BQuick On Sept. 10: Top 10 Stories In Under 10 Minutes
This is a roundup of the day’s top stories in brief.
1. Relief For Bank Borrowers: Expert Panel Formed
The Narendra Modi government formed a panel to assess relief sought in the matter of waiver of interest and interest on interest.
Former Comptroller and Auditor General Rajiv Mehrishi, Former Indian Institute of Management Ahmedabad professor Ravindra Dholakia, and former State Bank of India Managing Director B. Sriram will be part of the panel, according to a government press release.
The panel's terms of reference to include measuring the impact on economy and financial stability of waiving off interest and waiving off interest on interest during the Covid-19 moratorium and suggestions to mitigate financial constraints of various sections of society in this respect and the measures to be adopted.
The panel will submit its report within a week.
The panel was set up after the Supreme Court sought views from the Reserve Bank of India and the central government on the issue of “charging compound interest and credit rating/downgrading’’ during the six-month moratorium.
The court will next hear the case on Sept. 28.
2. Ambani And Bezos: From Rivals To Allies?
Mukesh Ambani’s Reliance Industries Ltd. is offering to sell a roughly $20 billion stake in its retail business to Amazon.com Inc., a person with knowledge of the matter told Bloomberg News.
Amazon has held discussions about investing in the conglomerate’s Reliance Retail Ventures Ltd. unit and has expressed interest in negotiating a potential transaction, the person said.
RIL is willing to sell as much as a 40% stake in the subsidiary to Amazon, the person said, asking not to be identified because the information is private.
Amazon hasn’t made any final decision on the size of its potential investment, and talks could still fall apart, the person said.
A deal, if successful, would not only create a retail behemoth but will also turn Jeff Bezos and Ambani from rivals into allies.
3. Reliance-Future Group Deal: The CCI Scrutiny
The next crucial step for the Rs 27,513-crore Reliance-Future Group deal would be the competition regulator’s approval. Reliance Retail Ventures' acquisition of Future Group’s retail, wholesale, logistics and warehousing assets would involve an extensive scrutiny of markets both companies overlap in.
So far, the CCI has looked at pure-play retail market deals. For instance, Amazon’s investment in Shoppers Stop, Future Retail’s acquisition of Heritage Foods Ltd., Walmart’s investment in Flipkart.
But Reliance-Future deal will be the first one where the CCI will have the opportunity to examine the entire value chain in the retail industry, Rahul Rai, an independent competition lawyer, told BloombergQuint.
"The four verticals—front-end retail, wholesale, logistics and warehousing—will be looked at as separate markets which are linked to each other. Within front-end retail, there’s offline and online. So the regulator will examine the vertical and horizontal overlaps in all these markets," Rai said.
A closer look at CCI’s previous orders gives some indication of how the front-end retail market may be delineated in the Reliance-Future deal.
4. India Looks To Woo Global Manufacturers With $23-Billion Package
India is planning to offer incentives worth Rs 1.68 lakh crore ($23 billion) to attract companies to set up manufacturing in the South Asian nation, people with knowledge of the matter said.
Prime Minister Narendra Modi’s government will offer production-linked incentives to automobile manufacturers, solar panel makers, and specialty steel to consumer appliance companies, according to documents reviewed by Bloomberg News.
Textile units, food processing plants and specialised pharma product makers are also being considered for the plan.
The incentive programme, being spearheaded by the country’s policy planning body, uses the template of a scheme implemented earlier this year to draw businesses away from China.
New Delhi has been working on attracting investments to revive a battered economy .
5. Nifty Rallies, Wall Street Recovery Continues
Indian equity markets snapped a two-day losing streak, ending the weekly options expiry session with strong gains, courtesy Reliance Industries.
The S&P BSE Sensex ended 1.7% or 646 points higher at 38,840.
The NSE Nifty 50 index ended 1.55% or over 170 points higher at 11,449.
Both Sensex and the Nifty saw their biggest single-day gain in over a month.
Follow the day’s trading action here.
Even as the Covid-19 crisis is expected to hurt earnings for at least another year, market veteran Kenneth Andrade sees one factor driving India Inc.’s profitability this decade: lower costs.
Read more to see why Andrade thinks there will be a reversal of profitability and volumes.
U.S. stocks advanced for a second day, again led by the tech shares battered during Tuesday’s rout.
The S&P 500 churned higher even after data showed cracks in recent labor-market strength.
The Nasdaq 100 extended its climb back from a three-day selloff of 11%, with Apple Inc. and Tesla Inc. rallying for a second session.
In Europe, the euro jumped 0.7% the region’s central bank was said to agree that there’s no reason to overreact to the currency’s strength.
West Texas Intermediate crude declined 0.6% to $37.53 a barrel.
Get your daily fix of global markets.
6. Two Of Three Rated Firms Qualify For Debt Restructuring
Ratings agency Crisil Ltd. has said nearly two-thirds of the companies that it rates will eligible for a debt restructuring, considering the financial benchmarks set by the Reserve Bank of India-appointed Kamath Committee.
For its analysis, the ratings agency studied the rated portfolio of 8,500 companies after sorting them by ratings, sector and moratorium availed.
The ratings, Crisil said, excludes financial sector firms and small and medium-sized businesses.
“Three out of four investment-grade companies (rated Crisil BBB- or higher) and one out of two in the BB rating category qualify for restructuring of bank loans,” Crisil’s Senior Director Subodh Rai said. “However, in the Crisil B category, only one in three qualify because companies here tend to have relatively weak debt protection metrics.”
The number of companies being eligible for restructuring could increase as the situation on the ground evolves.
7. The Key To Expanding India’s Priority Sector Lending
Banks will need to tap into their agent network and leverage existing partnerships with non-bank lenders to target potential borrowers in districts with low credit penetration.
In order to move lending towards the low credit districts, banks will need to work on improving the credit absorption in these districts, said CS Setty, managing director for SBI. The bank will explore the use of their agents for that.
Since these districts have historically had low deposits, banks and lenders did not have an incentive to reach out and lend to customers here.
But expanding agent networks in these districts and using farmer producer organisations and microfinance companies can help source new customers and push credit.
The challenge is even bigger in India’s north eastern states.
8. Covid-19: Record Spike In India, Serum Institute Halts Oxford Vaccine Trials
India recorded the highest number of new Covid-19 cases reported by any country in a single day, yet again.
India added nearly 96,000 cases of infection in taking the total tally to over 44.6 lakh, according to health ministry's data.
That includes over 34.7 lakh who have been discharged while over 75,000 have died.
Active crossed the 9 lakh mark and are now 21% of the total Covid-19 infections recorded in the country.
Over 1,100 died due to Covid in the last 24 hours. This was the eighth day the country reported over 1,000 deaths.
Track news and developments around the outbreak here.
The Serum Institute of India, enlisted to manufacture a billion doses of AstraZeneca Plc’s experimental Covid-19 vaccine, is pausing its own clinical trial, after earlier declaring it would push ahead despite safety concerns forcing the British drugmaker to halt its tests.
Indian trials were halted after receiving a notice from the Drug Controller General of India seeking information on the illness of a person participating in AstraZeneca’s trials in Britain, the company said in an emailed statement.
The regulator asked Serum to demonstrate why its clinical trial license should not be suspended until the safety of the vaccine is established, according to a report from the Press Trust of India.
The episode is proving a sobering reminder of the challenges of balancing speed with caution in the race for a vaccine.
9. India-China Ties And Ladakh: Between Simmer And Boil
Beijing hopes to make India responsible for starting a fracas, violating existing agreements on the use of force on the disputed border, and to secure an excuse for military escalation, writes Bharat Karnad.
The fact that the Indian jawans at Mukhpari neither flinched nor reacted precipitately in the face of jeering PLA troops itching for a fight, indicates tremendous discipline on their part.
A more confident Indian Army should prepare, with fast-moving Special Forces, to take back the area—Fingers 4 to 8—on the northern bank of the Pangong Tso.
Remove the PLA blockade at the Y-junction on the Depsang Plains, dislodge the Chinese from Indian territory around the Hot Springs-Gogra-Kugrang area.
Secure the mountain ridge on the east bank of the Shyok River to protect the new highway to Daulat Beg Oldi.
The uptick in the Indian Army actions in eastern Ladakh, however, is not matched by equally efficacious Indian diplomacy. Read more.
10. An Indian Duet For Urban Jobs
A ready-to-implement template for an urban employment guarantee programme. By NREGA architect Jean Drèze.
An urban counterpart of NREGA would provide the sort of fallback employment option that so many people need at this time
But framing an urban employment guarantee law requires more experience with public works in urban areas than we have today.
Remember, NREGA built on decades of experience with drought relief works in rural areas.
So here is another option – let’s call it a Decentralised Urban Employment and Training or the DUET scheme.