Economy News-Daily Digest: 8 Key updates
1. Flipkart gets $2.5 bn from SoftBank Vision Fund for 20% stake
Flipkart has raised an estimated $2.5 billion from SoftBank Vision Fund. With this the Japanese bank would become one of the biggest shareholders in Flipkart.
This is the biggest ever private investment in an Indian technology company. SoftBank Vision Fund will get about 20% stake in Flipkart.
2. RBI gets teeth to tackle NPAs
Parliament has given its stamp of approval for the Banking Regulation (Amendment) Bill. The bill will replace the NPA ordinance and provide powers to the RBI for dealing with the NPA mess in the banking system.
The Bill will now go in for Presidential assent.
As the Ordinance paves way for an Act, the RBI can issue directions to any banking company or companies to effectively use the provisions of the Insolvency and Bankruptcy Code, 2016 for timely resolution NPAs.
3. New NSSO survey to give govt a fix on e-comm activities
The government is for the first time trying to understand India’s booming e-commerce market through a new survey and data available through the Goods and Services Tax.
In its latest 74th round survey, the National Sample Survey Organisation (NSSO) is asking the consumers if they have used e-commerce websites. The first results of the survey, which will cover the entire country, are likely to be released in late 2018.
4. Union Bank board clears induction of Dai-ichi Life arm as partner in AMC
The board of directors of Union Bank of India gave ‘in-principle’ approval to induct Dai-ichi Life Holdings’ group company Asset Management One Company as a strategic partner in Union Asset Management Company Pvt Ltd (Union AMC). It will own 40% stake in Union AMC. Union AMC is currently a wholly-owned subsidiary of Union Bank of India (UBI).
Dai-ichi Life Insurance has a three-way life insurance joint venture with Bank of India and UBI. Dai-ichi Life Insurance holds 45.94 stake in Star Union Dai-ichi Life Insurance, BoI and UBI hold 28.96% and 25.10% stakes, respectively.
5. HCC bags ₹810-cr order for hydro power plant in Kashmir
Infrastructure major Hindustan Construction Company has bagged an EPC contract worth Rs. 810 crore from Jammu & Kashmir State Power Development Corporation Ltd (JKSPDCL) for constructing a 93-MW hydro power plant on Sind River in Central Kashmir. The project is to be completed in 48 months.
6. CA Institute sets up Digital Accounting and Assurance Board
The CA Institute constituted a ‘Digital Accounting and Assurance Board’ to foster a cohesive global strategy on aspects related to digital accounting and assurance. DAAB will identify, deliberate and highlight issues in accounting (including valuation) and assurance (including internal audit) in the digital world.
7. RBI issues rules for tri-party repo contracts
The Reserve Bank of India (RBI) issued norms for tri-party repo contracts, including Rs 25 crore as minimum equity capital for an entity to work as a tri-party agent.
Tri-party repo is a type of repo contract where a third entity called a tri-party agent acts as an intermediary between the two parties. This third-party agent is besides the borrower and lender. The services include activities such as collateral selection, payment and settlement, custody and management during the life of the transaction.
Introduction of tri-party repos will likely contribute to better liquidity in the corporate bond repo market. This will provide markets an alternate repo instrument to government securities repo.
The tri-party repo may be traded using any trading process permitted by the central bank. Tri-party repo may be traded over-the-counter (OTC), including on electronic platforms, or stock exchanges. All trades would have to be reported within 15 minutes of the trade for public dissemination to the Clearing Corporation of India, exchanges or authorised reporting platform.
All tri-party agents need a prior nod from the RBI to act in that capacity. The tri-party agents can be Scheduled commercial banks, recognised stock exchanges and clearing corporations of stock exchanges.
8. Demonetisation effect: RBI’s dividend to govt halves to Rs 30,659 crore
The Reserve Bank of India (RBI) will transfer Rs 30,659 crore for the financial year 2016-17 as a part of its surplus transfer to the government. This is less than half of the Rs 65,876 crore it transferred last year. The dividend for the year 2016-17 is the lowest since 2011-12 During 2011-12, the RBI had transferred Rs 16,010 crore of its surplus to the government. The RBI’s financial year is from July to June.
Though the RBI did not give any reason for the decline in dividend but economists are of opinion that the decline was due to the cost incurred by the RBI in printing new notes as well as in sterilising liquidity after demonetisation.
In 2012-13, the YH Malegam Committee recommended the central bank transfer its entire surplus to the government. The RBI has been transferring its entire surplus to the government since then. It paid Rs 52,679 crore in 2013-14 and Rs 65,896 crore in 2014-15.