Current based PRELIMS QUESTION 3 June 2020

1. Consider the following statements regarding the Insolvency and Bankruptcy Code (Amendment) Bill 2020.
1. This seeks to create a threshold of a minimum of 10 per cent of allottees or 100 individual allottees to initiate insolvency proceedings for real estate projects.
2. This Bill seeks to ring-fence new management from offences committed by the erstwhile management.
3. The amendment also seeks to protect the going concern status of companies undergoing insolvency proceedings.
Which of the statement(s) given above is/are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-d
Explanation
Insolvency and Bankruptcy Code (Amendment) Bill 2020
The Insolvency and Bankruptcy Code (IBC) Amendment Bill, that will help ring-fence successful bidders of insolvent companies from the risk of criminal proceedings for offences committed by previous promoters, has already been passed by the LokSabha.
The Bill replaces an ordinance. The amendments were earlier introduced as ordinances. Now after the Parliament session began the ordinance was introduced as a bill. And the bill has now been passed in the Parliament.
The IBC, which came into force in 2016, has already been amended thrice.
The Minister said that the need for amendment in the IBC arose because of the changing requirement and requirement of fine-tuning the law.
Key Features:
The threshold for certain creditors for initiating resolution process:
The Code allows the creditors to initiate an insolvency resolution process if the amount of default by the debtor is at least one lakh rupees.
The Ordinance adds an additional requirement for certain classes of financial creditors for filing the application.
These classes include real estate allottees and security or deposit holders represented by a trustee or agent. The application by these creditors should be filed jointly by at least 100 such creditors or 10% of their total number, whichever is less.
Supply of critical goods and services not to be discontinued:
The Ordinance mandates that the supplies of goods and services considered critical by the resolution professional cannot be discontinued during the moratorium period.
This applies to goods and services that are considered critical to protect and preserve the value of the debtor and manage its operations as a going concern.
Suppliers of critical goods and services can stop supplying if: (i) the debtor has not paid dues arising from the supplies during the moratorium period, or (ii) in certain other circumstances as may be specified.
Licenses and permits not to be terminated due to insolvency:
The Ordinance states that any existing license, permit, registration, or clearance given by any government authority to the debtor will not be suspended or terminated due to insolvency.
This provision will be applicable as long as the debtor does not default in the payment of current dues arising for the use or continuation of such licenses or permits.
Liabilities for prior offences:
The Ordinance states that the company will not be liable for any offence committed prior to the commencement of the insolvency resolution process.
Further, the Ordinance provides immunity to the company from actions against their property in relation to such offences.
Immunity to the company will be given only if the resolution plan results in a change in the management or control of the company.
Appointment of the Interim Resolution Professional and commencement date:
Under the Code, the insolvency commencement date is the date on which an application for the corporate insolvency resolution process (CIRP) is admitted.
An Insolvency Resolution Professional (IRP) is required to be appointed within 14 days from the date of admission of the application for CIRP.
The date of appointment of the IRP is treated as the insolvency commencement date.
The Ordinance states that the IRP must be appointed on the date of admission of the application, which will be considered as the insolvency commencement date.

2. Consider the following statements regarding the Forex Swap.
1. A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.
2. The swap will be in the nature of a simple sell/buy foreign exchange swap from the Reserve Bank side.
Which of the statement(s) given above is/are correct?
(a) 1 only
(b) 2 only
(c) Both 1 and 2
(d) Neither 1 nor 2
Answer-c
Explanation-
RBI opens dollar-swap window
The Reserve Bank of India (RBI) has opened a six-month dollar sell-buy swap window to pump liquidity in the foreign exchange market.
On a review of current financial market conditions and taking into consideration the requirement of U.S. dollars in the market, it has been decided to undertake a six-month U.S. dollar sell/buy swap to provide liquidity to the foreign exchange market.
It is RBI’s first move following financial markets in India and across the globe experiencing turbulence over the spread of COVID-19.
The central bank will conduct U.S. dollar-rupee sell-buy swaps worth $2 billion on March 16, 2020.
The swaps would be conducted through the auction route in multiple tranches and the auctions would be multiple price-based that is, successful bids will be accepted at their respective quoted premiums.
What are swaps?
A swap is a derivative contract through which two parties exchange the cash flows or liabilities from two different financial instruments.
Swaps do not trade on exchanges, and retail investors do not generally engage in swaps.
Rather, swaps are over-the-counter contracts primarily between businesses or financial institutions that are customized to the needs of both parties.
Currency Swaps:
A currency swap is an agreement in which two parties exchange the principal amount of a loan and the interest in one currency for the principal and interest in another currency.
At the inception of the swap, the equivalent principal amounts are exchanged at the spot rate.
Unlike an interest rate swap, the principal is not a notional amount, but it is exchanged along with interest obligations.
In a currency swap, the parties exchange interest and principal payments on debt denominated in different currencies.
Currency swaps can take place between countries.
The purpose of a currency swap is to hedge exposure to exchange rate risk or reduce the cost of borrowing a foreign currency.
https://www.rbi.org.in/scripts/BS_PressReleaseDisplay.aspx?prid=49501

3. Consider the following statements regarding the Indian Medical Association (IMA).
1. The Association was started in 1928 on the occasion of the 5th all India Medical Conference at Calcutta.
2. It is the only representative voluntary organization of Doctors of Modern Scientific System of Medicine, which looks after the interest of doctors as well as the well being of the community at large.
3. The National Headquarter of the IMA is situated at Calcutta, and its Journal Office functions from New Delhi.
Which of the statements given above are correct?
(a) 2 and 3 only
(b) 1 and 2 only
(c) 1 and 3 only
(d) 1, 2 and 3
Answer-b
Explanation-
Indian Medical Association (IMA)
The Indian Medical Association (IMA), the national organization of “Doctors of Modern Scientific System of Medicine”, was organized in 1928, and currently IMA has around 100,000 members belonging to different branches of medical profession and function.
It is the only representative, national voluntary organisation of Doctors of Modern Scientific System of Medicine, which looks after the interest of doctors as well as the well being of the community at large.
Indian Medical Association in the year 1946 helped in organisation of the World body, namely, World Medical Association, and thus became its founder member. As an organisation it has been, and continues to play an important role in its deliberations. It hosted the III World Conference on Medical Education under the joint auspices of W.M.A. and I.M.A. in New Delhi in 1966.
Today, I.M.A. is a well established organisation with its Headquarters at Delhi and State / Terr. Branches in 29 States and Union Territories.
The National Headquarter of the IMA is situated at New Delhi, and its Journal Office functions from Calcutta. For Housing the headquarters of the Association, a six storeyed building has been constructed at Indraprastha Marg, New Delhi and a Building of IMA housing the J.I.M.A has also been constructed at 53. Creek Row, Calcutta.
http://www.ima-india.org/ima/left-side-bar.php?pid=299

4. Consider the following statements regarding the Vulture in India.
1. The major reason behind the vulture population getting nearly wiped out was the drug Diclofenac.
2. India’s conservation efforts are focussed on the three species of vultures which are Critically Endangered according to the IUCN.
3. The vulture research facility at Pinjore, Haryana became Asia’s first Vulture Conservation Breeding Centre in 2005.
Which of the statement(s) given above is/are correct?
(a) 2 and 3 only
(b) 2 only
(c)  3 only
(d) 1, 2 and 3
Answer-d
Explanation-


5. Consider the following statements regarding the Ganga River Dolphin (Platanista gangetica).
1. This is found in parts of the Ganges-Meghna-Brahmaputra and Karnaphuli-Sangu river systems in India, Nepal, and Bangladesh.
2. It is classified under Appendix-I of the CITES and Schedule-I of Wildlife (Protection) Act, 1972 providing absolute protection as offences under these are prescribed the highest penalties.
3. Vikramshila Gangetic Dolphin Sanctuary (VGDS) in Bihar’s Bhagalpur district is India’s  second sanctuary for its national aquatic animal.
4. It can only live in freshwater, and catch their prey using ultrasonic sound waves.
Which of the statement(s) given above is/are correct?
(a) 1, 2 and 4 only
(b) 2, 3 and 4 only
(c) 1, 2 and 3 only
(d) All of the above
Answer-a
Explanation-
Gangetic river dolphins
The Gangetic river dolphins were officially discovered in 1801 and are one of the oldest creatures in the world along with some species of turtles, crocodiles and sharks, according to the World Wildlife Fund (WWF).
They once lived in the Ganges-Brahmaputra-Meghna and Karnaphuli-Sangu river systems of Nepal, India, and Bangladesh, but are now mostly extinct from many of its early distribution ranges, as per WWF.
In 2009, the Gangetic dolphins were declared India’s National Aquatic animal during the first meeting of the erstwhile National Ganga River Basin Authority (NGRBA) and it is placed under the “endangered” category by the International Union for Conservation of Nature (IUCN). The Gangetic river dolphins can only live in freshwater, are blind and catch their prey in a unique manner, using ultrasonic sound waves. These dolphins prefer deep waters and, as per WWF, they are distributed across seven states in India: Assam, Uttar Pradesh, Madhya Pradesh, Rajasthan, Bihar, Jharkhand and West Bengal.
Their numbers have dwindled in the last few decades mainly because of direct killing, habitat fragmentation by dams and barrages and indiscriminate fishing.
In addition to the species being India’s national aquatic animal, the Gangetic dolphin has been notified by the Assam government as the state aquatic animal, too.
Some of the efforts made to preserve and increase the numbers of these dolphins include the setting up of the Conservation Action Plan for the Gangetic Dolphin (2010-2020), which has identified threats to Gangetic dolphins and impact of river traffic, irrigation canals and depletion of prey-base on dolphin populations.
Additionally, the Gangetic dolphins have been included in Schedule -I of the Wildlife Protection Act, 1972, which means they have the highest degree of protection against hunting. They are also one among the 21 species identified under the centrally sponsored scheme, “Development of Wildlife Habitat”.
It is among the four freshwater dolphins in the world- the other three are:
The ‘Baiji’ now likely extinct from the Yangtze River in China,
The ‘Bhulan’ of the Indus in Pakistan, and
The ‘Boto’ of the Amazon River in Latin America.
These four species live only in rivers and lakes.
Its presence indicates the health of the riverine ecosystem.
Threats
Pollution: It faces a number of threats such as dumping of single-use plastics in water bodies, industrial pollution, and fishing.
Restrictive Flow of Water: The increase in the number of barrages and dams is also affecting their growth as such structures impede the flow of water.
Poaching: Dolphins are also poached for their flesh, fat, and oil, which are used as a prey to catch fish, as an ointment and as a supposed aphrodisiac.
Shipping & Dredging: It is also called a blind dolphin because it doesn’t have an eye lens and uses echolocation to navigate and hunt.
Like bats, they produce high-frequency sounds which help them to detect objects when the sound waves bounce off them.
Due to their dependence on echolocation, the Gangetic dolphins also suffer from the noise pollution created by large ship propellers, and by dredging.