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India Vietnam relation

India Vietnam relation



Historically India and Vietnam share a common struggle for independence from colonial rule.


India was the Chairman of the International Commission for Supervision and Control(ICSC), which was formed pursuant to the Geneva Accord of 1954 to facilitate the peace process in Vietnam


India established full diplomatic relations with Vietnam in 1972.


Area of corporation


Defense-

Recently India gifted an indigenously build INS Kirpan to Vietnam.

INS Kiltan participated in the PASSEX Exercise with Vietnam People’s Navy.


Bilateral Trade

According to Indian statistics, bilateral trade reached a growth of 27% and reached 14.24 USD

(Indian export- USD 4.99billion, Indian import from Vietnam- USD 6.12 billion


Political support-

Both countries support each other on different international platforms eg- Vietnam always backed India to become a permanent member of the UN Security Council(UNSC).


Economic: 

India has a long-standing development partnership with Vietnam that has made positive contributions towards capacity building, sustainable development goals, and socio-economic pa development in Vietnam within the ASEAN framework.


Under the MEKONG GANGA PROJECT(MGC) framework, India has been taking QUICK IMPACT PROJECTS(QIPs) which direct benefit communities at the grassroots level.


Vietnam is India’s 15th largest trading partner globally and India is the 10th largest trading partner of Vietnam.


CULTURAL COOPERATION

The Swami Vivekananda Indian Cultural Centre (SVCC) was established in Hanoi in September 2016 to promote a comprehensive understanding of India and to foster closer links between peoples of both countries through cultural exchanges


CAPACITY BUILDING-

under the Indian Technical and Economic Cooperation (ITEC) program India provides training programs and scholarships. Contributing to Vietnam,s socio-economic development.


MEA


Prelims question-


Q- Among the following, which one is the largest exporter of rice in the world in the last five year?

  1. China

  2. India

  3. Myanmar

  4. Vietnam.


To see the answer CLICK HERE


Evergreening of loans

Evergreening of loans


Recently Reserve Bank of India (RBI) Governor Shaktikanta Das raised red flags over banks adopting innovative methods for evergreening of loans – covering up the real status of stressed loans of corporates.



What are Evergreen loans?

An evergreen loan is a type of interest only loan in which principal payment is deferred.



What is Evergreening of loans

It is a practice where financial institutions give extra lines of credit to borrowers creating the illusion of improved loan performance.


Why do institutions practice this?


  • There is sufficient evidence, anecdotal and otherwise, that restructuring is often used by banks for ‘evergreening’ problem accounts to keep the reported NPA levels low. Corporates were allowed to opt for the liberal restructuring route between 2000 and 2014, when a host of companies used fresh loans from banks to evergreen their loan books. However, with the enactment of the bankruptcy code, evergreening has declined but recovery has remained abysmally low.

  • Avoid classifying them from NPA- selling or buying back loan between two lenders to avoid NPA.



  • To hide their default- institutions persuade good borrowers to enter into structural deals



Effects and Impact-

Evergreening of loans create false impression of te asset quality and profitability of banks and delay the recognition and resolution of stressed assets.

Undermines credit and moral discipline among borrowers, and reduce the confidence  of depositor and investor .



RBI Initiative- 

As rbi governor latest warning shows that evergreening of loans is still being practiced. 

However with the enactment of bankruptcy code, evergreening has declined but recovery has remained low.


RBI supports banking sector by resolutionary framework, providing liquidity support and by establishment of Asset Reconstruction Company(ARC)


Penalties imposed by RBI for violating various rules related to fraud reporting, KYC, customer grievance redressal etc.


Supervisory action has also been initiated against some large private sector for banks.


INDIAN EXPRESS



Prelims question


Q- In India the central bank’s function as the ‘lender of last resort’ usually refers to which of the following?


  1. Lending to trade and industry bodies when they fail to borrow from other sources

  2. Providing liquidity to the banks having a temporary crisis.

  3. Lending to governments to finance budgetary deficits


     Select the correct answer:

  1. 1 & 2

  2. 2 only

  3. 1 & 3

  4. 3 only


To see the answer CLICK HERE