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QBiz: Pvt Banks Slowest in Passing on Rate-Cut Benefits & More

1. Private Banks Lag PSU, Foreign Lenders in Passing on Rate Cut Benefits to Borrowers

Private banks were the slowest to pass on the benefits of falling interest rates to their customers in 2019 compared to their state-run and foreign rivals, Reserve Bank of India (RBI) data showed.

The median one-year marginal cost of funds-based lending rate (MCLR) for private banks fell a meagre 12 basis points (bps) to 9.18% between January and December 2019, compared to RBI’s cumulative 135 bps cut in its key policy rate to 5.15%. Most bank loans are typically priced over the one-year MCLR, making it the most tracked rate.

In the same period, state-run banks have lowered their one-year median MCLR by 45 bps and foreign banks have cut their lending rates by 75 bps. Foreign banks have the lowest median one-year MCLR rate at 7.9% as of December. Their public counterparts are at 8.3%. For all scheduled commercial banks taken together, the one-year median rate stands at 8.3%.

(Source: Livemint)

2. Corporates to Get 2 More Years to Split Posts of MD and Chairman

The market regulator will extend the deadline for listed companies to split the post of chairman and managing director by two years, sources close to SEBI said. The deadline was 31 March 2020, but many top corporate houses had sought more time to implement it.

A committee led by Uday Kotak had first suggested such a move to SEBI as part of a major overhaul of corporate governance norms for listed companies. The suggestion was that only a non-executive director should be made chairman, which would eventually lead to the splitting of the posts of chairman and MD. The idea is to segregate the roles between the chairman, who presides over the board and deals with broader issues, and the MD, who is mainly in charge of the day-to-day operations.

(Source: The Hindu Business Line)

3. Forex Scam: No Relation With Capstone Forex, Says Edelweiss CEO Rashesh Shah

Edelweiss Group chairman and CEO Rashesh Shah on Sunday, 12 January, said he has no relationship with Capstone Forex and all allegations of Fema violations against him were false.

“We appreciate that regulators and agencies have an obligation to investigate; if any information is sought from us, as a responsible corporate citizen, we will of course provide the same,” Shah said in a statement.

Shah said while it is unfortunate that he was unable to go in person to the Enforcement Directorate (ED), “our senior authorised representative did attend in person with the requisite information. Needless to say, if in the future any assistance or support to the investigation is requested from us, we will cooperate fully”.

(Source: Financial Express)

4. Govt to Help Firms Making Import Substitute Products: Nitin Gadkari

Union Minister Nitin Gadkari on Sunday said the Centre is formulating a scheme to encourage "import substitute products" in the manufacturing sector in order to save foreign exchange.

India has increased import tariffs or imposed duties by withdrawing exempt status of goods over the past few years to encourage local manufacturing.

"There are many industries which are working on import substitute products and saving the nation's money. The Central government is forming a scheme to encourage these industries," the Union minister for micro, small and medium enterprises (MSMEs) said.

(Source: The Economic Times)

5. Cement Prices Jump in January, but Sustainability Remains Crucial

The New Year began on a happy note for the Indian cement sector. Analysts’ channel checks suggested that cement producers have taken price hikes.

“Prices have increased by about Rs 10 per bag (3% up from last month) in most parts of the country (according to our channel checks) after declining by about Rs 30 per bag in the last six months," wrote analysts led by Amit Murarka of Motilal Oswal Financial Services Ltd in a report on 9 January. A cement bag weighs 50 kg.

From a demand perspective, the first half of the calendar year is seasonally better for cement companies. A Motilal Oswal study of cement price movement over the past 25 years shows strong seasonality, with prices rising by 7% on average in the first half of a calendar year, but declining by 2% in the second half.

(Source: Livemint)

6. Transparency Matters! SEBI Likely to Fine-Tune Disclosure Norms Soon

Capital market regulator Sebi is understood to be looking at better disclosures by companies after recent episodes where material information was not made available to exchanges and, in some instances, where developments reported to the bourses did not take place.

The regulator is believed to be taking a relook at the regulations under the ‘Listing Obligations and Disclosure Requirements’ and is understood to be working on guidelines that clearly define material and non-material events.

BSE MD & CEO Ashishkumar Chauhan confirmed to FE that discussions were on at various levels between the regulator, the government and the exchanges on the proposed nature, timing and the mode of disclosures. “There is a debate about what to disclose because any person can write anything. If you don’t disclose it’s a problem, if you disclose it’s even more of a problem. Because of social media, you tend to have consequences which are unintended,” he said.

(Source: Financial Express)

7. Industry Urges Centre to Formulate National Food Processing Policy

The food processing industry has urged the government to formulate a model National Food Processing Policy with the aim of increasing farmers’ incomes and strengthening the value-addition ecosystem for agri-produce in the country.

Currently, while some states have enacted their own food processing policies, others have integrated their food processing sector policy with their industrial policy.

According to the pre-Budget recommendations submitted to the Government by the food processing industry under the aegis of the Confederation of Indian Industries (CII), formulation of a comprehensive National Model Food Processing Policy for states to adopt will help capitalise on the diverse food production base and encourage investments in the sector. “The policy should lead to ease of doing business, alignment between the central and state policies and procedures, empowerment of farmers and overall growth of the sector,” CII added.

(Source: The Hindu Business Line)

8. PE Funds Raise Nearly $600 Billion in 2019

Private equity funds globally raised $595 billion in 2019, less than what they raised in the preceding two years, according to a report from Preqin, an alternative assets data tracker.

However, the fundraising in 2019 was the third highest ever, only surpassed by 2017 and 2018, when PE funds generated $628 billion each. The number of funds that raised their targeted corpus from their investors, however, fell for the third straight year, from 2,398 in 2017 to 1,790 in 2018 and 1,316 in 2019, indicating that investors are only willing to back select funds and showing an increasing average ticket size of a fund.

(Source: Livemint)

9. India is in Talks With Mongolia and Russia for Importing Coking Coal: Pradhan

Union Minister Dharmendra Pradhan has said India is in talks with Mongolia and Russia for importing coking coal to reduce dependence on few countries for supplies of the commodity.

The minister said the Centre is looking to import coking coal, a raw material for making steel, at a reasonable price as the country has set a target to produce 300 million tonne of the metal by 2030-31.

"India has been importing coal from Australia, which is good, but high-quality coking coal is also available in Mongolia. We are looking to bring that coal at a reasonable price. We are in talks with the Mongolian government," Pradhan said at a programme on Saturday, 11 January, evening.

(Source: The Economic Times)

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