1. RBI’s Unified Payment Interface Is Now Live
The National Payments Corporation of India (NPCI) has launched the platform for its Unified Payment Interface, it said in a release on Thursday. Soon, the 21 banks that are currently on board will launch their mobile applications on the Google Play Store.
The United Payment Interface, or UPI, is a system that allows for instantaneous transfer of money using what NPCI, the developer, calls a virtual payment address. In April this year, when the system was unveiled at the Reserve Bank of India by Governor Raghuram Rajan, it had been announced that 36 banks had signed up to be part of UPI.
However, as of now only 21 are ready to go live. Andhra Bank, Axis Bank, Bank of Maharashtra, Bhartiya Mahila Bank, Canara Bank, Catholic Syrian Bank, DCB Bank, Federal Bank, ICICI Bank, TJSB Sahakari Bank, Oriental Bank of Commerce, Karnataka Bank, UCO Bank, Union Bank of India, United Bank of India, Punjab National Bank, South Indian Bank, Vijaya Bank and YES Bank are expected to launch their mobile applications by the end of the week.
(Source: BloombergQuint)
2. Raghuram Rajan’s Parting Gift to India’s Corporate Bond Market
The Reserve Bank of India announced an array of changes aimed at widening and deepening India’s corporate bond market in order to raise it to global standards and eliminate the risk of banks’ large non-commercial exposures to a particular group.
Investors welcomed the measures — unveiled just days before Raghuram Rajan steps down as governor — as the big-bang reforms they had long been waiting for. These include the staggered reduction of banks’ loan exposure, increased participation by overseas investors in corporate bonds and making top-rated bonds eligible for borrowing from Reserve Bank for liquidity needs.
RBI has also thrown open the avenue of overseas rupee-denominated longterm masala bonds to banks as a means of shoring up their dipping capital and financing infrastructure and affordable housing.
(Source: The Economic Times)
3. Uber Said to Lose at Least $1.2 Bn in First Half of 2016
The ride-hailing giant Uber Technologies Inc is not a public company, but every three months, dozens of shareholders get on a conference call to hear the latest details on its business performance from its head of finance, Gautam Gupta.
On Friday, Gupta told investors that Uber’s losses mounted in the second quarter. Even in the US, where Uber had turned a profit during its first quarter, the company was once again losing money.
In the first quarter of this year, Uber lost about $520 million before interest, taxes, depreciation and amortization, according to people familiar with the matter. In the second quarter the losses significantly exceeded $750 million, including a roughly $100 million shortfall in the US. That means Uber’s losses in the first half of 2016 totaled at least $1.27 billion.
(Source: Livemint)
4. Large Firms to Pay More for Bank Loans From FY18: RBI
The Reserve Bank of India (RBI) has proposed a major overhaul in the way large companies borrow. In separate decisions announced on Thursday, the central bank made it costlier for large companies to borrow more than a certain amount from banks even as it took steps to increase liquidity and participation in the corporate bond market. It also proposes to reduce the cap on bank exposure to large corporate entities.
Starting next financial year, large Indian companies will have to pay more for borrowing from banks—part of an effort by the central bank to curb lenders’ exposure to stressed corporate entities. Large companies accounted for 58% of total bank credit of Rs 65.47 trillion at the end of March.
According to guidelines that RBI released on Thursday, banks will have to set aside higher provisions and assign higher risk weights for loans (essentially set aside higher capital) to large companies beyond a certain limit.
(Source: Livemint)
5. Srinivasan, Piramal Inducted as Non-Exec Directors of Tata Sons
Tata Sons, the holding company of the $103-billion diversified Tata conglomerate, expanded its board by inducting two of India’s prominent industrialists as non-executive directors.
Venu Srinivasan, chairman of TVS Motor, and Ajay Piramal, chairman of both the Piramal Group and Shriram Group, were appointed to the board on Thursday.
The salt-to-software conglomerate had in the past inducted several industrialists on the board of their blue-chip companies to gain from their experience and expertise. For several years, Aditya Vikram Birla was a member on the Tata Steel board, while his son Kumar Mangalam Birla too had the position later. In fact, Pilani Investments, the holding company of the Birla family, owned more stake in Tata Steel at one point than the Tata Group.
Bombay Dyeing founder Nusli Wadia is still a non-executive director of Tata Steel.
(Source: The Economic Times)
6. Strike at World’s Biggest Coal Miner Seen Blunted by Indian Glut
India’s ample coal stockpiles may blunt the power of unions planning a strike at Coal India Ltd, the world’s biggest miner of the fuel.
Labour groups including All India Coal Workers’ Federation are demanding the company start early wage talks and begin recruiting to fill vacancies, as well as calling on the government to stop selling its shares of the company. The one-day strike scheduled for 2 September may cut output by about 1.5 million metric tons from the Kolkata-based miner, which produced 536 million tons of coal in the year ended 31 March.
The problem for the unions is the days of coal shortages are over. Coal India can afford to lose a day’s production, rather than agreeing to an unreasonable demand.Goutam Chakraborty, Analyst, Emkay Global Financial Services.
(Source: Bloomberg Quint)
7. Donald Trump as President Can Cause Global Recession, Warns Citigroup
The election of Donald Trump as President of the United States could lead to chaos in markets and increased policy uncertainty that could tip the world into recession, according to Citigroup Inc.
A Trump victory in particular could prolong and perhaps exacerbate policy uncertainty and deliver a shock (though perhaps short-lived) to financial markets. Tightening financial conditions and further rises in uncertainty could trigger a significant slowdown in US, but also global growth.Willem Buiter, Chief Economist, Citigroup Inc.
Buiter, for his part, has been warning of a global recession for nearly a year, though he previously saw a deceleration in Chinese growth as the proximate cause.
In what they deem to be a “conservative” estimate, Citi’s team suggests that a Trump victory would cause a one-standard deviation tightening in US financial conditions and pick-up in global policy uncertainty, which would adversely affect consumption and investment in both the US and the rest of the world.
(Source: The Economic Times)
8. Under Urjit Patel Expect Less Chat and Unified Communication
When Urjit Patel became head of the Reserve Bank of India’s monetary police department three years ago, the to and fro of bankers and traders meeting officials for cosy, broad-ranging discussions abruptly ended.
Meetings go on to this day, but out went the kind of private chats that could unsettle markets, occurrences that became known as “open mouth operations”, as opposed to open market operations the RBI carries out.
As he takes over as RBI governor next month, market players and economists who have met him expect Patel to instil the same arm’s length approach and unified communication to the institution as a whole.
That is likely to involve acting as its chief spokesman and waiting for scheduled reviews to discuss policy in public, which some traders believe will bring more clarity and transparency to the RBI’s stance as long as Patel communicates it effectively.
(Source: Business Standard)
9. SBI and ICICI Bank “Too Big to Fail” for Second Year in a Row
The Reserve Bank of India on Thursday retained the tag of “too big to fail” banks for SBI and ICICI second year in a row.
This means that the banking regulator considers failure of these banks to be dangerous for the economy, which renders them ‘too big to fail’. RBI had designated both these banks as domestic systemically important banks (D-SIBs) last year for the first time.
Originally the central bank had plans to name 4-6 banks as systemically important. These banks are required to make additional capital requirements after they were named as D-SIBs.
Based on the methodology announced by the central bank, SBI will need to maintain additional capital equivalent to 0.6 percent of its loans and investments while ICICI will need to maintain 0.2 percent more.
(Source: The Economic Times)