QBiz: Rupee Breaches 70 Mark; Trade Deficit At Five-Year High
1. Rupee Breaches 70 Mark, Putting Pressure on Government
The rupee fell to a record low of 70 against the US dollar on Tuesday, 14 August, amid fears that the financial troubles faced by Turkey may quickly spread to other emerging economies, triggering a capital flight.
The rupee ended trading on Tuesday at 69.89 per dollar.
The weakening of the rupee has many implications for the economy. While rising oil import bill may add pressure on government finances as well as on inflation, exporters may gain some advantage, although it may be temporary.
Economic affairs secretary Subhash Chandra Garg said the rupee was still performing better than some other currencies. He said the country had sufficient foreign exchange reserves to deal with volatility.
“Even if the rupee falls to 80, it will not be a concern provided all other currencies depreciate,” he added.
2. Exports Rise 14 Percent in July, Trade Deficit Hits Five-Year High on Oil Imports
India’s trade deficit widened to a more than five-year high of $18.02 billion in July, the commerce ministry said on Tuesday, 14 August, driven largely by a surge in oil imports. Though merchandise exports rose 14.32 percent year on year in July, the trade deficit widened as oil imports surged 57.41 percent to $12.35 billion.
Merchandise exports last month rose to $25.77 billion from a year ago, while imports rose 28.81 percent to $43.79 billion, the commerce ministry said.
Oil prices jumped on Tuesday after Saudi Arabia said it cut production, adding to concerns over global supply as US sanctions against Iran curb its exports, though the prospect of a slowdown in global economic growth kept a lid on markets.
3. India May Cut 50 Percent of Iran Oil Imports to Secure US Waiver for Shipments
India, the second biggest crude customer for Iran, may cut its imports from the Islamic republic by half to secure a waiver from the US to continue with shipments, people familiar with the matter said.
Officials from the US had discussed the issue of a conditional waiver on sanctions in talks last month in New Delhi, the people said, requesting not to be identified as the discussion was private. India has expressed its inability to scrap oil imports from Iran completely as its supplies are being offered at competitive rates, the people said. New Delhi expects a response as early as next month when talks resume.
President Donald Trump’s administration has been forced to reconsider its plan to choke off all of Iran’s oil exports after countries including China and India – which together comprise about half of Iran’s oil exports – expressed their inability to halt shipments.
(Source: Business Standard)
4. Allahabad Bank Says Ananthasubramanian No Longer MD and CEO
State-owned Allahabad Bank said, on 14 August, Usha Ananthasubramanian no longer heads the bank following the Finance Ministry directive on 13 August to remove her from the post.
"In exercise of powers under section 9 of the Banking Companies Act, 1970 the central government hereby removes Usha Ananthasubramanian, from the office of Managing Director and Chief Executive Officer of Allahabad Bank, with immediate effect," the bank said in a regulatory filing.
Accordingly, Usha Ananthasubramanian has ceased to be the MD & CEO of the bank with effect from the date of aforesaid government notification, it said.
She was divested of her powers as the head of the bank three months ago as a fallout of the Rs 14,000 crore fraud at Punjab National Bank after being named in the CBI's charge sheet.
5. Bitcoin Investment Scam in Gujarat Could Be Worth Rs 500 Crore
Investors in Gujarat may have lost over Rs 500 crore in an alleged fraudulent scheme floated by the promoters of BitConnect, a cryptocurrency platform which shut down earlier this year, police said on 14 August.
Director General, Criminal Investigation Department (CID) Ashish Bhatia said that many of the victims were yet to come forward. “We have received only one complaint of Rs 1.14 crore at present. Many victims told us they want to lodge complaint but they have not come forward. They might be having the fear of Income Tax department (questioning the source of money). So we do not have the exact figure,” Bhatia told PTI.
“Many from Gujarat, mostly from Surat, had invested in the scheme. If we add up the money extorted by Shailesh Bhatt, the figure may come to over Rs 500 crore,” he said.
6. New Airport Projects May Be Awarded on a Revenue Sharing Basis
The civil aviation ministry on Tuesday proposed a revenue-sharing model for awarding greenfield airport projects to developers that is considered simpler and less prone to disputes about gold-plating of expenses.
According to the proposed model concession agreement, which will be fine-tuned after feedback from industry, airport developers will compete to win contracts based on the amount of revenue per passenger to be shared with the authority that gives the contract, instead of the current norm of developers sharing a part of the profit from the venture.
Profit-sharing contracts are prone to disputes over costs and are no longer favoured in India. Already, the government has moved to auctions involving revenue sharing in sectors such as oil and gas, to replace profit-sharing contracts.
7. Government Seeks Public Comments on Draft Data Protection Bill by 10 September
The government has sought public feedback on draft data protection bill which proposes seeking “explicit consent” for processing sensitive personal information like religious or political belief, sexual orientation and biometric information.
A high-level panel headed by Justice B N Srikrishna submitted its recommendations and the draft bill on data protection to IT Minister Ravi Shankar Prasad a fortnight ago.
It suggested steps for safeguarding personal information, defining obligations of data processors as also rights of individuals, and mooting penalties for violation.
8. IDBI Bank Net Loss Widens to Rs 2,410 cr in First Quarter
State-owned IDBI Bank's net loss widened to Rs 2,410 crore in the first quarter of this fiscal against Rs 853 crore in the year-ago quarter due to a huge jump in loan loss provisions.
The net loss in the reporting quarter, however, is lower that the preceding quarter's net loss of Rs 5,663 crore.
The public sector bank, which is under RBI's prompt corrective action framework to nurse it back to health, saw its gross non-performing assets (GNPAs) rise to 30.78 percent of gross advances as at June-end 2018 from 27.95 percent as at March-end 2018.
(Source: Hindu Business Line)
9. RBI Rejects Kotak Mahindra Bank’s Plan For Dilution Of Promoter Stake
Private sector lender Kotak Mahindra Bank Ltd., on Tuesday, 14 August, said that the Reserve Bank of India has not accepted the promoter stake dilution plan the bank had presented. In a stock exchange notification, the bank said that it believes it has met the regulator’s guidelines and will continue to engage with the Reserve Bank of India on the same.
“RBI has today communicated to us that our PNCPS issuance does not meet their promoter holding dilution requirement. We continue to believe that we have met the requirement and will engage with the RBI in this behalf,” Kotak Mahindra Bank said in a statement.