dfa-15-sep

Daily Financial News Analysis – 15th Sep’20 – Free PDF Download

 

Veli Band

  • Veli Band – wearable device that alarms proximity for helping implement social distancing norms.
  • Qual5 India Pvt. Ltd, a startup co-founded by woman entrepreneur Kiranmayee.
  • The start up was mentored and funded by Indian Institute of Management, Kozhikode’s business incubator and entrepreneurship development center.
  • Veli Band helps implement social distancing and location and contact tracing which can help organizations comply with social distancing norms during the current pandemic situation.
  • Veli Band momentarily vibrates, sounds buzzer, and flashes LED simultaneously to notify wearers that another band is within 3 feet.
  • Veli band is omni directional, comes with a rechargeable battery and uses Bluetooth Low Energy technology for detection.

FM Seeks Nod for ₹2.36L Cr Extra Spend

  • The government will infuse ₹20,000 crore in state-run banks through bonds in this financial year and spend an additional ₹1.67 lakh crore in the year that will largely cover the Covid-19 relief measures announced earlier.
  • Finance minister Nirmala Sitharaman on Monday sought Parliament’s approval for gross additional expenditure of ₹2.36 lakh crore, presenting the first batch of supplementary demands for 2020-21 on the opening day of the monsoon session.
  • The net cash outgo is ₹1.67 lakh crore while balance ₹69,000 crore will come from the savings of ministries or departments or enhanced recovery or receipts.
  • The government said the recapitalisation of banks will be through issue of securities and likely cover Covid-19 related stress for some banks.
  • In July, Reserve Bank of India (RBI) governor Shaktikanta Das had said that bank recapitalisation was necessary and asked lenders to raise money in advance to build resilience in the financial system.
  • According to the RBI’s financial stability report, the gross non-performing asset ratio of public banks could increase to 15.2 % by March next year from 11.3% a year ago.
  • The government will also issue Rs 6,122 crore worth government securities to IMF towards its quota.
  • The big items of additional spending are ₹40,000 crore for the rural employment scheme MGNREGA, ₹31,000 crore for direct benefit transfer to rural women, ₹16,000 crore for price stabilisation fund and food subsidy and ₹46,602 crore as deficit grant to states.
  • The health ministry will get additional ₹14,000 crore, most of which will fund pandemic related expenditure.
  • Many of these additional expenditures were announced as part of the ‘AtmanirbharCovid-19 relief package.
  • Pradhan Mantri Garib Kalyan Yojana gets ₹4,860 crore.

Govt Introduces Banking Regulation (Amendment) Bill

  • Finance minister Nirmala Sitharaman on Monday introduced the Banking Regulation (Amendment) Bill, 2020, which seeks to allow the Reserve Bank of India to restructure or merge a struggling lender without first freezing or limiting withdrawals by depositors.
  • The bill also seeks to bring about 1,540 cooperative banks with 86 million depositors under the purview of the Banking Regulation Act, 1949.
  • The bill replaces an ordinance promulgated on June 26 to bring urban and multi-state cooperative banks and empower the RBI.
  • The banking regulator has had to restrict withdrawals and lending before undertaking steps towards restructuring or amalgamation.
  • The government sought to withdraw a bill introduced earlier as changes made in the Banking Regulation Act via the ordinance also had to be incorporated.
  • This included the provision enabling the RBI to make a scheme for restructuring a bank without imposing a moratorium on withdrawal of deposits, Sitharaman said.
  • She cited the case of Punjab and Maharashtra Cooperative Bank where depositors were unable to withdraw their money beyond a certain extent for months as RBI had to impose a moratorium in September last year due to a NPA crisis.
  • Opposition members including Congress’ Shashi Tharoor and Saugata Roy of the Trinamool Congress opposed the bill, accusing the Centre of encroaching on the rights of states.

Inflation

  • India’s retail inflation cooled marginally to 6.69% in August.
  • Though it stayed well above the 6% outer band of the central bank’s inflation target, likely ruling out the possibility of a near-term rate cut.
  • The rate of inflation – as measured by the Consumer Price Index (CPI) — was 6.73% in July.
  • It stood at 3.28% in August 2019.
  • The Reserve Bank of India’s monetary policy committee (MPC) had left the repo rate – the rate at which it lends to banks — unchanged at 4% in its last review meeting in August.
  • Food inflation, led by vegetables, pulses, oils, and meat & fish, was 9.05% last month, lower than 9.27% in July.
  • Urban inflation at 6.8% was above the national average but also higher than 6.66% registered in rural areas in the past month.
  • Separately, released data by the commerce and industry ministry showed that India’s wholesale inflation turned positive in August for the first time since March, reflecting a recovery in producers’ pricing power.

 

 

 

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