Current Affairs of 10th January

1. According to the RBI, some lenders are still using Libor contracts.

The Reserve Bank of India (RBI) instructed banks and other financial institutions to move to any Alternative Reference Rates (ARR) as soon as possible and obligatorily by December 31 as the end of the London Interbank Offered Rate (Libor) approached. The two most common alternatives are the Secured Overnight Financing Rate (SOFR) and the Sterling Overnight Interbank Average Rate (SONIA), but neither is nearly as popular internationally as Libor, which will be phased out by the end of the year.

 

Libor: The Reserve Bank of India’s Advice

 

• Following the discovery of a rate-fixing scandal a few years ago, Libor had to be eliminated. The RBI had advised banks to abandon Libor in August 2020.

 

• The transition to ARR has been completed by nearly all foreign exchange-dealing banks; however, they have yet to select the most dependable ARR.

 

• According to bankers, it is highly unlikely that Indian banks will lead this issue. Instead, they will adhere to evolving international practices.

 

• The extension of the publication deadline for some US dollar Libor settings until June 30, 2023 is primarily intended to ensure that USD Libor-linked legacy contracts are rolled over, not to encourage continued reliance on Libor.

 

• After December, any Libor contract should only be used for hedging against other Libor-linked contracts.

 

Alternative Benchmarks from the RBI:

 

The popular Indian benchmark Mumbai Interbank Forward Outright Rate (MIFOR), which uses Libor as a benchmark, must also be abandoned as a result of Libor’s demise.

 

The Reserve Bank of India (RBI) stated that banks and other financial institutions will need to conduct a comprehensive review of all direct and indirect Libor exposures and establish a framework to mitigate risks arising from such exposures due to transitional issues, such as valuation and contractual clauses. Additionally, banks will need to establish the infrastructure necessary to offer products referencing the ARR.

 

Regarding MIFOR:

 

The Reserve Bank of India (RBI) stated that MIFOR publisher Financial Benchmarks India (FBIL) began publishing daily adjusted MIFOR rates on June 15 and modified MIFOR rates on June 30 “which can be used for legacy contracts and fresh contracts respectively.” Once more, MIFOR should only be used for hedging and managing interest risk after December 31.

 

What is LIBOR, or the London Interbank Offered Rate?

 

The standard interest rate at which major international banks lend to one another is known as the London Interbank Offered Rate (LIBOR). LIBOR is administered by the Intercontinental Exchange (ICE), which asks major global banks how much they would charge other banks for short-term loans. The Waterfall Methodology, a layered, transaction-based, and data-driven process, is used to calculate the rate. The Secured Overnight Financing Rate (SOFR) will take its place on June 30, 2023, and its use will gradually decrease after 2021.  

 

How does the London Interbank Offered Rate work?

 

• In the international interbank market, major international banks lend to one another for short-term loans at the London Interbank Offered Rate (LIBOR), a benchmark interest rate.
• The Intercontinental Exchange (ICE) calculates and publishes the rate every day, but it is being phased out due to recent scandals and questions about its legitimacy as a benchmark rate.
• The Secured Overnight Financing Rate (SOFR) will take its place after the Federal Reserve and UK regulators phase out LIBOR by June 30, 2023.
• As part of this phase-out, the LIBOR one-week and two-month USD LIBOR rates will no longer be published after December 31, 2021.
• How does LIBOR function?
• The administration is in charge of ICE Benchmark Administration (IBA).
• It is governed by the Financial Conduct Authority (FCA) of the United Kingdom.
• Every day, Intercontinental Exchange asks major international banks how much they would charge for short-term loans.
• These numbers are then used to determine the average.
• Five currencies serve as its foundation: the Swiss franc, the Euro, the British pound, the Japanese yen, and the US dollar, with seven possible maturity dates.
• Due to the combination of five currencies and seven maturities, 35 separate LIBOR rates are calculated and presented each business day.
• The most frequently cited rate is the three-month US dollar rate, also known as the current LIBOR rate.

 

2. The Indian Army will receive superior, low-smoke kerosene oil from Bharat Petroleum.

Limited by Bharat Petroleum Corporation:

The introduction of Low Smoke Superior Kerosene Oil (SKO) for the Indian Army in Jammu has been announced by Bharat Petroleum Corporation Limited (BPCL), a Maharatna and Fortune Global 500 company. As the first OMC to begin providing the Army with the new LSLA grade SKO supplies, BPCL will significantly improve the serving environment and alleviate concerns about smoke and smell when using SKO.

 

Why was this action taken?

 

The Army personnel who use normal kerosene at higher altitudes, where oxygen levels are extremely low, are exposed to significant smoke, which is harmful to their health. As a result, the low-smoke kerosene is a significant step toward providing our soldiers operating in extremely challenging terrain with cleaner fuel.

 

This oil’s advantages:

 

Because it is used as fuel in the room heaters (Bukhari) at the high-altitude camps, SKO supplies to the Army are essential. Around 70 TKL/A of SKO are used by the Army’s Northern and Eastern commands. The low-smoke kerosene is a significant step toward providing cleaner fuel because the Northern Command consumes approximately 45 TKL/A more of it. The upgraded SKO was offered by BPCL’s Industrial and Commercial (I&C) SBU, in collaboration with the Corporate Research & Development Centre (CRDC) and Mumbai Refinery, during the product innovation process, and field trials were conducted at Karu (Leh-Ladakh) and Gangtok.

 

The following are important lessons for all competitive exams:

 

Headquarters of BPCL: Mumbai;

Established in: 1952;

BPCL’s CMD: Vetsa Rama Krishna Gupta

 

3. The Kilauea volcano in Hawaii erupts once more after a brief lull.

Kilauea volcano in Hawaii: 

 

After a brief pause, the Kilauea volcano in Hawaii erupted once more, spewing lava fountains and volcanic ash into the air. According to a notice issued by the United States Geological Service (GSGS), the eruption began on January 5, 2022, in the afternoon. Lava from the volcano is contained in Kilauea’s crater, a closed section of Hawaii Volcanoes National Park. The US Geological Survey (USGS) issued a warning to the locals that as they moved downstream, the large quantities of volcanic fumes might still pose a threat. Sulfur dioxide and other elements can combine with the surrounding environment to form volcanic smog, which can be harmful to human health. Pele’s hair, which consists of tiny strands of drifting lava, and other delicate volcanic particles that have the potential to irritate the skin and eyes are additional dangers. According to the USGS, the Hawaiian Volcano Observatory noticed a light in photographs and came to the conclusion that Kilauea had begun to erupt.

 

About the Kilauea Volcano: 

 

• Of the five volcanoes that make up Hawaii, Kilauea is the most active. It is a shield volcano, which is a type of fluid lava volcano that is distinguished by its extensive lava flow.

 

• A massive depression created when the ground surface collapses into an empty magma chamber is known as a caldera, and Kilauea has two active rift zones and a recently formed caldera. Halemaumau is the name of the pit crater within Kilauea. Prior to the 2018 eruptions, it contained a lava lake.

 

• Kilauea is one of the world’s most active volcanoes. It lasted for 16 months before it stopped erupting in September 2021. Kilauea had been erupting almost continuously for more than a year prior to its most recent lull in December. In 2018, it was the site of a massive eruption that destroyed hundreds of homes.

 

• Hawaii has had two volcanoes spewing lava side by side since November 27, when Mauna Loa erupted for the first time in 38 years. Both of the volcanoes stopped erupting around the same time. It is still unknown what caused the two volcanoes to stop around the same time. During the twin eruption, visitors to Hawaii Volcanoes National Park were able to observe lava from both eruptions simultaneously.

 

Cultural and Spiritual Importance: 

 

For the native Hawaiians, volcanic eruptions hold significant cultural and spiritual significance. During the Mauna Loa eruption, a lot of Hawaiians took part in traditional practices like singing, chanting, and dancing to honor Pele, the god of fire and volcanoes.

 

The Five Major Volcanoes of Hawaii Island: 

 

The Island of Hawaii is made up of four other volcanoes in addition to Kilauea: Mauna Loa (active), Hualalai (dormant), Mauna Kea (dormant), and Kohala (extinct). The eruptions of Kilauea and Mauna Loa are contributing to the island’s current expansion.

 

4. Single Block And Multiple Debit functionality. 

The Reserve Bank of India (RBI) is set to introduce additional features to the existing Unified Payments Interface (UPI) platforms to allow multiple debits. The central bank will roll out single-block and multiple debit functionality that will enable users to block funds in their accounts. With the added feature, merchants can make multiple debit transactions within a permitted limit.

 

5. African Swine Flu:

Recently, 700 pigs culled in Damoh, Madhya Pradesh to control African Swine Fever.

 

About:

 

African swine fever (ASF) is a highly contagious viral disease of domestic and wild pigs, whose mortality rate can reach 100%.

The virus belongs to Asfarviridae family.

 

Symptoms : vomiting, Diarrhea,reddening or darkening of the skin, particularly ears and snout, gummed up eyes etc.

 

African Swine Fever can be spread through:

 

• Direct contact with infected pigs, faeces or body fluid
• Indirect contact via fomites such as equipment, vehicles or people who work with pigs between pig farms with ineffective biosecurity.
• Pigs eating infected pig meat or meat products.
• Biological vectors – ticks of the species Ornithodoros.
• It is endemic to sub-Saharan Africa but has spread to many other regions of the world, including Asia and Europe.
• It is not known to affect human beings. 
• There is no cure or precaution available for the infection and no approved vaccine So the only way to stop it spreading is by culling the animals.

 

6. National Health Authority (NHA)

NHA is introducing a new system to measure and grade hospital performance under the flagship scheme Ayushman Bharat Pradhan Mantri Jan Arogya Yojana (AB PM-JAY). 

 

About:

 

The objective of the new system is to shift the focus of measuring performance of hospitals from volume of services provided to the value of healthcare services.

 

The new initiative will introduce the concept of ‘value- based care’, where payment will be outcome based and providers will be rewarded according to the quality of the treatment delivered.

 

Under the new model, the providers will be rewarded for helping the patients improve their health, which consequently will reduce the effects of disease in the population in the long term.

 

Under value-based care, the performance of AB PM-JAY empanelled hospitals will be measured based on five performance indicators such as:

1. Beneficiary Satisfaction; 
2. Hospital Readmission Rate; 
3. The extent of Out-of-Pocket Expenditure; 
4. Confirmed Grievances and 
5. Improvement in-patient’s Health-Related Quality of Life.

 

7. The World Bank recently published its report titled “Traffic Crash Injuries and Disabilities: 

 

The Burden on Indian Society”. This report was released by Union transport minister, Nitin Gadkari, on February 13, 2021. The report mentions the disproportionate impact of a road crash on poor households.  It also throws light on the links between poverty, road crashes, inequality and vulnerable road users across India.

 

Key Findings of the report

 

The report highlights that, India has only 1 per cent of the world’s vehicles. Even though it accounts for 11 per cent of the global death due to road accidents. It stands highest death toll in the world because of road accident.

 

The world bank report highlighted that the road crash deaths among rural poor households accounts for 44 per cent.

 

While road crash death among urban poor households accounts for 11.6 per cent.

The report further highlights that the low-income household spends seven months of its income on post-road crash care.

 

It also states a high-income household spends less than a month’s salary on post-road crash care.

 

The report reveals that the socio-economic burden of road crashes is disproportionately borne by poor households.

 

It also reveals that the women bore the brunt of caregiving after a crash. This results into more financial and mental stress this exacerbate the inequality of opportunities.

 

The World Bank notes that the road crashes have a devastating and disproportionate impact on the poor households. It can throw the family into deep poverty. In that light, the World Bank showed its commitment to support the government in order to create a safety nets for poor households. The safety net would help in easing the financial burden of the poor families. It will also help them to face the challenge of the emergency linked to road crashes.