dfa-23-oct

Daily Financial News Analysis – 23rd Oct’20 – Free PDF Download

New Card Users Rule

  • Jan 2020 – RBI circular – all new debit and credit cards issued after March 2020 will have online payments, contactless and overseas transactions disabled “by default”.
  • The deadline for implementation was subsequently extended to September due to the pandemic.
  • The banks were asked to provide a toggle-based option on their respective banking apps for customers to then personalise their preference based on their risk appetite.
  • The customers can enable these features by calling their banks directly as well.
  • The Payments Council of India (PCI) and global fintech giants Visa and Mastercard are planning to approach the Reserve Bank of India to seek relaxation on this order by RBI.
  • The digital payments industry is of the view that the new rules, introduced from October by the central bank to improve security, could inadvertently lead to high rates of transaction failures, impacting customer confidence in the channel.
  • PCI spokesperson said that the idea is to work with the regulator to improve customer confidence in the channel as complex rules for first-time users entering the digital ecosystem could limit their adoption.

Digital Pay SROs

  • The Reserve Bank of India has finalised the guidelines for setting up SELF-REGULATORY-ORGANISATIONS (SROs) for digital payments in India.
  • The proposed body would be a not-for-profit entity, akin to industry associations such as Indian Banks Association (IBA) or Mfin.
  • The role of such an SRO would include liaisoning between stakeholders and regulators to ensure efficient communication, improving standards and imposing regulatory codes for the industry.
  • “An SRO is a non-governmental organisation that sets and enforces rules and standards relating to the conduct of member entities in the industry, with the aim of protecting the customer and promoting ethical and professional standards,” the central bank said.
  • “The SRO is expected to resolve disputes among its members internally through mutually accepted processes to ensure that members operate in a disciplined environment and even accept penal actions by the SRO,” it added.
  • Meanwhile, industry bodies such as Business Correspondents Federation of India and Payment Council of India are learnt to be in the process of applying for a licence under the framework.

Vi Dials US Credit Funds

  • Vodafone Idea (Vi) has dialled top US credit funds to garner a sizable chunk of the ₹25,000 crore ($3.4 billion) it plans to raise to upgrade its network and meet adjusted gross revenue (AGR) liabilities.
  • The company has held initial discussions with Oak Hill Advisors, Marathon Asset Management, Spectrum Asset Management, Anchorage Capital and Providence Investment Management.
  • The funding structure, based on a risk assessment after consulting Vi’s shareholders and lenders, could include stiff conditions.
  • These may include having a say in Vi’s management or having board-level participation, given the lossmaking telco’s stressed financial state and highly leveraged balance sheet.
  • The final contours are not yet finalised.

Unilever

  • Unilever said it’s “over the hump in India,” citing the business revival in the Anglo-Dutch consumer goods company’s second-largest market.
  • Unilever – There’s been a pickup in economic activity and the marketplace in India after a very strong lockdown in the first half.

Trade Facilitation Agreement

  • The agreement is a global protocol that has articles covering provisions such as information availability and publication, advance rulings, review procedures, customs cooperation and exportation-importation of goods, and seeks to reduce the cost of global trade.
  • The benefits are pegged at over a trillion dollars.
  • It is part of the WTO’s Bali ministerial package of 2013.
  • India has opposed binding commitments on countries to put in place practices for faster clearances of cross-border merchandise.
  • US, Brazil, Colombia and Japan urging the World Trade Organization (WTO) members to speed up implementation of the agreement.
  • These nations have argued that trade is a critical channel for getting essential products to those in need amid the Covid-19 pandemic.
  • New Delhi has said that countries should not be saddled with binding commitments as they are best placed to determine when to implement them.
  • India told the WTO members that it has implemented several of its TFA commitments ahead of the originally scheduled dates and that it has now put into place more than 73% of its commitments.

Employment

  • Centre for Monitoring Indian Economy – India’s labour market remains under stress, primarily because of a fall in the employment rate in rural India and continued low employment rate in urban India.
  • According to CMIE, keeping the employment rate from slipping is challenging.
  • “To merely keep the employment rate unchanged, the economy has to generate additional jobs. It needs to run to stay where it is,” CMIE suggested.
  • Citing labour market statistics derived from CMIE’s Consumer Pyramids Household Survey, CMIE said the data is indicating a stagnation of India’s economic recovery from a shock in April during the lockdown.

 

 

 

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