ICICI Bank Share Price Slumps, Axis Bank Share Price Falls after Fitch Downgrade, Nandan Nilekani Committee Report On Digital Payments and Other Top Business News of the Day

ICICI Bank share price slumps, Axis share price falls after Fitch downgrades the two. Facebook, Amazon, Netflix, and Google lose $137bn in stock market value on back of regulatory concerns. Growth of Ola and Uber India almost flat over the last six months.  RBI bars SR Batliboi from auditing books of commercial banks for a year. IL&FS Financial Services took loans by keeping lenders in the dark about adverse regulatory findings on its ability to meet liabilities, reports SFIO. Nikelani panel suggests changes to encourage digital payments, suggests 24x7 NEFT, RTGS, elimination of all charges. App-based services that employ gig workers have some of the worst working conditions among Indian startups, according to study.

 

Moving on to the top Business news today:

 

 BANKING 

ICICI, Axis share prices fall after Fitch downgrades the two. RBI bars SR Batliboi from auditing books of commercial banks for a year.

 

Downgrade: ICICI Bank and Axis Bank shares fell around a percent each intraday today after global rating agency Fitch downgraded both by a notch on back of weakening financial health of the private sector banks.

 

Fitch Ratings has downgraded both ICICI Bank as well as Axis Bank's Long-Term Issuer Default Rating (IDR) to 'BB+' from 'BBB-' and its Viability Rating to 'BB+' from 'BBB-'. The Outlook on the IDR is Stable. 

 

That’s New: In the first such case, the RBI has banned audit firm SR Batliboi & Co. LLP, member of global auditing firm EY, from carrying out audit assignments in commercial banks for one year beginning April 1. 


The move comes on back of lapses identified in a statutory audit assignment carried out by the firm. 

 

 IL&FS 

 
IL&FS Financial Services took loans by keeping lenders in the dark about adverse regulatory findings on its ability to meet liabilities, reports SFIO.
 
 
Kept in the Dark: Following an investigation by the Serious Fraud Investigation Office (SFIO), it has been alleged that IL&FS Financial Services (IFIN), a subsidiary of Infrastructure Leasing & Financial Services (IL&FS), had taken loans by keeping lenders in the dark about adverse regulatory findings on its ability to meet liabilities and using forged financial statements. 
 
 
Lenders claim that they had given loans to IFIN on the basis of its credit ratings and financial statements, which according to them had met the guidelines to lend to NBFCs. 
 
 
A Different Truth: As per SFIO, the financial statement doesn't show the true and fair view of the state of affairs of the company as the company was funding the defaulting borrowers and over a period of time to avoid recognition of these stressed defaulting borrowers as NPA and consequent provisioning. This modus operandi ensured in depicting artificially that the profitability and asset quality as positive always.
 
 
India’s shadow banks are being forced to go overseas more for money as local lenders balk at extending funds, flagging strains in a key industry for an economy that’s already sputtering.
 
 
Charity May Not Always Begin At Home: India’s Non-Banking Financial Companies (NBFCs) have raised more than $2bn of overseas bonds and loans in 2019, a record compared with the same period in previous years, according to data compiled by Bloomberg. 
 
 
As per this report, NBFCs in India are being forced to seek money from overseas as local lenders hesitate at extending funds, flagging the risk premium associated with the sector, especially following the IL&FS crisis.
 
 
More on the matter here
 
 
 PAYMENTS 
 
 
Nikelani panel suggests changes to encourage digital payments, suggests 24x7 NEFT, RTGS, elimination of all charges. 
 
 
Suggestions Are Welcome: The Nandan Nikelani Committee appointed by the RBI to deepen digital payments in India has suggested measures include elimination of charges, 24X7 RTGS and NEFT facility, duty-free import of point-of-sales machines, doing away with convenience fee on payments made to government agencies, and the use of machine-driven, online dispute resolution systems by payment systems for handling complaints.
 
 
More on the suggestions made by the Nandan Nilekani-led panel on digital payments here
 
 
Read the original report here.
 
 
 FANGS 
 

Facebook, Amazon, Netflix, and Google lose $137bn in stock market value on back of regulatory concerns.
 
 
Deep Dive: Facebook, Amazon, Netflix, and Google (FANG) together lost over $137bn in stock market value amid news of antitrust scrutiny by the U.S. Federal Trade Commission into Facebook and the Justice Department into Google.
 
 
Facebook lost $41bn and Google $52bn as its stock fell 6.9%, on pace for the lowest close since January 3. Despite not being directly affected, Netflix and Amazon’s stocks also fell by 1.6% and 4.7% respectively.
 
 
What’s New: In a two-and-a-half hour long keynote at the Worldwide Developer Conference, Apple showed everything it has been working on for the past few months. Upgrades were announced in the AppleTV, Apple Watch, iOS 13, and Airpod technologies, while new developments included the iPadOS, a cylinder-style Mac Pro along with its Pro Display XDR and MacOS Catalina, among others.
 
 
Here’s a quick rundown of all the major announcements. 
 
 
 GIG 

 
Growth of Ola and Uber India almost flat over the last six months. App-based services that employ gig workers have some of the worst working conditions among Indian startups, according to study.

 
Flatlining: As per industry analysts daily rides executed by Ola and Uber over the last six months have grown merely by 4%, resulting in higher fares and waiting times for customers.

 
Reductions in driver incentives by 40% which has led to a shortage of cabbies has been cited as the main reason, with Bengaluru having seen a 25%-30% drop in the supply of active drivers, according to a top official.
 
 
Ride prices have increased by at least 15%-20% during non-peak hours across cities, with the waiting time increasing to 12-15 minutes from 2-4 minutes two years ago.
 
 
A Job Without Benefits: According to a study by the Fairwork Project (an initiative led by two Oxford University researchers) app-based service companies like Uber, Ola, Zomato, and Uber Eats provide terrible working conditions to their gig workers, who are paid minimum wage and offered no job benefits.
 
 
The companies were judged on five principles of fairness--pay, conditions, contracts, management, and representation. Of a total score of 10, Ola and Uber scored two; Uber Eats, two; while Zomato scored four, with pay being the only criterion that Ola and Uber met. More on this here
 
 
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