The First Forum is an initiative which focuses on covering the latest happenings going around in the world in a brief format. This is in lieu with the importance of catching up with these events in this fast changing world.
In this Thirteenth Edition of The First Forum we would be covering the following:
1. Business
2. Economics
3. Finance

(By Shruti Jha, Nikunj Gulati, Kanika)

Business

ED files Money Laundering case against Naresh Goyal
The Enforcement Directorate (ED) has registered a case under the Prevention of Money Laundering Act (PMLA) against Naresh Goyal, former chairman of the Jet Airways and the airline. Earlier the financial probe agency had registered a case of Foreign Exchange Management Act (FEMA) violations against the airline and Naresh Goyal. Searches were carried out at Goyal’s residence by officials and he was summoned to the ED office where he was questioned for around four hours. Read MoreAccording to ED, Naresh Goyal and others allegedly misused loans which they borrowed from various banks and diverted it to foreign countries. The amount in question is about 9,000 crores. The allegation is that 20-30 % of the amount was diverted illegally into foreign countries. The Serious Fraud of Investigation Office and Income Tax Department are also investigating Jet Airways in this matter. Goyal tried to flee the country but was detained at the airport.

SBI Sets Rs 10,000 Crore Limit for Yes Bank Investment
State Bank of India, which can pick up a 49 per cent stake in the crisis-hit Yes Bank under the Reserve Bank of India’s draft scheme of reconstruction, has set a maximum investment limit of Rs 10,000 crore for the lender and will not be allowed to reduce the holding to below 26 per cent before three years from the date of capital infusion. Read MoreThe Board believes that if SBI becomes the sole investor in the bank and picks up a 49 per cent stake, then the immediate investment requirement would be Rs 2,450 crore and that SBI had received the draft scheme of reconstruction and its investment and legal teams were doing their due diligence of the scheme. In a rare move, the RBI late on Thursday (March 5) placed Yes Bank under a 30-day moratorium. The Board says the effort will be that the resolution plan is approved and implemented before the timeline set by the RBI declaring that the proposed plan will not have any impact on SBI’s balance sheet.

Apple asks Employees to Work from Home as Virus Spreads
APPLE INC on Friday asked employees at its Silicon Valley headquarters to work from home if possible as a “precaution,” a spokesman confirmed to Reuters. Officials in Santa Clara County, where Apple’s 12,000-person Apple Park campus is located, had earlier asked large companies to consider asking employees to telecommute and find other ways of limiting close contact. Read MoreThere were 20 confirmed cases of the coronavirus in the county as of March 5, health officials said. Apple is also asking employees in the Seattle area to work from home. In California, its Santa Clara County retail stores remain open, a spokesman said. Apple last month said the spread of the virus in China would cause it to miss revenue targets for the quarter ending in March and cause iPhone shortages.

6 of top-10 Indian firms lose ₹95,432 crore in m-cap, Reliance worst hit
Six of the 10 most valued domestic companies suffered a combined erosion of ₹95,432.26 crore in market valuation last week, dragged down by Reliance Industries Limited and HDFC Bank amid a bearish trend in the broader market. During the last week, the BSE Sensex plunged 720.67 points or 1.88%. Read MoreOn Friday, the Sensex plummeted 894 points amid the Yes Bank crisis and coronavirus outbreak which has stoked fears of a global recession. The market capitalisation (m-cap) of Reliance Industries plummeted ₹37,144 crore to ₹8,05,118.67 crore, taking the biggest hit among the top-10 firms for the week ended Friday. While there was a massive drop in other top-10 firms as well like HDFC Bank, Bajaj Finance, ICICI Bank, Bharti Airtel, there were some who achieved a gain even in these cries. Tata Consultancy Services made the maximum gain with other big companies like Infosys, Hindustan Unilever Limited and Kotak Mahindra Bank. In the ranking of the 10 most valued firms, RIL retained its top spot, followed by TCS, HDFC Bank, HUL, HDFC, Infosys, ICICI Bank, Kotak Mahindra Bank, Airtel and Bajaj Finance.

Reliance Communication insolvency official files resolution plan with NCLT
The insolvency resolution professional of Reliance Communications Ltd on Friday filed a resolution plan for the company with the Mumbai bench of National Company Law Tribunal, the erstwhile telecom firm said. Earlier this week, the CoC (Committee of Creditors) had unanimously approved the resolution plans provided by Reliance Jio Infocomm Ltd. and UV Asset Reconstruction Company (UVARC) for Reliance Communications Ltd, two banking sources had told Mint. Read MoreJio has offered around ₹4,700 crore to buy tower and fiber assets of RCom’s subsidiary Reliance Infratel Ltd, while UVARC has bid ₹14,000 crore for spectrum, real estate assets as well as the enterprise and data center businesses, held in Reliance Communications Ltd and Reliance Telecom Ltd, the sources had said. In addition, the lenders will claw back the priority payments of around ₹4,300 crore made to Chinese and Indian lenders as sources inform. However, despite the provision, loans of Chinese lenders will reduce by nearly 65% to around ₹4,000 crores from about ₹12,000 crores, the source said. The 38 lenders of R.Com will recover ₹23,000 crore, which is more than 70% of their outstanding of ₹33,000 crore of secured debt.

Economics

YES Bank stock crash and financial mess
In a drastic turn of events, India’s central bank took control of the country’s fifth-largest private sector lender Yes Bank on Thursday and imposed limits on withdrawals. Read MoreIndia’s central bank took control of the country’s fifth-largest private sector lender Yes Bank on Thursday and imposed limits on withdrawals, spreading confusion and fear among account holders. Shares of Yes Bank, which traded at 404 rupees at its peak in August 2019, fell to a record low of 5.65 rupees on Friday, with the stock plunging nearly 85%. The fall wiped out 79.43 billion rupees ($1.08 billion) from Yes Bank’s market value.

OPEC’s pact with Russia falls apart, sending oil into tailspin
A three-year pact between OPEC and Russia ended in acrimony on Friday after Moscow refused to support deeper oil cuts to cope with the outbreak of coronavirus and OPEC responded by removing all limits on its own production. Oil prices plunged 10% as the development revived fears of a 2014 price crash, when Saudi Arabia and Russia fought for market share with U.S. shale oil producers, which have never participated in output limiting pacts. Read MoreBrent has lost about a third of its value this year, tumbling towards $45 a barrel, its lowest since 2017, putting oil-dependent nations and many oil firms under heavy strain as the global economy reels due to the virus outbreak, which has dampened business activity and stopped people traveling.

IMF makes available $50 billion to help address Coronavirus
The International Monetary Fund has announced $50bn (£39bn) of support for countries hit by the coronavirus. The organisation also warned that the outbreak had already pushed this year’s global economic growth below last year’s levels. The emergency measure came after the virus has spread rapidly outside China to more than 70 countries. Read MoreThis week governments and central banks around the world have taken action to ease the impact of the virus. The IMF said it is making the money available to help poor and middle-income countries with weak health systems respond to the epidemic. At the same time the fund said the spread of the coronavirus has erased expectations of stronger economic growth this year, and will push 2020 global output gains to their slowest rate since the financial crisis in 2008.

Ready for Rate Cuts to Shield Economy From Coronavirus: RBI Chief
The RBI cut interest rates five times in 2019 to support an economy headed for its weakest expansion in 11 years. Reserve Bank of India (RBI) governor has said he is ready to act to shield the economy from the coronavirus and reiterated there’s room to cut interest rates if needed. Read MoreSpeaking in an interview with Bloomberg News in Mumbai hours before the Federal Reserve slashed interest rates by half a percentage point in an emergency move, Shaktikanta Das said “there is a strong reason for coordinated policy action.” For India, options include a rate cut and supporting the market through liquidity measures, he said. Inflation, which had kept the central bank from easing since December, is expected to moderate, he said in an interview at the RBI’s headquarters on Tuesday. He argued the bank’s flexible inflation-targeting framework allows the central bank to look through recent price pressures and loosen policy.

Air India Divestment Process Going “Extremely Well”, May Extend Deadline
Civil Aviation Minister Hardeep Singh Puri on Friday indicated that the deadline for submission of preliminary bids for Air India could be extended even as he emphasised that the disinvestment process is going on “extremely well”. Making a second attempt to privatise loss-making Air India in as many years, the government on January 27 came out with a Preliminary Information Memorandum (PIM). Read MoreThe government has proposed selling 100 per cent stake in Air India along with budget airline Air India Express and the national carrier’s 50 per cent stake in AISATS, an equal joint venture with Singapore Airlines. When asked whether the deadline for submission of initial bids would be extended, Puri said, “only to accommodate a few days that we lost”. Specific details could not be immediately ascertained. The last date for submitting preliminary bids is March 17.

Finance

Cryptocurrencies are finally legal
The Supreme Court on 4th March lifted the curbs on exchanges in cryptocurrency imposed by RBI. The judgement comes after a series of hearings challenging RBI’s ban on financial firms or individuals in India from trading in cryptocurrencies. Read MoreThe 180-page Supreme Court judgment by a three-judge Division Bench, in a way, allowed trading and investment in crypto assets and exchanges offering this service in India. Moreover, it is worth noting that there was no formal ban on cryptocurrencies under any law in existence in India. Cryptocurrencies are virtual currencies and a digital representation of value. They can be digitally traded and can function as a medium of exchange, a unit of account and a store of value, though they do not have the status of legal tender. The order is likely to come as a big relief to virtual currency proponents in the country.

Global Money Market Inflows Hit 30-Week Highs as Coronavirus Fears Rattle Stocks
Global investors sent a net $61 billion into money market funds in the week that ended March 4, hitting 30-week highs for the category, while global equity funds posted their largest asset losses since December 2018, according to data released Friday by fund-tracker EPFR. Read MoreThe flight to safety came amid global financial market volatility as investors and companies try to predict the global economic impact from the rapidly spreading new coronavirus. A record $4 billion came out of alternative funds, while Greece and Turkey bond funds also set new records for outflows. India equity funds, meanwhile, posted their largest asset loss since the first quarter of 2008. Although, Latin American equity funds were among the few categories that gained assets despite the broad market turmoil by posting their largest inflows in nearly two years.

RBI takes over Yes Bank Board, withdrawal limits set to Rs. 50,000
RBI has superseded the Board of Directors of Yes Bank for a period of 30 days and capped withdrawal at Rs.50,000 and also imposed restrictions on its operations. It took a decision after consultation with the Central government. RBI said a “moratorium” has been imposed on Yes bank stressing that the bank’s financial capability has undergone a steady decline largely due to the inability of the bank to raise capital. Read MoreThe central bank move is aimed at preventing a run on the bank such an event can cause contagion in the entire banking system as financial institutions are interlinked. Finance Minister Nirmala Sithraman on Friday assured Yes Bank depositors that their money is safe and there will be no loss to any of them.

Bad news as the interest rate on EPF reduced to 8.50% for FY20
The Central Board of Trustees (CPT) of Employees Provident Fund Organisation (EPFO) lowered the interest rate on deposits to 8.50% for the current financial year (FY20). The lowered interest rate in over five years. Now the labour ministry requires the finance ministry’s concurrence on the matter. Read MoreThe proposal is sent to the Finance Ministry to avoid any liability on account of shortfall in the provident fund income for a fiscal. The finance ministry has been urging the labour ministry to align the Employee Provident Fund (EPF) interest rate with other small saving schemes run by the government such as Post-Office Savings Schemes and Public Provident Fund. The move has an impact on salaried employees and around six crore subscribers to the Provident Fund Schemes as they would earn lower returns for the financial year. Minister Santosh Kumar Gangwar said the EPFO will have a surplus of over Rs.700 crore with the 8.5% interest rate for the ongoing fiscal year.

Finance Minister introduced a bill to amend the Banking Regulation Act
Finance Minister Nirmala Sitharaman introduced a bill in the Parliament to amend the Banking Regulation law to give the RBI more powers to regulate cooperative lenders and prevent fraud such as the one seen in PMC Bank. It is proposed to strengthen the co-operative banks by increasing professionalism, enabling access to capital, improving governance and sound banking through RBI. Read MoreIntroducing the Banking Regulation (Amendment) Bill 2020, the Finance Minister said it is the ‘need of the hour’ to avoid a PMC bank like the crisis in the future. But however, the bill could not be passed as the proceedings in the Lok Sabha were disrupted for the second consecutive days as the ruling party and opposition members argued over the recent violence in Delhi.

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