Daily Financial News Analysis – 4th Dec’19 – Free PDF Download

Customer Outreach Initiative

• PSBs have disbursed: four lakh 91 thousand crore rupees as loans during the month of October and November.
• Finance Ministry said that banks disbursed
  1. October : 2.52 lakh crore rupees
  2. November : 2.39 lakh crore rupees
  3. MSMEs : 73 thousand crore rupees
  4. Agriculture : 78 thousand crore rupees

Singapore Imports

• India’s merchandise imports from Singapore in 2018-19: $16.3 billion (record high)

1. An unusual 118% spurt

• It has alarmed customs officials and puzzled the commerce ministry.
• Fear: Chinese exporters may be diverting supplies.
• New Delhi – Singapore: duty concessions under a FTA.
• New Delhi, too, has been mounting pressure on Beijing to trim the massive trade imbalance.
• Highest annual surge in imports from Singapore: back in 2006-07
  1. June 29, 2005: Comprehensive Economic Co-operation Agreement was signed.

Small Savings

• Last few years trend: Deposits in small savings schemes have been growing much faster than bank deposits.
• Analysts: reductions in bank deposit rates
• According to a recent Citi report
  1. Banks paid 6.25-7.25% for one-year term deposits in November 2019
  2. Small savings schemes offered up to 8.6% in the same month

FM to meet FMs: GST revenue

• Shortfall in GST collections is threatening to upset the budget maths of both the Centre and states.
• Centre has even started defaulting on paying the constitutionally guaranteed compensation amounts to the states.
• December 18: GST Council’s next session
• Might see hikes in tax rates on a host of items and a pruning of the 156-strong list of exempt items.
• The Council might also formulate alternatives to compensate states as the source fund has proved to be inadequate.
• While technically the Centre has the option of dipping into the Consolidated Fund of India to make good the cess shortfall, it is unlikely to do so, given the fiscal constraints.

Solar Projects

• A slowdown may be in the horizon for this sunrise sector.
• Situation in FY17 and FY18 was good.
• But recent tenders floated by the Solar Energy Corporation of India (SECI) have remained undersubscribed.
• What went wrong?

1. Delays in payments by state-run distribution companies (discoms)
2. Laxity in issuing tariff orders on the part of state electricity regulators
3. Reopening of power purchase agreements (PPAs) by Andhra Pradesh and Uttar Pradesh

• Industry sources also blame the

1. rising complexities related to land acquisitions
2. abrupt curtailment of purchase by discoms
3. mandatory tariff ceilings under auctions for waning investor interest

• Uncertainties stemming from Andhra Pradesh’s decision has created panic.
• The pace of adding renewable generation capacities had slowed to
  1. FY17: 11.3 GW
  2. FY18: 11.8 GW
  3. FY19: 8.6 GW

Air India Sale

• Department for promotion of industry and internal trade asked the aviation ministry. if it would be feasible to change the so-called “Substantial Ownership And Effective Control” clause.
• The rule mandates that control of an airline always remain in Indian hands.
• This is one of several reasons global firms have been wary of bidding for Air India.
• Currently, foreign airlines are barred from buying more than 49% in a local carrier, and foreign investors, other than airlines, need government approval to buy a stake bigger than 49%.
• Budget Speech:  Narendra Modi’s government will look into suggestions of opening up sectors including aviation to more foreign investment.

Data Protection Bill

• Union Cabinet headed by Prime Minister Narendra Modi may give approval to Personal Data Protection Bill.
  1. processing of personal and private data by public and private entities
• Broad guidelines on collection, storage and processing of personal data, consent of individuals, penalties and compensation, code of conduct and an enforcement model is likely to be a part of the law.

S&P

• Credit rating agency Standard & Poor’s has reaffirmed India’s sovereign rating at ‘BBB-’ with stable outlook.
• S&P: India’s economy continues to achieve impressive long-term growth rates despite a recent deceleration.
• S&P expects the Indian economy to continue to outperform its peers and that the growth will remain strong over the next 2 years.
• In September 2014, S&P had assigned India the lowest investment grade rating with stable outlook.
• Prior to that, it had assigned the same rating to India with a negative outlook.
• On November 8, Moody’s Investors Service had cut India’s sovereign credit rating outlook to “negative” from “stable”.

Goldman Sachs Projection

• The slowdown that began in January 2018 is expected to end soon
  1. Better global growth
  2. Easier domestic financial conditions
  3. Positive fiscal impulse
  4. Improved sentiment
  5. Easing supply bottlenecks
• Goldman Sachs indicated that India’s growth is likely to have troughed.

• “We forecast India’s GDP growth at 5.3% and 6.6% in FY20 and FY21, respectively, lower than what we had previously projected.
• Confidence concerns in the domestic financial sector pose a key downside risk to our outlook,” the report said.

Fix Floor Price For Data

• Cellular Operators Association of India (COAI) on Tuesday wrote to the Telecom Regulatory Authority of India (Trai) to set a floor price for data services.
• Current data rates in the country are, perhaps, the lowest in the world at Rs 7.77 per GB per month.
• Approximately, a consumer uses 10 GB data per month.
• Prior to September 2016 (before the launch of Reliance Jio) data rates were roughly Rs 50 per GB and consumption was 153 MB per month per consumer.
• For 4G services, operators do not charge for voice services and offer voice and data combo packs where only data is charged, so effectively data tariffs are the only tariffs which subscribers pay.

Q1  Descriptive Question: Briefly explain WATERFALL MECHANISM under the Insolvency and Bankruptcy Code (IBC).
Q2 Under Basel III norms, the CAPITAL ADEQUACY RATIO required is ___%

1. 8%
2. 11%
3. 9%
4. 7%

Download Free PDF

Sharing is caring!