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QBiz: Govt Clears IBC Amendment Bill; Rupee Starts 2018 on A High

A roundup of the top business stories of the day.

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1. December PMI Data Signals Revival in Manufacturing, Indian Economy

The Nikkei India manufacturing Purchasing Managers’ Index (PMI), a bellwether of economic activity, grew at the fastest rate in five years in December.

Coming in the backdrop of a pickup in merchandise exports and output of eight infrastructure sectors in November, this has stoked expectations of a sustained revival in the Indian economy.

The manufacturing PMI rose to 54.7 in December from 52.6 in the previous month. A reading above 50 denotes expansion and one below it signals contraction. The manufacturing PMI is based on data compiled from monthly replies to questionnaires sent to purchasing executives in over 400 industrial companies in India.

Merchandise exports grew at a six-year high of 30.5% in November while the index for core sectors expanded at its fastest pace in 13 months at 6.8% during the same month.

Source: Livemint)

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2. Govt Announces Details of Electoral Bonds for Political Funding

The union government on Tuesday announced details of political funding that can be routed by donors to parties through electoral bonds, a scheme announced by it in Union Budget 2017.

Electoral bonds will allow a political donor to purchase bonds from authorised banks. These can be redeemed only through the registered accounts of a political party in a prescribed time frame.

In line with the Election Commission’s recommendation, the government in last year’s budget session also capped anonymous cash donations to political parties at Rs 2,000.

On Tuesday, finance minister Arun Jaitley said the electoral bonds, which are interest-free banking instruments, can be bought from specified branches of State Bank of India in multiples of Rs1,000, Rs1 lakh, Rs10 lakh or Rs1 crore.

Source: Livemint)

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3. IBC Amendment Bill Cleared by the Parliament

The Parliament on Tuesday gave its nod to amendments to the insolvency and bankruptcy code that aims to keep defaulting promoters out of the resolution process of insolvent companies.

The Insolvency and Bankruptcy Code (IBC) (Amendment) Bill 2017 was passed by Rajya Sabha amid concerns that the changes could bar genuine domestic investors from the insolvency resolution process, adversely affect micro, small and medium enterprises (MSMEs) and lead to large scale litigation.

The bill, which replaces an ordinance, was passed by the Lok Sabha last week. The amendments will be notified after the President gives his assent.

Source: Livem)

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4. Indian Rupee Starts 2018 On A High

The Indian rupee hit a two-and-a-half-year high in trade on Tuesday, as a weaker dollar pushed up Asian currencies.

The rupee gained for the fourth straight session and closed at 63.48 against the US dollar, compared to its previous close of 63.68. This is the strongest the Indian currency has traded since 17 July 2015.

Much of the recent gain have come in response to a weaker dollar. The Dollar Index fell below the 92 mark on Tuesday as the euro strengthened. According to traders, the move in the overseas currency markets prompted banks and exporters to sell the dollar, leading to gains for the rupee. Over the last four sessions, the rupee has appreciated by 62 paise.

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5. Choose Between Advisory Or Distribution Business: SEBI

Market regulator Securities and Exchange Board of India is looking to remove the conflict of interest that exists for an entity which distributes an investment product and advises on the same product. The regulatory today released its third consultation paper to amend the SEBI (Investment Advisers) Regulations, 2013.

The regulator has proposed that individuals who have registered as investment advisers shall not provide any distribution services in financial products, either directly or indirectly or through their immediate relatives. The regulator has defined immediate relative as spouse, parents, siblings or their children.

“This is clearly saying that if you are advising, your only source of income should be advisory. Even the people who are registered investment advisers today, their major income is through distribution through the arms length format,” said financial planner Harshvardhan Roongta.

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6. Prepaid Meter Roll-Out to Face Regulatory Hurdles

Power meters are to get both smart and prepaid, under a Union power ministry plan to reduce distribution losses to 15 percent by 2019.

This needs some changes in billing format and to the Electricity Act. Some vendors have also raised questions over the specifications of tender conditions, as it doesn’t allow certain digital operations.

Government sources said a committee had been formed to ensure “the cost of prepaid meter to be Rs 1,000 per piece and below”, to make it affordable for cash-short state power distribution companies (discoms). The plan is to issue a tender for procuring one million prepaid meters, to be anchored by Energy Efficiency Services Ltd (EESL).

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7. New Infosys CEO Salil Parekh Takes Charge

Salil Parekh took charge as managing director and chief executive officer of Infosys Ltd. today amid expectations that he will steer India’s second-largest software services provider towards higher growth.

The Infosys board selected Parekh to lead the company for the next five years nearly four months after former CEO Vishal Sikka stepped down, capping months of hostilities between co-Founder NR Narayana Murthy and the earlier board led by R Seshasayee.

Shares of Infosys have gained about 8 percent since Parekh’s selection. He enters during a challenging environment, including a threat of visa curbs in the US, slower client spending in legacy verticals like banking and financial services, and increasing competition. Infosys has already slashed its sales growth forecast for the current financial year to 6.5 percent from 7.5 percent earlier.

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8. NITI Aayog Says It's 'Unviable' to Support Air India: Government

The government's premier policy advisory body NITI Aayog has said in its report on the debt- laden Air India that it was "unviable" to provide financial support to the national carrier, the Centre told Parliament today. Air India has a debt of Rs 51,890 crore.

The government has initiated a process for strategic disinvestment of Air India as part of efforts to revive the national carrier.

As part of a turnaround plan approved by the previous UPA dispensation, Air India was to receive a bailout package of up to Rs 30,231 crore for a period of 10 years, starting in 2012.

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9. FRDI: Deposit Insurance May Need to Rise up to Rs 15 Lakh to Cover at Least 90% of FDs

The government may have to raise the deposit insurance cover by more than 12 times in the proposed insurance bill if it has to ensure a safety net for at least 90 percent of deposits, which was the base when the limit was last revised a quarter century ago.

In 1993, when the limit for providing deposit insurance was set at Rs 1 lakh, as much as 90 percent of the accounts had that much or less amount. But as of March 2016, that share had shrunk to 67 percent. If 90 percent of the deposits were to be still covered, then the threshold should now have to go up to at least Rs 15 lakh from Rs 1 lakh, an ET analysis shows.

"If we adjust inflation since 1993, deposit insurance requires a substantial jump. Where the amount should be — that is obviously open for debate but it should at least cover 60-70 percent of the total deposits," said Kuntal Sur, partner, financial services (risk and regulation leader), PwC India.

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