Q.1) The Reserve Bank of India (RBI) has accepted the recommendations of the expert committee under K.V. Kamath set up to suggest financial parameters for resolution of coronavirus-related stressed assets. Critically analyse the recommendations made by the committee.

Why this question?

  • With continuing economic stress especially of firms in the high-contact services sectors like aviation and hotel industry, the RBI has now allowed banks the option of restructuring loans of financially stressed firms. Thus the question.

Introduction: Mention the impact of Covid-19 on the banking sector

Body: Discuss the following aspects

  • Recommendations of Kamath Panel
  • Benefits
    • Flexible approach in loan restructuring
    • Ensuring high provisioning norms
  • Concerns: 
    • Stringent conditions: Some of the thresholds are too high for companies in particularly stressed sectors such as aviation to meet. 
    • Adopting indicators like Debt/EBITDA in the framework, implies that highly leveraged companies (having more debt than equity) are unlikely to take advantage of this facility.

Conclusion: The Indian experience with restructuring schemes post the global financial crisis of 2008 has not been good. Stringent checks are needed if the problems of “extend and pretend” that had plagued the earlier restructuring schemes are to be avoided.


Q.2) Even as digital literacy is likely to grow during this pandemic, concerns remain about basic literacy. Discuss (150 words)

Why this question?

  • More than one in five Indians above 7 years still cannot read and write in any language as per NSS 75th round survey on Household Social Consumption: Education. Thus the question.

Introduction: Mention the key findings about the state of literacy and digital literacy in India as per the latest NSS survey.

Body: Discuss the following aspects

  • Govt. initiatives for promoting literacy
  • Concerns and challenges like socioeconomic disparity, gender gap, digital divide

Conclusion: Summarize and suggest  a way forward