BQuick On Nov. 21: Top 10 Stories In Under 10 Minutes   

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

1. Rajan, Acharya Question Need To Open Up Banking For Indian Corporates

Former Reserve Bank of India Governor Raghuram Rajan and Deputy Governor Viral Acharya flagged the timing of the central bank-formed internal working group’s recommendation to allow large industrial houses and corporates to promote a bank.

• “Why now? Have we learnt something which allows us to override all the prior cautions on allowing industrial houses into banking?” according to a joint article by Rajan and Acharya posted on professional networking site LinkedIn.

• Such a recommendation is a “bombshell”, and should not be considered, the two former Indian central bankers argued.

• In fact, it’s even more important now for the regulator to stick to its tried and tested limits on corporate involvement in banking, they said, adding there’s a need to tread this path cautiously, especially at a time the financial system is still learning from the collapse of IL&FS and Yes Bank.

Rajan and Acharya listed two reasons why allowing corporates to promote banks could hurt the sector.

2. S&P Red Flags Corporates Owning Banks

The recommendations of the Reserve Bank of India’s internal working group allowing corporate ownership of Indian banks is fraught with risks, according to S&P Global Ratings.

• “The RBI will face challenges in supervising non-financial sector entities, and supervisory resources could be further strained at a time the health of India’s financial sector is weak,” the global rating agency said in a statement.

• The working group’s concerns regarding conflict of interest, concentration of economic power, and financial stability in allowing corporates to own banks are potential risks, S&P said.

Read more to see what are the risks involved with corporate ownership of banks.

Related Coverage

• RBI’s new banking proposals: Who stands to benefit?

• IDFC, IDFC First Bank shares rally on new banking proposals.

• Is India letting cronyism deeper into banking?

3. AstraZeneca-Oxford Vaccine Highly Effective

A Covid-19 vaccine developed by the University of Oxford and AstraZeneca Plc prevented a majority of people from getting the disease in a large trial, another promising development in the quest to end the pandemic, and the rollout could begin next month.

• The vaccine stopped an average of 70% of participants from falling ill, an early analysis of the data show.

• The effectiveness rose to 90% for one of two regimens, using half a dose followed by a full one later, close to the high bar set by Pfizer Inc. and Moderna Inc.

Despite being less effective than Pfizer and Moderna, the British vaccine has some advantages.

4. U.S. Stocks Gain; Dollar Falls To 2018 Lows

U.S. stocks rose and the dollar weakened on signs of progress toward a Covid-19 vaccine.

• The S&P 500 bounced back from its end-of-the-week selloff, led by companies that will benefit from a return to normal economic activity.

• Pfizer Inc. and Moderna Inc. climbed in after a U.S. government official said immunizations may start soon.

• The dollar dropped to a two-and-a-half year low as the prospect of vaccine roll-outs added to headwinds for the world’s reserve currency.

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Nifty's Falls Short Of 13,000

Indian equity markets ended the first session of the November F&O expiry week with gains, even as banking stocks underperformed.

• The S&P BSE Sensex ended 0.4% higher at 44,077.

• The NSE Nifty 50 index ended 0.5% higher at 12,926, falling short of the 13,000-mark once again.

Follow the day’s trading action here.