Market regulator approves reforms to safeguard markets, protect investors
The Securities and Exchange Board of India has announced a clutch of proposals, including ending the practice of individuals holding permanent directorship at boards of listed companies and putting in place a framework to prevent frauds by stockbrokers. The proposals were cleared by SEBI’s board during its meeting on Wednesday. It has also given its nod for norms for environmental, social and governance disclosures by listed companies. It will also introduce a fund-blocking facility for secondary market transactions, similar to what is being done for initial public offerings.
Why it’s important: The reforms were expected and will help in furthering accountability and transparency. It is also putting in place a mechanism to prevent and detect fraud or market abuse by stockbrokers.
SEBI allows private equity firms to become promoters of local mutual funds
After nearly three years of deliberations, the market regulator has allowed private equity firms to serve as promoters of Indian mutual funds, a move that will hasten consolidation in the country’s Rs 41 lakh crore mutual fund industry. Private equity funds can now set up mutual funds independently or in collaboration with other firms under the approved framework. The move by the Securities and Exchange Board of India assumes significance against the backdrop of several existing sponsors and trustees facing a cash crisis due to the inability of their core businesses to generate enough capital.
Why it’s important: Clearing the way for private equity funds to become sponsors of mutual funds opens a new business line for them in India’s fast-growing mutual fund industry. It will help deepen the market.
Google has to pay Rs 1,337 fine for abusing market dominance, gets relief on four directives
The National Company Law Appellate Tribunal has upheld the Rs 1,337 crore fine imposed on Google by the Competition Commission of India for misusing its dominant position in the Android ecosystem. The tribunal, however, set aside four of 10 directives that the commission imposed on Google to change its business model. Google will not need to allow hosting of third-party app stores inside Play Store as had been previously ordered. The tech giant said it was studying the order and reviewing its legal options.
Why it’s important: Google will likely challenge the order upholding the penalty in the higher judiciary. Going by its previous experience in the European Union in this count, it might have to cough up the fine.
Competition watchdog can now fine tech giants based on global turnover
Parliament has approved changes to the competition law that seek to cover global deals by digital companies under the local law and empower the antitrust watchdog to impose penalties on multinationals for violations based on their international revenue. The amendments also provide for settlement of minor violations. The Competition (Amendment) Bill, 2022, seeks to capture deals happening in global digital companies, provided the entities involved have a strong business presence in India. Any such deals where the value exceeds Rs 2,000 crore will need to be notified to the Competition Commission of India.
Why it’s important: The antitrust regulator can now consider the global turnover of a firm being penalized instead of the current practice of calculating a fine based only on the relevant market revenue. This will have wide ramifications and will likely be challenged in court.
Government to borrow 57.55 per cent of full-year target in first half of 2023-24
The central government will borrow 57.55 per cent of its full-year target in the first half of upcoming fiscal year. This will be lower than the borrowing in the first six months of 2022-23 at 59 per cent of the full-year target. The norm has been to borrow 60-63 per cent in the past few years. The government borrowing program is scheduled to be completed in 26 weekly tranches of Rs 31,000-39,000 crore each.
Why it’s important: The government has been frontloading its borrowing program in the past few years so that the funds can be utilized more efficiently. State spending has been a major driver for the economy since before the pandemic started.
Air India raises Rs 14,000 crore in loans from State Bank, Bank of Baroda
Tata-owned Air India has secured Rs 14,000 crore in funding from State Bank of India and Bank of Baroda through a mix of fresh loans and refinance of existing debt. The fundraising comprised Rs 12,500 crore to refinance existing loans and the remaining Rs 1,500 crore obtained through the pandemic-era Emergency Credit Line Guarantee Scheme. A part of the borrowing is also likely to be used to fund the payout for the voluntary retirement scheme, which is likely to cost over Rs 200 crore.
Why it’s important: The fresh money will help Air India’s efforts to expand in both domestic and international markets with leased aircraft and new planes. The airline has ambitious plans to grow its market share.
Central government to issue sovereign green bonds worth Rs 23,764 in 2023-24
The Centre is expected to issue Rs 23,764.46 crore worth of sovereign green bonds in 2023-24, according to the expenditure profile documents of the federal budget. This is nearly 49 per cent higher than the Rs 16,000 crore worth of green bonds issued in the preceding financial year. Most of the green bond proceeds will go to the Railways (Rs 12,479 crore) to make electric locomotives and build new Kolkata metro lines.
Why it’s important: There is considerable investor interest in green bonds that the Indian government intends to meet its energy transition needs. Building green infrastructure is a welcome move.
8. Other firms step up as funding winter sidelines start-ups sponsoring Indian Premier League
Indian Premier League franchises are set to generate record sponsorship revenues this season despite a funding drought that has sidelined many of last season’s heavy-spending startups. Companies have committed crores of rupees as sponsorship money ahead of the league’s 16th edition, with Reliance Industries-owned Rise Worldwide alone facilitating 60-plus multi-team deals worth Rs 400 crore. In all, the 10 franchises have locked sponsorship revenues worth around Rs 800 crore, with teams earning Rs 70-110 crore each. In total, more than 100 brands have signed deals this time, including 28 new brands.
Why it’s important: The cricket tournament that attracts massive viewership is too good an opportunity for companies to pass up on them, although a funds crunch has seen muted support from start-ups.
Tata Neu app looks to Indian Premier League to ratchet up growth after muted launch
Tata Neu is gearing up for faster growth during the upcoming Indian Premier League after a muted start in its first year of operations. The Tata Group is the title sponsor of the tournament. Neu has contributed less than 10 per cent of gross sales to Tata’s two biggest digital assets, online grocer BigBasket and online pharmacy 1mg, since launch April last year. While BigBasket is expected to close the financial year with $1.5 billion of gross merchandise value, the number for 1mg would be $300-350 million.
Why it’s important: Tata Neu app has failed to live up to the expectations of the conglomerate. It remains to be seen whether another high-decibel marketing campaign can ensure higher consumer engagement.
Payments corporation clarifies that 99.99 per cent of UPI transactions to remain free
The National Payments Corporation of India, which operates the flagship UPI platform has clarified that about 99.9 per cent of total transactions are done by linking a bank account to any UPI-enabled application and these account-to-account transfers remain completely free for customers and merchants. On March 24, the corporation issued a circular on interchange applicable to merchant transactions through prepaid instruments on the UPI platform, which came after the Reserve Bank of India made it mandatory for PPIs to be part of the interoperable UPI ecosystem.
Why it’s important: Unfounded rumors that UPI transactions over Rs 2,000 will attract a surcharge has spread like wildfire on social media platforms. The swift clarification will reassure users of the popular payments system.