BQuick On Sept. 19: Top 10 News Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. RBI Gives Yes Bank’s Rana Kapoor Four More Months
Private sector lender Yes Bank Ltd. has disclosed that its chief executive and managing director Rana Kapoor has been asked to step down after a term extension up to Jan. 31, 2019, as per a letter received from the Reserve Bank of India.
- The bank in a statement to the stock exchanges said its board is meeting on Sep. 25 to decide on the future course of action.
- The disclosure follows an Aug. 30 communication in which the bank had said the RBI has allowed Kapoor to continue as the bank’s CEO until "further notice".
- While Yes Bank has seen rapid growth over the last decade, Kapoor’s leadership came into question after the regulator pointed out discrepancies in the way the bank reported its bad loan numbers.
Everything you need to know about Kapoor's Yes Bank journey here.
2. New CEOs For 10 State-Owned Lenders
The government has appointed managing directors and chief executive officers at 10 public sector banks with immediate effect. Five of those officials hail from State Bank of India, according to the Department of Personnel & Training’s notification.
Catch all the details of the reshuffle here.
3. Indian Markets Slump; U.S. Stocks Fluctuate
Indian equity benchmarks posted their worst three-day decline in six months dragged by HDFC twins, IndusInd Bank Ltd., Maruti Suzuki India Ltd. and ITC Ltd.
- BSE Sensex Index fell 0.45 percent or 169 points to 37,121.
- NSE Nifty Index declined 0.39 percent or 45 points to 11,234.
- Thirteen of 19 sector gauges compiled by BSE ended lower dragged by S&P BSE FMCG Index’s 1.1 percent drop.
- On the flipside, the S&P BSE Metal Index was top gainer, up 1.25 percent.
Follow the day's trading action here.
U.S. stocks fluctuated, while Treasuries fell as investors turned attention to the latest Nafta talks.
- The S&P 500 Index was mixed as technology firms weighed on benchmarks, while banks paced gains as the 10-year Treasury yield advanced above 3.07 percent.
- The dollar fell against most peers and the Mexican peso reversed a rise after a report said the U.S. and Canada are unlikely to reach a deal on Nafta this week.
- West Texas crude traded above $70 a barrel.
Get your fix of global markets update here.
4. Rupee’s Best Day In Nearly Four Months
The Indian rupee rallied the most in almost four months following a ET Now report that the central bank is studying the possibility of allowing oil companies to purchase dollars directly from it instead of market. Sovereign bonds also advanced, tracking gains in the currency.
- The currency gained 0.8 percent, the biggest since May 25, to close at 72.3788 per dollar on Wednesday, after rising as much 0.9 percent following the news report.
- India’s central bank has enough reserves to defend the rupee, according to the State Bank of India and Nomura Holdings Inc.
- The Reserve Bank of India can sell an additional $25 billion, at least, in the foreign-exchange market, SBI estimates, based on intervention patterns since the 1990s.
5. More Sold!
Aditya Birla Group is selling More - a chain of retail stores, after having struggled to make a success of it.
- RKN Retail Pvt. Ltd., jointly with Kanishtha Finance & Investment Pvt. Ltd. and Aditya Birla Retail Ltd., entered into a share purchase agreement with Witzig Advisory Services, to sell their combined stake aggregating to 99.99 percent, according to a statement to the exchanges.
- RKN Retail and Kanishtha Finance are holding companies of billionaire Kumar Mangalam Birla and family, while Witzig is owned by Samara Alternative Investment Fund.
- The deal’s been struck with Samara for an enterprise value of Rs 4,200 crore, according to people familiar with the deal. No official statement on the deal value was available from either party.
- While the media statement issued by RKN said Witzig is “owned and controlled” by Samara, people familiar with the deal told BloombergQuint that Amazon may also be involved in this transaction via an ownership interest in Witzig.
6. Deadline Looms, Clarity Awaited
With less than a month to go before the Reserve Bank of India’s new data localisation rules kick in, the industry is still awaiting clarity on the final stance taken by the regulator.
- The RBI first drew attention to the issue of local storage of payments data in April when it noted that only a few firms are storing such data in India.
- Local storage and access to such data, the RBI said, was essential for supervisory purposes. A six-month period was given to firms to comply with this directive and a deadline of Oct. 15 was set.
- The regulations will impact a whole host of payment firms, including MasterCard, Visa and American Express, which have a wide network of credit and debit cards in India.
Here are payment firms’ key concerns.
7. An Independent Payments Regulator?
An inter-departmental committee set up to suggest reforms to India’s payment laws has recommended setting up an independent payments regulator, outside the Reserve Bank of India. The payments regulator would be known as the Payments Regulatory Board.
- The RBI has always maintained that regulating payment systems is part of its core mandate. It has argued that a body regulating payments has to fall under its umbrella.
- In suggesting a separate payments regulator, the committee did not accept recommendations from the RBI.
- The report also recommended a “formal mechanism for co-ordination so that the regulation of payments, in so far as it may be relevant in the context of financial stability, monetary policy and credit policy is achieved harmoniously.”
Will this lead to a greater role for the government?
8. Gadkari's Angst With Risk-Averse Bankers
Risk-averse bankers are slowing construction of infrastructure projects in India, Nitin Gadkari, the country’s minister for road transport and highways, said.
- Loans to road contractors and bank guarantees for projects have dried up, threatening to stall India’s plans to build more than 84,000 kilometers (52,195 miles) of roads by 2022, Gadkari said.
- Bankers are dithering about lending decisions as they they fear that if a decision goes wrong even 5 to 7 years down the line, they could be subject to probes the way some of their peers are undergoing now, Rajnish Kumar, chairman of State Bank of India, said in May.
For the sake of industry, sake of investment, sake of contractors, creating jobs, for the sake of economy, we need positive support from banks.Nitin Gadkari, Minister For Road Transport And Highways
Here’s the entire conversation with Gadkari.
9. Recovery Only Next Year, Say Cement Firms
Construction has been one of the key drivers for India’s economic growth for two successive quarters. Yet, cementmakers remain under pressure.
- The industry, considered an indicator of economic health, faces a supply glut amid higher costs, underutilised capacities and low pricing power.
- This situation, according to annual reports of cementmakers, is unlikely to change until next year.
- Deutsche Bank said in a note that the cement sector earnings could be weak in the near term due to higher fuel and freight costs.
- The brokerage, however, expects that increasing cost pressures and delayed capacity additions will lead to better pricing.
Here are highlights from the annual reports.
10. Crucial Power Sector Lenders’ Meeting Tomorrow
Lenders to India’s power industry are scheduled to meet Thursday to discuss ways to resolve 1.4 trillion rupees ($19.2 billion) of stressed assets that’s hobbling the sector, people with knowledge of the matter said.
- The meeting will be hosted in New Delhi by Power Finance Corp., a state-owned firm that lends to the country’s electricity generators, according to the people, who asked not to be identified because the details aren’t public.
- Representatives from the finance and power ministries, and Rural Electrification Corp. are also expected to participate, one of the people said.
- The meeting follows a Sept. 11 Supreme Court order to temporarily halt a move to begin bankruptcy proceedings against delinquent power producers, stalling efforts by the central bank to clean up soured debt at the nation’s banks.
Will banks make headway?