UPSC CSE Current Affairs — 24 July 2026

The Government of India and RBI have jointly reinforced rural credit delivery through institutional mechanisms including Priority Sector Lending (PSL) mandates, Kisan Credit Card (KCC) scheme, Interest Subvention Scheme, and NABARD refinancing. As of 2024-25, KCC accounts exceed 7.7 crore with outstanding credit above ₹9.8 lakh crore. RBI's PSL guidelines require 18% of Adjusted Net Bank Credit for agriculture. These measures aim to reduce rural households' dependence on informal moneylenders and ensure last-mile credit access.

Rural credit in India operates through a layered institutional architecture. At the apex sits RBI, which mandates Priority Sector Lending norms — commercial banks must direct 40% of ANBC (Adjusted Net Bank Credit) to priority sectors, with 18% specifically to agriculture, of which 8% must reach small and marginal farmers. NABARD functions as the refinancing backbone, providing liquidity to cooperative banks and Regional Rural Banks (RRBs) that directly serve farm households.

The Kisan Credit Card scheme, revamped in 2019-20, provides revolving credit for crop cultivation, post-harvest expenses, and allied activities at a subsidised interest rate of 7% (with 3% additional subvention for prompt repayment, effectively bringing it to 4%). The government's Modified Interest Subvention Scheme (MISS) provides interest subvention on short-term crop loans up to ₹3 lakh.

Despite these mechanisms, structural challenges persist: the share of institutional credit in total rural credit is around 56-58%, meaning nearly half of rural borrowing still comes from informal sources. Financial exclusion is acute in eastern and northeastern states. RBI's Financial Inclusion Index (FI-Index), which stood at 64.2 in March 2024, partially captures this gap. The seamlessness of rural credit flow thus depends on coordinated PSL enforcement, NABARD's refinancing capacity, SHG-bank linkage programmes, and digital credit infrastructure like the PM Jan Dhan Yojana ecosystem.

The Foreign Contribution (Regulation) Act, 2010 (FCRA) regulates acceptance and utilisation of foreign contributions by individuals, associations, and companies in India. Administered by the Ministry of Home Affairs (MHA), it requires NGOs to register under FCRA to receive foreign funds. Registration must be renewed every five years. The 2020 amendment introduced key restrictions: prohibition on sub-granting, mandatory SBI New Delhi Main Branch account, and Aadhaar-linked registration. Over 20,000 FCRA registrations have been cancelled since 2011.

FCRA sits at the intersection of national security, civil society regulation, and foreign policy. The law's core logic is that foreign money, if unchecked, could influence political processes, religious conversions, or anti-national activities — hence the state's right to monitor and restrict its flow.

The 2020 Amendment tightened the framework considerably. NGOs can no longer sub-grant foreign funds to other organisations, which effectively cut off smaller grassroots groups that relied on larger NGOs as conduits. The requirement that all foreign contributions must be received exclusively through a designated SBI branch at New Delhi Main Branch centralises surveillance. Administrative expenses funded by foreign contribution were capped at 20% (reduced from 50%).

The Supreme Court in Noel Harper v. Union of India (2022) upheld the 2020 amendments as constitutionally valid, rejecting the argument that they violate Articles 14, 19(1)(c), or 21. The Court held that receiving foreign contributions is not a fundamental right.

Critics argue FCRA has been weaponised against dissenting voices — Amnesty International, Missionaries of Charity, and Greenpeace India all faced suspension or cancellation. The UN Special Rapporteurs have flagged FCRA as potentially inconsistent with international human rights standards. This tension between sovereignty and civil society freedom makes FCRA a rich topic for both UPSC and CLAT examiners.

A Parliamentary Standing Committee has recommended establishing a Self-Regulatory Organisation (SRO) as an interim mechanism to govern cryptocurrencies in India until formal legislation is enacted. The SRO would function under RBI and SEBI oversight, focusing on investor protection, KYC norms, and anti-money laundering compliance. The committee stressed that crypto assets need regulatory clarity without stifling innovation, proposing a phased approach bridging the current regulatory vacuum and future statutory framework.

India's cryptocurrency sector has operated in a legal grey zone since the Supreme Court lifted RBI's banking ban in 2020 (Internet and Mobile Association of India v. RBI). Despite imposing a 30% flat tax on crypto gains and 1% TDS from 2022, India lacks a dedicated crypto law. The Parliamentary Standing Committee's SRO recommendation is significant for several reasons. First, it acknowledges the reality of millions of Indian retail investors in crypto without a safety net. Second, it mirrors the approach used in fintech and microfinance sectors, where SROs preceded formal regulation. Third, placing the SRO under dual oversight of RBI (for payment/currency aspects) and SEBI (for investment/securities aspects) reflects the unresolved classification question — is crypto a currency, commodity, or security? The committee's push for investor protection aligns with global trends: the EU's MiCA framework, the US SEC's enforcement actions, and IMF's warnings about crypto's macroeconomic risks. For India, the concern is capital flight, foreign exchange volatility, and retail investor losses. The SRO model would require crypto exchanges to self-police on KYC, AML, and disclosure norms while formal legislation catches up — a pragmatic interim solution given Parliament's legislative backlog on the Cryptocurrency and Regulation of Official Digital Currency Bill.