Daily News Simplified - DNS

11 04 20

Notes

SL. NO.

TOPICSTHE HINDU

PAGE NO.

1 Moratorium on repayment puts NBFCs in a spot 15

2 Saudi, Russia want oil cuts finalised at G20 talks 15

3 Sanitization Tunnel 02

4 Shanti Hiranand 04

2. Saudi, Russia want oil cuts finalised at G20 talks (The Hindu Pg. No. 15)

Title Moratorium on repayment puts NBFCs in a spot (The Hindu – Pg. 15)

Syllabus Prelims: Indian EconomyMains: GS Paper III – Indian Economy

Theme Sustainability of NBFCHighlights Moratorium on repayment puts NBFCs in a spot

Context: Non-banking financial companies (NBFCs) may face a tough time following the

Reserve Bank of India’s recent directive on providing a moratorium on repayment.

A sector which was already reeling under IL&FS and DHFL crises has been presented with another major challenge and this may be more pernicious.

Before understanding the crises, let us first understand what and NBFC is?

What an NBFC is?

A NBFC is a company registered under the Companies Act, 2013 of India. What they do?

o Business of loans and advances,o acquisition of shares, stock, bonds,o hire-purchase insurance business or chit-fund business,

What they cant do?o They can’t make the following as their principal business:

agriculture, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.

So how do NBFC’s operate?

NBFCs typically borrow money from banks or sell commercial papers to mutual funds to raise money.

NBFCs provide services which are similar to those of banks but they do not hold a banking license.

NBFC focuses on business related to loans and advances, acquisition of shares, stock, bonds, debentures, securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business.

What is the reason behind such a crises?

The Reserve Bank of India (RBI) had asked banks, co-operative banks and NBFCs to offer three-month moratorium on loan repayments by their customers in the wake of the COVID-19 pandemic and the nationwide lockdown.

However, banks have refused to give the same facility to NBFCs which have taken huge loans from the banking sector.

This is putting significant pressure on such companies. Or in simple words

o NBFCs are highly dependent on banks for funding and the mainly take lons from banks which they further distribute to customers.

o Now these entities have to provide relief to their customers but they still have to continue repaying banks and other borrowers.

What does the data suggests?

According to Crisil, liquidity pressure will increase for almost 25% of the Crisil-rated NBFCs if collections do not pick up by June 2020.

These NBFCs have ₹1.75 lakh crore of debt obligations maturing by then.

So do these NBFCs have other sources of funding which can allow them to sail through

Dated: 11-April-2020 DNS Notes

TitleSyllabus Prelims: International Relation

Mains: GS Paper II – International RelationTheme International Oil PricesHighlights

Context

The price war between Saudi and Russia as a part of OPEC+ group has come to an end with both countries agreeing to cut down oil production to stabilize the international oil price which is at a 30-year low currently.

The lockdowns and consequent travel restrictions has resulted in excess oil production of 14.7 million barrels/day in the second quarter of 2020 which has resulted in collapse of oil prices to a 30-year low.

The price of Brent Crude (international benchmark of crude oil price) is hovering around $30/barrel.

The latest meeting of the OPEC+ in Vienna had led to failure of the deal with Russia declining to sign the deal.

Tentative deal

Now the major oil producers including OPEC, Russia and US are trying to come to an agreement to cut the oil supply to stabilize the price.

The OPEC members and Russia have arrived at a deal to reduce oil production by 10 million barrels per day (10% of the supply) in May and June 8 million barrels/ day from July to December 2020 and 6 million barrels/day from January 2021 to April 2022

However one hurdle is Mexico has not supported the deal. Thus the OPEC members have now urged G20 (of which Mexico is a part) to the

production cuts to stabilize the price.

Background

Basics

Oil being a commodity is subject to price fluctuations primarily on two factors namely supply and demand.

If the supply is more and demand is less the price will fall and vice versa.

Global oil supply

Globally major suppliers of oil include OPEC (The Organization of the Petroleum Exporting Countries) who are responsible for about 40 percent of the world’s oil supply and 60 percent of the oil traded globally.

OPEC includes 13 countries with major ones including Saudi Arabia, Iran, Iraq, UAE, and Venezuela to name a few. (Qatar withdrew from the group in 2018)

Saudi Arabia is the world’s largest supplier with nearly 10% of the global share Major Non-OPEC producer and suppliers of oil include USA (since 2014) and Russia.

In focus: OPEC+ Deal

Under the Vienna Agreement of 2016, OPEC-plus deal was signed between major oil producers to coordinate the production levels to check the price fluctuation

Dated: 11-April-2020 DNS Notes

It is basically an agreement between OPEC and non-OPEC oil producers, to cut oil production in order to prevent falling oil prices.

Besides the deal is seen as a counter to keep the oil prices from falling due to shale oil production from US since 2014.

Geopolitics of Oil Price

Russia and Saudi are leading producers of oil in the world who have been competing for supplying cheaper oil to predominantly the Chinese market.

Since 2014 US has also entered the race as a result of shale oil production. Russia had withdrawn from the deal earlier this month to keep the oil prices low and

drive away competition from US Shale. (Cost of producing Shale is higher than cost of producing crude oil in Russia)

Now with COVID 19 effect on demand slump and consequent prices the major oil producers have decided to come together in slashing the production levels.

Personal Notes

Dated: 11-April-2020 DNS Notes

Title 3. Sanitization Tunnel (The Hindu Pg. No. 02)Syllabus Prelims: Social Issues

Mains: GS Paper II – Social IssuesTheme Disinfection against Corona VirusHighlights

Initially, disinfectant tunnels had been set up in China, where COVID-19 was first identified. But even in China, the usage of bleach to douse people came under sharp criticism as it would only harm people.

Governments have been quick to set up disinfectant tunnels to sanitize people in public places amid the COVID-19 outbreak.

But what has gone unnoticed is the chemical component — sodium hypochlorite. Experts suggest sodium hypochlorite can harm certain membranes in the body, instead of

killing the virus. But according to the World Health Organisation (WHO), the disinfectants will work on

surfaces, but not on the human body, and can also harm people. Spraying alcohol or chlorine all over your body will not kill viruses that have already

entered your body. Spraying such substances [alcohol or chlorine] can be harmful to clothes or mucous membranes

What are the characteristics of sodium hypochlorite? Sodium hypochlorite is a clear, slightly yellowish solution with a characteristic odour. As a bleaching agent for domestic use it usually contains 5% sodium hypochlorite Sodium hypochlorite is unstable. Chlorine evaporates at a rate of 0,75 gram active

chlorine per day from the solution. This also happens when sodium hypochlorite comes in contact with acids, sunlight, certain

metals and poisonous and corrosive gasses, including chlorine gas. Sodium hypochlorite is a strong oxidator and reacts with flammable compounds and

reductors. Sodium hypochlorite solution is a weak base that is inflammable.

What happens to the pH value when sodium hypochlorite is added to water?Due to the presence of caustic soda in sodium hypo chlorite, the pH of the water is increased.

Both ECDC and ICMR have recommended the use of sodium hypochlorite only on surfaces and not the human body. The ICMR, in its infection control guidelines, has recommended the use of 1 per cent of the chemical compound to clean surfaces with blood and body substance spills and they must be left to dry.

Personal Notes

Dated: 11-April-2020 DNS Notes

Title 4. Shanti Hiranand (The Hindu Pg. No. 04)Syllabus Prelims: Polity and Governance

Mains: GS Paper II – Polity and GovernanceTheme Preparedness against Covid-19Highlights Thumri

Originated in Eastern Uttar Pradesh, mainly in Lucknow & Benares, around 18th century.

It is said to have begun in Uttar Pradesh with the court of Nawab Wajid Ali

A romantic & erotic style of singing; also called “the lyric of Indian classical music”.

Lyrics are typically in Brij Bhasha and are usually romantic & religious.

Compositions are mostly on love, separation and devotion.

Various episodes of the lives of Lord Krishna & Radha is portrayed.

The beauty of thumri lies in the artist’s ability to convey musically as many shades of meaning as the words of a song can bear.

A Thumri is usually performed as the last item of a Khayal concert. It is a much freer form than khayal.

Three main gharanas of thumri — Benaras, Lucknow and Patiala. Begum Akhtar is one of the most popular singers of thumri style.

Dadra

Dadra bears a close resemblance to the Thumri. However there are some differences -

Ghazal

It is mainly a poetic form than a musical form, but it is more song-like than the

Thumri Dadra

Lyrics are typically in Brij Bhasha

Song form usually composed of an opening verse in old Hindi followed by independent rhyming couplets in Urdu.

One antra More than one antra

Tala less prominently used

Talas are prominently used

A Thumri is usually performed as the last item of a Khayal concert.

Singers usually sing a dadra after a thumri.

Dated: 11-April-2020 DNS Notes

thumri. The ghazal is described as the “pride of Urdu poetry”.

A poetic expression of both the pain of loss or separation and the beauty of love in spite of that pain.

Originated in Iran in the 10th century AD.

Spread in South Asia in the 12th century due to the influence of Sufi mystics and the courts of the new Islamic Sultanate. Reached its zenith in the Mughal period.

Amir Khusrau was one of the first expounders of the art of making Ghazal.

Some of the famous persons associated with Ghazals: Muhammad Iqbal, Mirza Ghalib, Rumi (13th century), Hafez (14th century), Kazi Nazrul Islam, etc.

Personal Notes