May 2019 Economic Affairs

Sakshi Education

India projected to grow at 7.1%
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.
High-level panel pitches for 'Elephant Bonds'
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.
Modern currency chests to hike service charges
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.
RBI extends RTGS timings from 4:30 pm to 6 pm
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.
RBI proposes guidelines for large Non-Banking Financial Companies
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 launches Corp SME Suvidha for MSMEs
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.
Agreement for Rajasthan with World Bank
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
Ujjivan Small Finance Bank director, Sachin Bansal, Nitin Chugh)

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.
RBI to observe financial literacy week from June 5-9
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'.
First session of 17th Lok Sabha from June 17, Budget on July 5
The first session of the 17th Lok Sabha will commence on 17th June, 2019.

The Rajya Sabha will have its sitting from 20th June, 2019 onwards.

The election for the Speaker of the Lower House will be held on 19th of June.

The President will address the Joint sitting of both the Houses of Parliament on the 20th.

The Economic Survey will be tabled on 4th of July and the Union Budget will be presented on the 5th of July.
RBI proposes new liquidity norms for NBFCs
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, today 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 signs tripartite agreement with India and Japan
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 today 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 Garage to create AI-based solutions
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 Forex reserves up by $1.3 billion
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).
Panel on digital payments submitted reports
A Reserve Bank-appointed committee headed by Aadhaar architect Nandan Nilekani submitted its suggestions on promoting digital payments to Governor Shaktikanta Das.In January, a five-member panel was set up by RBI on deepening digital payments.

The RBI will examine the recommendations of the committee and will dovetail the action points, in its Payment Systems Vision 2021 for implementation.
HDFC ERGO launches protection policy for vector-borne diseases
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.
SIDBI’s pilot scheme for fintech NBFCs
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 1st state to list Masala bond
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 infra sector grew 18.5%
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 under top 3 rural banks
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 savings bank product
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.
ADB signed agreement with IRFC
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.
Asian economies to dominate 7%
The 2020s are set to be the Asian decade, with the continent dominating an exclusive list of economies expected to sustain growth rates of around 7%.

Ethiopia and Côte d’Ivoire are also likely to reach the 7% growth pace.

India, Bangladesh, Vietnam, Myanmar and the Philippines should all meet that benchmark, according to a research note.
Sebi issued notice to Kotak, HDFC MF
Sebi has sent show-cause notices to Kotak Mut-ual Fund and HDFC Mutual Fund, seeking details about their investments in the debt instruments of Essel Group companies.

Essel Group promoters have sought time to repay their lenders.

Both fund houses had exposure to Essel Group companies in their fixed maturity plans (FMPs).
Retail inflation at 6-month high in April
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.
NABARD announced rs 700 crore capital fund
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 reaches all-time low against US dollar
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.

Opposition parties blamed Imran Khan-led PTI government's policies for weakening the national currency. Maryyium Aurangzeb of PML-Nawaz said in Islamabad that the prime minister is responsible for the mess in which he has landed the country.

In August, 2018, when Khan took over the government, one dollar was equal to Rs 124.
CBIC introduced weightage system
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.
India extends tariff deadline on U.S. items
The government has again extended its deadline to impose retaliatory import duties on 29 U.S. products, including on almonds, walnuts and pulses, till May 16.

A Finance Ministry notification said that implementation of increased customs duty on specified imports from the U.S. has been postponed from May 2 to May 16 this year.

These deadlines have been extended several times since June 2018.
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, US agree to strengthen economic co-operation
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.

Prime Minister of Australia -Scott Morrison.
RBI raised caps on home loans by SFBs
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 acquired shares of CG Power
Yes Bank has acquired eight crore shares in electric equipment maker CG Power and Industrial Solutions which were pledged to it by aborrower.

The acquired shares represent 12.79% ownershipin 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, Canadian fund set up renewable trust
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.
CBIC to organise meeting of Regional Heads
Central Board of Indirect Taxes and Customs (CBIC) is organising a meeting of the Regional Heads of Customs Administration of Asia Pacific Region of the World Customs Organisation (WCO) in Kochi from 08th to 10th May, 2019.

India is hosting this meeting in its capacity as Vice Chair of the Asia Pacific region that it assumed on 1st July, 2018 for a two-year period.
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%.
Govenment prohibits imports of electronics goods
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.
100 US firms to join Department of Commerce
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.
RBI first to begin interest rate easing cycle
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%.
IndusInd Bank & BFI merger approved
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.
IRDAI formed 13 member panel
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.
RBI proposed strict rules
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.
GST Revenue collection for April 2019
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's growth forecast lowered to 7.3%
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.
SEBI fined NSE over Rs 625 Crores
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.
I-T Department, GSTN to sign MoU
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 announced premium content deals
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.
Government to take over National Housing Banking from RBI
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 tied up with Wishfin
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.