Reserve Bank to roll out digital currency for wholesale businesses
The Reserve Bank of India is likely to introduce its Central Bank Digital Currency this financial year in a phased manner, initially for use only by wholesale businesses. The currency is being is designed in a way that leaves no room for anonymity by users. The CBDC will be introduced for retail segments after the central bank examines its usage among wholesale businesses.
Why it’s important: The digital currency with sovereign backing will provide a massive boost to India’s digital economy. It differs from other cryptocurrencies because it comes with a government guarantee.
No plans to introduce charges on UPI transactions, finance ministry clarifies
The Finance Ministry has said that the United Payments Interface is a digital public good and there is no consideration in the government to levy any charges on this. “UPI is a digital public good with immense convenience for the public & productivity gains for the economy. There is no consideration in Govt to levy any charges for UPI services. The concerns of the service providers for cost recovery have to be met through other means,” the finance ministry said in a tweet.
Why it’s important: The clarification will lay to rest fears that UPI payments may attract differential charges based on transaction amounts, a possibility explored in a discussion paper of the Reserve Bank.
Market regulator to expand disclosure rules for QIP fundraising
The Securities and Exchange Board of India is mulling exhaustive disclosure requirements for companies wanting to raise funds through qualified institutional placements. The higher disclosure requirements would be on the use of the proceeds of the fundraising, which is not required currently.
Why it’s important: The main benefit of QIPs is that it allows listed entities to quickly raise capital by selling shares and debentures to institutional investors without lengthy paperwork. Broader disclosure norms could erode that flexibility.
False M&A disclosures to cost companies plenty, antitrust regulator says
Companies making incomplete or false disclosures to the Competition Commission of India will face higher penalties, chairperson Ashok Kumar Gupta said in an interview. The provisions in the Competition (Amendment) Bill, 2022, which is being reviewed by a parliamentary standing committee, will ensure faster approval of mergers and acquisitions, and will work on a trust-based system, he said.
Why it’s important: With more trust comes more responsibility. If the competition law allows more faster M&As that reduce costs and enhance efficiency, it’s only reasonable to expect that those who exploit the trust should face the consequences.
Reliance files contempt plea against market regulator in share allotment case
Reliance Industries has filed a contempt plea against the Securities and Exchange Board of India before the Supreme Court, alleging willful disobedience on to an order of the court that directed the regulator to give Reliance access to certain documents in a two-decade-old stock allotment case.
Why it’s important: The plea comes at a time when Sebi is preparing for a review petition on the apex court order. This could protract the legal battle unless the Supreme Court puts an end to it swiftly.
Russian banks in talks with Indian lenders to facilitate bilateral business
Over 15 Russian banks are in advanced talks with Indian banks to facilitate bilateral business in their respective local currencies. This will bypass the trade mechanism tied to the US dollar. They are working on building a reference exchange-rate framework between the rupee and the rouble to do this.
Why it’s important: Rupee-denominated trade with Russia will make for cheaper crude oil imports while enabling Russia to soften the impact of Western sanctions. Smaller Indian banks could also use this an opportunity to expand operations in Russia.
Banks to use own discretion in settling international trade in rupees
The central government has told banks that they can exercise their commercial discretion and not deal with sanctioned entities, particularly in Russia, while settling international trade in rupees. The banks had reached out to the government and the Reserve Bank of India on concerns that the rupee trade mechanism could lead to economic sanctions on them by Western nations.
Why it’s important: Indian banks could be impacted if balances in nostro accounts — those that a lender holds in foreign currency in another bank — are frozen. They should facilitate only those transactions that do not lead to such consequences.
Consumer goods firms reduce prices on reduced input costs ahead of festive season
Consumer goods makers have started to slash prices of products such as TVs, laptops, smartphones, apparel and some daily necessities like biscuits and staples to pass on the benefits of a fall in input costs in the past few weeks.
Why it’s important: After continuous price hikes during the pandemic, the softer prices ahead of the festive season could revive consumer demand in the country. Consumer budgets remain stressed due to squeezed earnings and high inflation, and cheaper goods would encourage sales.
Sufficient wheat stocks mean no need for imports, government says
There is no plan to import wheat as India has sufficient stocks of the grain, the government has clarified. India’s wheat reserves have shrunk in August to the lowest for the month in 14 years, while wheat inflation is close to 12 percent. Wheat prices for consumers rose 11.7 percent in July, according to official data.
Why it’s important: There has been speculation that the government may slash import levies on wheat to cool domestic prices that have risen since war broke out in Ukraine. There is currently a ban on wheat exports.
Larsen & Toubro plans $ 2.5 billion investment in green energy
Engineering company Larsen & Toubro has prepared a plan that will help it capitalize on emerging opportunities in clean and green energy. The blueprint includes a $ 2.5-billion investment (Rs 20,000 crore) in green energy, including green hydrogen, over the next 3-4 years, as well as tapping the entire value chain in the ecofriendly energy sector.
Why it’s important: Energy transition plans to combat climate change has begun in real earnest in India. It is seeing significant interest from conglomerates such as Reliance and Adani. Many other are joining the bandwagon.
