Indian banks may tie up with Russian lenders not affected by sanctions
Indian banks such as Canara Bank, Bank of Maharashtra, and UCO Bank may join hands with Russian banks that are not under Western sanctions to facilitate bilateral payments. These banks will likely open accounts at their Russian counterparts and vice versa, as decided last week in meetings held in New Delhi.
Why it’s important: Bilateral trade between India and Russia has been impacted due to the Ukraine war. The partnership between banks will ensure smooth trade flows without violating the economic sanctions imposed by Western nations.
Apollo in talks to buy real estate loan book of L&T Finance
Apollo Global Management is in advanced talks with L&T Finance Holdings to acquire realty loans worth Rs 8,000-9,000 crore. The deal, pegged at $1 billion, will also help L&T get cash upfront instead of through staggered payments, allowing it to deleverage its balance sheet, while the private equity group will get a portfolio of real estate assets with some first-loss protection.
Why it’s important: L&T Finance is looking to focus on the retail segment by pruning its infrastructure and real estate exposure. This deal will help it to accomplish that.
Regulator considers linking insurance fraud with credit score
The Insurance Regulatory and Development Authority of India is considering a proposal to make insurance frauds a parameter for calculating credit scores to restrain an increase in such illegal activity. The proposal is being considered by the insurance regulator because such frauds have been estimated to cost over Rs 450 billion every year.
Why it’s important: If the proposal is approved, insurance frauds would feature when the risk profiles of individuals are evaluated, which would reflect on their credit scores. A poor credit score can prevent an individual from availing financial services such as loans and credit cards.
Finance ministry to relaunch Banks Board Bureau with expanded mandate
The finance ministry will expand and relaunch the Banks Board Bureau by bringing in more representatives from the insurance sector. The development is aimed at legally empowering the body to recommend candidates for public-sector insurers and hasten top-level hiring at all state-run financial institutions.
Why it’s important: The revamp will enable the bureau to recommend top executives at financial institutions. It would also address judicial orders that have held the bureau was not the competent authority to recommend appointments at state-run general insurers.
India’s bad bank rushes to complete first transaction to avoid missing deadline
India’s bad bank is racing against time to complete its first transaction by 30 June, failing which it will have to seek an extension from the Reserve Bank of India. The National Asset Reconstruction Company, the government-backed asset turnaround company, had earlier set itself a deadline of 31 March to acquire Rs 500 billion worth of bad assets, but failed to meet it due to procedural reasons.
Why it’s important: The central bank’s licensing norms say NARCL must start operations and complete a transaction by 30 June. It is, however, still valuing assets proposed to be sold by lenders. It is unlikely that the agency will be able to meet the deadline.
LIC valuation will reflect its inherent strength once market stabilises
The stock price of state-owned Life Insurance Corporation of India has eroded as much as 25 percent since its initial public offer. Chairperson M R Kumar said once the market stabilises, its inherent strength and performance will be recognized.
Why it’s important: Investors looking to book quick profits from the initial share sale has been disappointed. LIC shares are now likely to fetch reasonable returns only in the medium to long term.
Employee payments in virtual digital assets to attract 30 percent tax
Employers will have to pay 30 percent tax on virtual digital assets such as cryptocurrencies they offer to employees as compensation or otherwise. The tax will be levied on the difference between the cost of asset acquisition and transfer price to the employee. In the case of employees, the transfer price would be considered the cost of acquisition.
Why it’s important: The value of cryptocurrencies have crashed in recent weeks. Companies looking to pay employees in virtual digital assets are unlikely to find many takers, more so it they are taxed at a high rate.
Reliance Industries likely to make important announcement in AGM
The 45th annual general meeting of Reliance Industries may be held in the next few weeks. Some experts said it may revive plans of an oil-to-chemicals demerger, which was shelved last year. The company may also spell out its future plans for its retail and telecom businesses that operate as separate units. It could also make further announcements in the green energy sector.
Why it’s important: Reliance derives almost 60 percent of its revenue and nearly 50 percent of pre-tax earnings from its refining, petrochemicals, and fuel retail business. Retail and telecom account for 34 percent of revenue and nearly 45 percent of pre-tax profits. The ratio might change as the conglomerate focusses more on its consumer businesses.
Telecom operators call for tougher norms for private captive networks
The Cellular Operators Association of India, which counts Bharti Airtel, Vodafone Idea and Reliance Jio as members, has demanded tough conditions for allowing enterprises to set up captive non-public networks. The demand comes a few days after the cabinet, despite opposition from telcos, permitted enterprises to set up private networks, with the department of telecom assigning them spectrum directly.
Why it’s important: The telcos are strongly opposed to private networks, which they fear might erode the viability of their businesses. The tech companies, who stand to benefit, are strongly in favor. It’s not clear how this will play out, given the high floor prices for G spectrum.
India’s win on fishing subsidies at WTO is start of a long fight
India’s successful defense of the rights of developing countries to subsidize fisheries at the World Trade Organization’s ministerial conference is just the start of a long battle. The small print suggests the matter will require further negotiations. Members will need to announce comprehensive guidelines within four years, or the current agreement will be terminated.
Why it’s important: Developing countries led by India will need a stronger negotiating position to get what they want on fisheries subsidies. India gives a subsidy of $15 per fisherman per year, while the amounts in Denmark, Sweden, and the Netherlands are $42,000, $65,000, and $75,000, respectively.