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May 2019 - Economy News

  • The World Economic Situation and Prospects (WESP) 2019 Mid-year Update was released by the United Nations on 21 May 2019. India's economy is projected to grow at 7.1% in the fiscal year 2020. The Indian economy, which generates two-thirds of the regional output in South Asia, expanded by 7.2% in 2018.

  • A government-appointed advisory group has suggested issuance of 'Elephant Bonds' wherein people declaring undisclosed income will have to mandatorily invest half of that amount in these securities. These recommendations are part of a report prepared by the 12-member group, set up by the commerce ministry in September 2018.

  • The Reserve Bank of India allowed large modern currency chests to increase the service charges on cash deposited by non-chest bank branches from the existing rate of Rs.5 per packet of 100 pieces to a higher rate subject to a maximum of 8 per packet. For this, only a currency chest (CC) that fulfils the minimum standards will be eligible to be classified as a large modern CC.

  • To facilitate high-value fund transfers, the Reserve Bank of India (RBI) has announced an extension of timings for customer transactions through Real Time Gross Settlement (RTGS) by one and half hours from 4:30 PM to 06 PM. In a notification, issued from Mumbai RBI that new timing will be effective from 1st June. The RTGS is an online fund transfer system, supported by the RBI, which enables money transaction on a real-time basis. The minimum amount for the transaction under this system is Rs 2 lakh. There is no upper limit on the value of funds that can be transferred via the RTGS system.

  • The Reserve Bank of India (RBI) released draft guidelines on liquidity risk management framework for non-banking financial companies (NBFCs) and core investment companies (CICs) with an aim to help them deal with severe liquidity problems and prevent re-occurrence of IL&FS type of debt crisis. The guidelines were released after an analysis of the recent developments in the NBFC sector.

  • Corporation Bank launched ‘Corp SME Suvidha’, a product for GST-registration. The product has been designed as part of the bank’s efforts to provide the best products to the MSME sector. PV Bharathi, Managing Director and Chief Executive Officer of the Corporation bank, launched the product in Mangaluru recently.

  • India signs Loan Agreement with the World Bank for Strengthening the Public Financial Management in Rajasthan Project. The objective is to improve Budget execution, enhanced accountability and greater efficiency in Revenue Administration in Rajasthan. Project size is USD 31 million, USD 21.7 million will be financed by the World Bank& USD 9.3 million by State Budget. Tenure -5 years.

  • Sachin Bansal joins Ujjivan Bank as director. The founder of Flipkart, Sachin Bansal joins Ujjivan Small Finance Bank as director. Ujjivan Small Finance Bank is chasing a plan to upgrade itself into a state-of-the-art mass- market bank. This is the second big futuristic move by Ujjivan management after it roped in HDFC Bank’s digital banking head Nitin Chugh as its next chief executive.

  • The Reserve Bank of India will observe Financial Literacy Week across the country from 3rd to 7th June, 2019. The theme this year is - 'Farmers and how they benefit by being a part of the formal banking system'.

  • RBI has issued draft guidelines on liquidity management for the NBFCs and proposed a liquidity coverage ratio for large NBFCs. It covers all deposit taking NBFCs and non-deposit taking NBFCs with an asset size of 5,000 crore and above. Company fixed deposits (FDs), unlike bank FDs, don’t come with insurance.

  • BHEL net profit jumps 50.7% to Rs 1,215 crore in FY19. The public sector giant Bharat Heavy Electricals Limited (BHEL) has posted a quantum jump in profits and has recommended a final dividend of 60% during the financial year 2018 - 19. During the year, the company achieved a profit before tax (PBT) of Rs. 2,058 crore, compared to a PBT of Rs. 1,585 Crore during the year before, registering a surge of 29.8%. A press release of the corporation released in Trichy, Tamilnadu, says that net profit for the year stands at Rs. 1,215 crores, against Rs.807 crores in the previous fiscal, resulting in a 50.7% jump.

    During the year, BHEL had also developed in-house the country’s first state-of-the-art regenerative braking system and delivered the first 6,000 HP electric locomotive to the Indian Railways. The company also received its maiden order for electrification of 440 km rail route during the year. BHEL is in the process of setting up a rail-based logistics terminal at Haridwar and has plans to make Bengaluru a solar business hub.

  • Sri Lanka has signed a tripartite agreement with India and Japan for development of eastern terminal of Colombo port. The Memorandum of Cooperation (MoC) was signed in Colombo by Sri Lankan ports minister Sagala Ratnayake, Indian high commissioner to Sri Lanka Taranjit Singh Sandhu and a Japanese representative.

    As per the agreement, Sri Lanka Port Authority (SLPA) will hold 51 per cent majority stake in the port development while Japan and India will have combined stake of 49 per cent. The three governments have decided to work out details at joint working group meetings and advance their cooperation towards early commencement of work and operation of the terminal.

    The deal is significant as over 70% of India’s transhipment business is handled at Colombo ports. One of the terminals is controlled by Chinese company and there was a long-pending proposal to handover the development of Eastern terminal to an Indian company. The deal is part of Memorandum of economic cooperation signed between India and Sri Lanka in 2017.

  • IBM India announced that it has tied-up with HDFC ERGO General Insurance Company to co- create new Artificial Intelligence (AI)-based solutions. Teams from HDFC ERGO and IBM Services will work together to develop and test new solutions. The IBM Garage team comprises insurance industry experts, design thinkers, data scientists, architects, and others.

  • India's foreign exchange reserves increased by $1.368 billion. According to the RBI's weekly statistical supplement, the overall forex reserves rose to $420.055 billion from $418.687 billion. India's forex reserves comprise Foreign Currency Assets (FCAs), gold reserves, Special Drawing Rights (SDRs) and India's reserve position with the International Monetary Fund (IMF).

  • HDFC ERGO General Insurance Company announced the launch of  'Mosquito Disease Protection Policy'. This new policy will cover an individual against common mosquito-borne diseases like Dengue Fever, Malaria, Chikungunya, Japanese Encephalitis, Kala-azar, Filariasis and Zika Virus. HDFC ERGO General Insurance Company is India's third-largest non-life insurance provider in the private sector.

  • Small Industries Development Bank of India (SIDBI) launched a pilot scheme to extend financial assistance of up to Rs.10 crore to fintech Non-Banking Finance Companies (NBFCs). Fintech NBFCs are digital loan companies. They should have minimum capital risk-weighted assets ratio of 15%. Their non-performing assets should be less than or equal to 4%.

  • Kerala became the first state to tap into masala bond market by listing the Kerala Infrastructure. Investment Fund Board (KIIFB)’s masala bond in LSE’s International Securities Market (ISM). The masala bond has tenor of 5-year and a 9.723% coupon. The main objective of this initiative was to tap masala bond market and to rebuild the infrastructure in Kerala from the proceeds of masala bond.

  • Bank credit to infrastructure sector grew by 18.5% to Rs.10.55 lakh crore as of 2018-19, the highest since 2012-13 fiscal, as per the RBI data. Outstanding bank credit to the sector was Rs.8.91 lakh crore as at March 2018.In FY18 and FY17, growth in bank credit to the sector was negative at 1.7% and 6.1%, respectively.

  • Tripura Gramin Bank received India’s top three Rural Banks (RRBs) in terms of profit, business, and growth. Currently, India has 46 Regional Rural Bank out of which Tripura Gramin Bank ranked 3rd in the country. Tripura Gramin Bank posted a profit for 7 successive years to Rs 125.45 crore in fiscal 2018-19.

  • Karnataka Bank launched a new savings bank product called 'KBL SB Salary' for salaried class with three variants of Executive, Prime, and Classic. All these 3 variants of KBL SB Salary Scheme are available for the Salaried People with a host of Digitally Powered features and without any Minimum Balance Criteria. No annual charge on Debit Cards is a major feature.

  • Asian Development Bank (ADB) signed an agreement with Indian Railway Finance Corporation (IRFC). It will provide $750 million long-term financing for the Railways Track Electrification Project as part of a broad modernization program. It is the largest single non-sovereign loan ever.

  • 20th Conference of RHCA concludes. The Central Board of Indirect Taxes and Customs (CBIC) had organised a Conference of the Regional Heads of Customs Administration of Asia Pacific Region of the World Customs Organisation (WCO) in Kochi from 08 to 10 May 2019. India hosted this Conference in its capacity as Vice-Chair of the Asia Pacific Region of WCO which it assumed on 1st July, 2018 for a two-year period.

  • India's retail inflation touched a six-month high in April to 2.92% on high food prices, compared with 2.86% in March. As per the Ministry of Statistics and Program Implementations, despite a slight increase in inflation, consumer price index remains below the target of 4 (+/-2)%. The consumer price index (CPI)-based retail inflation was at 2.57% in February 2019.

  • The National Bank for Agriculture and Rural Development announced a Rs 700-crore venture capital fund for equity investments in agriculture and rural-focused startups. NABARD has been contributing to other funds till now and this is the first time that the rural development bank has launched a fund of its own. The fund has been launched by Nabventures with a proposed corpus of Rs 500 crore.

  • Pakistan's currency hit an all-time low against the US dollar after it dropped to Rs 148 per dollar in the inter-bank market. The devaluation followed bailout package by the International Monetary Fund (IMF) in the weekend. The IMF agreed to provide USD 6 billion to Pakistan under stringent conditions, including a higher role of market forces in determining currency rates.

  • Central Board of Indirect Taxes and Customs (CBIC) introduced a weighting system for appointments under compassionate grounds. It will be based on nine criteria like family income, dependents, remaining service period of the deceased, etc. The main objective is to ensure objectivity, transparency, and uniformity in the selection process for appointments on the compassionate ground.

  • Myntra appoints Virat Kohli, Anushka Sharma. Flipkart-owned fashion e-commerce platform Myntra announced that it had appointed celebrity couple Virat Kohli and Anushka Sharma as its first brand ambassadors. This is couple’s second big brand endorsement deal after men’s ethnic wear brand Manyavar, which they have been associated with since 2017.

  • Yes Bank slips to 10th most valuable lender. Private lender YES Bank Ltd has slipped three notches to 10th spot, in terms of market valuation, for the first time. Its shares slumped over 30% in the last two sessions after the bank reported a surprise net loss in its March quarter earnings. HDFC Bank is the most valued Indian bank with a market cap of 6.45 trillion.

  • India and the United States have agreed to strengthen economic co-operation and bilateral trade by ensuring greater collaboration amongst stakeholders, including government, businesses and entrepreneurs. A bilateral trade meeting was held between the two countries in New Delhi . Commerce and Industry Minister Suresh Prabhu and US Secretary of Commerce Wilbur Ross co-chaired the meeting.

    Both leaders appreciated the strong, robust and growing bilateral ties across the entire spectrum of trade and commerce. Both sides also expressed satisfaction over last year's progress, with bilateral trade in Goods and Services registering a growth of 12.6 per cent. India and US also discussed various outstanding trade issues.

  • Indian & Australia's co-operation on terrorism. India and Australia have agreed to further deepen counter-terrorism co-operation through regular exchange of information and sharing of best practices on countering extremism and radicalization. The two countries held the 11th Meeting of Joint Working Group on Counter-Terrorism at Canberra.

  • The RBI has increased the eligibility cap on home loans extended by regional rural banks and small finance banks to Rs.35 lakh in metropolitan areas and Rs.25 lakh in other centres. All such loans will be now classified by these banks as priority sector loans. In addition, the existing family income limit of Rs.2 lakh per annum is revised to Rs.3 lakh per annum for EWS and Rs.6 lakh per annum for LIG.

  • Yes Bank has acquired eight crore shares in electric equipment maker CG Power and Industrial Solutions which were pledged to it by a borrower. The acquired shares represent 12.79% ownership in the company and will be valued at 292.56 crore. CG Power had a turnover of RS.6,287 crore in fiscal year 2017-18.

  • NCLT began bankruptcy process. The lenders to the crippled Reliance Communications (RCom) moved NCLT to appoint a new resolution professional (RP) and form a committee of creditors. It is the first step to begin the bankruptcy process of the Anil Ambani group company that owesclose to Rs.50,000 crores to 31 lenders led by SBI. RCom was in trouble for years forcing it to discontinue operations two years ago.

  • Mastercard to invest $ 1 billion to develop India. Mastercard will invest $1 billion in India over the next five years, with plans to make the country a global technology node for its platforms. The company has already invested $1 billion in the Indian market in the last five years. This investment will help foster innovation and increase Mastercard’s speed-to-market capabilities and value-added services.

  • Piramal Enterprises Ltd. and Canada Pension Plan Investment Board (CPPIB) have entered into a MoU to co-sponsor a renewable energy-focused Infrastructure Investment Trust. The InvIT would seek to acquire up to 1.5-2GW of stable and cash-generating renewable assets on a hold-to-maturity basis. Both PEL and CPPIB will act as co-sponsors of the proposed InvIT and hold up to 75% of the units.

  • RBI withdraws mandate on IL&FS NPAs. Following the National Company Law Appellate Tribunal’s decision to allow banks to declare NPAs of Infrastructure Leasing & Financial Services Limited and its group entities, the RBI has now withdrawn its circular. The circular mandated to disclose bad loans of the IL&FS group in its notes of accounts. Previously, RBI had asked banks and financial institutions to disclose the NPA.

  • Fiscal deficit touched 4.52% at end-February. Finance Ministry told that the country's fiscal deficit at RS. 8.51 trillion at the end of February 2019 had touched 4.52% of the GDP. The government's has pegged its fiscal deficit target for 2018-19 at 3.4% for which was revised upwards from the earlier 3.3%.

  • The government of India has prohibited Import of second-hand or refurbished electronics and ITgoods without registration with the Bureau of Indian Standards. Under the Electronics and IT Goods (Requirement of Compulsory Registration) order 2012, imports of these goods is allowed through the registration with the BIS or on specific exemption letter from the ministry of IT and electronics.

  • The U.S. Commercial Service will bring more than 100 U.S. companies to India as part of the U.S. Department of Commerce’s largest annual trade mission program, Trade Winds. Trade Winds Indo-Pacific features a three-day business forum in New Delhi, with additional trade mission stops in Ahmedabad, Chennai, Kolkata, Mumbai, Bengaluru, Hyderabad, and Bangladesh.

  • The Reserve Bank of India is the first central bank in the Asia-Pacific region to begin an explicit interest rate easing cycle buoyed by benign food inflation and easier global financial condition. The Monetary Policy Committee (MPC) has cut rates in February and April 2019.The RBI has cut policy interest rates twice by 0.25% each to a one-year low of 6%.

  • National Company Law Tribunal (NCLT) approved the merger of IndusInd Bank with Bharat Financial Inclusion (BFIL). The merger will be completed within 2-4 weeks. Post-merger, BFIL will become a subsidiary of the Bank. Bharat Financial Inclusion Limited BFIL is a non-banking finance company, licensed by the Reserve Bank of India.

  • Kotak Bank launches debit card-based e-mandate. Kotak Mahindra Bank launched a debit card-based authentication solution on NPCI’s e-Mandate API platform. With this, the bank has become the first Destination Bank to go live with Net Banking and Debit Card-based e-mandate authentication. It will enable its customers to create electronic mandates via both the Debit Card and Net Banking channels.

  • IGNOU to launch course on GST. The Indira Gandhi National Open University (IGNOU) will launch an awareness programme on Goods and Services Tax (GST) in collaboration with Bombay Stock Exchange Institute Limited. The programme will be launched from its July 2019 session. It aims to impart the basic knowledge and skills required to fulfill various requirements under the GST Act.

  • Insurance Regulatory & Development Authority of India (IRDAI) has set up a 13 member committee under IRDAI Executive Director Suresh Mathur. It will review the regulatory framework on micro insurance & recommend measures to increase the demand for such products. It has been formed in the backdrop of a less-than- desired offtake of microinsurance products despite their inherent benefits.

  • India raised import duty on wheat to 40%. India has raised its import duty on wheat to 40% from 30% to support local farmers. India is the world’s No. 2 producer of the grain. Local wheat prices have fallen over 11% in 2019 due to ample supply from last year’s crop and forecasts of record output.

  • India’s Central Bank, the RBI would tighten rules on opening and operating current accounts of corporate borrowers. This would be done to prevent the diversion of funds. The rules would be applicable to corporates who have borrowed and used credit facilities of more than Rs 50 crore from the banking system.

  • The total gross GST revenue collected in the month of April 2019 is Rs 1,13,865 crore of which CGST is Rs 21,163 crore. The total number of GSTR 3B Returns filed for the month of March up to 30th April 2019 is 72.13 lakh. The government has settled Rs 20,370 crore to CGST and Rs 15,975 crore to SGST from IGST as regular settlement.

  • India Ratings & Research (A Fitch Group Company) has lowered the country’s growth forecast for the current fiscal to 7.3%, from the earlier projection of 7.5 %. The agency has listed three key reasons for lowering its projection.

  • Markets regulator SEBI directed National Stock Exchange to pay more than Rs.625 crore in the case of misuse of its co-location facility. SEBI has been probing alleged lapses in high-frequency trading offered through NSE’s co-location facility. The National Stock Exchange of India Ltd. is the second largest in the world by nos. of trades in equity shares from January to June 2018.

  • BSE's first independent woman director. Bombay Stock Exchange has appointed its first independent woman director Jayshree Vyas. Vyas is a chartered accountant working as the managing director of Shree Mahila Sewa Sahakari Bank, Ahmedabad, since 1986. She helped in launching the first financial literacy programme in Sewa Bank in 2001.

  • Global Gold Demand Increases 7%. The WGC’s 2019 First Quarter Global Trends Report said that worldwide gold demand increased to 1,053 tonnes in the Q1. This is an increase of 7% compared to the first quarter of 2018. Central banks continued to dominate the gold market with global official gold purchase totaling 145.5 tonnes in the first quarter, a 68% increase compared to the first quarter of 2018.

  • The Income Tax Department and the Goods and Services Tax Network (GSTN) will sign an MoU that will allow the two to match their data regarding company financials to pin down any anomalies. The MoU will also include the rules pertaining to the modalities of the exchange and the confidentiality of the data. The order also provides for the automatic exchange of data.

  • Wipro acquired Splash Corporation. Wipro Consumer Care has signed an agreement to acquire Splash Corporation, a Philippines- based personal care company. The transaction strengthens Wipro’s consumer care portfolio in personal care and completes its South-East Asian footprint. This is Wipro’s 11th acquisition in the consumer line business and the 9th acquisition in the personal care segment overall.

  • Twitter has announced premium content deals with Univision, The Wall Street Journal, NFL, ESPN, and Viacom for live-streaming videos on its platform. The deals will showcase new live and on-demand premium video programming, offering advertisers new opportunities to connect with influential and receptive audiences.

  • The government will be taking over the National Housing Bank (NHB) after buying entire stake for Rs 1,450 crore from the Reserve Bank of India (RBI). The RBI has exited the NHB, thus making it a fully government-owned entity. RBI was holding 100% stake in the NHB, the housing finance regulator.

  • Bharti AXA General Insurance has tied up with Wishfin’s insurance arm Wishpolicy, to offer two-wheeler insurance to customers via WhatsApp. This service option is an instant and additional customer service option for policyholders, apart from Bharti AXA General Insurance’s multiple channels.



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