Morning Scan: All the big stories to get you started for the day


Loans get costlier as banks pass on rate hike to borrowers

A day after the Reserve Bank of India raised the policy repurchase rate by half a percentage point, several commercial banks including ICICI Bank and Bank of Baroda raised their external benchmark-linked loan rates by an equal amount. HDFC, the country’s largest mortgage lender, also raised rates on housing loans by 0.5 percentage point, resulting in total increase of 0.85 percentage point since May 4.

Why it’s important: Lenders were expected to hike interest rates in line with Reserve Bank of India’s benchmark rate. Borrowing will now become costlier for both households and corporates.

Inflation may have cooled to 7.1% in May on favourable base

India’s retail inflation rate likely cooled to 7.1 percent in May from 7.8 percent in the preceding month largely because of a high base, according to a Mint poll of 24 economists. The government will release monthly data on Monday. Inflation jumped from 4.2 percent in April 2021 to 6.3 percent in May 2021, which is now set to create a favorable base effect. However, the sequential pickup remains high since a 7.1 percent annualized inflation rate implies a 1 percent monthly inflation rate.

Why it’s important: The estimate of consumer price rise is still much higher than the 6 percent upper tolerance limit of the Reserve Bank of India for the fifth month in a row. The increase is likely driven by costlier food, mainly edible oil and tomato.

Reliance and Apollo submit binding bids to buy Boots drugstores

Reliance Industries and Apollo Global Management has emerged as the frontrunner to acquire Walgreens Boots Alliance’s Boots pharmacies unit in the UK, valuing the assets in the range of $ 7-8 billion. They have put in binding bids that is fully backed by committed financing.

Why it’s important: If the deal goes through, it would be the last cr0ss-border acquisition by India’s most valuable company. The winning bidder could be picked within weeks.

Abu Dhabi to acquire 20% stake in IIFL Home Finance

Sovereign wealth fund Abu Dhabi Investment Authority will buy a 20 percent stake in IIFL Home Finance for Rs 2,200 crore, valuing the mortgage lender at Rs 11,000 crore . IIFL Home Finance, a wholly owned subsidiary of IIFL Finance, proposes to use the additional capital to continue expanding into new markets to meet the growing demand for housing loans.

Why it’s important: The purchase will be the largest equity investment in India’s affordable housing finance segment by a financial investor. It comes at a time when housing loans have become costlier.

E-commerce discounts return on electronic goods on slowing sales

Discounts on consumer electronics have returned on e-commerce platforms after a gap of two years as sales of televisions, smartphones and refrigerators have slowed down. Discounts have made a comeback and will continue till the festive season since brands have to create demand and grow their business.

Why it’s important: While pent-up demand in bigger cities has been exhausted and consumers have diverted expenditure to travel and dining out, high inflationary pressure has eaten away discretionary spendings by consumers in smaller towns and rural areas.

Monsoon set to advance further, rainfall deficit 42% in June first week

There is no delay in the southwest monsoon, and it will advance further into peninsular India, likely reaching Mumbai in the next four days, the India Meteorological Department has predicted. Monsoon rainfall was 42 percent below average during June 1-8, the weather bureau said.

Why it’s important: A good monsoon is crucial for India’s slowing economic recovery after the Covid-19 pandemic as a good cropping season would boost rural demand.

Coal India floats import tender to bolster inventory at power plants

Coal India floated an international tender for the import of 2. 4 million tons of coal to build up stocks. Power plants have coal inventory to last only for nine days, despite the state-owned miner extracting the mineral Coal at faster rates.

Why it’s important: An unusually early and hot summer has seen the country’s power demand smash new records. India’s power production is still heavily dependent on coal, which is why there’s a scramble to import more of it to keep fans and ACs running.

Private networks to make 5G service unviable, telecom operators say

The Cellular Operators Association of India, which has Bharti Airtel, Reliance Jio and Vodafone Idea as members, has told the government there is no reason for its members to roll out 5G networks as they will be unviable if captive private wireless networks are allowed to be run by enterprises. Permitting captive networks will diminish the revenue so much that there will be no viable business case left for the telecom service providers, the lobby group said.

Why it’s important: The government may allow technology companies to bid for 5G spectrum, as suggested by the telecom regulator. The strong opposition by current operators could delay the rollout of 5G service in the country.

Yes Bank in talks to raise Rs 10,000 crore to restructure business

The new board of Yes Bank will decide on a capital raising plan that the private lender has been considering since last year, according to outgoing chairman Sunil Mehta. The board has initiated talks with potential investors to raise Rs 100 billion as part of the restructuring scheme.

Why it’s important: The private lender has been in trouble due to the high proportion of bad loans in its books. It now intends form a new asset reconstruction company by September.

Issues come to fore on linking UPI network with credit cards

The central bank’s move to open credit card transactions on the UPI digital payment network is throwing up a new set of challenges from lack of clarity on merchant discount rates to confusion on merchant authentication and know-your-customer norms, fintech executives and bankers said.

Why it’s important: The inclusion of credit cards in the UPI network will dramatically expand the market for digital payments powered by 30-day interest-free credit.