BQuick On August 14: Top 10 News Stories In Under 10 Minutes
1. RBI Rejects Kotak’s Bank Stake Dilution Plan
Kotak Mahindra Bank Ltd. said that the Reserve Bank of India has not accepted the promoter stake dilution plan that the bank had presented. In a stock exchange notification, the private lender said that it believes it has met the regulator’s guidelines and will continue to engage with the RBI on the same.
- Earlier this month, Kotak Mahindra Bank had used the non-convertible perpetual non-cumulative preference share route to dilute promoter shareholding.
- The issuance brought down the promoter's interest in paid-up capital to 19.7 percent from 30.3 percent.
- But as a percentage of post-issue equity share capital, the promoter group shareholding remained at 30.3 percent since preference shares do not count towards the equity share capital.
- The RBI had mandated the bank to reduce promoter shareholding to below 20 percent by December 2018 and 15 percent by March 2020.
Here’s what experts made of the Kotak saga.
2. Rupee Breaches 70/$-Mark For First Time
The Indian rupee fell past the 70 per dollar-mark for the first time ever in intraday trading, weighed down by an emerging market currency rout. It later pared losses to close at 69.89 per dollar from 69.93 per dollar yesterday.
- The local currency has been hit hard by a recent Turkey-led selloff in emerging market assets and the trade spat between the U.S. and China.
- Economic Affairs Secretary Subhash Chander Garg said intervention by the RBI to stabilise the rupee may not help as the currency is weakening due to global factors.
- The currency is down almost 9 percent this year, making it Asia’s worst performer.
If you look at the trade weighted rate, the Indian currency has strengthened a lot between 2014 and 2018. In real terms, the rupee has appreciated almost 20 percent. In the last six months, it has only given up 6 percent of that. So we are still stronger compared with 2014 and from a competitive viewpoint, it would not necessarily be a bad thing if the rupee gradually weakens.Sajjid Chinoy, Chief India Economist, JP Morgan
Here’s more on the Indian currency's outlook.
3. Indian Markets Rebound; U.S. Stocks Rise
Indian equity benchmarks snapped their two-day decline.
- S&P BSE Sensex Index rose 0.55 percent or 207 points to 37,852.
- NSE Nifty 50 Index climbed 0.7 percent or 79 points to 11,435.
- Fifteen out of 19 sector gauges compiled by BSE ended higher led by the S&P BSE Healthcare Index’s 2.5 percent gain.
Follow the day’s trading action here.
U.S. stocks halted the longest slide since March and the dollar came down from a 14-month high as global markets steadied in the wake of Monday’s Turkey-induced turmoil.
- The S&P 500 Index advanced for the first time in five days.
- The Stoxx Europe 600 Index fell 0.1 percent and headed for it’s fifth straight decline.
- The MSCI Emerging Markets Currency Index gained 0.2 percent following four days of declines.
- West Texas Intermediate crude rose 1 percent to $67.88 a barrel.
Get your fix of global markets update here.
4. Earnings Update: Grasim, IDBI Bank, Sun Pharma
Sun Pharmaceutical Industries Ltd. reported quarterly profit in line with estimates.
- Profit stood at Rs 983 crore in the quarter ended June, compared with a loss of Rs 425 crore in the year-ago period, according to its exchange filing.
- Revenue grew 16 percent to Rs 7,224 crore.
- Ebitda rose 47 percent to Rs 1,607 crore.
- Margin expanded 460 basis points to 22.2 percent.
Here's how the drugmaker performed in different geographies.
Grasim Industries Ltd. reported its highest quarterly profit in nearly nine years, surpassing estimates.
- Net profit stood at Rs 642.5 crore, a rise of 85 percent from the year-ago period, according to its exchange filing.
- Revenue rose 74.8 percent to Rs 4,789 crore.
Read the Aditya Birla group firm’s earnings fineprint here.
IDBI Bank Ltd. remained India’s worst lender by asset quality as gross bad loans rose and losses widened in the April-June period.
- Gross non performing loans rose to 39.7 percent of the total advances from 27.9 percent in the quarter ended March.
- Net loss widened to Rs 2,410 crore from Rs 850 crore a year ago.
Read more about the lender's financial woes.
5. Race For Bhushan Power
Sajjan Jindal-promoted JSW Steel Ltd. outbid Liberty House U.K. and Tata Steel Ltd. in the final round of bidding for Bhushan Power & Steel Ltd., according to three people in the know who didn’t want to be identified.
- JSW Steel offered to pay Rs 19,350 crore to lenders of Bhushan Power and Rs 350 crore to the operational creditors of the company under the insolvency proceedings, the people said.
- That cumulatively was higher than Liberty House U.K.’s Rs 18,900-crore bid and Tata Steel’s Rs 17,200-crore offer, they said.
Here are the next steps in the race for Bhushan Power.
6. Hackers Steal Rs 94 Crore From Pune Bank
Fraudsters hacked into the server of Cosmos Bank in Pune, Maharashtra to take out Rs 94 crore in a second such cyber breach reported at an Indian bank this year.
- Hackers outside the country are suspected to have carried out the fraud, according to an official of the Pune Police.
- The cybercrime division is investigating the fraud.
- The fraudsters used 450 international Visa debit cards, and made about 12,000 transactions in 2 hours 13 minutes from ATMs and other locations across 21 countries on Saturday, ANI tweeted quoting Cosmos Bank Chairman Milind Kale.
The bank’s chairman has called it “a big criminal racket”. Here’s more.
7. Microlenders Want 2010 Crisis-Era Rate Caps Eased
Self-regulatory Microfinance Institutions Network will approach the Reserve Bank of India to ease lending rate caps introduced for microlenders in 2014, according to two people in the know, as the limits are hurting smaller players.
- The caps are affecting the margins of smaller microfinance lenders which can't raise funds at lower costs.
- Microlenders are facing competition from traditional lenders with five of their larger peers turning into banks.
- The aim of seeking easier rate caps is to have a level-playing field with full-sized banks.
Read more on why microlenders are seeking relief.
8. India's Trade Gap At Over Five-Year High
India’s trade deficit in July widened the most in more than five years, worsening the outlook for the rupee that hit a record low.
- Trade deficit widened to $18 billion in July, fanned by a higher oil import bill. That compares with the $16.6 billion gap in June.
- Imports rose 29 percent to $43.8 billion.
- Exports grew 14 percent to $25.8 billion.
- While a weaker rupee is positive for exports, it poses an inflation risk for a nation that imports more than 80 percent of its crude oil needs and adds to the stress on current-account.
Here's why the trade deficit swelled.
9. India Wants To Let NRIs Vote By Proxy. Some Experts Are Concerned.
The Lok Sabha, last week, passed a legislation that proposes to amend the Representation of the People Act, 1951, that will enable Indians living abroad to appoint a proxy to cast their vote in elections to Parliament and state assemblies.
- As per current rules, overseas Indians could exercise their right to electoral franchise provided they were registered in their constituency and physically present there on polling day.
- The number of such voters on the electoral rolls is 24,507-a minuscule proportion of the Indian electorate.
- “The secrecy of the vote will be lost,” former Chief Election Commissioner TS Krishnamurthy told BloombergQuint in an interview.
- The former legal counsel to the Election Commission SK Mendiratta offered a contrarian view saying it would "enable legitimate voters to exercise their franchise".
- Biju Janata Dal leader Kalikesh Singh Deo linked the bill to Prime Minister Narendra Modi’s outreach to the NRI community during his foreign visits.
Watch experts debate the significance of proxy voting by NRIs.
10. National Health Stack: Data For Data’s Sake, A Manmade Health Hazard
If the NITI Aayog and the government are sure that there is a need for a national healthcare database, perhaps they can start using the Central Government Health Scheme (which includes all current and retired government employees and their families) as a pilot scheme for this, and then extend it to the Employees’ State Insurance system and the armed forces. If, and only if, it works for these groups and the claimed benefits are observed, then perhaps it can be expanded to the rest of the country’s healthcare systems.
- How will such a database work?
- Will the data be safe?
- Who will use it?
- How will patients with no internet access it?
Have we learnt from the Aadhaar experience, ask Murali Neelakantan, Swaraj Barooah, Swagam Dasgupta, and Torsha Sarkar.