QBiz: RBI Cuts Rates to 6-Yr Low; IMF Revises India’s GDP Forecast

Read The Quint’s compilation of top business stories from dailies across the country.

5 min read
A file photo of RBI governor Urjit  Patel. (Photo: PTI)

1. New Doctrine: RBI Cuts Rates to 6-Yr Low

In his first public pronouncement as governor of the Reserve Bank of India, Urjit Patel showed he is open to tango with the government. The central bank cut interest rates by a quarter point despite the inflation forecast for fiscal 2018 nudging over target, opened up room for treating bad loans differently in contrast with his predecessor, threw a lifeline to banks on provisioning and held out hope of more rate reductions.

RBI lowered the repo rate, at which it lends to banks, by 25 basis points to 6.25 percent. With the benchmark rate reduced to a near-six-year low, a new monetary doctrine seems to be in place.

The BSE Sensex climbed 0.32 percent to 28,334.55 points and yield on the benchmark bond fell six basis points to 6.72 percent, reflecting optimism that further rate cuts are on the horizon. The rupee strengthened 0.18 percent to 66.46 per dollar.

(Source: The Economic Times)

2. IMF Revises India's GDP Forecast to 7.6% on Robust Growth Momentum

Less than three months after trimming its India growth forecast, the International Monetary Fund (IMF) on Tuesday raised it by a tad, citing the resilience of its economy and robust growth momentum.

The IMF now expects the economy, Asia’s third largest, to expand 7.6 percent in 2016-17, up from its earlier projection of 7.4 percent.

“India’s economy continued to recover strongly, benefiting from a large improvement in the terms of trade, effective policy actions, and stronger external buffers, which have helped boost sentiment,” the IMF said in its World Economic Outlook (WEO).

(Source: Livemint)

3. Spectrum Auction: Government Receives Bids Worth Rs 60,969 Crore On Day 3

The much-hyped spectrum auction crawled on the third day on Tuesday, adding Rs 4,097 crore of bids to take total commitments to Rs 60,969 crore but over 60 percent of the airwaves remained unsold as premium 4G bands found no takers.

The debt-ridden telecom players stayed away from high-cost 700 MHz and 900 MHz bands even on the third day of bidding.

Sources said there is no demand yet for frequencies in the 700 MHz and 900 MHz bands while bidding interest continues to be largely around 1800 MHz and 2300 MHz that can be used by operators to provide 4G services.

(Source: BloombergQuint)

4. Cheaper Loans On The Cards; ICICI Bank Cuts Rate

The Reserve Bank of India’s decision to cut its policy rate by 25 basis points was cheered by the markets and it seems borrowers may soon have something to cheer about too.

ICICI Bank reduced its lending rate by 5 basis points soon after the policy announcement. India’s largest lender State Bank of India (SBI) may also follow suit if the cost of funds drops as a result of RBI’s policy stance.

ICICI Bank’s 5-basis-point reduction takes its one-year marginal cost lending rate to 9.05 percent, with effect from 1 October. Earlier in the day, the bank’s Chief Executive Officer Chanda Kochhar said the reduction in the rate by the RBI would give a strong impetus to both consumption and investment led growth for the country.

(Source: BloombergQuint)

5. Startups Can Raise $3 Million Via External Commercial Borrowings Annually: RBI

With a view to boosting innovation and promoting job creation, the Reserve Bank of India on Tuesday said startups can raise external commercial borrowings (ECBs) of up to $3 million in a financial year.

They will be permitted raise the overseas funds in rupees as well as in foreign currency.

India has the third-largest number of startups globally.

The statement on developmental and regulatory policies announced by RBI said startups have the potential to play a significant role in economic growth and job creation by spurring innovation and injecting competition.

(Source: BloombergQuint)

6. What an Idea: Birla Plans Big Recast of Telecom Infra

After Grasim and Aditya Birla Nuvo, Kumar Mangalam Birla is planning to reorganise his telecom infrastructure and towers business with an aim to simplify the holding structure by consolidating its scattered tower holdings into a single entity and unlock value.

Idea Cellular owns 100 percent of its 11,000 captive towers via a wholly owned arm Idea Cellular Infrastructure Services Limited (ICISL). Additionally, Idea also owns 16 percent in Indus Towers ­ a telecom tower JV with Airtel and Vodafone ­ through Aditya Birla Telecom Limited (ABTL). Providence Private Equity owns 16 percent of ABTL while the remaining 84 percent is owned by Idea Cellular and its nominees.

(Source: The Economic Times)

7. Myntra Plans Offline Push for Private Brands

Flipkart-owned online fashion retailer Myntra plans to open a new offline store for one of its private labels before the end of the year, even as it looks to further expand its current roster of private labels during the upcoming festive season, a top company executive said.

In an interview with Mint, Myntra chief executive Ananth Narayanan said that the company plans to scale up all its private labels, especially ethnic wear, and sell some of these labels on Jabong, which Flipkart acquired in July for $70 million.

Myntra currently boasts of private labels such as Roadster, HRX, Dressberry and Anouk.

(Source: Livemint)

8. After Rate Cut, Markets Turn to GST, Q2 Results

The markets gave a lukewarm response to the Reserve Bank of India’s (RBI’s) decision of slashing repo rate by 25 basis points (bps) to 6.25 per cent. The S&P BSE Sensex hit an intra-day high of 28,404, while the Nifty50 hit reached 8,783 levels. Both indices, however, trimmed gains to end at 0.4 percent higher at 28,334 and 8,769 levels, respectively.

A runaway rally, analysts say, was ruled out as markets had already priced in a 25 bps rate cut given the decline in retail inflation to 5.1 percent in August.

“Markets will now focus on developments regarding the GST. The second quarter results (Q2FY17) of India Inc and the US presidential elections will also impact sentiment,” said U R Bhat, managing director, Dalton Capital Advisors.

That apart, analysts remain watchful of the geopolitical situation between India and Pakistan.

(Source: Business Standard)

9. Govt Weighs Stricter Norms, Heavy Fines in Draft Drugs and Cosmetics Act

The government is considering measures, including imposing heavy fines and imprisonment, in the draft Drugs and Cosmetics Act to prevent pharmaceutical companies from violating manufacturing norms, according to two health ministry officials .

Consistent violations of the Good Manufacturing Practices (GMP) may invite not just suspension of drug licences, as is the case now, but also stiff fines and even imprisonment of executives.

Recalling batches of drugs that fail to conform to standards of strength, quality or purity is likely to be made mandatory after being notified by the drug regulator.

(Source: Livemint)

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