BQuick On Feb. 20: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. MPC’s ‘Tunnel Of Testing Trade-Offs’
A majority of India’s six-member Monetary Policy Committee, which voted to keep rates unchanged at its meeting in February, sees some space for further interest rate cuts, showed minutes of the meeting released on Thursday.
- With growth weak and inflation high, the committee finds itself in, what Reserve Bank of India’s deputy governor called, “the tunnel of testing tradeoffs.”
- RBI Governor Shaktikanta Das struck a dovish note in his commentary suggesting that a focus on growth is important in the current situation.
- Chetan Ghate was the lone MPC member who said there was no space for further policy rate cuts.
- Ravindra Dholakia, who has in the past argued for steeper rate cuts, saw enough reason to pause and watch not just inflation but also the outcome of state budgets.
The MPC now faces the burden of lifting demand conditions that are constrained by a sudden spike in inflation, led by food prices.
2. Yes Bank: New Suitors
Hinduja Group Ltd. is partnering with private equity firm Cerberus Capital Management LP in seeking to pick up a stake in embattled Yes Bank Ltd., people familiar with the matter told Bloomberg News.
- Representatives of Cerberus and the U.K.-based Hinduja group, run by brothers Gopichand Hinduja and Ashok Hinduja, met Reserve Bank of India officials earlier this month regarding the bid, the people said, asking not to be identified as the information is private.
- The beleaguered Indian lender has been struggling to raise capital for the past few months, amid concerns about the quality of its assets and its exposure to the stressed shadow banking sector.
- Firms including JC Flowers & Co., Tilden Park Capital Management, Oak Hill Advisors and Silver Point Capital have submitted non-binding expressions of interest, Yes Bank said in a stock exchange filing.
The deliberations are ongoing and more investors may join the consortium.
3. Axis Bank Explores A Strategic Partnership
Axis Bank Ltd., Max Financial Services Ltd. and Max Life Insurance Company Ltd. signed a confidentiality and exclusivity pact to explore the possibility of the private lender entering into a long-term strategic partnership with the life insurer.
- The deal is subject to receipt of applicable regulatory approvals and corporate authorisations, satisfactory completion of due diligence, and execution of definitive documentations, according to an exchange filing.
- Max Financial Services holds a 72.5 percent stake in Max Life, while Mitsui Sumitomo Insurance and Axis Bank hold 25.5 percent and 2 percent stake, respectively, the filing said.
The companies said a potential transaction could provide filip to the whole life insurance sector.
4. Sensex Resumes Decline, U.S. Stocks Slump
Indian equities ended a topsy-turvy session lower, resuming declines after a one-day breather.
- The S&P BSE Sensex fell 0.37 percent or 152.88 points to end at 41,170.12.
- The NSE Nifty 50 fell 0.37 percent or 45.1 points to close at 12,080.
- The broader markets represented by the NSE Nifty 500 Index fell 0.12 percent.
- The market breadth was tilted in favour of buyers.
- Six out of 11 sectoral gauges compiled by NSE ended higher.
Follow the day’s trading action here.
U.S. equities slumped alongside European stocks on concern that the coronavirus’ spread beyond China will take a heavy toll on corporate earnings.
- The dollar jumped and gold traded at a seven-year high as investors sought havens.
- The S&P 500 Index eased off a record high after Japan reported two deaths and South Korea confirmed its first fatality from the disease.
- ViacomCBS Inc. tumbled after revenue missed estimates, while Morgan Stanley dropped after agreeing to buy E*Trade Financial Corp. for $13 billion.
Get your daily fix of global markets here.
5. Indiabulls: Probe Finds No Major Irregularities
An Indian government investigation hasn’t found any significant financial irregularities in the operations of the Indiabulls group, people familiar with the matter told Bloomberg News. The companies’ shares and bonds jumped.
- The registrar of companies in its third inspection report has said all transactions between various units of the group have been at arms’ length, the people said, asking not to be identified as the report isn’t public.
- It also found that loans it had been probing -- to DLF Ltd., Americorp, and Anil Ambani’s Reliance Group -- have all been repaid while those given to the Vatika and Chordia groups are standard accounts.
- The probe found a few compoundable offenses, such as improper implementation of accounting standards, and appropriate action would be taken in these cases, the people said.
The Delhi High Court will now hear a petition to probe Indiabulls on similar allegations.
6. The Many Ifs And Buts In DHFL’s Q3 Earnings
Dewan Housing Finance Corporation Ltd., which is undergoing insolvency proceedings, reported a profit during the quarter ended December, helped by a tax adjustment. The earnings, prepared under charge of the administrator appointed by the Reserve Bank of India, outlined a series on ongoing investigations surrounding the company’s affairs, which could alter the financial picture.
- DHFL reported a profit after tax of Rs 934.35 crore for the third quarter of 2019-20 compared with Rs 313.6 crore a year ago.
- Net interest income for the quarter stood at Rs 960.83 crore, up 6.3 percent from the year-ago period.
- The reported net interest income and profit, however, does not provide a fair picture as DHFL is under moratorium as per insolvency rules and has not paid interest on borrowings.
If the interest was accrued on borrowings, profit would have been lower by Rs 392 crore.
7. Vodafone Idea, Bharti Airtel Start Paying Up But...
Telecom operators have started paying their adjusted gross revenue dues to the Department of Telecommunications but the government is now verifying on what the exact amount should be.
- On Thursday, Vodafone Idea paid Rs 1,000 crore taking its total payment of dues since Monday to Rs 3,500 crore.
- Bharti Airtel Chairman Sunil Bharti Mittal, whose firm had paid Rs 10,000 crore three days ago, has also said that it will clear off the dues before the March 17 deadline set by the Supreme Court.
- Telecom firms have already paid about Rs 16,000 crore in AGR dues, a government official told reporters in Delhi.
- However, the telecom department has also said that it will verify companies' claims of lesser AGR dues by initiating random test checks before the deadline ends.
The checks will happen for all firms but will start with those claiming they have already made full and final settlement towards their statutory liabilities.
8. The Ghost Town And A Bank Fraud
In the middle of a bustling northern suburb of Mumbai, cranes lay frozen atop unfinished buildings, rusted steel rebars poke the air, cobwebs of scaffolding cling to sunburnt concrete, and the undergrowth is creeping in. The place is deserted, but for five security guards eating lunch out of their tiffin boxes and three puppies scampering around.
- In this ghost neighbourhood the size of 12 cricket fields in Goregaon, once stood 70-year-old Patra Chawl.
- As it began to crumble, residents agreed to redevelopment. But the work on the Rs 1,000-crore project stalled three years ago after the builder went bust.
- The state housing authority now alleges fraud.
- At the centre of all this is Housing Development & Infrastructure Ltd., an insolvent slum redeveloper whose founder is being probed for allegedly siphoning money from Punjab and Maharashtra Cooperative Bank.
Find out how the Patra Chawl redevelopment project is linked to the PMC Bank fraud.
9. How The Personal Data Protection Bill Tackles Data Breaches
India should require data fiduciaries to report each and every breach to either the Data Protection Authority or the consumer, depending on the severity of the breach, writes Prashant Reddy.
- Many of the biggest data companies are reluctant to disclose the data breaches.
- Most of them justify their silence on the grounds that there was no evidence to suggest that customers were being directly impacted by the breach.
- The PDP Bill 2019 is silent on time-frames for notifying the data breach.
There are serious practical issues with how the relevant clause in the bill has been drafted, Reddy writes.
10. Why Coronavirus May Be Spreading So Fast
The novel coronavirus is shed in the feces of infected people, which may help explain why it’s spread so fast, according to Chinese researchers.
- The finding of live virus particles in stool specimens indicates a fecal-oral route for coronavirus, which may be why it’s caused outbreaks on cruise ships with an intensity often seen with gastro-causing norovirus, which also spreads along that pathway.
- More than 600 Covid-19 infections were confirmed among passengers and crew aboard the Diamond Princess, the ship quarantined for two weeks in Yokohama, Japan.
- “This virus has many routes of transmission, which can partially explain” its rapid spread, the Chinese Center for Disease Control and Prevention said in a report Saturday.
- “The virus can also be transmitted through the potential fecal-oral route,” the Chinese CDC said. “This means that stool samples may contaminate hands, food, water” and cause infection when the microbes enter the mouth or eyes, or are inhaled, they said.
The agency recommends strengthening sanitation and hygiene measures to prevent fecal-oral transmission in epidemic area.