BQuick On June 6: Top 10 Stories In Under 10 Minutes

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

1. MPC Cuts Rates To A Nine-Year Low

India’s Monetary Policy Committee voted to cut interest rates by another 25 basis points, citing significant weakness in growth impulses.

• Paring its growth estimate for 2019-20 to 7 percent from 7.2 percent earlier, the committee also changed its stance from 'neutral' to 'accommodative', suggesting it stands ready to cut rates further should economic conditions warrant it.
• Unlike the last two policy decisions, this one was unanimous, with all six MPC members voting for a cut in rates and a change in stance.

Meanwhile, inflation remains in check, allowing the MPC room to cut rates.

What Will Happen To Your EMIs?

• The MPC, headed by Shaktikanta Das who took over as Reserve Bank of India governor in December 2018, has cut rates by 75 basis points so far in 2019.
• But that hasn't translated into lending rate cuts, with interest rates not changing much for the average borrower.
• Cumulatively, transmission of the 50 basis points in reduction of the policy repo rate in February and April 2019 was 21 basis points to the weighted average lending rate on fresh rupee loans, said the MPC in its resolution on Thursday.
• However, the WALR on outstanding rupee loans increased by 4 basis points as the past loans continue to be priced at high rates, the statement added.

Here’s what’s holding up transmission.

2. DHFL Crisis: Downgrades, Side Pockets, Money Transfers...

Care Ratings Ltd. has downgraded all outstanding borrowings of Dewan Housing Finance Ltd. to ‘Default’ grade after the non-bank lender missed interest payments on non-convertible debentures on Tuesday.

• The rating agency cited increased liquidity pressures being faced by the company and delays in bringing in a strategic investor as the reason behind the downgrade.
• Care Rating’s rationale for downgrading all of DHFL’s borrowings is similar to that offered by CRISIL and ICRA, which cut the rating on the non-bank lender’s Rs 850 crore commercial paper programme to ‘Default’ on Wednesday.
• DHFL, in a statement, said that the downgrades are not justified. "These actions are unwarranted and the company is seeking clarification on the rationale that predicts DHFL's inability to service pay-outs on the due dates.”
• Tata Asset Management Ltd. has decided to carve out a separate portfolio for securities of DHFL held in three of its funds after rating firms downgraded the shadow lender to default, the company said in an emailed statement.
• Blackstone is planning to transfer the funds on June 10 for its purchase of Wadhawan group unit Aadhar Housing Finance Ltd., people familiar with the matter told Bloomberg News.

Here’s all you need to know about the ongoing crisis at the housing financier.

4. Azim Premji To Step Down, Rishad Premji To Take Over

A five-decade run of leadership at Wipro Ltd. will come to an end on July 30, when Azim Premji steps down as executive chairman and managing director.

• His son Rishad Premji will take over the mantle of executive chairman whereas Chief Executive Officer Abidali Neemuchwala will add on the title of managing director, Wipro said in a filing with stock exchanges.
• Premji, 73, will remain associated as non-executive director with the company he joined in 1966 and nurtured from a mid-sized cooking oil business into an IT and and BPO giant with $8.5 billion in revenue.
• He will also carry the ornamental title of Founder Chairman.

Here’s a look at Premji’s legacy.

5. NITI Aayog Reconstituted

Prime Minister Narendra Modi has approved the re-constitution of National Institution for Transforming India or NITI Aayog.

• Rajiv Kumar will continue as the the vice chairman, according to a Press Information Bureau release.
• VK Saraswat, Ramesh Chand and VK Paul will be the full-time members.
• Defence Minister Rajnath Singh, Home Minister Amit Shah, Finance Minister Nirmala Sitharaman, and Agriculture Minister Narendra Singh Tomar will be the ex-officio members.
• Road Transport Minister Nitin Gadkari, Social Justice Minister Thaawar Chand Gehlot, Railways Minister Piyush Goyal, Statistics Minister Rao Inderjit Singh will be special invitees.

6. Hike In Pipeline Tariffs To Boost GAIL's Earnings But...

GAIL (India) Ltd. will benefit from the tariff hike for its gas pipeline network, however, the earnings gain may not be as much as the India’s largest gas company had anticipated.

• The Petroleum & Natural Gas Regulatory Board approved an integrated tariff rate for two of the key pipelines managed by GAIL. While the new rate is 18 percent higher than the previous, it’s nearly 58 percent lower than what the gas producer had asked.
• The new prices will be applicable from April 1, 2019 and the next review of these prices will happen after three years.
• The old and new Hazira-Vijaipur-Jagdishpur pipelines accounts for nearly 60 percent of the total gas transmission volumes.

Here’s the reason behind the lower rate hike.

7. Solar Panel Makers Seek Safeguard Duty

Solar panel makers may urge the government to impose a safeguard duty on Thailand and Vietnam as imports of the equipment from these Southeast Asian nations rose following a levy on China and Malaysia last year.

• Developers have been routing solar cells through Thailand and Vietnam after India in July levied a 25 percent duty on imports from China and Malaysia for two years, according to solar equipment manufacturers BloombergQuint spoke to.
• Cheaper imports from China, according to energy consultant Bridge to India, caters to nearly 85 percent of India’s solar panel requirements that helped power producers quote record-low tariffs in auctions.
• The levy increased project costs for solar farm developers and pushed up tariffs from record lows.

Here’s the range of import duty the industry want.

8. Gold Imports Jump In May

Gold imports by India grew 36 percent in May from a year earlier as jewellers and customers rushed to buy after prices declined to the lowest level this year.

• Overseas purchases rose to 105.8 tons last month from 77.6 tons a year earlier, a person familiar with the data told Bloomberg News.
• Combined shipments during April-May were 226.6 tons, up about 74 percent from the year-ago period.
• Prime Minister Narendra Modi’s election victory last month strengthened the local currency just as benchmark gold futures in India dipped to their lowest level this year.

Other factors also boosted gold demand in May.

9. China Unveils Stimulus To Help Sales Of Cars, Electronics

China unveiled a stimulus plan to help spur demand for automobiles and electronics as escalating tensions with the U.S. threaten to hurt the world’s second-biggest economy.

• The policies announced on Thursday don’t include any new spending from the central government, but encourage local governments to provide “support” if they have the capacity.
• Local governments will be banned from placing any new restrictions on car purchases or limits on using new energy vehicles, according to the statement on the National Development and Reform Commission‘s website.
• China is trying to support an economy which is slowing due to the effects of weak domestic demand and a worsening dispute with the U.S., the largest export market.

The announcement was less generous and expansive than a leaked earlier draft.

10. India Going Cashless Could Be A Model For The World

India aims to curb cash – but this time it wants to do it properly.

• The real innovation in mobile payments in India began a few months prior to the cash ban of November 2016. It’s called a unified payment interface, or UPI.
• In this, India was ahead of even Asian money centers like Singapore and Hong Kong. With more than 140 Indian banks sharing the interface, and Alphabet Inc.’s Google and Facebook Inc.’s WhatsApp offering instantaneous payment services on it, UPI has become a keenly watched experiment.
• Now a committee set up by the central bank under Nandan Nilekani wants to expand the platform to foreign-currency remittances by the non-resident Indian diaspora as well as to settle residents’ payments when they travel overseas.

Assuming the suggestion gets implemented, India will have its own WeChat Pay.