QBiz: FM Unveils Banks Merger; India’s Q1 GDP Growth Falls to 5%
Catch the latest business news round-up in today’s QBiz.
1. FM Sitharaman Unveils Major Overhaul of Ailing State-Run Banks
A week after announcing a raft of measures to boost economic growth and improve investor sentiment, finance minister Nirmala Sitharaman on Friday announced consolidation of 10 state-run lenders into four bigger banks.
Punjab National Bank (PNB), Oriental Bank of Commerce and United Bank of India will be brought together to form the second-largest state-run bank in the country, with a business of₹17.95 trillion (loans plus deposits) and will be at least 1.5 times that of PNB, Sitharaman said at a press conference. State Bank of India (SBI) is the country’s largest lender.
2. Slowdown Deepens as Q1 GDP Growth Falls to 5%
India’s economy reported its weakest growth in more than six years at 5% in the June quarter and slowed for the sixth straight quarter, prompting the government to unleash a spate of stimulus measures to spur economic activity.
India had already lost the “fastest growing major economy" tag to China in the March quarter, when it grew at 5.8%. China’s economy grew 6.2% in the June quarter despite the ongoing trade war with the US. Indonesia grew at 5.05% in the same period.
3. E-Commerce: CCI Study Finds Deep Distrust Between Sellers, Platforms
The interim findings of a report by the Competition Commission of India (CCI) to study market trends with focus on emerging distribution methods and strategies in e-commerce has flagged a number of conflicting issues between such online platforms and sellers, which include preferential treatment, deep discounts and sharing of consumer data.
The report related to the interim findings which was made public on Friday, was conducted by the fair trade regulator to develop a better understanding of the functioning of e-commerce in the country and its implications for markets and competition. The complete report is expected to be made public during the October-December 2019 quarter.
(Source: Financial Express)
4. Flipkart Staff Set to Cash out Stock Options Worth $100 MN
Walmart-owned Flipkart has received board approval to give its current employees the chance to cash out 10% of their vested stock options, according to an email circulated on August 29 by chief executive officer (CEO) Kalyan Krishnamurthy.
Employees will be able to sell the options allotted to them at $125-130 apiece, the email said. The value of the options expected to be bought back by Flipkart is estimated to be around $100 million, according to two people familiar with the matter.
(Source: Hindustan Times)
5. Zomato Eyeing Delivery Gold, May Spark the Next Food Fight
Zomato is pressing ahead with the launch of its Gold membership plan for food delivery, along similar lines to a now contentious programme that has pitted restaurants against food aggregators.
Zomato has not decided whether this will be available to its existing Gold members or offered as a separate programme to its customers. Its existing Gold membership programme, which is being opposed by restaurants, lets customers avail special benefits on food and drinks.
(Source: Hindustan Times)
6. Total M&A, PE Deals Value Drops 13 Percent to $ 9788 Million in July
Total value of merger and acquisitions and private equity deals dropped by 13 per cent to USD 9,788 million in July as sentiment was affected due to Brexit-related uncertainty and rising geopolitical tensions, says a report.
The total M&A and private equity deal value in the same month last year was at USD 11,210 million, according to Grant Thornton’s PE Dealtracker – July 2019 report.
On the volume side, the number of M&A and PE deals was 110 in July, 15 per cent lower from 130 in July 2018, it said.
7. NBFC Credit Flow to Corporates Declined Last Fiscal: RBI
The credit flow from non-banking financial companies (NBFCs) s to the commercial sector declined in 2018-19 on account of lower flows from non-deposit-taking systemically important NBFCs and housing finance companies, particularly in the aftermath of IL&FS event, the Reserve Bank of India said in its annual report.
Moreover, lower issuances of debt and equity instruments by non-financial entities and lower investment by LIC in corporate debt, infrastructure and social sector also resulted in lowering financial flows in 2018-19 from year-ago levels, the central bank mentioned.
(Source: Financial Express)
8. Yes Bank Increases Capital Raising Ability
Private lender Yes Bank Ltd’s board, on Friday, proposed to increase the bank’s authorized share capital from₹800 crore to ₹1,100 crore to be able to raise enough growth capital.
Following a seven-hour long board meeting, the bank said in an exchange filing that since the bank has already utilized the capital raising limit available under the previously approved resolution by the shareholders in its meeting held in June, 2019, it was necessary to increase the bank’s authorized capital to be able to raise more money.
9. SEBI Slaps Rs 1.81 Crore Fine on Inventure Growth and Securities, 12 Officials
Markets regulator Sebi on Friday slapped a total penalty of Rs 1.81 crore on stock broker Inventure Growth and Securities Ltd and its twelve officials for failing to utilise the initial public offering (IPO) proceeds for purposes as stated in the prospectus. Sebi conducted an investigation in the IPO of equity shares by the stock broker between August 4, 2011 and August 11, 2011.
The investigation revealed that the stock broker “failed to utilize the IPO proceeds for the purpose as stated in the prospectus, made false statements with regard to raising bridge loans and failed to make disclosures regarding acceptance of deposits under…of the Companies Act, 1956 and Companies (Acceptance of Deposits) Rules, 1975, in its RHP and Prospectus.”
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