QBiz: RBI Profit More Than Trebles; India to Woo Foreign Firms

Catch the latest business news round-up in today’s QBiz.

4 min read
The RBI seal. 

1. Reserve Bank Profit More Than Trebles in 2018-19

Reserve Bank of India’s (RBI) profit for 2018-19 more than trebled to Rs 1.76 lakh crore owing to lower expenditure and higher other income, which has enabled a higher surplus transfer to the government.

On the other hand, the contingency fund, the central bank’s war chest for countering exchange and interest rate volatility, has shrunk by over 15% because of the new reserves transfer formula devised by the Bimal Jalan committee.

(Source: Hindustan Times)

2. Govt to Front-Load Spending to Aid Growth: FM

The government will front-load capital spending this fiscal year in a bid to support economic growth, finance minister Nirmala Sitharaman said. Speaking to reporters in Guwahati, the minister said the government will come up with more measures to arrest the economic downturn.

Front-loading, or spending the entire allocated amounts for various projects early in the financial year rather than waiting for the last quarter, is typically done to support growth.

(Source: Livemint)

3. Digital Payment Volumes Set to Grow at 20% per Annum: Report

Digital payment volumes in India are set to grow at over 20 percent each year over the next four years, ahead of those in China as well, a report said on Thursday.

The progressive thinking of the RBI, central and state governments, industry associations and payment enterprises will make this target achievable, the report by KPMG, a consultancy, said.

(Source: PTI)

4. Divestment Process: Essel Sells 205 MW of Solar Assets to Adani for Rs 1,300 Crore

The debt-ridden Essel Group, controlled by Subhash Chandra, has entered into an agreement with Adani Green Energy to sell its 205-MW operating solar assets at an enterprise value of Rs 1,300 crore. On 8 March, FE had reported the company was in talks with Adani and CPPIB for sale of its 685-MW solar portfolio on a piecemeal basis. The company is further working to close the divestment of additional 480-MW solar asset portfolio, the company said in a statement.

The assets, located in Punjab, Karnataka and Uttar Pradesh, have long-term power purchase agreements (PPAs) with various state electricity distribution companies. The Essel Group promoter’s debt was at Rs 11,000 crore, of which Rs 4,224 crore was reduced post the Oppenheimer deal, bringing the figure down to Rs 6,776 crore. With the latest announcement, the debt will come down further.

(Source: Financial Express)

5. India to Woo Foreign Firms to Capitalise on Trade War

India is targeting companies including Apple, Foxconn and Wistron Corp. with a charm offensive aimed at encouraging them to shift business out of trade war-hit China, according to a source and a document seen by Reuters.

Several Indian officials met on 14 August and discussed a list of “target companies” that also include Taiwan-headquartered contract manufacturer Pegatron Corp., a person with direct knowledge said.

(Source: Hindustan Times)

6. Revival of Demand, Investment Top Priority: RBI Annual Report

Reviving consumption demand and private investment remains the top priority in the current fiscal, the Reserve Bank of India (RBI) said on Thursday, signalling the possibility of at least one more interest rate cut this year.

To revive growth, governor Shaktikanta Das asked banks to pass on past rate cuts to borrowers at a faster pace by linking lending rates to external benchmarks such as repo rate.

Das’s renewed pitch for addressing the causes of the slowdown in Asia’s third-largest economy comes amid sales of passenger vehicles dropping to a near two-decade low in July and news of mass layoffs across several industries. The central bank has already slashed rates by 110 basis points this year to spur growth.

(Source: Livemint)

7. FDI Rules Revamp to Fuel Offline, Online Expansion of Global Brands, Say Phone Makers

Global phone makers like Apple, OnePlus and Vivo on Thursday underlined their long-term commitment to the Indian market and said the recent easing of FDI rules for single brand retail trade (SBRT) would bolster plans for offline and online expansion. The government, on Wednesday, eased the FDI norms for single-brand retail, offering players more flexibility on local sourcing norms.

It also did away a provision that required companies to mandatorily set up a brick-and-mortar store before getting into online retail trading. “OnePlus is committed to deepening its local manufacturing operations and is looking to scale up its production facilities to support exports to global markets,” OnePlus India General Manager Vikas Agarwal told PTI. He added that the new regulations will attract others brands to invest locally and accelerate development of local manufacturing ecosystem.

(Source: PTI)

8. Non-Food Credit by Scheduled Commercial Banks Rises 12.3 Percent

Non-food credit by scheduled commercial banks rose 12.3% in FY19, compared with 8.4% in the previous year, driven mainly by flows to large-scale industry and the services sector. Among bank groups, credit extended by public sector banks (PSBs) accelerated to 9.6% in March 2019 from 5.3% a year ago. Credit growth by private sector banks accelerated to 19.9% from 18.7% a year ago, led by their orientation towards personal loans which are low stressed, the report said.

Banks’ credit to the commercial sector rose by 13.3% as on March 31, compared with 10% a year ago, as several supply-side developments provided a favourable environment for credit growth to firm up and sustain. “Some reduction in balance sheet stress, recapitalisation of PSBs, calibrated reduction in SLR morphed into the liquidity coverage ratio (LCR), growing traction in the IBC process and aggressive efforts towards asset recoveries/write-off/sales as well as provisioning… underscore the critical role of availability of sufficient capital in enhancing credit growth,” the RBI said.

(Source: Financial Express)

9. In Relief for Lenders, AI Unit to Pay Rs 22,000 Cr Dues in Sep

Lenders to Air India Ltd are set for major relief as Air India Assets Holding Ltd (AIAHL) is expected to repay Rs 22,000 crore of its Rs 29,464 crore of its working capital debt next month, a move that will also sharply lower the interest obligations of the national carrier, said two people with direct knowledge of the matter.

AIAHL, a special purpose vehicle (SPV) created to warehouse the debt of Air India, will raise the money through a government-guaranteed bond issue, said one of the persons mentioned above, requesting anonymity.

(Source: Hindustan Times)

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