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Morning Scan: All the big stories to get you started for the day

A round-up of the biggest articles from newspapers

August 11, 2022 / 08:26 AM IST

Reserve Bank issues strict rules for digital lending, keeps third parties out

The Reserve Bank of India has mandated that disbursal of loans and collection of repayments must be executed only between borrowers and entities regulated by the banking regulator and no third party can be involved in this process. The direction is part of the first set of operational guidelines issued to banks and non-bank lenders who employ digital lending apps to bring these services under tighter oversight.

Why it’s important: There have been complaints that lending apps are charging usurious rates, following aggressive recovery practices, and committing fraud and breach of data privacy. The tighter rules should put an end to all that.

Enforcement Directorate probes 10 crypto exchanges for laundering Rs 1,000 crore

The Enforcement Directorate is probing at least 10 cryptocurrency exchanges for laundering more than Rs 1,000 crore from firms said to have a China link. The probe has unearthed instances of the accused firms in an instant loan app case approaching the exchanges to buy crypto coins, which were then sent to international wallets.

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Why it’s important: The exchanges supposedly did not conduct due diligence, nor did they raise suspicious transaction reports. Indian authorities have been wary of crypto exchanges and the latest probe could only strengthen their fears.

Alternative investment firms struggle to sell holdings in start-ups

Alternative investment funds scheduled to wind up in the next few months are struggling to sell their holdings in unlisted ventures and startups. Once a close-ended AIF’s life cycle is complete, the fund manager is required to liquidate its holdings within 12 months and distribute the proceeds to investors. Most AIFs are, however, either not keen to sell their holdings or have been unable to find buyers at the desired valuations.

Why it’s important: The struggle to offload holdings could only get tougher because investors are staying clear of riskier investments due to tightening liquidity.

Government to end price caps on domestic airfares by end of August

The civil aviation ministry has decided to remove price caps for the Indian aviation sector from August 31. Caps on capacity and fares were introduced in May 2020 following the resumption of air travel after the pandemic lockdown. The government allowed 100 per cent capacity deployment in October last year, but it continued with the pricing regulation, citing an adverse cost environment.

Why it’s important: Flexibility in setting fares might not lead to increased discounts as jet fuel, which account for over 40 percent of operating costs, has become costlier. Prices may fall a bit on low demand routes, flights with poor loads and new routes.

JSW Energy to buy renewable assets of Mytrah in big green push

In what would be JSW Energy’s biggest acquisition, its arm JSW Neo Energy has agreed to buy the solar and wind power assets totaling 1,753 MW from Mytrah Energy. The deal has decided on an enterprise value of about Rs 10,530 crore. The deal is subject to regulatory approvals.

Why it’s important: India’s conventional energy firms have started pivoting to green power and JSW now joins the bandwagon. Its new energy unit is also looking at hydro pumped storage, battery energy storage and green hydrogen to become a power product and services firm.

SoftBank warns portfolio firms to prepare for funding winter

After announcing cost rationalizations due to record losses, SoftBank may also radically reduce new investments, including in the Indian market. The Japanese tech investor last year invested around $3.2-3.5 billion in the Indian start-up ecosystem, almost 10 percent of the total investment. In 2022, the investments may not even touch $1 billion.

Why it’s important: Indications of a funding winter have been there for the past few months. SoftBank’s stance confirms the end of easy money. Start-ups will have to tighten belts and become more efficient.

Neuberg Diagnostics to expand network, go public by end of June 2023

Healthcare expert GSK Velu’s Neuberg Diagnostics plans to spend Rs 500 crore to expand its network in India. The diagnostic chain will also expand its overseas presence. The company would look at an initial share sale by the end of June next year.

Why it’s important: The high demand for medical reports during the pandemic provided a huge boost to diagnostic chains. Having established a presence, it is logical to expand network footprints. The sector is likely to see high growth in the next few years.

Government to study demand for 5G spectrum to run private networks

The telecom department has invited participation to study the demand for airwaves to set up 5G captive non-public networks. Participants can apply to be part of the exercise between August 10 and September 9 through a module launched on the Saralsanchar portal, it said in a notification.

Why it’s important: The allocation of 5G spectrum has been a contentious issue, pitting telecom operators against technology companies. The government may have softened it stand given that it allocated airwaves to Adani to run enterprise solutions at group firms.

Retail inflation in India may have eased to 6.78 percent in July

Retail inflation in the country may have softened in July to 6.78 percent from 7.01 percent in June as food and commodity prices cooled, but the rate of price rise would remain above the 6 percent upper tolerance limit of the Reserve Bank for the seventh straight month, according to a survey of 28 economists by Mint. The slowing would be for the third consecutive month.

Why it’s important: The Reserve Bank has been aggressively raising policy rates to tame inflation. If retail inflation cools down, it might moderate the rate hike cycle.

Hindalco posts record quarterly profit of Rs 4,119 crore, a rise of 48 percent

Aditya Birla Group’s aluminum firm Hindalco reported record profit for the second consecutive quarter because of superior performance from American unit Novelis although high input costs led to sequentially lower margins and profits at the India arm. The company reported a consolidated revenue of Rs 58,018 crore in the three months ended June, up 40 percent. Consolidated profit improved by 48 percent to Rs 4,119 crore.

Why it’s important: Despite headwinds of choked supply chains worldwide, Hindalco has projected optimism that the situation will improve in the upcoming quarters. The outlook for the sector seems to be brightening.
Moneycontrol News
first published: Aug 11, 2022 08:15 am
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