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Thursday, January 30, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


Abidali Neemuchwala steps down as Wipro CEO for 'family time'

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BENGALURU: Wipro said its CEO Abidali Neemuchwala has resigned due to family commitments but that he would stay on until a successor was appointed.The company said its board has initiated a search to find its next leader."We thank Abid for his leadership and contributions to Wipro. Over the last four years, Abid helped build a strong execution mindset, drove key acquisitions and scaled our digital business globally," chairman Rishad Premji said in a statement.Neemuchwala joined Wipro from TCS in April 2015 as Group President and COO. He was elevated to CEO in February 2016.

Your bank deposit cover may go up by Rs 2L

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Mumbai: The government is discussing a proposal to double the insurance cover on bank deposits to Rs 2 lakh and an announcement to this effect may be made in the February 1 budget, said several people with knowledge of the matter. The move comes after the government and the Reserve Bank of India (RBI) faced flak over their handling of the closure of Punjab & Maharashtra Co-operative Bank (PMC), which downed shutters in September last year, leaving thousands of depositors high and dry.The government is expected to bring about these changes through an enabling amendment that would increase the deposit cover in the future without tinkering with the Deposit Insurance & Credit Guarantee Corporation (DICGC) Act."Looking at the aftermath of the PMC Bank crisis, doubling of the deposit cover will be a much-anticipated breather for bank deposit holders," said Ashvin Parekh, proprietor of Ashvin Parekh Advisory Services. "The only challenge to my mind is who will now bear the added cost of a higher insurance premium? "Safety of bank deposits took centre-stage after the collapse of PMC Bank. Currently, the DICGC Act, 1961, provides deposit insurance of up to Rs 1 lakh and the rest of the amount is forfeited in the event of a bank failure. This compensation was last fixed more than 25 years ago. 73788743 The government is also considering proposals on allowing emergency access to deposit insurance when a bank fails, inflation indexation of the insurance cover and risk-based pricing of the insurance premium depending on the health of the financial institution."The biggest bone of contention is higher premium payout if the deposit cover is raised. I think banks will have to bear the burden of that, but at least they should consider forcing less robust institutions to pay a higher premium cover," said a senior banking official.Many Requests Made to Raise LimitRBI data showed more than 78% of PMC Bank depositors had deposits below Rs 50,000. As per an SBI analysis, 61% of the total deposit accounts in India are under Rs 1lakh, around 70% are under Rs 2 lakh and 98.2% are under Rs 15 lakh. There have been several calls to raise the deposit cover. The issue had come up at the time of the Financial Resolution and Deposit Insurance Bill, which the previous government introduced in 2017 and then withdrew the next year. Data on Cross Country Deposit Insurance Coverage limit shows that deposit insurance coverage in India is one of the lowest at $1,508 as against $250,000 in the US and $111,143 in the UK.

WhatsApp Pay in 6 months, says Zuckerberg

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BENGALURU: Facebook expects to roll out WhatsApp Pay in a number of countries in the next six months, even as its payment licence remains stuck in India.Facebook is working on building technology infrastructure to turn its private messaging apps, WhatsApp and Messenger, into private social platforms where users can hang out and engage with businesses. "One example that we've been working on is WhatsApp Payments where you're going to be able to send money as quickly and easily as sending a photo," said Mark Zuckerberg on an earnings conference call with analysts, while talking about the growth of commerce and payments on private messaging apps."I'm really excited about this, and I expect this to start rolling out in a number of countries and for us to make a lot of progress here in the next six months," he said.WhatsApp's payment feature, called WhatsApp Pay, is designed to run on the Unified Payments Interface (UPI) — developed by the National Payments Corporation of India — which allows users to pay others or do business transactions through their bank accounts. Its licence has not been approved in India yet as it has to complete localising all the data within the country's borders. WhatsApp has about 400 million users in India. The payment feature is currently running in pilot mode. If the company gets a payment licence for a full-fledged rollout, other players in the market, including Google Pay, PhonePe and Paytm will face stiff competition. Zuckerberg said commerce and payments are areas that will be important for private social platforms such as WhatsApp and Messenger, as well as social networking sites Facebook and Instagram. Beyond WhatsApp Payments, Zuckerberg said the company is working on several other efforts to help facilitate more commerce from Facebook Marketplace to Instagram Shopping. "We're taking a number of different approaches here, ranging from people buying and selling to each other directly to businesses setting up storefronts, to people engaging with businesses directly through messaging and a number of things on payments --using existing national systems like India's UPI to creating new global systems," he said.Facebook beat Wall Street estimates in the quarter ended December but slowing profit growth dragged down share prices. Net income rose 7% year-over-year to $7.3 billion, compared to 61% growth over 2018.

India may ease its grip on insurance

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The Centre is likely to drop the clause that mandates control of insurance companies by Indian promoters as it seeks to enhance foreign direct investment (FDI) limit in the industry to 74% from 49%, said people with knowledge of the matter.The government has held several meetings with the insurance regulator, insurers and consultants on higher FDI in the sector. Many global insurers, such as Metlife and Generali, have not raised their stakes in Indian operations due to the clause that was introduced in 2015."The government will amend the relevant provision while dropping control and ownership clause of the Insurance Act through the Finance Bill," said an official at the Insurance Regulatory and Development Authority of India (Irdai).73788679 Cabinet Note in the Work"It has decided to prepare a cabinet note proposing higher FDI of 74%," the official said.The FDI increase is being evaluated very carefully, said a source close to the development. "The complexity of 'Indian owned and controlled' is involved, and the government is looking to address this issue," he said. Regulations on royalties, dividends, ring-fencing of balance sheets and board composition are also likely to be reviewed, said another person who had attended the meetings.It's been proposed that overseas investors start at 49% and raise their stake to 74% over time. However, foreign insurers have suggested that the limit be set at 74% from the outset.The government raised the FDI ceiling in insurance to 49% from 26% in March 2015. This prompted foreign promoters to increase their stakes in joint ventures besides paving the way for initial public offerings. Among the listed life insurers are HDFC Life, SBI Life and ICICI Prudential. Listed general insurers include ICICI Lombard, GIC Re and New India Assurance. India has 24 life insurance companies and 34 general insurance companies.Before the 2015 change, the Insurance Act did not require domestic ownership and control. It was therefore possible for offshore strategic partners to have substantial control, including over reserved matters or veto rights on operational and financial policy decisions.The government increased the FDI limit in insurance intermediaries to 100% in September, a move aimed at opening up the large-scale professional advisory space to investment.

Coronavirus contamination: Indian handset companies call up govt for clarity

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New Delhi: Smartphone manufacturers have asked the government to clarify whether Chinese components pose any risk of coronavirus contamination after workers raised concerns about possible infection."We have written to telecom secretary Anshu Prakash and MeitY (Ministry of Electronics and Information Technology) secretary Ajay Prakash Sawhney to take up this matter with the health department and to issue a clarification," said Pankaj Mohindroo, chairman of the Indian Cellular & Electronics Association (ICEA). The lobby group represents companies such as Foxconn, which makes phones for Xiaomi, Apple and Nokia, and Wistron, which makes iPhones, besides Vivo and Oppo.India imports mobile phone components worth Rs 7,000-8,000 crore from China every month."There is a query from the industry on the subject of equipment sub-assemblies and components from China wherein there is a perceived threat by handlers of the supply and also workers in warehouse/plants about the spread of coronavirus," ICEA said in its letter, which ET has seen.The association has issued a limited advisory to its members based on one from the US Centers for Disease Control and Prevention (CDC). "There is real fear among workers that the highly contagious virus might spread through machinery, components and devices imported from China," Mohindroo said.The CDC has said the likelihood of such infection is low in its latest advisory on the coronavirus."In general, because of poor survivability of coronaviruses on surfaces, there is likely very low risk of spread from products or packaging that are shipped over a period of days or weeks at ambient temperatures," it said.There is no evidence to support transmission of 2019-nCoV associated with imported goods, it said.The letter to the government states: "However, it is not conclusively suggested by CDC that there may be no transmission as such."73789955 Govt Urged to Review ImpactMohindroo said the document was very carefully worded. "We would like the government to let us know whether the virus can or cannot be transmitted through inanimate objects to humans, like most viruses," he said.On Thursday, the Federation of Indian Export Organisations (FIEO) had urged the government to review the impact of the outbreak on trade as China is one of the top trading partners for India and the rest of the world. The FIEO said that if the problem persisted, it may impact domestic mobile manufacturers as they import many of their components from China. China accounts for 75% of the total value of components used in TVs and almost 85% in the case of smartphones in India. ET reported on January 30 that smartphone and consumer electronics companies in India were staring at production cuts and possible delays in the launch of new products due to the coronavirus outbreak in China that has disrupted component supplies. Apple CEO Tim Cook has said that iPhone production could be impacted, possibly affecting earnings.

IBM raises IITian Arvind Krishna to CEO effective April

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Bengaluru: IBM said its board of directors had appointed Arvind Krishna as chief executive officer, effective April 6, making him the latest Indian who will hold that rank at a global technology giant.IBM said current CEO Ginni Rometty would continue as executive chairman of the board through the end of 2020, at which point she would retire after almost 40 years with the company.Krishna is currently senior vice president for cloud and cognitive software and was a principal architect of the company's acquisitions of Red Hat."Arvind is the right CEO for the next era at IBM. He is a brilliant technologist who has played a significant role in developing our key technologies such as artificial intelligence, cloud, quantum, computing and Blockchain. He is also a superb operational leader," CEO Rometty said in a statement Krishna studied at the Indian Institute of Technology, Kanpur and has a PhD in electrical engineering from the University of Illinois. He joined IBM in 1990.IBM also appointed James Whitehurst, CEO of Red Hat, as President at the company, effective April 6.

MF exposure to top 10 Nifty cos at 10-yr high in quest for alpha

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Mumbai: Mutual funds have been progressively increasing their exposure to the top ten Nifty stocks to reduce underperformance and generate alpha. In 2019, as much as 60.62 per cent of mutual funds' equity investments were in these from the Nifty50 stock by weightage, data from Value Research showed.This exposure in the top ten Nifty stocks is at a decadal high. In 2017, the corresponding figure stood at 50.09 per cent, while in 2018, it was 49.7 per cent.There is a statistical basis for high exposure to top ten Nifty stocks. These stocks have been clocking higher growth in their earnings per share (EPS) than the Nifty index. For instance, while the Nifty is expected to post 17 per cent growth, in its EPS for FY20, this group of stocks is expected to deliver 34 per cent growth in their earnings for the same period.Besides, analysts point out that the top ten Nifty stocks, in which foreign portfolio investors have high stake, not only offer earnings growth safety but also have relatively better cash flow and balance sheet to tide over uncertainty in demand. In addition, these stocks also have high liquidity which is comforting for portfolio managers."Three factors contributed to this trend. These are category change, mid-and-small-cap downfall and the resultant shift to large-caps and steady deployment of funds by both mutual funds and pension funds. Within this, the narrow allocation to select Nifty stocks has ensured that fund managers taking exposure to these stocks do not underperform," said Vidya Bala, founder of Prime Investors.She added that the markets are showing signs of a slightly broad-based rally since September 2019 and that we may see assets getting more diversified across stocks from this narrow allocation."This dependence on the top ten Nifty stocks makes sense because these stocks not only keep your money safe but they are also recording decent earnings growth," said Ashish Shanker, head, investment advisory, Motilal Oswal Private Wealth Management. "The GDP growth has declined to sub 5 per cent levels. There are very few triggers now which can indicate that a broad-based rally may transpire."Until there is a broad based economic recovery, this is likely to continue, Shanker said, adding one can see visible signs of economic recovery and a broad-based rally only by the end of calendar year 2020."In an environment when growth was slowing down, fund managers shied away from mid-and-small caps and stuck to quality companies. In the coming quarters, this polarisation will even out as growth comes back," said Dhiraj Sachdeva, founder of Roha Capital Advisors. 73788656

Indiabulls Housing Finance buying back its slumping bonds

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By Anto Antony and Rahul SatijaAn Indian shadow bank is offering to buy back its cheapened bonds after an ongoing fraud probe and a prolonged credit squeeze helped push yields as high as 43 per cent last year.Indiabulls Housing Finance Ltd. will repurchase anything trading at a yield of more than 12 per cent and has already spent 15 billion rupees ($210 million) to buy its local debt in December, Chief Executive Officer Gagan Banga said in an interview at his Mumbai office. The lender has consistently denied allegations of wrongdoing and Banga said the deals aim to correct pricing in an opaque and shallow market."Unless the bond markets fully mature, I don't know the way out," Banga said. "That's what we can do to send a strong message, normalize the market."Indiabulls's bonds and shares have slumped since September 2018, when the collapse of an infrastructure financier triggered a squeeze that's still denying cash to all but the strongest shadow lenders. Authorities are investigating Indiabulls for improper lending and last year rejected its plan to merge with a bank, blocking a path that would have helped both firms raise funds and strengthen buffers.73789522 Policy makers have long tried to deepen India's debt market and further steps are expected in the budget due Feb. 1. While there are more than 23,000 outstanding corporate bonds in India, only about 350 trades were reported on average each day in 2019 through September, data from the Securities and Exchange Board of India show.Indiabulls lost its top credit rating in the final few months of 2019 due to the funding squeeze and failure to get regulatory approval for its proposed merger with Lakshmi Vilas Bank Ltd. The Delhi High Court on Feb. 28 will hear a petition to probe Indiabulls on allegations that the company gave "dubious loans" worth billions of rupees to shell companies through firms owned by the group's founders "to increase their personal wealth."Indiabulls's rupee bond due 2021 traded at a 27.5 per cent yield on Jan. 22, only to fall back to 15 per cent two days later. The lender said it was a "freak trade," that pushed the yield to 43.04 per cent in October; Bajaj Allianz Life Insurance Co. ended not delivering the debt to Deutsche Bank AG, people familiar with the matter had said at the time."It is buybackable if it's anything above 12 per cent," Banga said. "I understand my liquidity position better than anyone else. It's the best utilization of capital. Why will I not do it?"Over the past two years, Indiabulls has sold its commercial property portfolio to Blackstone Group for a reported 92 billion rupees. A company presentation shows it held 1.1 trillion rupees worth of assets as of Sept. 30; 19.3 per cent of this in the form of liquid instruments, almost four times more than the average of the top five shadow lenders in India.On Wednesday, Indiabulls offered to prematurely redeem its bonds maturing in February."Indiabulls is flexing its sizable cash muscles to take on investors rushing to exit at a time when the shadow banking sector is facing an unprecedented credit squeeze," said Ajay Bodke, chief executive officer for portfolio management services at Prabhudas Lilladher Pvt.Going ahead, Banga said he won't issue bonds maturing in less than five years. This decision, together with fewer loans to the stressed real estate sector, will lower Indiabulls's credit growth to about 20 per cent in the coming years from 22 per cent before the crisis, he added."I used to play tennis. I haven't touched the racket in two years," Banga, 44, said. "I can only push myself so much."

Coronavirus contamination: Indian handset companies call up govt for clarity

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New Delhi: Smartphone manufacturers have asked the government to clarify whether Chinese components pose any risk of coronavirus contamination after workers raised concerns about possible infection."We have written to telecom secretary Anshu Prakash and MeitY (Ministry of Electronics and Information Technology) secretary Ajay Prakash Sawhney to take up this matter with the health department and to issue a clarification," said Pankaj Mohindroo, chairman of the Indian Cellular & Electronics Association (ICEA). The lobby group represents companies such as Foxconn, which makes phones for Xiaomi, Apple and Nokia, and Wistron, which makes iPhones, besides Vivo and Oppo.India imports mobile phone components worth Rs 7,000-8,000 crore from China every month."There is a query from the industry on the subject of equipment sub-assemblies and components from China wherein there is a perceived threat by handlers of the supply and also workers in warehouse/plants about the spread of coronavirus," ICEA said in its letter, which ET has seen.The association has issued a limited advisory to its members based on one from the US Centers for Disease Control and Prevention (CDC). "There is real fear among workers that the highly contagious virus might spread through machinery, components and devices imported from China," Mohindroo said.The CDC has said the likelihood of such infection is low in its latest advisory on the coronavirus."In general, because of poor survivability of coronaviruses on surfaces, there is likely very low risk of spread from products or packaging that are shipped over a period of days or weeks at ambient temperatures," it said.There is no evidence to support transmission of 2019-nCoV associated with imported goods, it said.The letter to the government states: "However, it is not conclusively suggested by CDC that there may be no transmission as such."73789955 Govt Urged to Review ImpactMohindroo said the document was very carefully worded. "We would like the government to let us know whether the virus can or cannot be transmitted through inanimate objects to humans, like most viruses," he said.On Thursday, the Federation of Indian Export Organisations (FIEO) had urged the government to review the impact of the outbreak on trade as China is one of the top trading partners for India and the rest of the world. The FIEO said that if the problem persisted, it may impact domestic mobile manufacturers as they import many of their components from China. China accounts for 75% of the total value of components used in TVs and almost 85% in the case of smartphones in India. ET reported on January 30 that smartphone and consumer electronics companies in India were staring at production cuts and possible delays in the launch of new products due to the coronavirus outbreak in China that has disrupted component supplies. Apple CEO Tim Cook has said that iPhone production could be impacted, possibly affecting earnings.