And recently the Indian Defence Minister has told the parliament that China has mobilized large number of troops and armaments along several points of LAC. And in such instances since May we are usually saying that China is violating the agreements. So in today's discussion let us see what these agreements are and what are their important provisions. The syllabus relevant for this analysis is highlighted here for your reference. Please go through it. The first agreement of importance is the 1993 agreement on the maintenance of peace and tranquility along LAC in the India-China border areas. See the article one of this agreement clearly states that the two sides that is India and China should resolve all the boundary questions through peaceful and friendly consultations. Until then they have to strictly respect and observe the line of actual control. And more importantly both the sides agreed not to use or threatened to use force against the other by any means. Then article two states that each side has to keep its military forces to a minimum level along LAC. So this article is what is particularly violated by China. It has assembled large number of troops along the LAC. And this agreement also called for developing effective confidence building measures in the areas of LAC. And also both sides cannot undertake specified levels of military exercises in mutually identified zones. And even if such exercises have to be carried out by one country near the LAC, then prior notification has to be given to the other country. But India did not receive such notifications from China. So China cannot argue that the large number of troops is for military exercises. And the same condition is also applicable for the air intrusions. See you can see it here. The two sides agreed to take adequate measures to ensure that air intrusions across the line of actual control do not take place and shall undertake mutual consultations should intrusions occur. Both sides shall also consult on possible restrictions on air exercises in areas to be mutually agreed near the line of actual control. And also based on the article four of this agreement, we are holding the diplomatic consultations between the border person of both the countries. Article four is given here for your reference. So simply it means through this agreement both sides agreed to maintain peace and tranquility in the areas of LAC, which is being currently breached by China. Now the second important agreement is the 1996 agreement on confidence building measures in the military field along line of actual control in the India-China border areas. So it is an elaborate agreement. It bars or prohibits the use of military capability against one another. Further, it bars using armed forces deployed in the border areas along LAC to attack the other side or to engage in military activities that threaten other side or to undermine the peace, tranquility and stability in the border areas. It was also agreed that the two sides will reduce or limit the number of field army, border defense forces, paramilitary forces etc. which are deployed in mutually agreed geographical zones along the LAC. Further, the major categories of armaments are also to be reduced or limited. This includes compact tanks, infantry combat vehicles, guns with 75 mm or bigger calibre, then motors with 120 mm or bigger calibre, surface-to-surface missiles, surface-to-air missiles and any other weapon system mutually agreed by both countries. Additionally, it also bars flying of combat aircrafts within 10 kilometers of line of actual control. But if this is required, then the country has to give these informations in advance to the other side. See the information include the type and number of combat aircrafts, height of the proposed flights in meters, then proposed duration of flights, proposed timing of flights and also areas of operations defined in latitude and longitude. Now this agreement gains importance because it prohibits certain activities along LAC for preventing dangerous military activities also, such as both sides shall not open fire, cause biodegradation, then use hazardous chemicals, conduct blast operations or hunt with guns or explosives within 2 kilometers of line of actual control. Like we already saw, even if such activities have to be conducted, the other side shall be informed through diplomatic channels or by convening a border personal meeting. So the agreement prohibits almost all activities which could lead to another war between the countries. But the recent massive mobilization of troops, tanks, armored carriers and also air defenses very close to the line of actual control has definitely violated the agreements. Even though the agreement demands both sides to strictly respect the LAC, still they could not be effective because the agreements depend on both sides arriving at a common understanding of the alignment of LAC in the India-China border areas. The agreements also call to agree for exchanging maps which indicates the respective perceptions of the entire alignments of LAC as soon as possible. And as we know, this did not happen yet. And there is different perceptions about the line of actual control by both the countries. According to the author of this FAQ, this alignment process has made only little progress since 2003 and both sides have only exchanged the maps in the central sector. But there are overlapping claims at several points of the LAC due to differences in the perception and this led to not commonly delineated line of actual control. And another reason for this ineffectiveness of agreements is that they do not define what is the minimum level of troops to be deployed along line of actual control. And this also led to face-offs. Thus, what is the way forward? Here the author tells that the agreements have to be reviewed. Until then, both the sides have to abide by the existing boundary agreements as agreed in the recent Five Point consensus agreement. And by this, peace and tranquility can be maintained in the border areas. So, this is all about the discussion of this news article. With this, we will move on to the next news. Now, this news article talks about the Insolvency and Bankruptcy Code Second Amendment Bill of 2020. Know that it amends the Insolvency and Bankruptcy Code of 2016. And the bill was passed in Raj Sabha yesterday. We have explained in detail about the IBC and the procedures involved on our 16th November 2019 The Hindu Analysis. Now, before going to the important changes made by the amendment, let us understand some basics about the Insolvency and Bankruptcy Code 2016 or IBC. First, what is insolvency? It is a financial state when the value of total liabilities of an individual or a group exceeds its total assets. Insolvency leads to a state of default which can happen due to financial failure or business failure. So, a person facing insolvency needs to take corrective actions to rectify the situation to avoid possible bankruptcy. So, bankruptcy is the next state of insolvency. Here, an individual is declared as incapable of paying his debts or bills at any time in present as well as in the foreseeable future. Generally, the failure of resolution process leads to bankruptcy. Here, resolution refers to a plan proposed by any authorized person or entity for enabling the overdue payments of a corporate debtor. And this will be through restructuring of the entity or even through partial payments of the debts. And it will be done while allowing the corporate debtor to continue his business. Under the IBC, the educating authority in relation to insolvency resolution and also the liquidation is the National Company Law Tribunal that is NCLT. NCLT then appoints a resolution professional or RP. See, the resolution professional has the duty to preserve and protect the assets of the corporate debtor including the continued business operations of the corporate debtor. RP also has to invite the prospective lenders, investors and any other persons to put forward resolution plans for the debtor company. With this, let us come to the bill. See, the bill seeks to temporarily suspend initiation of corporate insolvency resolution process or CIRP for certain types of defaults. Normally, the creditors of the company approach the NCLT or National Company Law Tribunal to initiate the corporate insolvency resolution process in case of a default. And the bill provides that for defaults arising during the six months from March 25, 2020, corporate insolvency resolution process can never be initiated by either company or its creditors. The central government may extend this period to one year through notification. And during this period, the CIRP can still be initiated for any defaults arising before March 25, 2020. The bill provides that no application shall be filed by a resolution professional in respect of a default against which initiation of corporate insolvency resolution process is suspended. Earlier, the creditor can initiate insolvency proceedings on a default of just more than 1 lakh. And this threshold was increased to 1 crore up to April 30. So, the proceedings will not be affecting MSMEs. The question which is related to this topic will be discussed in the practice questions discussion. With this, we'll move on to the next news. Now, this news article is with reference to the recent findings about MOON by a research study. The findings are based on images and data sent by ISROS Chandrayaan-1. Now, the finding is that MOON may be resting along the poles. And this is because researchers have found spectral signature of hematite. Now, what is hematite? See, hematite mineral is a form of iron oxide or you can call it rust, which is produced when iron is exposed to oxygen and water. And this has puzzled the scientists because the surface of the MOON is known to have iron-rich rocks. But MOON is not known for the presence of water and oxygen. And water and oxygen are needed to interact with iron in order to create rust. Here, the mystery starts with the solar wind which is a stream of charged particles that flow out from the sun. And it bombards earth and MOON with hydrogen. And hydrogen makes it harder for hematite to form. Because here, hydrogen is a reducer or reducing agent. And this means hydrogen adds electrons to the materials it interacts with. That's the exact opposite of what is needed to make hematite. For iron to rust, it requires an oxidizer or an oxidizing agent which removes electrons. Now here, the earth is shielded from this hydrogen by its magnetic field. Whereas the MOON is not shielded. So, logically it means hematite should not have been formed in MOON. Now, scientists have given reasons for formation of hematite on MOON. So, one of the reasons for this according to the NASA scientists is that Earth's own atmosphere is lending a helping hand. That is, Earth's atmosphere could be protecting MOON as well. So, the oxygen present in Earth's atmosphere might have caused the rusting on MOON. From this finding and based on the Chandrayaan-1's MOON data, another major inference is that MOON's poles are home to water. Actually, Chandrayaan-1's orbiter had discovered water ice on MOON, and it also mapped out a variety of minerals while surveying the MOON's surface in 2008 itself. The researcher has studied the presence of water extensively in data from Chandrayaan-1's MOON mineralogy mapper instrument that is M-Cube. And know that M-Cube was built by NASA's Jet Propulsion Laboratory. Here, remember that Chandrayaan-1 is India's first mission to MOON, and it was launched successfully by India's Paula satellite launch vehicle that is PSLV C-11 in 2008. The spacecraft was orbiting around the MOON at a height of 100 kilometers from the lunar surface, and it was looking for chemical, mineralogical, and photogeologic mapping of the MOON. And for this purpose, the spacecraft carried 11 scientific instruments built by India, USA, UK, Germany, Sweden, and Bulgaria. Now, the hope is that NASA's Artemis mission can bring some hematite samples so that detailed chemical studies can confirm if the lunar hematite was actually oxidized by Earth's oxygen or not. Here, Artemis is a lunar exploration program of NASA under which NASA is committed to land American astronauts, including the first woman and the next man on the MOON by 2024. The mission will also use innovative technologies to further explore the lunar surface. So, this is all about this news article. With this, we'll move on to the practice questions discussion based on today's news analysis. Here, we have our first question. With reference to insolvency and bankruptcy code, consider the following statements. It is a two statements question. Insolvency is a financial state where the liabilities of an individual or an organization exceeds its assets, and they are unable to raise enough cash to pay its debt. Now, the second statement reads, bankruptcy is the next state of insolvency when an individual is declared as incapable of paying up his debts at any time in present as well as in the foreseeable future. See, this statement is also correct. Here, we have to identify the correct statement or statements from the given statements. So, both statements are correct. The correct answer is option C. Now, see the second question, which among the following statements is not correct with reference to the hematite recently seen in news. It is also a two statements question. The first statement reads, it is a type of iron oxide and most abundant iron ore mineral in India. See, statement one is correct. Hematite is one of the principal ores of iron and about 79% of hematite ore deposits are found in eastern sectors, that is, Assam, Bihar, Chhattisgarh, Jhagan, Odisha and Uttar Pradesh. Hematite is considered superior because of its higher grade and it is the most abundant iron ore mineral in India. So, statement one is correct. Now, second statement reads, it is found in moon and Mars. See, the second statement is also correct. Recently, it is found in moon, which we have discussed in today's news. And very long ago, gray colored hematite was found in Mars. And red and gray iron oxides on Mars are really just different forms of the same mineral. Here, we should know that gray hematite has the same chemical formula that is Fe2O3 as its red-stea-red-casin. But it has a different crystalline structure. Here, the red rust is fine and powdery and gray hematite is crystal and larger. And some say that the reddish brown color of Mars is because of the reddish, that is, hematite only. So, in this question, we are supposed to identify the incorrect statement or statements. Both the statements are correct here. So, the correct answer is option D, neither one nor two. Now, we have this question. Consider the following statements. External assistants and the foreign institutional investments in government securities are the top two constituents of non-sovereign debt. And the second statement reads, external commercial borrowings and the outstanding NRA deposits are the top two constituents of sovereign debt. See, both these statements look correct, but be careful. The sovereign and non-sovereign are interchanged here. External assistants and FII, that is, foreign institutional investments in government securities are the constituents of sovereign debt, while external commercial borrowings and the outstanding NRA deposits are the constituents of non-sovereign debt. So, here both the statements are incorrect. Here we have to identify the correct statement or statements. So, both are incorrect. So, the correct answer is option D, neither one nor two. Now, see this question with reference to securitization and reconstruction of financial assets and enforcement of Security Interest Act of 2002. Consider the following statements. Here also, we have two statements. The first statement reads, it allows banks and financial institutions to recover their dues even if the security interest is created in agricultural land. See, this statement is incorrect. The provisions of the Surfacy Act does not apply when security interest for securing repayments of any financial asset does not exceed 1 lakh rupees or when any security interest is created in agricultural land. Now, the second statement reads, the Act provides for right to appeal, where an aggrieved person, including the borrower, can appeal in the debt recovery tribunal. See, this statement is correct. Also, the debt recovery tribunal's decision can be appealed in debt recovery appellate tribunals or DRATs. Here, we have to identify the incorrect statement. So, here statement one is incorrect and statement two is correct. So, the correct answer is option A. Now, we have this main question. Please write your answers and post it in the comment section. Our feedback will be given in a reasonable time frame. And with this, we'll come to the end of analysis of all the news articles taken up for today's discussion and also the practice questions discussion. If you like this video, press the like button, comment and share and do subscribe to Shankar IIS Academy YouTube channel for latest videos and updates relating to civil service preparation. Thank you.