A man reads a newspaper near Nariman Point in Mumbai, India (Photographer: Brent Lewin/Bloomberg)  

BQuick On Sept. 27: Top 10 News Stories In Under 10 Minutes 

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

1. Yes Bank’s Denial

Private sector lender Yes Bank, on Thursday, refuted allegations of evergreening of corporate loans and inflating its share price ahead of key fund raising activities. The bank also said that it had no dealings with Rana Kapoor’s family office, which manages personal investments of the CEO and his family.

  • The clarifications from the lender came in response to queries sent by National Stock Exchange (NSE), after the exchange received a written complaint making certain allegations against the bank. Yes Bank said that while it had received the queries from the stock exchange, it had not been given a copy of the original complaint.
  • While responding to NSE’s queries about allegations of evergreening of loans, the bank said that it had not entered into any transactions with the intent to do any window dressing of corporate loans to hide their NPA status. The bank clarified that it is subjected to an annual risk based supervision of the Reserve Bank of India (RBI), which is very comprehensive.
  • The bank therefore denies any window dressing of corporate accounts to conceal actual NPAs as has been indicated in the query.

Here are the other responses to NSE by Yes Bank.

2. RBI Moves To Ease Liquidity Conditions

The Reserve Bank of India allowed lenders to dip further into statutory liquidity reserves, to help them meet their liquidity coverage ratio requirement.

  • The central bank said that banks could ‘carve out’ upto 15 percent of holdings under SLR to meet their LCR requirements, compared to 13 percent earlier.
  • The measure will help reduce the need for statutory bond requirements of banks, and increase funds available for lending to their clients.
This should supplement the ability of individual banks to avail of liquidity, if required, from the repo markets against high quality collateral. This in turn will help improve the distribution of liquidity in the financial system as a whole.
Reserve Bank Of India Statement

This follows a series of steps the RBI has been taking to ease liquidity in the market.

3. Indian Markets Extend Losses; U.S. Stocks Rise

Indian equity benchmarks extended losses dragged by banking and financial shares as futures and options contracts for September series expired.

  • The S&P BSE Sensex fell 0.6 percent or 218 points to 36,234
  • The NSE Nifty 50 Index dropped 0.7 percent or 76 points to 10,978.
  • Nifty logged in the worst futures and option series since February as it fell 5.99 percent.
  • The S&P BSE Realty Index was the top loser, while the S&P BSE IT Index was top gainer.

Follow the day’s trading action here.

U.S. stocks climbed and the dollar jumped to a two-week high as investors digested the likelihood of more Federal Reserve interest-rate increases stretching into next year.

  • Gains in the largest tech companies helped lift the S&P 500 Index after four days of losses, and the Stoxx Europe 600 edged higher
  • The S&P 500 Index rose 0.2 percent as of 9:32 a.m. in New York
  • The Stoxx Europe 600 Index rose 0.1 percent.
  • The MSCI All-Country World Index fell 0.2 percent.

Get your fix of global markets update here.

4. Disaster Aid Via GST Hike On Luxury Cars?

The GST Council may consider increasing the cess on luxury cars to raise funds to help states affected by natural calamities, a senior government official told BloombergQuint on condition of anonymity.

  • The proposal to hike the cess, subject to a ceiling of 25 percent, would be discussed in the meeting of Goods and Service Tax Council scheduled on Sept 28.
  • Currently, the highest cess that the GST Council can impose on cars is 25 percent without an amendment to the GST (Compensation to States) Act. The current GST on cars is 28 percent.
  • If not through the compensation cess, the GST Council may levy a cess on the value of cars. In that case, the current compensation cess would be kept at the same rate, the official cited earlier said.

Here’s how it can be done.

5. Aadhaar Verdict: The Impact On Fintech Firms

The 12-digit Aadhar number is now out of bounds for fintech companies in India. With the Supreme Court on Wednesday terming Aadhaar authentication by private companies as “unconstitutional”, companies such as online wallets and e-tailers, among others, will now have to make changes to how they onboard and verify customers, in addition to how they transact.

  • The decision is set to impact private companies right from Flipkart-owned PhonePe, Paytm, Reliance Jio and Amazon, among others, which rely on Aadhaar for e-verification.
  • Amazon recently launched cardless equated monthly installments on Amazon Pay through the digital finance platform Capital Float and asked customers to provide Aadhaar numbers or virtual ID and PAN details on the Amazon app for verification.
  • Pranesh Prakash, fellow, Centre for Internet and Society, said that with this judgment Aadhaar is no longer an identity infrastructure as its creators have dreamt of. “It is now just another ID.”

Firms are now awaiting more clarity.

6. Oil Prices And The Sectors Bearing The Brunt

The world’s third-largest importer of oil has a lot to lose with Brent crude, the Asian benchmark, surging to a near four-year high in September. The price rise will adversely impact the world’s seventh-largest economy as it will not only widen its fiscal and current account deficits but also lead to higher inflation and interest rates—thereby affecting consumption and investments.

  • A $10 per barrel rise in crude prices can increase inflation by nearly 30 basis points and stunt growth by 10 bps (more on this here).
  • This has a direct impact on many industries that use either crude oil or its derivatives as raw material. Usually, some of the impact gets passed on to consumers, stoking inflation.
BQuick On Sept. 27: Top 10 News Stories In Under 10 Minutes 

Here’s a look at the impact of rising crude oil prices on the various sectors of industry.

7. Supreme Court’s Two Big Rulings

The Supreme Court today scrapped a 158-year old law as it pronounced that adultery is no longer a crime. Declaring the Section 497 of the Indian Penal Code unconstitutional, the apex court said it's time to say that the husband is not the master.

  • The court also said that adultery can be a ground for divorce but cannot be declared a criminal offence as there are multiple parties involved in it.
  • The Chief Justice of India also said that mere adultery can’t be a crime, unless it attracts the scope of Section 306 (abetment to suicide) of the IPC.

Legal sovereignty of one sex over another is wrong, CJI Dipak Misra noted.

In a seperate ruling, the Supreme Court also declared that there was no need for a larger bench to re-examine the 1994 judgment which said that a mosque is not integral to the practice of Islam. The ruling has now cleared the way for the apex court to hear the main Ayodhya case on Oct. 29.

  • In a majority 2:1 verdict, the bench headed by CJI Misra said the civil suit has to be decided on the basis of evidence and the previous verdict has no relevance on it.
  • Justice Nazeer had said a Constitution Bench must decide what constitutes essential practices of a religion and only thereafter the Ayodhya land dispute should be heard.

Follow the developments of Ayodhya dispute here.

8. India’s Not The Weakest Emerging Market, Why Is Its Currency So?

The current levels of the rupee are out of sync with its fundamentals and the current weakness is mainly driven by market sentiment, writes Rabobank’s Hugo Erken.

  • Relatively healthy emerging markets, such as India and Indonesia, have been dragged into the current EM currency turmoil by countries performing much worse.
  • Investors are still putting the so-called ‘Fragile Five’ countries from the 2013 taper tantrum in one asset class.
  • When the dust has settled and investors re-assess portfolios based on these fundamentals, one could expect some strengthening.

The big question is if the RBI will step up its efforts to support the rupee.

9. The Fed Is Taking Off The Training Wheels

The training wheels are coming off. Step by step, Federal Reserve Chairman Jerome Powell is diminishing the importance of some of the Great Recession-era totems that were aimed at guiding investors, consumers and executives about what the Fed was anticipating doing and when it might do it. The message is that we don’t need them so much anymore, writes Bloomberg Opinion's Daniel Moss.

  • The FOMC ceased describing its stance as "accomodative", as indicating officials are closer to a point where borrowing costs don't juice or brake activity. Viewed from another point, the change could be construed as an admission they don't know where that point is, other than that it's coming up sometime.
  • But this isn't so much about what the Fed said on Wednesday. It's a broader point about how Powell is approaching his role and the changes the Fed has instituted since he took the helm in February.
  • In isolation, the adjustments look small. Taken together, they show a departure from his two immediate predecessors, Janet Yellen and Ben S. Bernanke.

We are talking about a more humble U.S.Federal Reserve under Powell.

10. What Does Personal Cyber Insurance Cover?

About 19 crore individuals, or two of every five Indians using the internet, have been victims of cybercrime in 2017, according to the Norton Cyber Security Insights Report released in July this year. That’s 24 percent more than individuals in the U.S. who faced similar threats.

  • And yet, India’s total cyber liability insurance premium size is just 1.6 percent of America’s, at $30 million.
  • The problem is not just the demand; the supply is limited as well. Only two insurance companies—Bajaj Allianz General Insurance and HDFC ERGO General Insurance—offer personal cyber risk covers in the country.

The personal cyber insurance policies available in India mainly cover:

  • Financial losses due to extortion, phishing/e-mail spoofing and unauthorised online transactions.
  • Litigation costs (defence/prosecution) against a third party
BQuick On Sept. 27: Top 10 News Stories In Under 10 Minutes 

Here’s a deep dive into how India’s cyber insurance products work.