General Awareness

BUSINESS AND ECONOMY - February 2017

Feb 2017

Mar 09, 2019

Savings Account, Short Term Loan Rates Linked to Repo Rate

In a first of its kind, State Bank of India has decided to link the interest rate paid on savings bank balance of over Rs. 1 lakh to the repo rate, the key policy rate set by Reserve Bank of India.
Also, the bank will link cash credit accounts and overdrafts, with limits above Rs. 1 lakh, to the repo rate. The new system will come into effect from May 1.
The move comes ahead of the April 1 deadline for banks to link the lending rate to the external benchmark which is aimed at increasing the effectiveness of monetary transmission.
Most banks are likely to link their lending rates to the repo rate.

Stake Sale Papers Given to IRDAI

City-based Star Health & Allied Insurance Company Ltd. has asserted that papers related to stake sale have been submitted to the Insurance Regulatory and Development Authority of India (IRDAI).
Sometime ago, Safecrop Holdings Pvt. Ltd., a consortium comprising WestBridge AIF, Rakesh Jhunjhunwala and Madison Capital, signed definitive agreements with the shareholders buy out their shares in Star Health.
Existing shareholders of Star Health include Star Health Investments Pvt. Ltd. and funds managed or advised by ICICI Venture, Tata Capital and Apis Partners.
The deal size was reported to be about $1 billion.

RIL-JM Financial Bid Gets Nod

The National Company Law Tribunal (NCLT) gave the green light to a Rs. 5,050-crore joint bid by Reliance Industries Ltd. (RIL) and JM Financial Asset Reconstruction Company to acquire debt-ridden textile manufacturer Alok Industries.
In July 2017, the Ahmedabad bench of the NCLT had admitted insolvency proceedings against the textile company under the Insolvency and Bankruptcy Code (IBC).
According to the details of the case, Alok Industries owed its lenders Rs. 29,500 crore and was taken to NCLT under the newly-instituted IBC.
The Committee of Creditors (CoC) had rejected the RIL-JM Financial bid for Alok Industries twice earlier.
Alok Industries is one of the first 12 corporate NPA accounts in which the corporate insolvency resolution process (CIRP) was initiated by the authorities under the IBC following the RBI's direction.

Mar 08, 2019

Government to Come Out with Rs. 20 Coins

The Government will come out with the first-ever Rs. 20 coin, which will be shaped like a 12-edged polygon with design of grains. A new series of one, two, five and ten-rupee coins too would be minted, with denominations written in the Hindi script. The exact date of issuance of these new series coins is yet to be announced.

Volkswagen India to Deposit Rs. 500 crore

The National Green Tribunal (NGT) directed Volkswagen India to deposit a sum of Rs. 500 crore with the Central Pollution Control Board (CPCB) within two months for using cheat devices in its diesel vehicles.
A bench headed by NGT Chairperson Justice Adarsh Kumar Goel enhanced the compensation amount of Rs. 171 crore, which was recommended by an NGT-appointed committee, as a means of "creating deterrence.

Renewable Status for Large Hydro Power Projects

To boost hydro power generation, the government approved a slew of measures including providing renewable energy status for large hydro projects and new funding provisions.
Earlier, hydro projects up to 25 MW capacity were considered as renewables and were eligible for various incentives like financial assistance and cheaper credit.
With the government's decision, hydro projects above 25 MW can also avail the benefits.
The Cabinet decision has also paved the way for adding hydro capacities of about 45 GW to the renewable energy basket of existing 74 GW which includes solar, wind and small hydro.

The Fastest Billionaire Population Growth

According to a report released by Knight Frank LLP, the number of Asian billionaires will rise by 27 per cent to 1,003 between 2018 and 2023, making up more than a third of the world's total billionaire population of 2,696. The billionaire population growth rates for North America and Europe are 17 per cent and 18 per cent respectively.
Asia will see the fastest billionaire population growth in the world over the next four years, despite economic uncertainties in the region triggered by the China-US trade war.
Asia will also see the biggest increase in ultra-high net worth individuals (people with net assets of $30 million or more). India leads the world with an expected 39 per cent surge, followed by the Philippines and China.

Income Tax Exemption Limit on Gratuity Doubled

As per the Labour Ministry, the income tax exemption limit on gratuity has been doubled to Rs. 20 lakh from the existing Rs. 10 lakh. This move will benefit employees who are not covered by the Payment of Gratuity Act, 1972.

Notifications on GST Exemption Limit

These notifications shall come into effect from the 1st of April, 2019. The decisions were announced on January 10 after the GST Council's 32nd meeting.
The government issued three notifications to implement a slew of concessions for small businesses, including doubling of Goods and Services Tax (GST) exemption limit to Rs. 40 lakh. The move is expected to benefit an additional two million micro, small and medium enterprises (MSMEs), a key political constituency, ahead of the crucial general elections.
According to the changed rules, state governments would opt for one of the two threshold limits for MSMEs: Rs 40 lakh and Rs 20 lakh. MSMEs having a turnover above these limits would be mandatorily required to get the GST registration for suppliers of goods.

New Coal Linkage Rules

The Cabinet Committee on Economic Affairs approved new rules that will provide greater coal availability to stressed thermal power projects, based on the recommendations of the Group of Ministers constituted to look into the issue. One of the reasons for the stress was the [non] availability of coal and that thermal projects without medium to long-term power purchase agreements would not get coal supply.

Mar 07, 2019

Wind Energy Capacity Expansion to Slow

According to a report by Crisil, capacity addition in the wind energy sector will slow down over fiscal 2019 to 2023, with only 14-16 GW being added due to a decline in bid responses and profitability of original equipment manufacturers.
Crisil Research expects capacity addition to grow slowly over the next five years, driven by the allotment of central transmission utility's (CTU) grid connected capacities.
The shift to a competitive bidding mechanism has slowed industry growth due to a significant fall in tariffs, triggering a decline in both bid response and profitability for original equipment manufacturers (OEMs).

Sterlite Plant to Reopen

As per reports, Vedanta Ltd. legal processes are in progress through state courts for reopening the Sterlite Copper plant in Tuticorin.
The Tamil Nadu government had, in May 2018, ordered the State pollution control board to seal and permanently close the mining group's copper plant following violent protests over pollution concerns.

Grasim Buys Soktas

Grasim Industries signed a definitive agreement to acquire 100% equity shareholding of Soktas India Private Limited (SIPL) from its promoters for an enterprise value of Rs. 165 crore, subject to net debt and working capital adjustments as of the closing date.
SIPL is into manufacturing and distribution of premium cotton fabrics with a manufacturing facility at Kolhapur in Maharashtra.

Venezuela Crisis Worsens

According to UN human rights chief Michelle Bachelet, sanctions have worsened Venezuela's crippling economic and political crisis, as Washington warned it may expand measures targeting President Maduro's government.

Mar 06, 2019

Bid for Rajkot Airport

Anil Ambani led Reliance Infrastructure Limited has received the Letter of Award from the Airports Authority of India (AAI) for a Rs. 648-crore contract for the construction of greenfield airport at Hirasar in Rajkot district of Gujarat.
The company had participated in the tender for engineering, procurement and construction (EPC) contract independently as the main contractor.
Reliance Infrastructure had scored the highest technical score of 92.2% among nine qualified bidders like Afcons and L&T.
Work on the airport is to be completed within 30 months from the date of issue of the award.

China Targets 6 to 6.5% Growth

China set an economic growth target of 6%-6.5% for 2019, after factoring in a slew of headwinds, including the trade war with the U.S., and financial bottlenecks for its private enterprises.
The growth rate estimate, which was lower than last year's projection of about 6.5%, was revealed in the government work report, which was delivered by Prime Minister Li Keqiang during the opening session of the National People's Congress (NPC) — China's Parliament.

India Downplays Impact of U.S. GSP Withdrawal

The Indian government downplayed the effect of the U.S. decision to withdraw trade concessions granted to India under the Generalised System of Preferences (GSP).
According to Commerce Secretary Anup Wadhawan, the impact would amount to only $190 million on the value of $5.6 billion in exports to the U.S. that fall under the GSP category.
The government would continue to talk to the U.S. during the 60-day period after which the GSP withdrawal would come into effect.
The U.S. Trade Representative office said that it had decided to withdraw the GSP status for India and Turkey at the direction of U.S. President Donald Trump following India's failure to provide the United States with assurances that it will provide equitable and reasonable access to its markets in numerous sectors.

Higher Capital Adequacy for HFCs

To improve solvency of housing finance companies, the regulator, National Housing Bank (NHB), has proposed to increase capital adequacy ratio to 15% in a phased manner.
The proposed norms are being issued in the wake of liquidity problems being faced by housing finance companies (HFCs) after Infrastructure Leasing and Financial Services crisis.
As per the road map outlined by the National Housing Bank , HFCs have to increase minimum capital adequacy ratio (CAR) to 13% by March 31, 2020, 14% by March 31, 2021 and 15% by March 31, 2022.

Bid to Privatise Ground Handling Delayed

Concerns over high royalties quoted by bidders for ground handling services at 76 airports owned by the Airports Authority of India (AAI) have delayed the announcement of the outcome of the bidding process.
Several ground handling agencies, including Celebi, Bhadra and the Bird Group, had earlier voiced concerns over royalties as high as 227% being quoted by certain bidders when the AAI opened the bids for the airports in December 2018.

Mar 05, 2019

Banks Fined for Delayed SWIFT Implementation

The Reserve Bank of India has imposed a penalty of Rs. 4 crore on Karnataka Bank, Rs. 3 crore on City Union Bank, Rs. 2 crore on DCB Bank and Rs. 1 crore on Karur Vysya Bank Ltd. for delayed implementation of SWIFT-related operational controls.
Besides these four banks, the RBI has also fined Indian Bank (Rs. 4 crore), IOB (Rs. 3 crore) and United Bank of India (Rs. 3 crore) for the same violations.
SWIFT is the global messaging software used for transactions by financial entities.

GMR Hyderabad International Airport Divests Stake

GMR Infrastructure said that its subsidiary GMR Hyderabad International Airport Ltd. (GHIAL) has fully divested its stake in its flight training arm to a third party for a token consideration.
GHIAL has divested its 100% stake in its subsidiary namely Asia Pacific Flight Training Academy Ltd (APFTAL) to a third party, for a token consideration.

Service for Fast Vehicle Claim Settlement

Private insurer Bharti AXA General Insurance has introduced a service that allows customers and partner garages to raise instant vehicle claims and get quicker claim settlements.
The insurance firm is aiming to process 20-25% of its total vehicle insurance claims in the first year through the service, Smart eSurvey, a live streaming solution for processing motor insurance claims.

Central Bank of India to Sell NPAs

State-run lender Central Bank of India has decided to sell non-performing assets (NPAs) worth Rs. 3,300 crore to asset reconstruction companies and other financial institutions.
The NPAs include Essar Steel, Bhushan Power and Steel, Alok Industries and Bombay Rayon Fashions.
According to the bid document, Bhushan Power and Steel has an outstanding of Rs. 1,550.07 crore while Alok Industries owes Rs. 1,251 crore. Essar Steel India outstanding is Rs. 423.61 crore while that of Bombay Rayon Fashions Rs. 96.30 crore.
The e-auction of all these accounts would take place later in March.

Umatara Exploration Contract

Hindustan Oil Exploration Company (HOEC), in collaboration with Indian Oil Corporation (IOC), has been awarded the contract for exploring Umatara field in Assam under the Discovered Small Field Policy Bid Round II.
A formal revenue-sharing contract is expected to be executed with the Centre later in March.
Participating interest of HOEC in the block will be 10% and IOC 90%. The field will be jointly operated and developed by both firms.
Umatara becomes the fifth block in HOEC's portfolio of northeast blocks, joining Dirok, Kherem, Kharsang and Greater Dirok.

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