Daily Current Affairs for UPSC Civil Services Exam – 25 January 2021

In Today’s News:

  1. Sunderbans – latest ZSI report.
  2. MCLR.

1. Sunderbans – latest ZSI report

News Summary

The latest ZSI report has stated that Sunderbans is home to 428 species of birds.

Prelims GS – Environment

Sunderbans and Mangroves:
  • The Indian Sundarban, covering the south-westernmost part of the delta, constitutes over 60% of the country’s total mangrove forest area and includes 90% of Indian mangrove species.
  • The mangrove forests protect the hinterland from storms, cyclones, tidal surges, and the seepage and intrusion of saltwater inland and into waterways.
  • They serve as nurseries to shellfish and finfish and sustain the fisheries of the entire eastern coast.
  • The Sundarbans are a part of the world’s largest delta formed by the rivers Ganges, Brahmaputra, and Meghna on the Bay of Bengal.
  • Sunderban is a vast area covering 4262 square km in India alone, with a larger portion in Bangladesh.
  • 2585 sq. km of the Indian Sundarban forms the largest Tiger Reserve and National Park in India.
  • The total area of the Indian part of the Sunderban forest, lying within the latitude between 21°13′-22°40′ North and longitude 88°05′-89°06′ East, is about 4,262 sq km, of which 2,125 sq km is occupied by mangrove forest across 56 islands and the balance is underwater.
  • India has designated Sundarban Wetland as a Wetland of International Importance(Ramsar site).
  • Sunderbans National Park is also a UNESCO World Heritage site.
Some unique Species found in Sunderbans:
  • 96 royal Bengal tigers
  • Masked finfoot
  • the Buffy fish owl
  • Goliath heron
  • the spoon-billed sandpiper
  • Critically endangered northern river terrapin (Batagur Baska),
  • the endangered Irrawaddy dolphin (Orcaella brevirostris),
  • the vulnerable fishing cat (Prionailurus viverrinus)
  • Two of the world’s four horseshoe crab species,
  • 9 of India’s 12 species of kingfisher are also found here.

Click here to know more about Sunderbans.


News Summary

In the newspaper, there is a mention of MCLR and loans in an article.

Prelims GS – Economic Development

  • The marginal cost of funds based lending rate (MCLR) refers to the minimum interest rate of a bank below which it cannot lend, except in some cases allowed by the RBI.
  • It is an internal benchmark or reference rate for the bank.
  • MCLR actually describes the method by which the minimum interest rate for loans is determined by a bank – on the basis of marginal cost or the additional or incremental cost of arranging one more rupee to the prospective borrower.
  • The MCLR methodology for fixing interest rates for advances was introduced by the Reserve Bank of India with effect from April 1, 2016.
  • This new methodology replaces the base rate system introduced in July 2010.
  • All rupee loans sanctioned and credit limits renewed w.e.f. April 1, 2016, would be priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which will be the internal benchmark (means a reference rate determined internally by the bank) for such purposes.
  • The MCLR shall comprise of:
    • The marginal cost of funds;
    • Negative carry on account of CRR;
    • Operating costs;
    • Tenor premium.
  • Marginal Cost of funds:
    • The marginal cost of funds shall comprise of Marginal cost of borrowings and return on net worth.
  • Negative Carry on CRR:
    • Negative carry on the mandatory CRR which arises due to return on CRR balances being nil will be calculated as under:
    • Required CRR x (marginal cost) / (1- CRR)
    • The marginal cost of funds arrived above shall be used for arriving at negative carry on CRR.
  • Operating Costs:
    • All operating costs associated with providing the loan product including the cost of raising funds shall be included under this head. It shall be ensured that the costs of providing those services which are separately recovered by way of service charges do not form part of this component.
  • Tenor premium:
    • These costs arise from loan commitments with longer tenor. The change in tenor premium should not be borrower specific or loan class-specific. In other words, the tenor premium will be uniform for all types of loans for a given residual tenor.
  • Since MCLR will be a tenor linked benchmark, banks shall arrive at the MCLR of various maturities by incorporating the corresponding tenor premium/ discount to the sum of Marginal cost of funds, Negative carry on account of CRR, and Operating costs.

Click here to know more about MCLR on the RBI scripts page.

Mini Insights

Mains GS3 – Economic Development

Benefits of MCLR:

Prior to the MCLR system, different banks were following different methodology for calculation of base-rate /minimum rate – that is either on the basis of the average cost of funds or marginal cost of funds, or blended cost of funds. Thus, MCLR aims

  • To improve the transmission of policy rates into the lending rates of banks.
  • To bring transparency in the methodology followed by banks for determining interest rates on advances.
  • To ensure availability of bank credit at interest rates that are fair to borrowers as well as banks.
  • To enable banks to become more competitive and enhance their long-run value and contribution to economic growth.

For further insights on MCLR, click here to view the Courtesy Arthapedia site.



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