Current Affairs – September, 2019

Key Facts: Why RBI has abruptly placed restrictions on PMC Bank?

The Reserve Bank of India has imposed caps on withdrawals made by customers of Punjab and Maharashtra Cooperative Banks for 6 months. The imposition was invoked by the central bank under Section 35 A of India’s Banking Regulation act, 1949.

PMC is spread across 6 states and has a network of 137 branches.

What are the restrictions imposed?

During the period of restriction, the customers of PMC bank are not allowed to withdraw more than Rs 1,000. RBI has also imposed restrictions on lending by cooperative bank. The notification issued by RBI said that the PMC banks cannot grant or renew loans, make investment, borrow funds, accept fresh deposits, agree or disburse payments without prior permission from the central bank. The bank said that the restrictions will be eased according to the performance of PMC banks. However, the bank license had not been withdrawn.

Why were the restrictions imposed?

The restrictions were a precautionary measure to prevent a run on the bank. The gross bad loans of the bank account to 3.76% of its advances and PMC discloses it is much higher than this. Also, these restrictions are precautionary measures while the central bank completes its audit on PMC. Though auditing of cooperative banks are done by state government, RBI has power to audit cooperative banks once a year.

The bank reported profit of 99 crores in 2019 as compared to 100 crores in 2018. Similarly the NPAs of the bank increased largely. It was 1.05% in 2018 and increased to 2.19% in 2019. The capital adequacy ratio was 12.29% in 2018 and increased to 12.62% in 2019. Capital Adequacy ratio is the measurement of bank’s available capital in terms of percentage of bank’s risk – weighted credit exposures. It is calculated by dividing the bank’s capital by its risk weighted assets.

What is Section 35 A of India’s Banking Regulation act, 1949?

Section 35A of the Banking Regulation act provides powers to RBI to give directions to banks. It enables RBI with the power to take action in order to prevent a banking company acting detrimental to the interests of the depositors.

Is PMC a scheduled bank?

Yes, PMC is a scheduled bank. It was provided the status of scheduled bank in 2000. The banks that are accounted in the second schedule of RBI act, 1934 are called scheduled banks. The banks with reserve capital more than 5 lakhs rupees are qualified to become scheduled banks. The banks should also satisfy RBI that its affairs are carried out in a way with no harm to the interest of the depositors.

Quick Facts: What is CTRL-Labs? Why Facebook is acquiring it?

On 23rd September, 2019, Facebook announced that it will acquire CTRL – Labs, a tech company that makes wrist bands capable of reading minds. The band can transmit electrical signals from brain into computers as digital input. The deal is worth approximately, from 500 million USD to 1 billion USD. This is the most substantial acquisition of Facebook after its acquisition of virtual reality company Occulus on a deal of 2 billion USD in 2014.

CTRL – Labs was founded by Patrick Kaifosh, a neuro scientist and Internet Explorer creator Thomas Reardon.

What is CTRL – Labs?

CTRL – labs is a start up looking to guide computers with the help of brain signals without using hands. The lab is working on brain science, machine learning and intends to create interfaces for people to control and manipulate the digital gadgets just by thinking.

What is CTRL – Labs’s wrist band?

The flagship product of CTRL – labs is a wrist worn device. It measures neuron activity in the brain and imitates the same motion on computer screen. This device does not read minds. However, it is capable of acquiring signals from brain and electrical impulses that come from muscle cells. In lay man terms the company says that one need not move his hand to move the hand on the screen. He just has to think about moving his arms.

Why is Facebook acquiring CTRL labs?

The acquisition eludes the company’s Building 8 initiative. Building 8 is a secretive research group. Regina Dugan, the leader of Building 8 announced it in 2017. Under the initiative Facebook had been working on non – invasive sensors that will help people communicate. The goal of the initiative is to let users type 100 words a minute using their minds alone. But not everything wandering in the brain, only specific information that it intends to convey.

Under Building 8 initiative, Facebook also plans to create sensors that allows users hear using vibrations on skin.

Apart from Building 8 initiative Facebook also wants to build new ways to interact with computers. Bottom line, Facebook is on the verge of integrating online and offline lives.

How does the band work?

The band leverages EMG to translate mental thought processes into action. EMG is Electrodiagnostic medicine technique to record and evaluate electrical activity in skeletal muscles. The band contains 16 electrodes to monitor electrical signals from motor neuron. The device detects the firing of a neuron at its axon which is called action potential. This puts the device above other wearable devices as they use EEG to measure electrical activity of the brain.