Credit growth rises as year-end demand picks up in India
Bank credit expanded 8.7 percent from a year earlier as on 11 March, with retail loans continuing to see the highest growth, Reserve Bank of India data showed. Retail loans continued to grow faster than corporate borrowings, which stood at Rs 31.8 trillion, up 12 percent from a year ago as on 28 January, while loans to industries were at Rs 30.5 trillion, up 6.4 percent.
Why it’s important: There is usually a greater push for loans in the last three months of a financial year as lenders look to meet year-end targets and borrowers utilize existing loan limits. While mortgage loans remained a key driver of growth, personal loans and borrowings from small businesses are also rising.
Enforcement directorate wants to block financing firms linked to Chinese companies
The Enforcement Directorate has prepared a list of 40 non-banking financial companies involved in digital lending activities but are acting as a front for companies linked to Chinese nationals. The agency that investigates financial crimes has asked the Reserve Bank to cancel licenses of such shadow lenders.
Why it’s important: Investigations have revealed that these shadow lenders have no control over lending or recovery operations, which are managed by digital lending fintech companies. The bigger issue with such practices is not the lending but access to sensitive customer data.
Solution in sight for new system to hasten trade settlements in stock markets
India’s stock exchanges and clearinghouses are exploring a mechanism where foreign portfolio investors can pay soon after the foreign exchange market opens on the morning of T+1, or the day after a deal is struck, instead of arranging funds and confirming trades in the previous evening when liquidity dries up in the money and forex markets. Faster processing will give traders who follow the buy-today-sell-tomorrow model more time to churn investments.
Why it’s important: The envisaged flexibility in the T+1 system is expected to address the concerns of foreign portfolio investors as well as to preserve the interest of active local traders. The shorter settlement cycle is expected to start by June and July.
Inox-PVR merger to form India’s largest film exhibition company
The boards of PVR and Inox Leisure, India’s two largest multiplex chains, have approved an all-stock merger of the companies to create India’s biggest film exhibition entity with a network of more than 1,500 screens. The merged entity will be named PVR Inox. After the merger, Inox promoters will own 16.66 percent stake in the new entity, while PVR founders will own 10.62 percent.
Why it’s important: The consolidation in the screening industry happens after pandemic-led closures of theatres and the rise of streaming platforms. A cash crunch caused by the shutdowns of movie halls has made it tough for cinema chains to invest in new properties, but easier to partner with rivals to increase screen count.
BharatPe is charting out glide path to public listing: chairman
Rajnish Kumar, chairman of controversy hit payments firm BharatPe, spoke about the way ahead for the company that saw cofounder and managing director resigning amid charges of financial misconduct. The board and the management of BharatPe are aligned to the glide path to list the company in the next 18-24 months, Kumar said.
Why it’s important: BharatPe needs to put the recent controversy behind it and strengthen its governance infrastructure. BharatPe can be a torchbearer for the startup ecosystem and boost investor confidence, its chairman said.
Reliance to enter the fast-growing quick delivery of groceries segment
The competition for instant grocery delivery is going to become hotter as Reliance Retail is set to enter the segment with its JioMart platform. The company will start JioMart Express trials in the next 2-4 days in Navi Mumbai, selling and delivering around 2,000 stock keeping units in a few hours. Reliance plans to take instant grocery sales to over 200 cities and towns where JioMart is operational by the end of the next quarter and double the reach in next few months.
Why it’s important: Reliance is aiming to be India’s largest instant grocer in a segment that is finding increasing favor with online customers. It will compete with Tata-owned BigBasket, which is set to launch in April, Zomato-funded Blinkit, Swiggy’s Instamart, Walmart-owned Flipkart Quick and Zepto.
States working on tariff issues with Tata, Adani Power
States buying electricity from the two large, imported coal-based plants totaling 8 GW in Gujarat owned by Tata Power and Adani Power are working to resolve issues amid record power demand projections this summer. About 17 GW of imported coal-based plants are non-functional because of high prices that have made it unviable at the tariffs available to them. This is putting pressure on domestic demand for coal and leading to low stocks of the fuel.
Why it’s important: Summer brings increased demand for electricity in India, but many coal-based thermal power plants are finding it difficult to sustain operations in the face of tariffs being lower than operational costs due to high prices of imported coal. This might lead to an increase in power tariffs.
Air traffic to rise after regular international flights resume after two years
Indian skies have opened again for scheduled international flights after a gap of two years. The start of scheduled international passenger flights marks the end of air transport bubbles, which came into effect in mid-2020.
Why it’s important: The resumption of international flights will bring more travel options for passengers that is likely to translate into better revenue opportunities for airline firms that are struggling with high fuel prices. The travel industry, hit hard by the Covid-19 pandemic, needs a swift revival in demand.
Technology access critical for M&A strategies of Indian firms
The merger and acquisition decisions of Indian companies for 2022 will be driven by a need to access key technologies to achieve strong and sustainable growth, according to the EY CEO Outlook 2022. Around 22% of Indian chief executives said acquisition of technology, new production capabilities and innovative startups will be their primary M&A activity, compared with just 14 percent for global CEOs.
Why it’s important: Technology is now at the core of value creation for most industries and corporates are recognizing the need to own technology instead of outsourcing critical functions to third-party vendors.
Indian economy may take a hit if the Ukraine war continues
If the war in eastern Europe continues beyond 2-3 weeks and Western sanctions against Russia remain in place, India’s economy may be adversely hit. A feeble impact is already being felt in many business sectors and that might worsen is supply lines are disrupted and global crude oil prices remain elevated.
Why it’s important: India is trying to script an economic recovery after the pandemic shock. But high commodity and crude oil rates could derail that as higher inflation could impact local demand, hurting growth prospects.
Disclosure: Moneycontrol is a part of the Network18 group. Network18 is controlled by Independent Media Trust, of which Reliance Industries is the sole beneficiary.