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On the auspicious occasion of Nuakhai, the Prime Minister has greeted the people.

Background

• In Chhattisgarh, Nuakhai, also known as Nuakhai Parab or Nuakhai Bhetghat, is also known as Navakhai Parv.
• Nuakhai is an agricultural festival observed primarily by tribal tribes and Hindus in Western Odisha.
• It is also seen in nearby Simdega in Jharkhand, where the cultural influence of Western Odisha is strong.
• The advent of the new rice harvest is marked by Nuakhai.
• The term “nua” means “new,” and “khai” means “food,” representing the farmers’ possession of freshly harvested rice.
• This event takes place on the panchami tithi (fifth day) of the lunar fortnight in the month of Bhadrapada (typically August-September).
• It takes place the day after the Ganesh Chaturthi festival.

Historical Foundations

• Nuakhai has its roots in ancient times, with the Pralambana Yajna, which entails harvesting the first crop and presenting a reverent offering to the mother goddess.
• The festival’s current shape is related to the reign of the first Chauhan King Ramai Deva of Patnagarh in western Odisha.

Celebration Schedule

• Nuakhai celebrations consist of nine ceremonies, beginning with Behrana and ending with Juhar Bhet.
• Beheren: This is the notice of the meeting date.
• Nuakhai: The highlight of the festival is eating the freshly gathered produce after offering it to the deity, which is accompanied by boisterous dancing and singing.
• Juhar bhet: It entails requesting blessings from elders and giving presents as a sign of respect and affection.

Source: https://www.newindianexpress.com/states/odisha/2023/sep/20/odisha-no-nuakhai-joy-for-displaced-residents-2616578.html

• On September 8, 2023, the Reserve Bank of India (RBI) announced that the Incremental Cash Reserve Ratio (I-CRR) would be phased out.
• This action was taken in an effort to eliminate excess liquidity brought on by events like the return of Rs 2,000 notes to the banking system.

RBI’s Choice

• After reviewing the situation, RBI made the decision to end I-CRR gradually.
• The goal of the central bank’s gradual release of the impounded funds is to prevent abrupt shocks to the system’s liquidity and maintain the smooth operation of the money market.

How to Interpret the Cash Reserve Ratio (CRR)

• Before exploring Incremental Cash Reserve Ratio (ICRR), CRR is a crucial idea.
• Banks are required to keep a particular percentage of their deposits and liabilities with the RBI in liquid cash.
• CRR is an essential weapon in the RBI’s toolbox for controlling the flow of liquidity throughout the economy and serves as a safety net when the banking system is under pressure.
• Banks must currently maintain 4.5% of their Net Demand and Time Liabilities with the RBI as CRR.

I-CRR

• On August 10, 2023, the RBI implemented I-CRR as a temporary tool to absorb excess liquidity.
• On the growth in their Net Demand and Time Liabilities (NDTL) between May 19, 2023, and July 28, 2023, banks were required to maintain an I-CRR of 10%.
• From the beginning of the next week on August 12, 2023, it became effective.
• In addition to the normal CRR, the RBI is authorised to apply an extra metric known as the Incremental Cash Reserve Ratio (ICRR).
• When the financial system is experiencing an excess of liquidity, ICRR is used.
• In essence, ICRR requires banks to deposit even more liquid cash with the RBI than is necessary for compliance with CRR.
• This helps to monitor and regulate liquidity in the banking sector on a more comprehensive level.

Motive for I-CRR

• Due to events including the reintroduction of Rs 2,000 banknotes, the RBI’s transfer of surplus funds to the government, a rise in government spending, and capital inflows, there was an excess of liquidity.
• In July, the RBI’s daily liquidity absorption totaled Rs 1.8 lakh crore.
• Maintaining pricing and financial stability required managing excess liquidity.

Impact on Liquidity Conditions

• It was anticipated that I-CRR would remove excess liquidity from the banking sector worth more than Rs 1 lakh crore.
• On August 21, it temporarily changed the liquidity of the banking system from surplus to deficit.
• The lack of liquidity was a result of several factors, including GST outflows and dollar sales by central banks.
• However, starting on August 24, the liquidity situation returned to excess.
• The RBI removed Rs 76,047 crore of extra liquidity from the system on September 8.

Source: https://www.thehindu.com/business/Economy/rbi-decides-to-discontinue-i-crr-in-a-phased-manner/article67284514.ece#:~:text=While%2025%25%20of%20the%20I,released%20on%20October%207%2C%202023&text=The%20Reserve%20Bank%20of%20India,CRR)%20in%20a%20phased%20manner.

The Governor of the Reserve Bank of India (RBI) has discussed the problems and weaknesses involving Urban Cooperative Banks (UCBs), emphasising the significance of resolving these issues.

Urban Cooperative Banks (UCBs) are what exactly?

• UCBs are main cooperative banks that serve small borrowers and businesses. They are typically found in urban and semi-urban areas.
• They are governed by the Cooperative Societies Act of the relevant State and registered under the Banking Laws (Cooperative Societies) Act of 1955.
• UCBs were once only allowed to lend for non-agricultural uses, but since 1996, they have expanded their size and operations.
• Five states, Andhra Pradesh, Gujarat, Karnataka, Maharashtra, and Tamil Nadu, account for 79% of all UCBs.

Types of UCBs

UCBs are categorized into different tiers by the RBI based on their deposit size:

• Tier 1: Deposits up to Rs 100 crore.
• Tier 2: Deposits ranging from Rs 100 to 1,000 crore.
• Tier 3: Deposits between Rs 1,000 to Rs 10,000 crore.
• Tier 4: Deposits exceeding Rs 10,000 crore.

Key concerns/addresses raised by RBI

(1) Operational Stability

• To contribute to the overall stability of the financial and banking industry, UCBs must strengthen their operational and financial resilience.
• The effectiveness of the governance inside UCBs is crucial in ensuring the stability of these particular banks.

(2) Setting up right priorities

• The integrity and openness of financial reporting must be a top priority for boards and directors of UCBs, who should abstain from cutting-edge accounting techniques that hide the true financial situation.
• To systematically control liquidity risk, asset liability management must be proactive.
• It is essential to set up a strong IT and cybersecurity infrastructure and to have the required capabilities available at the bank level.
• Governance procedures need to be improved, particularly those that deal with Compliance, Risk Management, and Internal Audit.

(3) Functioning of Boards

• Ensuring that directors have the necessary knowledge and experience.
• Assembling a qualified management board.
• Taking into account the board members’ tenure and diversity.
• Encouraging open and active participation at board meetings.
• Ensuring that committees at the board level operate effectively.

(4) Credit Risk Management

• Maintaining risk control by using strict underwriting guidelines.
• Putting in place efficient post-sanction surveillance.
• Early detection and stress reduction for emerging stress.
• To aid in recovery and keep adequate provisioning, follow-ups with significant non-performing asset (NPA) borrowers are pursued.

@the end

• For the general stability and resilience of the banking industry, it is critical to address the worries and vulnerabilities in urban cooperative banks.
• In order to maintain the health of UCBs, the RBI’s suggestions emphasise the significance of governance, risk management, and transparency.

Source: https://www.thehindubusinessline.com/money-and-banking/urban-co-operative-banks-face-dual-challenges/article30390395.ece

• The standoff between Tamil Nadu and the Centre over the National Eligibility and Entrance Test (NEET) has heated up.
• It has sparked debate on returning education to the State List of the Constitution’s Seventh Schedule.

Why is this in the news?

• Educational Independence: M.K. Stalin demanded that education be returned to the State List after being placed on the Concurrent List during the Emergency.
• NEET Disagreement: The sad suicides of a student and his father as a result of exam-related stress fueled Tamil Nadu’s opposition to NEET.

Why is Tamil Nadu opposed to NEET?

• Due to its mechanical concentration on grades, NEET, a centralised entrance exam for medical courses, attracts resistance in Tamil Nadu.
• The Effect on Local Models: NEET upended paradigms such as Christian Medical College (CMC) Vellore, which was noted for emphasising talent above grades.
• Impact of In-Service Quota: NEET eliminated Tamil Nadu’s in-service quota for medical graduates, lowering healthcare quality.
• Disadvantages The exam benefits wealthier sectors who can afford lakhs of dollars in tuition (especially repeaters), disadvantaging underprivileged groups and impeding their objectives.

The Emotional Nature of the Problem

• Equity and Social Justice: Opposition to NEET is strongly founded in aspirations for educational equity and autonomy, which are motivated by concerns about social justice.
• Kamaraj’s Dream: Chief Minister K. Kamaraj’s education vision for Tamil Nadu emphasised accessibility and empathy for the unlettered population.

Legislative Struggles

• Bills presented by the former AIADMK administration in 2017 demanding state autonomy in medical admissions. The President gave them back.
• Stalin’s Attempts: The Tamil Nadu Admission to Undergraduate Medical Degree Courses Bill, 2021, was passed by CM M.K. Stalin’s government in 2021, with the goal of abolishing NEET and basing admissions on Class 12 grades for social justice.
• Governor R.N. Ravi, who was opposed to the anti-NEET Bill, delayed its submission to the President, causing political problems.

Justice A.K. Rajan Committee

• Committee Formation: The Justice A.K. Rajan Committee was formed in 2021 to evaluate the fairness of NEET medical admissions.
• The committee criticised NEET for preferring repeaters and coached students while disadvantageous first-time applicants, resulting in lower admissions among marginalised groups.

Why is TN now enraged?

• Medical course admissions fall within the Concurrent List (Entry 25), which allows governments to regulate on these issues.
• Amending Central Laws: States may pass admissions laws and change central admissions rules as long as they do not violate legislative statutes.

Current Situation

• Historic Public Health Practises: Retaining PG doctors was critical to Tamil Nadu’s public health infrastructure, demonstrating the state’s excellent healthcare practises.
• Reconciling Uniformity and Fairness: The stalemate in the NEET programme demonstrates the difficulty of reconciling uniformity with local values and requirements.
• Clash of Values: The issue highlights a greater struggle between centralization and local autonomy, highlighting deeper concerns in India about democracy, equality, and social justice.

Source: https://indianexpress.com/article/explained/behind-tn-vs-centre-over-neet-a-larger-equity-federalism-battle-8892918/