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<div type="image" title="The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books." agency="ANI" msid="114778648" hostid="261" caption="&amp;lt;p&amp;gt;The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books.&amp;lt;/p&amp;gt;"></div> Imagine this. You have a younger sibling you’re mighty envious of. And why not? Unlike you, they seem to enjoy all the freedom and money in the world. They party like there’s no tomorrow, and here you are, stuck in a boring, ultra-disciplined but responsible routine that feels completely devoid of any independence, and mostly, funds. But of late, things are changing. This sibling is in massive trouble and just cannot escape the parent’s wrath anymore. Long story short, the party is over, and it is time to go back home. The rising defaults on this sibling’s part have now begun pulling the entire house down, thereby attracting the regulator’s ire. <h2>The Wild West of <keyword id="113684" type="General" weightage="20" keywordseo="microfinance" source="Orion">microfinance</keyword> and unsecured loans</h2>It's hard to ignore the issues with microfinance and unsecured loans in India. Many saw them as a small gamble and ignored the rising defaults much like the younger siblings’ tantrums, and now they find themselves in hot waters. The skyrocketing instances of non-payments aren't a micro-issue anymore and are threatening the stability of the entire banking system. In the quarter ended September 30, 2024, 5 of India’s 8 largest private sector <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword> reported a steep rise in their bad loan book, mostly thanks to microfinance loans. Some banks, in a bid to strengthen their fortress against these <keyword id="142154" type="General" weightage="100" keywordseo="bad-loans" source="Orion">bad loans</keyword>, have significantly upped their provisions. For instance, IndusInd Bank set aside Rs 525 crore during July and September 2024 to battle the menace of defaults on microfinance loans, which make up about 9% of its total loan book. See, banks rely heavily on their interest income, which they earn from advancing loans. Any loan where the borrower has not paid interest to the bank or defaulted for 90 days or more becomes bad, i.e. an NPA, or non-performing asset for the bank. And who likes things going bad? Simply put, there has been a steep rise in three areas, much to the dislike of banks and MFIs (micro-finance institutions). But hey, it's mostly their doing! <ol><li>GNPA ratio (gross net performing assets): The quantum of non-performing assets a bank has in proportion to its total assets.</li><li>Provision: The amount banks set aside to take care of such NPAs.</li><li>Slippage ratio: The rate at which good girls go bad, or the speed at which good loans turn into NPAs</li></ol>But how are these plaguing the Indian banking sector? And what does the road ahead look like? We decode it for you. <h2> Microfinance: A not-so-micro-menace</h2>Microfinance loans were initially brought forth for low-income households and individuals i.e. for those who might not generally have access to traditional ways of credit, like bank loans and more. They don’t require collateral or an asset to be pledged in lieu of the loan, making it a tad bit easier for borrowers. As of June 2024, the amount of outstanding loans in the microfinance industry stood at a staggering Rs 4,20,256 crore. Of this, NBFC-MFIs accounted for 40% and banks made for 33% of these. In 2022, RBI, in a bid to inspire some competition in this space, did something radical-they did away with the ceiling on how much interest MFIs could charge their customers. Previously, MFIs could add up to 12% to their cost of acquiring funds to determine the final interest rate chargeable to the consumer. So, assuming that Bank A incurs a 5% cost to acquire funds for further loaning, A could charge up to 17% interest from the end consumer. So, interest rates were in the hands of MFIs, and boy, did they have a gala time with it. Instead of spurring some healthy competition, as RBI expected, MFIs and banks went rogue and all guns blazing, competing for the title of “Who will charge the highest interest?” Recently, RBI banned 4 microfinance institutions (MFIs), namely Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited, and <keyword id="20117932" type="General" weightage="20" keywordseo="navi-finserv" source="keywords">Navi Finserv</keyword> from disbursing loans effective October 21, 2024. Why? Because they were charging 14% extra interest over their original cost of funds. To maintain their loan books (and pockets), banks and NBFCs resorted to shady practices like netting off loans, which RBI has now advised MFIs against. Here, lenders allow borrowers to settle a previous outstanding loan by issuing them a new loan! As crazy as it sounds, it helped banks to report less of their total assets as NPAs, since the new credit would cover pending instalments of the borrower’s previous loan. Then there was the issue of borrowers overleveraging, i.e. taking multiple loans using different IDs from various lenders and then failing to honour any of them. The consequence? Banks and NBFCs end up with massive NPAs. Data from credit bureaus suggests that over the last quarter, there was a 17.2% rise in the number of borrowers who had 5 or more active loans at the same time. <h2>Growth &gt; Caution</h2>It's an age-old tale unfolding yet again in India’s banking sector- Icarus flew too close to the sun and eventually, fell to its death. Between April and June 2024, NBFCs microfinance portfolio jumped by 2.7%. If you see this in terms of loan sources, microfinance loans issued by banks grew by 11.2% in Q1FY25. But the same portfolio in NBFCs swelled by almost double-23.9%. While most of these loans had an average ticket size between Rs 30,000-50,000, there was a sharp spike in the number of loans that had a ticket size of Rs 80,000 or more. Data suggests that as of March 2024, more than 12% of all microfinance borrowers had over 4 or more active loans. In dating parlance, this is a classic case of borrowers going polyamorous, minus the honesty and transparency. Not the best of situations, you'd agree! <h2>Will banks and NBFCs stand up to this stress?</h2>If their results for Q2FY25 are to be believed, NBFCs are not handling the pressure all that well. Or even slightly well. Only a few banks like Bank of Baroda (BoB), ICICI, and Indian Bank were up for the battle, even witnessing a decline in their loan delinquencies. Some others, like IndusInd Bank, saw their stock dip by a massive 16.2% over the last 5 days. Its slippages in the previous quarter burgeoned from Rs 15.3 billion in Q1FY25 to Rs 17.9 billion in Q2. As a result, the bank pushed a staggeringly high amount of money to create an NPA cushion for itself. While its management has highlighted its preference for secured lending, that was hardly reflected in its actions during the quarter, where growth in unsecured personal loans remained exceptionally high at over 7% on a QoQ basis. Turns out, only 44% of customers in IndusInd Banks’ microfinance loan portfolio were exclusive to it. The rest 47% were, you guessed it right-polyamorous! 27% had borrowed from another lender as well, apart from IndusInd Bank, while 20% were those who had outstanding loans with two other lenders, apart from IndusInd Bank. IndusInd Bank’s credit card segment did not miss the NPA bus and accounted for 7-8% of its GNPAs. Canara Bank’s total slippages during the previous quarter jumped to Rs 11.1 billion, up by 24.7% QoQ, and making up for 3.6% of its total loans. As for Bandhan Bank, its gross NPA for Q2FY25 inched up on a QoQ basis, up from 4.23% in Q1, to 4.68% in the second quarter. IDFC Bank’s heavy provisioning for its NPAs marred its profits significantly, causing its PAT (profit after tax) to dip by 73% on a YoY basis. Data from ICRA Analytics suggest that the AUM (asset under management) growth in microfinance loans and unsecured (personal and business) loans by the NBFCs will moderate to 10-12% and 19-21%, respectively, in FY2025 compared to 30% and 38%, in FY2024. Says A M Karthik, Senior Vice President &amp; Co-Group Head, Financial Sector Ratings, ICRA, “As bank funds constitute a larger share in the overall funding of NBFCs, a slower credit flow from banks to the NBFCs will compress their AUM growth. The NBFCs in unsecured and digital lending businesses shall face a higher squeeze in funding compared to others, and the unsecured lending space will continue to be a source of stress in the near term.” There has been uninhibited growth in <keyword id="6051027" type="General" weightage="20" keywordseo="Unsecured-loan" source="Orion">unsecured loan</keyword>s, apart from just the microfinance segment. For instance, Axis Bank’s gross slippages jumped by Rs 4,443 crore, largely thanks to its unsecured business. The same is the case with Yes Bank, which saw 35–40% of its retail slippages emerging from the unsecured loan portfolio. <keyword id="6376194" type="General" weightage="20" keywordseo="kotak-mahindra" source="Orion">Kotak Mahindra</keyword> Bank was also quick to follow Yes Bank’s suit, with around 35%-40% of its slippages coming from credit cards. <h2>How is the road ahead?</h2>While RBI has just cracked its whip and served a warning at the moment, experts at Morgan Stanley believe that more changes (read regulatory lashes) are underway. Moreover, with both festive and wedding seasons underway in our country, unsecured lending might pick up momentum, much to the disdain of the calibrated approach banks have been taking towards it so far. But if the situation doesn't improve, RBI will not waste any time in becoming the typical tyrannical <keyword id="19897820" type="General" weightage="20" keywordseo="bollywood" source="keywords">Bollywood</keyword> headmaster who runs his dominion with an iron fist. However, that's a story for another day. Do you have a topic in mind you'd want a simpler explanation for, or insights or personal experience to share on personal finance and more? Contact us at businessinsider@timesinternet.in.

Simply Put: Is the lending party over? The dangerous tango of Indian banks with microfinance and unsecured loans

The <keyword id="6355100" type="ORGANIZATION" weightage="20" keywordseo="Indian-Navy">Indian Navy</keyword> has conducted exercises with Russia and 'Quad' countries - an informal security forum comprising India, the US, Japan and Australia - in a message to China on getting a wider footprint in the Indo-Pacific region. The Indo-Pacific region is seen from the west coast of India to the US. The Indian Navy carried out a three-day bilateral maritime exercise with Japan in the north Arabian Sea from September 26, 2020 to September 28, 2020. It was the fourth edition of India-Japan Maritime bilateral exercise JIMEX, which is conducted biennially. The last edition of JIMEX was conducted in October 2018 off Visakhapatnam in India. Naval cooperation between India and Japan has increased in scope and complexity over the years. Advanced level of operations and exercises took place during three days. It is indicative of the continued upswing in Indo-Japanese defence relations and continued efforts by both governments to work closely for a more secure, open and inclusive global commons, in accordance with international regulations. The helicopter carrier of Japan JS Kaga took part in the recent exercise. The Kaga and its sister ship the Izumo are being converted into aircraft carriers that will carry US-built maritime planes, the F35-B. India, Japan, China and South Korea are the countries now involved in what is seen in strategic circles as the Asian carrier race. The Australian Navy and Indian Navy carried out passage exercise in the East Indian Ocean Region from September 23 to September 24. The exercise involved participation of HMAS Hobart from the Australian side and Indian naval ships Sahyadri and Karmuk. In addition, an Indian maritime patrol aircraft and helicopters from both sides carried out coordinated exercise. The exercise, aimed at enhancing interoperability, improving understanding and imbibing best practices from each other, involved advanced surface and anti-air exercises including weapon firings, seamanship exercises, naval manoeuvres and cross deck flying operations. To boost mutual confidence and cooperation, a bilateral maritime exercise between Indian Navy and Russian Navy took place in the Bay of Bengal on between September 4 and September 5. "The exercise was aimed at imbibing best practices between the two navies," Indian Navy spokesperson Commander Vivek Madhwal told IANS. He also said that the exercise helped to further boost mutual confidence and cooperation between the two Navies and would reinforce the longstanding bond of friendship between the two countries. The exercise is known as 'Indra Navy' and is the 11th edition. It is a biennial bilateral maritime exercise between Indian Navy and Russian Navy. Indian Navy units undertook Passage Exercise (PASSEX) with units of US Navy - Nimitz Carrier Strike Group as they transited through Indian Ocean Region on July 20. SEE ALSO: <a href="https://www.businessinsider.in/stock-market/news/lakshmi-vilas-bank-down-5-as-concerns-over-clix-capital-merger-deepen/articleshow/78399789.cms">Lakshmi Vilas Bank is down nearly 5% as concerns over Clix Capital merger deepen</a> <a href="https://www.businessinsider.in/tech/enterprise/news/airtel-launches-new-cybersecurity-product-with-cisco-radware-vmware-and-forcepoint-for-enterprises-it-took-100-crore-and-over-a-year-to-set-up/articleshow/78403006.cms">Airtel launches new cybersecurity product with CISCO, Radware, VMware, and Forcepoint for enterprises — it took ₹100 crore and over a year to set up</a> <a href="https://www.businessinsider.in/india/news/babri-masjid-demolition-case-cbi-special-court-acquits-all-accused-judge-says-demolition-was-not-pre-planned/articleshow/78401534.cms">Babri Masjid demolition case: CBI Special Court acquits all accused, judge says ‘demolition was not pre-planned’</a>

Indian Navy takes to seas with Russia and QUAD countries

<ul class="summary-list"><li>Iran's navy has received a delivery of cruise missiles, drones, and reconnaissance helicopters.</li><li>Iran's navy chief said the missiles had a range of "over 1,000 km," state media reported, per Reuters.</li></ul>Iran's navy has received a new delivery of cruise missiles, loitering drones, and reconnaissance helicopters, the <a target="_blank" href="https://en.irna.ir/news/85331455/Iran-adds-strategic-cruise-missiles-to-its-navy-fleet">Islamic Republic News Agency</a>, Iran's state media agency, reported.The report said that Iran had added both the Talaiyeh and Nasir cruise missiles to its naval fleet and had also taken deliveries of other "homemade equipment," including a surface-to-surface missile system and "a system for detection and tracking of divers."The new military systems were unveiled during a ceremony at Iran's Konrak naval base in southeast Iran.Shahram Irani, the head of the Iranian navy, said: "The Talaeiyeh cruise missile has a range of over 1,000 km and is a smart missile that can change targets mid-mission," state media reported, per <a target="_blank" href="https://www.reuters.com/world/middle-east/iran-navy-receives-new-cruise-missiles-amid-growing-regional-tension-2023-12-24/">Reuters</a>.It comes as the US Department of Defense accused Iran of a <a target="_blank" href="https://www.reuters.com/world/pentagon-says-iranian-drone-attack-hit-chemical-tanker-near-india-2023-12-24/">drone strike on a chemical tanker</a> in the Indian Ocean on Saturday."The motor vessel CHEM PLUTO, a Liberia-flagged, Japanese-owned, and Netherlands-operated chemical tanker, was struck at approximately 10 a.m. local time (6 a.m. GMT) today in the Indian Ocean, 200 nautical miles from the coast of India, by a one-way attack drone fired from Iran," a Pentagon spokesperson previously told Reuters.Tensions in the wider region have been on the rise as <a target="_blank" href="https://www.businessinsider.com/more-big-shipping-companies-suspend-red-sea-operations-2023-12?r=US&amp;IR=T">Iran-backed Houthi rebels from Yemen</a> have increasingly targeted commercial ships around the Red Sea in what is ostensibly a show of support for Palestinians in Gaza.The mounting attacks have led to a series of major shipping firms suspending their operations in the Red Sea, leading to fears over global supply chains, as Business Insider previously reported.Nicholas Brumfield, a Middle East politics researcher who focuses on Yemen and maritime security, wrote in a report for the think tank the <a target="_blank" rel=" nofollow" href="https://www.fpri.org/article/2023/12/why-are-the-houthis-attacking-now/#:~:text=Motivated%20by%20a%20mix%20of,Israeli%20attack%20on%20Gaza%20continues.">Foreign Policy Research Institute </a>that the "attacks are unlikely to cease, and may escalate further, so long as Israel's campaign continues."On Saturday, Iran denied US accusations that it has had a hand in helping the Houthis plan the attacks on Israeli-linked ships.

Iranian navy receives new cruise missiles, drones, and recon helicopters as US accuses the country of striking a chemical tanker     

Prime Minister <keyword id="19895781" type="General" weightage="20" keywordseo="narendra-modi" source="keywords">Narendra Modi</keyword> urged CEOs of US majors to take advantage of India's growth story as the country is making all efforts to become the third largest economy of the world in his third term. India is currently the fifth largest economy of the world after the US, China, Germany and Japan with a GDP of around USD 3.9 trillion. India has been the fastest growing large economies of the world with GDP growth rate of over 7 per cent for the last three consecutive years. Addressing CEOs of the large US tech firms on Sunday, Modi said India will make every effort to become the third largest economy in the world in his third term (2024-29). Companies should take advantage of India's growth story for collaboration and innovation by co-developing, co-designing, and co-producing in India for the world, harnessing the opportunities from the country's economic and technological growth, he said. Assuring the business leaders of India's deep commitment to the protection of intellectual property and to fostering tech innovation, Modi highlighted the economic transformation happening in the country, particularly in electronics and information technology manufacturing and semiconductors. Modi asserted that his government was committed to making India a "global hub of <keyword id="20073013" type="General" weightage="20" keywordseo="semiconductor-manufacturing" source="keywords">semiconductor manufacturing</keyword>". The meeting took place at the Lotte <keyword id="19904497" type="General" weightage="20" keywordseo="New-York" source="keywords">New York</keyword> Palace Hotel on Sunday during the second leg of Modi's three-day US visit. It saw the participation of CEOs of 15 major US-based firms working on cutting-edge technologies such as AI, quantum computing and semiconductors. "Had a fruitful roundtable with tech CEOs in New York, discussing aspects relating to technology, innovation and more. Also highlighted the strides made by India in this field. I am glad to see immense optimism towards India," Modi said in a post on X. During the conference, Modi said technology collaboration and efforts such as the Initiative on Critical and Emerging Technologies (ICET) lie at the core of the India-US Comprehensive Global Strategic Partnership, according to a Ministry of External Affairs press release. Organised by the Massachusetts Institute of Technology (MIT) School of Engineering, the CEOs of top US tech firms, including Google CEO Sundar Pichai, Adobe CEO Shantanu Narayena, Accenture CEO Julie Sweet and NVIDIA CEO Jensen Huang attended the meeting. Others who participated in the roundtable included AMD CEO Lisa Su, HP Inc. CEO Enrique Lores, IBM CEO Arvind Krishna, Dr Noubar Afeyan, Chairman of Moderna, and Verizon CEO Hans Vestberg. Modi also talked about India's BIO E3 (biotechnology for environment, economy and employment) policy to develop the country into a biotech powerhouse and on the topic of AI, noted that India's policy is to promote AI for all, underpinned by its ethical and responsible use. The CEOs appreciated India's growing prominence as a global technology hub, driven by its innovation-friendly policies and flourishing market opportunities. They also expressed strong interest in investing and collaborating with India, agreeing that investing in startups would be a synergistic opportunity to innovate and develop newer technologies in the country. Others who attended the conference included Biogen Inc CEO Chris Viehbacher, CEO of Bristol Myers Squibb, Chris Boerner, Eli Lilly and Company CEO David A. Ricks, LAM Research CEO Tim Archer, GlobalFoundries CEO Thomas Caulfield, and the CEO of Kyndryl, Martin Schroeter. "Further cementing technology and business connect. PM @narendramodi interacted with the top tech leaders and CEOs of USA, in a Roundtable hosted by the Massachusetts Institute of Technology School of Engineering, in New York today. PM emphasised India's growth prospects and discussed initiatives to foster collaborations and innovation across diverse sectors," the official account of the MEA said in a post on X. The prime minister had a separate meeting with Krishna P Singh, CEO of Holtec International, which is into nuclear and solar power generation. They discussed Holtec's plan for expanding manufacturing in India and advancing energy cooperation, PMO India said in a post on X. Earlier on Sunday, Modi addressed the <keyword id="20115166" type="General" weightage="20" keywordseo="Indian-diaspora" source="keywords">Indian diaspora</keyword> at the packed Nassau Veterans Coliseum on Long Island in New York. He also held bilateral meetings with world leaders at the sidelines of the UN General Assembly session here. Modi reached New York on Saturday after attending the Quad Leaders' Summit hosted by President Joe Biden in Wilmington, Delaware. <div type="Article" hostid="261" msid="113516805" title="Why is Indian Prime Minister Narendra Modi visiting the US this weekend?" mstype="2" mssubtype="0"></div>

PM Modi invites US CEOs to take a 'byte' out of India's growing technology sector

<ul class="summary-list"><li>Indian commandos seized back a cargo ship hijacked by Somali pirates over the weekend.</li><li>India is not associated with crack special forces — but this operation impressed analysts.</li></ul>Indian specialist commando units played a key role in seizing back a cargo ship that'd been hijacked by Somali pirates, giving the country a chance to flex its muscles.The Malta-flagged cargo vessel, the Ruen, was hijacked in December 2023 near Yemen.It was the first successful seizure of a vessel by Somali pirates since 2017, and added to the unrest around Somalia and the Red Sea.Over the weekend, India took the Ruen back.In a post on<a target="_blank" href="https://x.com/indiannavy/status/1769036561163702518?s=20"> X, the Indian Navy</a> said the operation had taken 40 hours and resulted in all 17 hostages being freed and 35 pirates being arrested.Dramatic<a target="_blank" href="https://x.com/sidhant/status/1769353429808455922?s=20"> footage released by the Indian Navy </a>showed commandos parachuting from a navy plane into the sea near the hijacked vessel.Analysts say the success of the operation highlights the effectiveness of India's navy units in fighting pirates.Carl Schuster, a former US Navy captain, <a target="_blank" href="https://edition.cnn.com/2024/03/19/india/india-pirate-ship-capture-intl-hnk-ml/index.html">told CNN </a>the incident highlighted the professionalism of the Indian Navy and Delhi's marine commando force, known as MARCOS."The Indian Navy itself is a highly trained and disciplined professional force," Schuster said."MARCOS' nearly eight months of training is modeled after Britain's SAS. Despite a very intense selection process, only about 10% to 15% of those who enter the training graduate," he said.The unit has more than 30 years of experience conducting dangerous maritime operations.It's not the first ani-piracy operation undertaken recently by the MARCOs. India's <a target="_blank" href="https://www.wionews.com/india-news/who-are-marcos-indias-toughest-men-conducting-anti-piracy-operations-in-arabian-sea-6-key-facts-685049">WION news</a> reported in January that the unit freed 19 Pakistani nationals from a hijacked vessel in the Arabian Sea.<a target="_blank" href="https://thediplomat.com/2024/02/what-does-china-think-about-indias-increased-anti-piracy-patrols-amid-the-red-sea-crisis/">The Diplomat reported </a>that India had recently increased its anti-piracy operations in the Indian Ocean region in response to increased threats to shipping lanes.<a target="_blank" href="https://www.navalnews.com/naval-news/2024/03/indian-navy-and-air-force-conduct-complex-anti-piracy-operation/">Naval News commented</a> that the complex operation showcased "India's capability of protecting its maritime interests even at such a vast distance from the coast."The most recent operation was carried out by navy vessels supported by helicopters and aircraft, the navy said."The vessel opened fire on the warship, which is taking actions [in accordance with] international law, in self-defense and to counter piracy, with minimal force necessary to neutralize the pirates' threat to shipping and seafarers," it said.Somali pirate attacks spiked around 2011 but then sharply declined after an international coalition was formed to ensure the security of vessels traveling in the Red Sea. This vital global shipping lane links Europe and Asia via the Suez Canal.But recently, piracy incidents have increased amid attacks <a target="_blank" href="https://www.businessinsider.com/houthi-attacks-ships-give-rebels-iran-intelligence-war-experts-2024-2?r=US&amp;IR=T">by Houthi militants in Yemen</a> on commercial shipping vessels.<a target="_blank" href="https://www.france24.com/en/live-news/20240214-fears-that-pirates-are-returning-to-seas-off-somalia">The AFP news wire</a> reported that ships are slowing down while they wait for information on whether it's safe to enter the Red Sea, giving pirates an opportunity to attack the vessels.

The Red Sea shipping crisis has given an unexpected country's elite commandos a chance to shine       

<ul class="summary-list"><li>An unidentified group of attackers seized an Israel-linked tanker off the coast of Yemen on Sunday.</li><li>A US Navy warship responded to a distress call and secured the seized ship, an official said.</li></ul>Attackers seized a tanker linked to Israel off the coast of Yemen on Sunday, authorities said. While no group immediately claimed responsibility, it comes after at least two other maritime attacks in recent days have been linked to the Israel-Hamas war.The attackers seized the Liberian-flagged Central Park, managed by Zodiac Maritime, in the <a target="_blank" href="https://www.businessinsider.com/pirate-hunters-track-smugglers-dhows-former-navy-admiral-says-2023-7">Gulf of Aden</a>, the company and private intelligence firm Ambrey said. An American defense official, speaking on condition of anonymity to discuss intelligence matters, confirmed to The Associated Press that the attack took place.Zodiac called the seizure "a suspected piracy incident.""Our priority is the safety of our 22 crew onboard," Zodiac said in a statement. "The Turkish-captained vessel has a multinational crew consisting of a crew of Russian, Vietnamese, Bulgarian, Indian, Georgian and Filipino nationals. The vessel is carrying a full cargo of phosphoric acid."A US Navy warship responded to a distress call from the tanker and secured the ship, US officials told <a target="_blank" href="https://www.reuters.com/world/middle-east/armed-individuals-seize-israeli-managed-oil-tanker-gulf-aden-us-official-2023-11-26/">Reuters</a>.Zodiac described the vessel as being owned by Clumvez Shipping Inc., though other records directly linked Zodiac as the owner. London-based Zodiac Maritime is part of Israeli billionaire Eyal Ofer's Zodiac Group. British corporate records listed two men with the last name Ofer as a current and former director of Clumvez Shipping, including Daniel Guy Ofer, also a director at Zodiac Maritime.It wasn't immediately clear who was behind the attack. Nearby Aden is held by forces allied to <a target="_blank" href="https://www.businessinsider.com/history-of-conflict-in-yemen-2017-12">Yemen</a>'s internationally recognized government and a Saudi-led coalition that has battled Yemen's Iranian-backed <a target="_blank" href="https://www.businessinsider.com/yemens-houthi-rebels-use-new-missiles-during-israel-hamas-war-2023-11">Houthi rebels</a> for years. In theory, that part of the Gulf of Aden is controlled by those forces and is relatively distant from Houthi-controlled territory in the country. <a target="_blank" href="https://www.businessinsider.com/somali-piracy-maps-2016-10">Somali pirates</a> also are not known to operate in that area.The US defense official said that it appeared "an unknown number of unidentified armed individuals" seized the ship.One senior US official told Fox News Chief National Security Correspondent Jennifer Griffin that five gunmen were involved in the attempted hijacking.Crew members of the Central Park tanker locked themselves in the ship's safe room for safety, the official told Griffin. The gunmen failed to beat the door down. According to Griffin, the official also stated that a <a target="_blank" href="https://www.businessinsider.com/japan-building-warships-to-counter-north-korean-missile-threat-2022-12">Japanese destroyer</a> helped the US Navy while two <a target="_blank" href="https://www.businessinsider.com/china-navy-six-highly-capable-vessels-middle-east-military-expert-2023-10">Chinese Navy warships</a> in the vicinity did not render assistance.The gunmen exited the vehicle and were sailing back to Yemen shores when US Navy personnel made the arrest, Griffin reported."US and coalition forces responded to a distress call from the M/V Central Park. The crew of the M/V Central Park is currently safe," a US defense official told Business Insider.The official did not address questions regarding the details of the incident, including whether 5 armed gunmen were involved in the attack and if Chinese Navy ships were near the area.Zodiac Maritime has been targeted previously amid a wider yearslong shadow war between <a target="_blank" href="https://www.businessinsider.com/israel-hamas-iran-walks-tightrope-us-steps-up-shadow-war-2023-10">Iran and Israel</a>. In 2021, a drone attack assessed by the US and other Western nations to have been carried out by Iran killed two crew members aboard Zodiac's oil tanker Mercer Street off the coast of Oman.The British military's United Kingdom Maritime Trade Operations, which provides warnings to sailors in the Middle East, had earlier warned sailors that "two black-and-white craft carrying eight persons in military-style clothing" had been seen in the area. It issued another warning, saying that radio traffic suggested a possible attack had occurred before acknowledging the seizure.The UKMTO put the ship's location over 60 kilometers (35 miles) south of Yemen's coast, some 80 kilometers (50 miles) east of Djibouti, and about 110 kilometers (70 miles) northeast of Somalia in the Gulf of Aden, a key shipping route.The Central Park seizure comes after a container ship, CMA CGM Symi, owned by another Israeli billionaire, came under attack Friday by a suspected <a target="_blank" href="https://www.businessinsider.com/americas-foes-unveil-drones-closely-resembling-us-military-reaper-2023-8">Iranian drone</a> in the Indian Ocean. Iran has not acknowledged carrying out the attack, nor did it respond to questions from the AP about that assault.Both the Symi and the Central Park had been behaving as if they faced a threat in recent days.The ships had switched off their Automatic Identification System trackers, according to data from MarineTraffic.com analyzed by the AP. Ships are supposed to keep their AIS active for safety reasons, but crews will turn them off if they appear to be targeted. In Central Park's case, the vessel had last transmitted four days ago after it left the Suez Canal heading south into the Red Sea.The attacks come as global shipping increasingly finds itself targeted in the weekslong war that threatens to become a wider regional conflict — even as a truce has halted fighting and <a target="_blank" href="https://www.businessinsider.com/21-images-of-released-hostages-and-prisoners-gaza-and-israel-2023-11">Hamas exchanges hostages for Palestinian prisoners</a> held by Israel.With the Israel-Hamas war — which began with the militant Palestinian group's October 7 attack — raging on, the Houthis seized a vehicle transport ship in the <a target="_blank" href="https://www.businessinsider.com/israel-iran-idf-houthi-rebels-hijack-ship-red-sea-2023-11">Red Sea</a> off Yemen. The Houthis did not immediately acknowledge the seizure of the Central Park.The Associated Press contributed to this story.

US Navy foils gunmen attempting to hijack an Israel-linked tanker off Yemen

<ul class="summary-list"><li>The US Navy has turned to an arsenal of drones to help it patrol Middle Eastern waters.</li><li>These drones fall under Task Force 59, a first-of-its-kind initiative for the Navy.</li></ul>Inside a massive warehouse located at a US Navy base in Bahrain, a tiny island country in the Persian Gulf, there are nearly a dozen drones on display.They come in different shapes, sizes, and capabilities. Some resemble conventional speedboats, while others look like they could have been plucked right from a science fiction movie. They are used for reconnaissance or to gather intelligence, and, when needed, they can be quite lethal.These drones belong to a Navy task force that's working to merge unmanned systems and artificial intelligence with maritime operations across the Middle East. It's an increasingly important task as wars become more and more <a target="_blank" href="https://www.businessinsider.com/attacking-russian-warships-naval-drones-like-hunting-prey-ukrainian-general-2024-3">reliant on autonomous platforms</a>.Known as Task Force 59, this initiative is the first of its kind for the Navy. It is intended to give the US greater <a target="_blank" href="https://www.businessinsider.com/iran-tried-capture-us-vessel-stopped-by-navy-patrol-2022-8">surveillance and deterrence options</a> in this volatile region where American and coalition forces are finding themselves facing threats from multiple of adversaries.Drones help "augment our traditional combatant force," said Capt. Colin Corridan, the Task Force 59 commodore. For commanders, this gives them "the option to take on greater operational risk while maintaining a tactical and strategic advantage." Put more simply, they don't necessarily have to put their personnel in danger to get the tough jobs done.<div type="image" title="Models of drones are kept in a warehouse at Naval Support Activity Bahrain." height="4000" width="6000" msid="108625865" hostid="261" sizebytes="751276"></div>Task Force 59 was <a target="_blank" href="https://www.cusnc.navy.mil/Media/News/Display/Article/2768468/us-5th-fleet-launches-new-task-force-to-integrate-unmanned-systems/">established</a> in September 2021 by US Naval Forces Central Command, or NAVCENT, and is headquartered at Naval Support Activity Bahrain, a major US base in the Gulf state that hosts the Navy's Fifth Fleet.Business Insider recently visited the installation, where, for over two and a half years, Task Force 59 has experimented with its diverse arsenal of drones and employed these systems in exercises and missions around Middle Eastern waters.Since its inception, Task Force 59 has conducted at least 34 bilateral and multilateral exercises, and operated its drones at sea for more than 60,000 hours across the vast Middle Eastern waterways, Corridan said in emailed remarks to BI earlier this month.A majority of Task Force 59's drones are unmanned surface vehicles, or USVs, meaning they function with some degree of autonomy at the water's surface.<div type="image" title="A MARTAC T-38 Devil Ray unmanned surface vehicle, equipped with a Lethal Miniature Aerial Missile System, operates in the Arabian Gulf, Oct. 26." height="3832" width="5760" msid="108625866" hostid="261" sizebytes="851398"></div>They vary in size — some are as short as 10 feet long while others push nearly 40 feet in length — but are similarly used for intelligence, surveillance, and reconnaissance, or ISR, purposes.Beyond the USVs, Task Force 59 also operates unmanned underwater and aerial vehicles, UUVs and UAVs, respectively, giving it a wide range of capabilities and options above and below the surface to collect data.Corridan said Task Force 59's drones are used daily in Fifth Fleet's area of operations, which spans a whopping 2.5 million square miles of water stretching from the Red Sea to the Indian Ocean. It also includes critical chokepoints, through which merchant vessels carrying various goods pass on their way to ports around the world."These unmanned systems offer tremendous opportunities for expanding regional maritime domain awareness and give us effective eyes on the water," Corridan said, adding that they "play an instrumental role in advancing our intelligence, surveillance and reconnaissance capabilities, while giving us increased lethality and enhanced operational readiness."All drone activity is monitored and coordinated in the Robotics Operations Center, a small, unassuming room at the Task Force 59 headquarters. Full of monitors and little flags on desks, this space is essentially a command and control center, where the US and its foreign partners oversee various exercises and missions.<div type="image" title="The Robotics Operations Center at Naval Support Activity Bahrain." height="4000" width="6000" msid="108625867" hostid="261" sizebytes="526270"></div>One such mission that took place in September saw the drones deployed <a target="_blank" href="https://www.businessinsider.com/us-navy-sent-naval-drones-monitor-iranian-gunboats-harass-ships-2023-10">to spy on Iranian warships</a>, gunboats, and aircraft around the Strait of Hormuz, a strategic waterway between the Persian Gulf and the Gulf of Oman where Tehran's forces have routinely been accused of <a target="_blank" href="https://www.businessinsider.com/video-iran-attack-boats-swarm-oil-tanker-latest-maritime-seizure-2023-5">harassing commercial vessels</a> and, at times, foreign military ships.Vice Adm. Brad Cooper, then the NAVCENT commander, <a target="_blank" href="https://www.cusnc.navy.mil/Media/News/Display/Article/3550985/us-5th-fleet-enhances-middle-east-maritime-security-with-unmanned-capabilities/">said at the time</a> that the integration of drones into routine fleet operations allows the US to better monitor and patrol the region, while also increasing deterrence against bad actors.Maritime awareness, a key focus of the September surveillance mission, has largely been the focus of Task Force 59 since its creation. But its work changed in October after <a target="_blank" href="https://www.businessinsider.com/us-navy-drone-boats-deadly-weapons-first-time-middle-east-2023-11">a USV fired a live munition</a> at a target simulating hostile forces during an exercise.The engagement marked the first time that a USV had fired a lethal munition in the Middle East. <a target="_blank" href="https://www.dvidshub.net/news/457005/exercise-digital-talon-advances-unmanned-lethality-sea">Cooper hailed the moment</a> as a "significant step forward" that brought the Navy's capabilities to the "next level." Instead of only being useful for maritime awareness, drones had proven that they could make a fleet more lethal, he said.<div type="image" title="An L3Harris Arabian Fox MAST-13 unmanned surface vessel sails in the Arabian Gulf on Jan. 22" height="3685" width="5538" msid="108625868" hostid="261" sizebytes="170458"></div>Developments like these emphasize the growing role that USVs are playing in conflict.Ukraine, for example, lacks a proper navy. But for months, Kyiv has turned to a <a target="_blank" href="https://www.businessinsider.com/ukraine-made-naval-drones-deadlier-larger-warheads-general-says-2024-3">dynamic fleet of USVs</a> packed with explosives to wreak havoc on Russia's Black Sea Fleet. It's an asymmetrical style of warfare that has proven to be <a target="_blank" href="https://www.businessinsider.com/russian-guns-on-warships-havent-stopped-ukraines-sea-drones-general-2024-3">quite difficult for Moscow to stop</a>.And thousands of miles away, Iran-backed Houthi rebels <a target="_blank" href="https://www.businessinsider.com/middle-east-ships-new-challenge-exploding-houthi-boats-us-navy-2024-1">have attempted to use USVs</a> to attack international shipping lanes off the coast of Yemen. But US forces tend to <a target="_blank" href="https://www.businessinsider.com/underwater-drones-red-sea-houthis-us-navy-threat-gaza-israel-2024-2">destroy these systems</a> in preemptive strikes before they even have a chance to launch them into the water.The trend extends beyond just the maritime domain, though, as militaries increasingly turn to <a target="_blank" href="https://www.businessinsider.com/ai-tool-helping-ukraine-battlefield-russia-europe-defense-tech-startup-2023-10">unmanned systems and AI</a> on and off the battlefield.In the Ukraine war, this aspect of modern warfare has been underscored by the <a target="_blank" href="https://www.businessinsider.com/drones-watching-soldiers-shows-future-wars-scary-us-army-officer-2024-3">widespread employment of cheap commercial drones</a> to conduct surveillance and high-cost attacks against the enemy. The deadly tactic is not new to this conflict, but it's one that the US military is wasting no time in <a target="_blank" href="https://www.businessinsider.com/us-troops-shoot-balloons-learn-to-defeat-dangerous-drone-threat-2024-3">training to defend against</a> considering developments in this space.<div type="image" title="A undated still image released on Oct. 6 from video taken by a MARTAC T-38 Devil Ray unmanned surface vessel of an Islamic Revolutionary Guard Corps Navy warship in the Strait of Hormuz." height="519" width="761" msid="108625869" hostid="261" sizebytes="6956"></div>The rise of autonomous systems in war has also <a target="_blank" href="https://www.businessinsider.com/drone-ai-russia-ukraine-war-experts-concerned-for-future-2023-1">raised questions about ethical use</a> and prompted discussion about what responsible development of military AI looks like. <a target="_blank" href="https://www.state.gov/political-declaration-on-responsible-military-use-of-artificial-intelligence-and-autonomy/">More than 50 countries</a>, including the US and Ukraine, have endorsed a framework to address this issue.For Task Force 59, while unmanned and AI systems will be used to monitor their environment and gather important data, Corridan said they will not act completely independent and a human will always remain in the loop to make critical decisions.And as the threat environment continues to change in the Middle East, so do the needs of the task force."We are consistently learning," Corridan said. "It's something we're getting after to ensure we are bringing operational value to the warfighter."

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