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BQuick On Feb. 26: Top 10 Stories In Under 10 Minutes

This is a roundup of the day’s top stories in brief.

1. India, Pakistan Face Off In Renewed Escalation

India carried out air strikes in Pakistan, destroying the biggest terror camp of the Jaish-e-Mohammed and killing a “large number” of terrorists, Foreign Secretary Vijay Gokhale said at a briefing in New Delhi.

  • Gokhale said that India had received credible intelligence that the JeM was planning to carry out other suicide attacks after the Pulwama bombing on a CRPF convoy that killed 40 jawans.
  • The "non-military preemptive action" was specifically targeted at the militant camp to avoid civilian casualties, the Ministry of External Affairs said in a statement.
  • More than 300 militants were killed in the air strikes, according to an Indian official speaking on condition of anonymity.
  • Speaking at an election rally in Rajasthan, Prime Minister Narendra Modi twice stated that India was “in safe hands” and declared it a “glorious day,” without explicitly mentioning the attack.
  • Pakistan had its own version of events. Prime Minister Imran Khan’s office said Pakistan would respond “at the time and place of its choosing,” rejecting India’s claim that it had hit a terror camp or inflicted heavy casualties.
  • The European Union and China urged the arch-rivals to exercise restraint and ensure that the tensions do not escalate further.

Here are the updates from the Balakot air strike.

2. Three More Banks Out Of PCA Framework

The Reserve Bank of India has decided to remove Allahabad Bank, Corporation Bank and Dhanlaxmi Bank Ltd. from the list of banks placed under its Prompt Corrective Action framework.

  • The decision was taken by the Board for Financial Supervision which met on Tuesday.
  • Since January, the regulator has released six banks, including five public sector lenders, from the corrective action framework intended to strengthen weak banks.
  • Half of India’s government owned lenders were under this new framework, which was tightened in April 2017 under former RBI Governor Urjit Patel.
  • The issue had become one of the many flash points that led to Patel’s exit and the appointment of Shaktikanta Das as governor.

Has the new governor brought about a reversal in RBI's stance?

3. Seasonally Weak February To Get Worse For Autos

Auto sales are likely to remain tepid in the seasonally weak month of February due to muted demand sentiment, according to a BloombergQuint survey of seven dealers across the country.

  • “Sales growth is most likely to be negative for the overall industry in February except for one or two players as there is clear demand fatigue,” Ashish Kale, partner at United Automobiles, said.
  • Higher fuel prices and upfront insurance costs slowed sales of automobiles, with demand remaining subdued even during the festival quarter last year.
  • Even year-end discounts offered by companies didn't help as inventory piled up.

Here’s a list of discounts being offered by automakers.

4. Geopolitical Concerns Drag Indian Markets Lower

Indian equity benchmarks ended lower as investors assessed the rising tensions between India and Pakistan.

  • The S&P BSE Sensex ended 239 points lower at 35,973.
  • The NSE Nifty 50 halted a four-day rally to end at 10,835, down 0.41 percent.
  • Seven out of 11 sectoral gauges ended lower, led by the NSE Nifty Realty Index’s 1.6 percent decline.
  • On the flipside, the NSE Nifty Media Index as the top sectoral gainer, up 3.2 percent.

Follow the day’s trading action here.

BQuick On Feb. 26: Top 10 Stories In Under 10 Minutes

Global stocks dropped on Tuesday as the rush of optimism over U.S.-China trade talks from earlier in the week faded.

  • The pound rallied as U.K. Prime Minister Theresa May promised a vote to delay Brexit if her proposed deal fails.
  • S&P 500 Index opened in the red and European stocks edged lower after U.S. President Donald Trump raised the possibility of signing a new trade deal with Chinese counterpart Xi Jinping, but cautioned an agreement “might not happen at all.”
  • Tesla fell after regulators asked a judge to hold Elon Musk in contempt for violating last year’s SEC settlement.
  • The dollar held losses after data showed U.S. housing starts tumbled in December.
  • West Texas Intermediate fell 0.3 percent to $55.34 a barrel.

Get your daily global markets fix here.

Also read: Credit Suisse Wants To Debunk The Theory Of Elections Inducing Market Volatility

5. True North Seals Max Bupa Deal

Max India Ltd. said it has sold its entire 51 percent stake in Max Bupa Health Insurance Company Ltd. to private equity firm True North Fund VI LLP for over Rs 510 crore.

  • The stake has been sold either directly or through its affiliates, the company said.
  • The all-cash transaction values Max Bupa at an enterprise value of Rs 1,001 crore.
  • Max Bupa is a joint venture between Max India and the U.K.-based healthcare services expert Bupa.

Max India shares rose 2.6 percent.

6. On Hold: Bharti Defence’s Liquidation

The National Company Law Appellate Tribunal has stayed the ongoing liquidation of Bharati Defence and Infrastructure Ltd.

  • The NCLAT directed that the liquidator will not take any steps to sell or transfer or alienate movable or immovable assets of the company.
  • The Mumbai bench of the National Company Law Tribunal had ordered the liquidation in January, rejecting the Edelweiss ARC's resolution plan approved by the lenders.
  • The NCLAT has directed that Edelweiss ARC be added to the case. It will hear the matter on March 29.

Here’s why Edelweiss ARCs plan was rejected.

7. Government’s Blacklist Threat

The government will blacklist successful bidders for insolvent firms who fail to pay the bid amount, a senior government official told reporters.

  • The government may also bar such companies at Request for Proposal or Expression of Interest stage, as amendments in the Insolvency and Bankruptcy law may take time, he said.
  • This comes after Liberty House, the successful bidder for taking over Amtek Auto Ltd., refused to honor payments to acquire the bankrupt firm.
  • Liberty House had alleged that the process followed during resolution was flawed and that the resolution professional did not share adequate information about the company at the beginning.

The government is focussed on discouraging frivolous bids.

Also read: The Account That Must Not Be Called An NPA

8. Winds Of Change For Corporate Borrowings

As corporations sit down to close their books for 2018-19, they may want to keep a wary eye out on the year to come, writes Ira Dugal.

  • Three large changes in the way corporates borrow are on the anvil.
  • Together, they could push up the cost of borrowing and force greater discipline.
  • In the process, some moments of disruption cannot be ruled out.

Here’s what those three changes are.

9. India’s Ponzi Scheme Curbs Have Sharp Edges

Accepting money from public is a risky business, and because of this, a heavily regulated one, too. The RBI regulates non-banking lenders, state governments regulate chit funds, and the Ministry of Corporate Affairs oversees deposit taking companies other than the NBFCs.

  • Despite this, non-compliant companies and dubious individuals have time and again defrauded predominantly the poor and illiterate through illicit deposit taking schemes, notes the Standing Committee on Finance Report of 2019.
  • The report cites nearly 1,500 cases of defrauding through illicit deposit schemes in the last 4 years alone. The cause for this is regulatory gaps and lack of strict administrative measures.
  • To tackle the menace of illicit deposit taking activities the government on Feb. 21 passed Banning of Unregulated Deposits Scheme Ordinance.

Two specific issues have been identified in respect of the ordinance.

10. 17 Lakh Companies, Two Months To Submit Existential Proof

India’s over 17 lakh companies have been given two months to show that they are ‘alive’.

  • As proof, they have to give the Registrar of Companies details of their registered office, its location by latitude and longitude, photos of the office exteriors and interiors featuring a director in them, statutory and cost auditors’ details and more.
  • The rules apply to all companies incorporated prior to December 2017. But the intent and the goal of the exercise have not been made clear by the Ministry of Corporate Affairs.
  • The government’s focus for a while has been to figure out companies that are being misused for money laundering and tax evasion and perhaps this is another attempt in that direction, Pratibha Jain, head of regulatory practice at Nishith Desai Associates, told BloombergQuint.

But there are questions if the move will be effective.