Daily Current Affairs – 2 October 2025

Explore the Daily Current Affairs 2 October 2025, relevant for UPSC exam. Download quick REVISION NOTES.

This implies banks were not allowed to give loans if a company wanted to:

• Buy shares of another company
• Take over another business using borrowed money

So companies had to use their own money, or borrow from non-banking sources (like NBFCs, private lenders, or foreign investors).

What will change?

Now, RBI is removing that restriction. So, banks can now give loans to companies who want to buy or take over other companies.

Positive Implications:

1. Boost to Merger and acquisition Activity: Allowing banks to finance takeovers could unlock a fresh pool of capital for corporates seeking acquisitions. This may lead to increased merger & acquisition (M&A) activity in India.
2. Lower Cost of Capital: Bank credit is often cheaper relative to alternative financing (e.g. high-yield debt or private credit). With this new route, companies may access funds more economically for strategic consolidation.
3. Wider Access & Institutionalization: Previously, promoters might rely on non‑bank financial institutions (NBFCs), private equity, or internal accruals for takeovers. This move brings more formal banking institutions into the process, possibly bringing in more due diligence and regulatory oversight.
4. Regulatory Signaling: This signals the RBI and the government want to encourage larger scale corporate consolidation, structural reforms, and possibly more capital market activity.

Risks & Challenges

1. Credit Risk & Misuse: There’s risk that promoters might misuse bank credit (e.g., artificially inflating valuations, opaque related-party transactions, etc.). That is a core reason why such lending was restricted earlier.
2. Concentration Risk: If large corporates borrow heavily across many banks, systemic risk can rise. RBI will need to carefully manage exposure limits. The article mentions RBI will use macroprudential tools and existing “Large Exposure Framework” to manage concentration risk.
3. Valuation Risk in M&A: If takeover deals are overvalued or fail post-deal, banks will be exposed to defaults. Due diligence and conservative underwriting norms will be crucial.
4. Regulatory Complexity & Transition Issues: Moving from a regime that barred such lending to one that allows it will require clear rules, guidelines, and likely transitional safeguards (e.g. stricter norms for governance, disclosure, promoters’ equity contribution, etc.).

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Key Features:

1. The project will be executed in EPC mode (Engineering, Procurement, Construction).
2. A 34.5 km elevated corridor will pass through Kaziranga National Park to allow free movement of wildlife and reduce human-animal conflict.
3. The highway lies on the Guwahati-Dibrugarh corridor, which is a major route in Assam along the Brahmaputra belt.

Significance:

1. Boost Infrastructure in the Northeast:

• Enhances regional integration and connectivity
• Facilitates economic development in border & tribal areas
• Boosts tourism, especially eco-tourism in Kaziranga region
• Supports Act East Policy through better logistics to SE Asia

2. Wildlife and Ecology vs Development Trade-off:

• Elevated corridor within Kaziranga NP: balance between development and conservation
• Wildlife-friendly infrastructure (viaducts, underpasses) reduces animal fatalities
• Need for environmental impact assessment (EIA) and local community consultation

3. Strategic and Political Importance:

• Builds trust in Northeast India’s integration
• Cabinet clearance reflects Centre–State coordination
• Politically significant in terms of development narrative before elections

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What are Flying Rivers?

Flying rivers are large volumes of water vapor (moisture) that are transported through the atmosphere. They are especially important in rainforests like the Amazon, where they play a key role in bringing rainfall to inland areas.

Concept:

Trees absorb water from the soil and release it into the air through a process called transpiration. This water vapor is carried by wind across regions, forming a “flying river.”

Therefore, Fewer trees = less transpiration = weaker flying rivers

Leads to:

• Droughts
• Failed crops
• Collapse of ecosystems
• Potential shift of rainforest into savanna

Why are Flying Rivers Important?

Benefit	Impact
Rainfall Distribution	Supplies water to inland regions far from the ocean
Forest Health	Maintains local rainfall needed by the forest itself
Agriculture	Supports farming across South America
Climate Regulation	Helps stabilize regional weather patterns

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Daily Current Affairs 2 October 2025

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