BQuick On June 24: Top 10 Stories In Under 10 Minutes

Here's a roundup of the day's story in brief.

1. India Gets Sharpest GDP Downgrade By IMF

The International Monetary Fund’s forecast for India’s economy swung from expansion to contraction, marking the sharpest downgrade in projections of the world’s main economies.

• The Washington-based lender now sees India’s gross domestic product declining 4.5% in the fiscal year through March 2021, compared with an April projection of 1.9% growth.
• The 6.4 percentage-point downgrade in the forecast is due to “a longer period of lockdown and slower recovery than anticipated in April,” the IMF said in an update of its World Economic Outlook report, released Wednesday.
• The IMF’s projection for India’s first full-year contraction in more than four decades is still milder than those of some analysts.

Weaker growth will also weigh on the government’s budget.

2. ICICI Bank Mulls $3-Billion Share Sale

ICICI Bank Ltd. is considering raising as much as $3 billion in a share sale as the lender seeks to bolster its capital ratios, people familiar with the matter told Bloomberg News.

• The Mumbai-based bank plans to start discussions with potential advisers for the offering soon, said the people, who asked not to be identified as the information is private.
• ICICI Bank is currently targeting a share sale as soon as September, though the timing could still change depending on market conditions, the people said.
• India’s second-largest private sector bank will be joining its peers in seeking capital to expand the lending business, betting on an economic recovery once the coronavirus pandemic subsides.

Find out how much capital Indian lenders could need next year.

3. RBI Tightens Grip Over Digital Lenders, Gets More Power Over Co-operative Banks

The Reserve Bank of India has reiterated its fair practices code for all lenders and has sought additional documentation for loan contracts signed by digital lenders.

• This, after reports emerged of aggressive recovery practices being used by some digital lenders and non-bank lenders amid a rise in defaults.
• In a notification on Wednesday, the regulator said that it has observed instances of digital platforms portraying themselves as lenders themselves and not naming the bank or non-banking finance company backing them.
• The RBI also cautioned against unscrupulous practices.

RBI laid out a set of processes that banks and NBFCs must follow.

The cabinet approved an ordinance to bring urban and multi-state cooperative banks under the supervision of the Reserve Bank of India, in a move aimed at giving the regulator greater control over such lenders.

• According to the bill, the RBI, in public interest, can supersede the management of a multi-state cooperative bank for up to five years and appoint an administrator.
• In case of a cooperative bank, registered with the Registrar of Cooperative Societies of a state, the regulator will have to consult the state government concerned before issuing an order to supersede the board.

This is the second attempt to legalise the framework.

4. India, U.S. Stocks Snap Winning Streak

Indian equity markets snapped a four-day gaining streak, as cues from the global markets turned adverse in the second half of trade.

• Both S&P BSE Sensex and the NSE Nifty 50 index ended 1.58% lower at 34,868 and 10,305 respectively.
• The Sensex declined 561 points while the Nifty fell 165 points in today's trade.
• Among the sectoral indices, the Nifty Bank was the top laggard.

Follow the day’s trading action here.

Every investor—unless they run a closed-ended investment fund like Warren Buffett—must focus on sizing their bets and selling stocks at an opportune time, instead of just buying them. according to S Naren of ICICI Prudential Mutual Fund.

Here’s the biggest lesson Naren has learnt from the ongoing market environment.

U.S. stocks fell the most in two weeks as the Trump administration considered fresh tariffs and a resurgence in virus cases around the world sharpened concern about the pace of the economic recovery.

• The S&P 500 snapped a two-day advance, sinking more than 1%.
• Travel stocks and other companies that stand to benefit from life returning to normal fared worse.
• The tech-heavy Nasdaq indices were little changed as investors continued to favor companies with fortified balance sheets and better prospects in a stay-at-home economy.
• Oil slid below $40 a barrel in New York and gold steadied at $1,770 an ounce.

Get your daily fix of global markets here.

5. Patanjali's Covid Treatment: Another Twist

A day after Patanjali Ayurved Ltd. was barred from advertising or publicising its claimed ayurvedic treatment for the novel coronavirus, the Uttarakhand Ayurved Department clarified that the company was granted a licence for production of immunity booster, cough and fever medicines.

• Patanjali didn’t mention it was developing a drug for coronavirus while applying for the licence, according to the licence officer of Uttarakhand Ayurved Department.
• The state government department will issue a notice to the yoga guru Ramdev-backed company, asking how it got permission to make the kit for Covid-19, news agency ANI said in a tweet quoting the licence officer as saying.

Patanjali, however, asserted that the company has met all parameters clinical trials and has provided information to the Ministry of Ayush.

6. A Letter And A Legal Battle

A letter signed by the four Hinduja brothers is at the center of a legal dispute over the future of the family’s $11.2 billion fortune.

• The 2014 document says that the assets held by one brother belong to all, and that each man will appoint the others as their executors.
• But now Srichand Hinduja, 84, the patriarch of the family, and his daughter, Vinoo, want the letter declared worthless.
• The dispute between the U.K.-based family came to light in a ruling delivered Tuesday by a London judge, who said that the three other brothers, Gopichand, Prakash and Ashok, tried to use the letter to take control of Hinduja Bank -- an asset that was in Srichand’s sole name.

If the claim succeeds then all assets in Srichand’s name would pass to his daughter and her immediate family.

7. Stay Thrifty, Centre Tells Ministries

India extended the cap on spending by ministries and departments by three months, as cash position of the government remains stressed amid the coronavirus pandemic.

• “Considering the need to effectively manage cash flows of the government, it has been decided to retain and continue with same expenditure management measures in the second quarter (July-September) as applicable in first quarter (April-June) of 2020-21,” an office memorandum by the Ministry of Finance said.
• The ministry, in April, had classified government departments into three categories and tightened their spending for the April-June period, barring for those fighting the outbreak.

The memorandum spells out additional guidelines about the amount that remains unspent.

8. Jio-Facebook Deal Clears Antitrust Hurdle

India’s antitrust regulator approved Facebook Inc.’s purchase of a 9.99% stake in the digital services unit controlled by billionaire Mukesh Ambani, giving the social media giant another foothold in one of the world’s fastest-growing online markets.

• The U.S.-based company will invest $5.7 billion in Jio Platforms through Jaadhu Holdings LLC, an indirect, wholly-owned subsidiary of Facebook, according to a filing on the Competition Commission of India website.
• “This was the major hurdle before Reliance Industries,” said Sudeep Anand, head of institutional research at IDBI Capital Market Services Ltd.

The clearance paves the way for a slew of smaller deals that take Reliance Industries closer to its goal of becoming net debt free.

9. Covid-19 Cases Spike In India; West Bengal Extends Lockdown

Over 4.5 lakh people have been infected by the deadly Covid-19 virus in India.

• The country added nearly 16,000 new Covid-19 cases, taking the total tally to 4,56,183, according to Health Ministry’s 8 a.m update.
• However, over 2.5 lakh of these cases have been declared as “cured/discharged”.
• Currently, the total active cases in India stand at 1.83 lakh, while the death toll is 14,476.
• West Bengal Chief Minister Mamata Banerjee announced extension of the lockdown in the state till July 31 with relaxations.

Track the developments around the Covid-19 outbreak in India here.

Globally, cases neared the 93 lakh mark with deaths crossing 4.78 lakh.

• Germany reported 712 new cases of Covid-19, with the infection rate remaining above a key threshold.
• Rising infection numbers in Israel prompted localized lockdowns, while Tokyo reported 55 cases, its highest daily tally since May.
• Newly diagnosed infections soared in some of the most populous U.S. states.

Follow the global spread of the virus here.

Related Coverage

• The pandemic hastens automation of India's low-paid jobs.
• India's richest states will have biggest income losses, SBI says.

10. RBI’s Missed Opportunity

The Reserve Bank of India has proposed a new set of rules to govern housing finance companies, on which it has sought public feedback before the guidelines are finalised.

• The proposed framework has followed the transfer of regulation of HFCs from the National Housing Bank to the RBI, which itself was a consequence of governance concerns laid bare by the collapse of Dewan Housing Finance Corporation Ltd.
• The proposals broadly seek to harmonise regulations between HFCs and non-bank lenders that are governed by the RBI.
• The issues that have been tackled in the proposed framework are definition and proportion of “qualifying assets” that a company must hold to be classified as an HFC, capital and liquidity rules that apply to these firms.

It also introduces a useful provision to prevent double financing. But it fails to close an important loophole.