1. RBI Retains SBI, HDFC, ICICI as Domestic Systemically Important Banks (D-SIBs) in 2024

Context: The Reserve Bank of India (RBI) has once again classified State Bank of India (SBI), HDFC Bank, and ICICI Bank as Domestic Systemically Important Banks (D-SIBs) for 2024. This means these banks are considered “Too Big To Fail”, with their stability being critical to the financial system. If any of these institutions were to fail, the consequences would be severe, potentially leading to widespread economic disruption.

What Are Domestic Systemically Important Banks (D-SIBs)?

D-SIBs are banks that are deemed so significant to the economy that their failure could create widespread financial instability. These banks are highly integrated into global and local financial systems and hold complex financial structures. Therefore, their operational continuity is vital for ensuring economic stability and public confidence in the financial system.

Key Characteristics of D-SIBs:

• High Integration: These banks are involved in a range of cross-jurisdictional activities and have a broad impact on both local and global financial markets.
• Government Support: D-SIBs are expected to receive government bailouts during financial crises to prevent catastrophic disruptions in the financial system. This “Too Big to Fail” status can result in these banks facing fewer risks in the funding markets but also creates moral hazard, encouraging excessive risk-taking.

The RBI Framework for D-SIBs:

To manage the risks associated with D-SIBs, the RBI issued a framework in July 2014, with the following goals:

• Annual Disclosure: The list of D-SIBs is disclosed annually, with specific capital requirements and risk regulations to mitigate systemic risks.
• Systemic Importance Score (SIS): The banks are categorized into buckets based on their SIS, which determines the additional capital they must maintain. The higher the SIS, the higher the capital surcharge.

Capital Requirements for D-SIBs:

To safeguard against potential financial distress, D-SIBs must hold additional Common Equity Tier 1 (CET1) capital. This requirement ranges from 0.20% to 0.80% of their Risk-Weighted Assets (RWAs), depending on their assigned bucket.

• SBI (Bucket 4): 0.80% additional CET1 capital
• HDFC Bank (Bucket 3): 0.40% additional CET1 capital
• ICICI Bank (Bucket 1): 0.20% additional CET1 capital

These capital buffers help ensure that these banks have the financial resilience to absorb shocks and continue operations during financial stress.

Two-Step Process for Assessing D-SIBs:

The RBI uses a two-step process to evaluate the systemic importance of banks:

1. Bank Selection: Only large banks (those whose size exceeds 2% of the country’s GDP) are considered for evaluation. Smaller banks are excluded from this assessment.
2. Score Calculation: Various financial and operational indicators are used to calculate a composite score for each bank. If a bank surpasses a predefined threshold, it is classified as a D-SIB and placed in one of the buckets.

Which Banks are Classified as D-SIBs in 2024?

The RBI has reaffirmed SBI, HDFC Bank, and ICICI Bank as D-SIBs for 2024, continuing their inclusion from the previous year. Here’s a breakdown of their positions:

• SBI: Placed in Bucket 4 (highest risk category)
• HDFC Bank: Placed in Bucket 3
• ICICI Bank: Placed in Bucket 1

These banks have been classified as D-SIBs for several years, with:

• SBI being first designated in 2015
• ICICI Bank in 2016
• HDFC Bank in 2017

International Considerations: G-SIBs and India:

Foreign banks operating in India that are classified as Global Systemically Important Banks (G-SIBs) are also subject to additional CET1 capital requirements, proportional to their Risk-Weighted Assets (RWAs) in India. Notable G-SIBs for 2023 include JP Morgan Chase, Bank of America, HSBC, and Citigroup, among others.

Conclusion:

The RBI’s designation of SBI, HDFC, and ICICI as D-SIBs underscores their pivotal role in India’s financial ecosystem. By maintaining higher capital reserves and adhering to strict regulatory guidelines, these banks are better positioned to withstand financial stress, ensuring the stability of the broader economy. Their continued classification as Too Big to Fail highlights their importance and the ongoing need for vigilant oversight in a rapidly evolving financial landscape.

2. Novo Nordisk Calls for FDA Action to Halt Compounded Versions of Semaglutide Drugs

Context: Novo Nordisk, the Danish pharmaceutical leader behind the widely used drugs Wegovy (for weight loss) and Ozempic (for type 2 diabetes treatment), has formally requested that the U.S. Food and Drug Administration (FDA) take action to prevent the compounding of semaglutide-based medications. The company warns that the compounded versions of these drugs, made to meet high demand, could pose serious health risks to patients, prompting concerns over safety and efficacy.

Comparing Generic and Compounded Drugs:

Generic drugs are officially approved medications that are chemically identical to the brand-name versions, undergoing rigorous regulatory oversight. They must meet strict standards for purity, bioavailability (how effectively the drug is absorbed into the bloodstream), and dosage accuracy.

In contrast, compounded drugs are personalized medications created by pharmacists to meet a specific patient’s needs, often when the commercial version is unavailable. However, these compounded versions are subject to less stringent regulation, leading to potential quality control issues.

Key Issues in Drug Compounding:

1. Limited Regulations: Under FDA guidelines, licensed pharmacists are permitted to compound drugs, particularly when commercial options are out of stock. With the increasing demand for Wegovy and Ozempic, compounding pharmacies have begun producing their own versions of semaglutide, sparking concerns from Novo Nordisk and other pharmaceutical companies.
2. Purity and Stability Risks:  Semaglutide has a complex chemical structure, making it difficult to replicate accurately. Compounded versions may fail to match the purity or stability of the FDA-approved products, which could undermine their effectiveness and safety.
3. Dosing Inaccuracies: The FDA-approved semaglutide is delivered through single-use pens, ensuring precise dosing. However, compounded versions are often dispensed in multi-dose vials or syringes, leading to the risk of incorrect dosing. Reports have surfaced of patients overdosing, resulting in serious side effects such as nausea and vomiting.
4. Health Risks: Semaglutide’s bioavailability (how well the drug is absorbed into the bloodstream) is critical for its effectiveness. Compounded versions may not be absorbed properly, diminishing the drug’s effects and increasing the risk of severe complications such as heart disease, nerve damage, and kidney issues.
5. Contamination Concerns: Compounded drugs require sterile environments and careful handling to prevent contamination. Recent years have seen the FDA flag sterility issues at compounding pharmacies, resulting in significant recalls of affected products.

Proposed Solution to Address Issues with Drug Compounding:

Adding Semaglutide to the DDC List: To mitigate these risks, Novo Nordisk has petitioned the FDA to add semaglutide to the Demonstrable Difficulties for Compounding (DDC) list. This would restrict the compounding of semaglutide when commercial options are available, ensuring that patients only use the FDA-approved version.

The FDA assesses drugs for the DDC list based on factors such as:

• Stability
• Bioavailability
• Dosage accuracy
• Sterility requirements

Novo Nordisk argues that semaglutide meets all of these criteria, making it a poor candidate for compounding due to the complexity and risks involved.

Conclusion:Novo Nordisk’s call for FDA action highlights the growing concerns around compounded versions of semaglutide, which may compromise patient safety. By placing semaglutide on the DDC list, the FDA would help ensure that patients receive a consistent, safe, and effective medication.

3. Booker Prize: Celebrating Literary Excellence

Context: In a remarkable achievement, Samantha Harvey, a British author, has won the Booker Prize 2024 for her extraordinary novel “Orbital”. This captivating, short, and wonder-filled narrative takes place aboard the International Space Station (ISS), offering readers a unique perspective and an unforgettable literary experience.

What is the Booker Prize?

The Booker Prize stands as the world’s foremost literary award for a single work of fiction. Since its inception in 1969 in the UK, it has grown to be a prestigious global award, initially focused on Commonwealth writers but now open to authors from anywhere in the world, as long as their work is written in English.

• Purpose: The prize seeks to celebrate exceptional fiction by rewarding the best novel of the year.

Eligibility Criteria:

To be eligible for the Booker Prize, a novel must meet the following conditions:

• Language: The novel must be an original work written in English, not a translation.
• Publication: It must be published in the UK or Ireland during the year of the prize.

Imprint: The novel must be published by a registered UK or Irish imprint (self-published works are excluded).

Prize Award and Recognition:

• Winner’s Prize: The Booker Prize winner receives £50,000 in recognition of their literary achievement.
• Shortlisted Authors: Authors who make the shortlist each receive £2,500, recognizing their contribution to the literary world.

The Booker Prize Foundation:

The Booker Prize Foundation, a registered charity established in 2002, is responsible for managing the Booker Prize for Fiction and the Man Booker International Prize (since 2005). The foundation ensures the continued celebration of literary excellence and provides a platform for global recognition of authors.

The Booker Prize continues to honor outstanding talent in fiction and plays a pivotal role in promoting the finest writers from across the globe.

4. Wildlife Institute of India (WII): Championing Wildlife Conservation

5. Bitcoin Surges to Record High Following Trump’s Presidential Win

Context: Bitcoin, the largest cryptocurrency globally, has skyrocketed to an all-time high after Donald Trump’s groundbreaking victory in the US presidential elections. This milestone reflects the growing significance of cryptocurrencies in the financial world.

Understanding Cryptocurrency:

What is Cryptocurrency?

Cryptocurrency refers to a form of digital or virtual currency that employs cryptography to ensure security, making it resistant to counterfeiting and double-spending.

• Operates on decentralized blockchain networks, a secure and transparent digital ledger.
• Functions without centralized control, offering immunity to government interference or manipulation.

Key Features of Cryptocurrency:

1. Decentralization:Most cryptocurrencies run on blockchain networks, ensuring no single entity governs the system.
2. Enhanced Security: Blockchain technology uses consensus mechanisms like Proof of Work (PoW) and Proof of Stake (PoS) to safeguard transactions.
3. Transparency and Anonymity: Offers visible transaction records while maintaining user anonymity.
4. Global Accessibility: Enables seamless cross-border transfers without the need for currency exchange or excessive fees.
5. Ownership: Cryptocurrency owners retain full control over their digital assets via secure wallets protected by private keys.

The Power of Blockchain Technology:

• Blockchain is a distributed ledger system that maintains transaction security and transparency.
• Uses consensus algorithms to validate transactions, ensuring only authentic ones are added to the ledger.

Challenges Facing Cryptocurrencies:

1. Regulatory Uncertainty: The lack of clear regulations creates fragmented markets, stifles innovation, and exposes investors to risks.
2. Market Volatility: Cryptocurrencies are notorious for wild price fluctuations, posing financial risks for investors.
3. Limited Consumer Protections: Fraud and scams remain rampant, with few avenues for recovering lost funds.
4. Environmental Concerns: Energy-intensive mining processes, particularly for Bitcoin, raise sustainability issues.

India’s Approach to Cryptocurrencies:

Taxation Policies:

• The Indian government introduced a 30% tax on cryptocurrency income in 2022, along with a 1% TDS on transactions.
• These measures have reduced domestic enthusiasm for crypto trading.

Regulatory Landscape:

• In 2018, the Reserve Bank of India (RBI) restricted banks from facilitating crypto transactions, citing macro-economic risks.
• The Supreme Court overturned this decision in 2020, providing a much-needed boost to the sector.

Way Forward for Cryptocurrency in India:

1. Comprehensive Regulation: Develop clear and balanced policies addressing security and consumer protection while defining cryptocurrencies’ legal status.
2. Investor Awareness: Promote education on the risks and opportunities associated with digital assets.
3. Global Collaboration: Foster international partnerships to align regulations and technical expertise for the crypto ecosystem.

Cryptocurrencies, led by Bitcoin, continue to revolutionize the financial landscape. While challenges remain, strategic policies and investor awareness can pave the way for a secure, inclusive, and innovative financial

6. Exercise Sea Vigil-24: A Pan-India Coastal Defence Initiative

Context: The Indian Navy is gearing up for the fourth edition of the national-level coastal defence exercise, ‘Sea Vigil-24’, scheduled to take place on 20th and 21st November 2024. This comprehensive drill underscores India’s commitment to strengthening its maritime security postures.

What is Exercise Sea Vigil?

Introduction:

Exercise Sea Vigil, first conceptualized in 2018, is a national-level coastal defence exercise designed to evaluate and enhance India’s maritime security mechanisms post the 26/11 Mumbai attacks.

Objective:

The exercise activates the Coastal Security apparatus across India, thoroughly assessing the nation’s Coastal Defence framework.

Key Features of Sea Vigil-24:

1. Multi-Agency Collaboration:
   • This year’s exercise involves six Ministries and 21 organizations/agencies, emphasizing a collaborative approach to coastal defence.
2. Focus Areas:
   • Protection of critical coastal assets such as ports, oil rigs, Single Point Moorings, Cable Landing Points, and vital coastal infrastructure.
3. Involvement of Other Services:
   • Integration of the Indian Army and Indian Air Force along with extensive deployment of ships and aircraft enhances the tempo and scope of the exercise.
4. Engagement of Coastal Communities:
   • Actively involves fishing communities, the coastal population, and students from NCC and Bharat Scouts and Guides to raise maritime security awareness.

Significance of Exercise Sea Vigil:

• Holistic Security Assessment: The drill serves as a platform for a comprehensive review of India’s coastal security infrastructure and maritime preparedness.
• Community Involvement: Encouraging active participation from local communities helps in fostering a shared sense of responsibility toward maritime security.
• National-Level Initiative: Sea Vigil, coordinated by the Indian Navy, is a unique initiative that brings together all maritime stakeholders for a synchronized security effort.
• Precursor to TROPEX: This exercise acts as a precursor to the Theatre Level Readiness Operational Exercise (TROPEX), conducted biennially by the Indian Navy to ensure comprehensive operational readiness.

Conclusion:Exercise Sea Vigil-24 is a critical step in reinforcing India’s maritime defence capabilities. By integrating various agencies, leveraging technology, and engaging coastal communities, it stands as a testament to India’s unwavering commitment to safeguarding its maritime frontiers.