BQuick On Nov. 4: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. World’s Largest Trade Pact Will Be Without India
Asian leaders plan to sign the world’s largest regional trade deal next year as India said it’s not ready to join.
- Indian Prime Minister Narendra Modi decided not to join the Regional Comprehensive Economic Partnership, or RCEP, in order to protect service workers and farmers, an official told reporters in New Delhi on Monday.
- India had pushed the other 15 nations to address its concern over deficits and open their markets to Indian services and investments, the official said.
- “India has significant outstanding issues, which remain unresolved,” RCEP countries said in a joint statement on Monday.
While the 15 nations will move forward with the mega trade deal, the doors for India to get on board have been left open.
2. Supreme Court Comes To Delhi’s Rescue
The Supreme Court ordered a ban on construction in Delhi and said administration and village heads of neighbouring states will be held liable for not preventing crop stubble burning, as it expressed anguish about inability to curb the smog that has engulfed the national capital.
- A bench headed by Justice Arun Mishra chided the central government and states of Delhi, Haryana and Punjab for failing to take measures to control pollution.
- The “governments are only interested in electioneering” and passing the buck, it observed, stopping the hearing for around 30 minutes to summon officials of the Ministry of Environment and Forest and an expert from the Indian Institute of Technology, Delhi.
- Every winter Delhi is covered in a toxic smog as crop burning and Diwali firecrackers add to the pollution caused by coal-fired power plants and vehicular traffic.
Here are the full set of directions that have been imposed by the Supreme Court.
3. Fitch Chief Economist Has A ‘Nasty’ Warning For India
Growth in Indian economy could slip to 5.5 percent in the current financial year, falling below the Reserve Bank of India’s already pared-down forecast of 6.1 percent, cautioned Fitch Ratings.
- An ongoing credit squeeze in the Indian economy, led by a shortfall of credit from non-bank lenders, could continue to hurt growth, said Brian Coulton, chief economist at Fitch Ratings, in a conversation with BloombergQuint.
- Apart from the availability of credit, the cost of credit, too, remains a concern despite 135 basis points in policy rate cuts so far this year.
Watch the full interview with Coulton where he explains why an economic recovery will be a long-drawn affair.
4. RBI Clamps Down On Top Bankers’ Variable Pay
The Reserve Bank of India has tightened rules for compensation packages offered to top management at private lenders and introduced mandatory rules to claw back rewards should a lender falter.
- The RBI’s final rules, which followed a draft set of guidelines put out for consultations in February, come against the backdrop of weak asset quality performance of a number of private sector lenders over the last few years.
- The rules, the regulator said, follow the Principles for Sound Compensation Practices issued by the Financial Stability Board in April 2009. The RBI has implemented part of these rules in previous years and is now taking them forward.
- The rules will apply to chief executive officers, wholetime directors and material risk takers at private banks, small finance banks and domestic executives of foreign banks.
Here’s how private bankers’ pay will change based on the new rules.
5. Sensex At Record High
Indian equity benchmark—S&P BSE Sensex—closed at record high.
- The 31-share Index rose 0.4 percent to end at an all-time high at 40,301.96, surpassing the previous record closing high of 40,267.62.
- The NSE Nifty 50 rose 0.43 percent to end at 11,941.30.
- Both the benchmark indices extended gains for the seventh consecutive trading session, their longest stretch of gains in over seven months.
- The broader markets represented by the NSE Nifty 500 index rose 0.29 percent.
- Six out of 11 sectoral gauges compiled by NSE ended lower.
Follow the day’s trading action here.
Meanwhile, HDFC Ltd.'s quarterly profit beat analyst estimates aided by higher dividend income.
- Net profit rose 60.5 percent to Rs 3,961 crore, compared with the Rs 3,265 crore estimate.
- Dividend income was at Rs 1,073.8 crore compared with Rs 5.7 crore in the same period last year.
The full earnings picture here.
6. RBI Asks NBFCs To Maintain Liquidity Coverage
The Reserve Bank of India today introduced a liquidity management framework for non-banking financiers, which seeks to bring in a liquidity coverage ratio of 100 percent for them in a phased manner.
- “All non-deposit taking NBFCs with asset size of Rs 10,000 crore and above, and all deposit taking NBFCs irrespective of their asset size, shall maintain a liquidity buffer in terms of LCR which will promote resilience of NBFCs to potential liquidity disruptions by ensuring that they have sufficient High Quality Liquid Asset to survive any acute liquidity stress scenario lasting for 30 days,” the central bank said.
- The liquidity coverage ratio requirement shall be binding on NBFCs from Dec. 1, 2020, with the minimum high quality liquid asset to be held being 50 percent of the ratio.
- This would be gradually brought up to 100 percent by December 2024, the RBI said.
How will the NBFCs use the liquidity coverage ratio? Find out here.
7. Burger King Eyes A Whopper IPO In India
Burger King India Ltd. filed for an initial public offering as the local unit of the American fast-food chain looks to raise cash for expanding in Asia’s third-largest economy.
- The burger chain plans to raise up to Rs 400 crore by issuing fresh shares, while QSR Asia Pte. Ltd.—the 99.39 percent owner of the company—is also looking to offload 6 crore shares, according to its draft red herring prospectus.
- The company is yet to disclose the pricing details.
- QSR Asia is indirectly backed by Everstone Capital and Ajay Kaul, former chief executive officer of Domino’s Pizza chain operator Jubilant FoodWorks Ltd.
Burger King will spend the bulk of the IPO proceeds to open new stores.
8. Your Non-Boozy Beer Could Get Costlier
India plans to increase taxes on non-alcoholic beer sold by AB InBev and Heineken NV, bringing them on a par with carbonated beverages and bring in a potential revenue of Rs 250 crore, according to a proposal.
- The government will seek to increase tax on drinks such as Budweiser 0.0 and Heineken 0.0 to 28 percent from 18 percent, and levy an additional 12 percent compensation cess, according to the proposal—BloombergQuint has reviewed the documents.
- As of now, no cess is levied on zero-alcohol beer.
- The proposal will be taken up in the GST Council’s next meeting; the date is yet to be finalised.
Import of non-alcoholic beer has jumped almost 600 percent and the government is looking to tap that demand and plug its fiscal hole.
9. Seventeen Confounding Questions About India
- Why are we always out to exploit others?
- Why have there been no revolutions?
- Why are we so apathetic?
- Why do we not respect personal boundaries?
Amit Varma asks the questions that all of us have always wanted to ask.
10. Yes, Cut The Loose Talk
Yes Bank Ltd. has changed. In the past, the troubled Indian lender kept quiet rather than tell shareholders the truth about its bad loans. Now, under new management, it can’t stop talking about an impending rescue. If the former approach nearly destroyed the bank, this latest strategy isn’t going to help fix it, writes Andy Mukherjee.
- If the previous management was guilty of hiding the lender’s tattered asset quality, the new lot’s premature hopefulness is thwarting orderly price discovery by giving rise to a cottage industry in loose talk.
- This everyday excitement is unhelpful.
- It would be nice to have Yes’s board approve a concrete fundraising offer — one that has at least a reasonable chance of satisfying the regulators.
Gill’s hurry to close fundraising by December is understandable. But Yes can't count chickens before the eggs have hatched.