India's PMI shrinks to 52.1 in June. State-run banks may get flexibility to hike employee wages based on profitability and paying capacity. Bank of Baroda to acquire loans worth INR3,000cr from DHFL. Lenders of DHFL meet to discuss debt recast plan. RBI waives RTGS and NEFT fees to encourage digital transactions. Paytm to get slightly more expensive from today. Indian startups raise a record $3.9bn in the first half of 2019. Next wave of e-commerce to be discovery-led.
Moving on to the top Business news of the day.
India's PMI shrinks to 52.1 in June.
Calm After the Storm: India’s manufacturing sector witnessed a slowdown in June from the three-month high of 52.7 in May as the Purchasing Managers’ Index (PMI) fell to 52.1.
Slower increase in new work intakes leading to slower rise in output and employment has been cited as one of the primary reasons for the fall in PMI.
Trends: India's Manufacturing PMI historical data can be accessed here.
State-run banks may get flexibility to hike employee wages based on profitability and paying capacity.
The What: In a significant departure from the practice followed so far, as per a new proposal discussed between the Indian Banks’ Association (IBA) and state-run banks, the latter will be given the flexibility to pay their employees according to their profitability and paying capacity.
The Magic Formula: As per the proposal, there will be a minimum hike in the wage up to a certain percentage. Over that, the increase will be market-driven, based on a bank’s profitability and capacity to absorb higher wage costs.
Here’s a deep dive into the previously proposed variable pay formula.
Bank of Baroda to acquire loans worth INR3,000cr from DHFL. Lenders of DHFL meet to discuss debt recast plan.
What’s the Plan: Bank of Baroda (BoB) has entered into an agreement with NBFC Dewan Housing Finance (DHFL) to acquire loans worth INR3,000cr against its current loan exposure of INR6,500cr.
Sweet Treats: The transaction is likely to help BoB trim its loan exposure to DHFL and also improve its loan book since the acquired loans are higher-rated assets.
In Other News: Lenders of debt-ridden NBFC DHFL led by state-run Union Bank of India are scheduled to meet today to discuss a potential debt recast plan for debt worth INR90,000cr which the non-bank lenders owes to them.
FYI: The consortium of 30 lenders may also consider conversion of debt into equity.
RBI waives RTGS and NEFT fees to encourage digital transactions. Paytm to get slightly more expensive from today.
Digital India: The RBI has decided to waive off RTGS and NEFT fees that was levied on internet banking customers by banks. This move is expected to boost online transactions amongst the populace.
Presently, RTGS is charged on transfers above INR2 lakh while NEFT is levied on transactions below INR2 lakh.
It will be interesting to see how this will affect digital transactions in India, where cash remains king, especially in rural areas where only about 16% of the population uses online payment channels.
Pay(more)tm: Paytm will begin charging customers a Merchant Discount Rate (MDR) for payments made through its platform from today.
MDR is already charged by banks and card companies on digital transactions and Paytm had till now picked up the tab on its customers’ MDR and kept it at zero to attract more customers. Now, to decrease its debt and turn profitable, the Noida-based company will reverse this policy.
The charge will be 1% on credit card payments, 0.9% on debit card payments and INR12-15 for transactions via UPI or net banking.
Indian startups raise a record $3.9bn in the first half of 2019. Next wave of e-commerce to be discovery-led.
It’s a Record!: Startups in India have raised a record $3.9bn from venture capitalists in the six months before 30 June, as per data from Venture Intelligence, a startup data tracker. This is a 44.4% jump from the $2.7bn received during the same period last year.
For Some Perspective: 2016 and 2017 saw full-year investments of $4.2bn and $4.3bn respectively.
The surge in capital allocation is perhaps augmented by Walmart’s $16bn deal with Flipkart.
The injection has also broadened, across companies and sectors, moving away from a few large companies such as Ola, Paytm and Flipkart.
Case in Point: WMall has raised $2m from SAIF Partners and Venture Highway, and is in talks to close its next round worth $8-$10m. Sequoia Capital-backed BulBul.tv is in talks to raise $6-$7m from Chinese alternative asset management firm CDH Investments. SimSim is in discussions with Accel Partners and Shunwei Capital to raise a $5m round, and Mall91 is looking to raise $8m from Go Ventures, the investment arm of GoJek.
The New Wave: Discovery-led social commerce platforms, which rely on videos and social platforms like Whatsapp unlike search-led platforms such as Flipkart and Amazon, have emerged as the next wave of e-commerce as venture capitalists discover “a picture of promise” in the sector.