Current account deficit balloons to record $ 36.4 in September quarter
India’s current account deficit in the fiscal second quarter rose to its highest since the taper tantrum of 2013 at 4.4 per cent of gross domestic product. The country’s current account balance recorded a deficit of $ 36.4 billion in the September quarter, up from $ 18. 2 billion, or 2.2 per cent of the GDP in the fiscal first quarter, Reserve Bank of India data showed. The deficit was at $ 9.7 billion, or 1.3 per cent of the GDP, a year ago. A deficit in merchandise trade was responsible for the doubling in a quarter.
Why it’s important: Although such a high current account deficit is undesirable, experts said healthy economic underpinnings and robust forex reserves will help India withstand the external imbalances.
Net bad loans ratio of India’s commercial banks sinks to a 10-year low
The rise in profitability that helped banks to improve provisions has resulted in net non-performing assets to net advances ratio falling to 1.3 per cent in September 2022, which is the lowest in 10 years, the Reserve Bank of India’s Financial Stability Report said. Net NPAs were at similar levels back in March 2012. As of end-September, net NPAs of private banks had fallen to 0.8 per cent, as against 1.8 per cent for public sector banks. Gross non-performing assets also continued their downward trend to reach 5 per cent at the end of September to a seven-year low.
Why it’s important: The significant improvement in the ratio shows that that banks are now capable of absorbing economic shocks even without any fresh infusion of capital. Resilience is back in Indian banking.
Economy is resilient and Reserve Bank ready to defend financial stability, says governor
The Reserve Bank of India is cognizant of global challenges could affect the domestic economy and is monitoring the situation along with other financial regulators, governor Shaktikanta Das said. “The international economic order stands challenged; financial markets are in turmoil due to monetary tightening in most parts of the world; food and energy supplies and prices are under strain; debt distress is staring at many emerging markets and developing economies; and every economy is grappling with multiple challenges,” Das said. The Indian economy is a picture of resilience amid such challenges, he said.
Why it’s important: Banks have held up well under the RBI’s stress test. A confident stance by the central bank will further help settle down jitters.
Fundraising through QIPs, rights issues declines to six-year low
Equity fundraising through qualified institutional placements and rights issues fell to the lowest since 2016 due to a cloudy market environment and a lack of need for growth capital. In 2022, companies raised Rs 11,743 crore and Rs 4,052 crore through QIPs and rights issues, respectively.
Why it’s important: Volatile stock markets made it difficult to price QIPs. Muted demand outlook also lowered the need for funds for capital spending.
Ujjivan Small Finance Bank finds stability, to look for new CEO
After a spate of exits and churn at the top management level last year, Ujjivan Small Finance Bank has found stability, as the regulator recently approved extending managing director and chief executive Ittira Davis’ term for another two years. Samit Ghosh, founder of the bank, has said the lender would soon start looking for a new CEO, and the criteria will be that the applicants need to be aligned with the purpose of the lender.
Why it’s important: The lender intends to grow carefully calibrate its growth in different parts of the country and a new leadership could help it doing that.
Lenders to Srei to hold challenge auction to select winner among bidders
Lenders to the twin Kolkata-based Srei companies will hold a challenge auction on January 3 to identify the highest bidder among the three contenders — Arena Investors-Varde Partners, National Asset Reconstruction Company, and Authum Investment & Infrastructure. Lenders have set a threshold value of Rs 3,000 crore as upfront payment, the minimum a resolution applicant must pay to be in the fray, according to a note issued by the lenders.
Why it’s important: The lenders are trying to recover as much money as they can. They have also reserved the right to negotiate for an improved offer even with those bidders that have submitted a bid.
Marion Biotech stops making cough syrup after complaints from Uzbekistan
Marion Biotech, whose cough syrup is under the scanner for allegedly causing the death of 18 children in Uzbekistan, has said that it has stopped production of the brand pending investigation by the country’s drugs regulator. The Drugs Controller General of India has started a probe in connection with the incident, and health minister Mansukh Mandaviya has said further action would be taken based on an inspection of Marion Biotech’s facilities in Noida on the outskirts of Delhi.
Why it’s important: India’s image as the world pharmacy has taken a beating due to recent deaths in Gambia and Uzbekistan linked to drugs exported by Indian firms. Authorities must tighten oversight to ensure quality standards.
India’s import of Russian crude oil set to increase after Moscow ban
Russia’s decision to ban oil exports to Western buyers supporting a price cap will likely boost Indian imports of Russian crude. West nations, which have insisted on a strict price cap on supplies from Moscow, have already imposed a ban on the bulk of Russian crude exports. Some residual volumes still being imported into Europe via pipelines could now be affected by the latest Kremlin move. This could leave Russia with surplus crude oil volumes, something Moscow may want India and China to absorb.
Why it’s important: India has been able to soften the recent oil price shock due to cheaper imports from Russia. Additional availability from that country will be seen as another opportunity to keep oil bills low.
Most app developers do not pay commission to Apple and Google stores
Only 0.08 per cent, or just 17 of the 21,000 Indian apps live on Apple Store pay 30 per cent commission to the company. The majority (87 per cent) do not pay any commission, according to Apple executives who deposed before a parliamentary standing committee on finance. Google told the committee that only 3 per cent of Indian developers on its Play Store paid a service fee. The remaining 97 per cent distribute their apps on the Play Store and utilize all the developer tools and services at no cost.
Why it’s important: The tech giants are rushing to assure Indian policymakers that their practices are not anti-competitive. It will take a lot of convincing.
Central government to offload hydropower projects in Arunachal Pradesh
With several hydropower projects in Arunachal Pradesh remaining stalled, the central government has identified around 10 to be taken over by state-run power developers. Tripartite agreements will soon be signed between the public sector units, the government of Arunachal Pradesh and the independent power developers originally awarded the projects.
Why it’s important: The plan is to take over the stalled projects and allow an exit for companies that have invested and want their money back through a litigation-free settlement.
