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Government Allows Some Shops to Open from Today Amidst Lockdown, Banks Could Ask Government to Suspend All IBC Cases for Two Years

Professor of Financial Economics and Part-time Value Investor, Transfin.
Apr 25, 2020 1:41 PM 6 min read
Editorial

Government allows some shops to open from today amidst lockdown. Delhi Airport readies to reopen, to implement new rules for passengers and staff. Traders' body CAIT to soon launch its own ecommerce marketplace. Banks continue to park sky high amounts in RBI’s reverse repo window. As oil prices plunge, the cost of storing oil shoots up. Franklin Templeton decision spreads panic to mutual funds, corporate bond markets. PMS investors looking for top-ups face ticket size hurdle. At least 328 companies have applied for a loan moratorium. Banks could ask Government to suspend all IBC cases for two years. Facebook launches drop-in video chat feature Rooms. 4cr Indians may be left without mobile phones due to lockdown. US FDA approves first at-home COVID-19 test kit.

 

 

OPEN FOR BUSINESS

Government allows some shops to open from today.

Partial Reprieve

The Government today said that all shops in rural areas, except those in malls, could open for business. In urban areas, all standalone and neighbourhood shops and those in residential complexes are allowed to open but not those in markets, market complexes and shopping malls. The order was clarified in a midnight statement by the Ministry of Home Affairs.

 

Sale of alcohol will continue to be prohibited and ecommerce platforms can sell only essential goods for now. All shops in areas identified as COVID-19 hotspots will remain shut. [The Hindu]

 

Delhi Airport readies to reopen, to implement new rules for passengers and staff.

Chimes of Change

Delhi Airport expects to resume operations after May 3rd, but it won't be business as usual for its staff and for passengers. They will have to contend with new rules and norms to ensure the safety of everybody. Mandatory face masks for all travellers and crew, no queues for security clearance, restricted use of in-flight lavatories and a stop on all in-flight meals - these are some restrictions that would be on the table. [HT]

 

Traders' body CAIT to soon launch its own ecommerce marketplace.

A New Player in the Arena

We have seen of late how multi-billion-dollar companies like Amazon, Reliance and Flipkart have begun courting the humble kirana store for their ecommerce operations. And we have followed how the Confederation of Indian Traders (CAIT) has consistently opposed big ecommerce platforms, accusing them of anticompetitive practices like predatory pricing.

 

Now, CAIT will reportedly teamed up with the Government’s Department for Promotion of Industry & Internal Trade (DPIIT) to soon launch a national e-commerce portal of its own, which will enable local kirana stores to take orders online and ensure last-mile contactless delivery. [Entrackr]

 

PARKING SPACE

Banks continue to park sky high amounts in RBI’s reverse repo window.

Why Spend When You Can Save

The RBI may want banks to lend more and not overuse the reverse repo window. But banks seem to be content with parking funds with the Central Bank, where they deem they are safer in these uncertain times when lending to corporates and individuals might lead to an uptick in bad loans down the lane.

 

The past week, daily infusion by banks via reverse repo reached over ₹7Lcr ($92.6bn), close to record highs. This has continued even as the banking regulator has warned it may cap the reverse repo rate to disincentivise the window. [ET Markets]

 

Don’t know what the fuss surrounding reverse repo rate is all about? Here’s an explainer for you. [TRANSFIN.]

 

As oil prices plunge, the cost of storing oil shoots up.

Oil for One, One for Oil

Over the past week the price of US WTI crude oil plunged to negative territory and Brent crude dived down too. As oil prices climb down, the price of finding a place to store oil has automatically shot up. And massive oil tankers at sea are happily providing services here – to store oil and to transport oil to storage facilities on land. And they’re happily price gouging too. In February, such tankers, which can hold as much as 2m barrels per vessel, charged $25,000 a day. Now, those prices have shot up to almost $300,000 in some cases. [Moneycontrol]

 

PS

Why did oil prices fall below zero and why is storing oil such a big issue right now? Head to this article to clear all your doubts. [TRANSFIN.]

 

INVESTING

Franklin Templeton decision spreads panic to mutual funds, corporate bond markets.

Don’t Panic!

Franklin Templeton Mutual Fund recently  decided to shut six of its open-ended debt funds, citing lack of liquidity in the debt market and unprecedented redemptions in these yield-oriented schemes in the wake of the coronavirus outbreak and the subsequent slump in the Indian economy. Panic over this decision has spread to the asset management industry and the corporate bond market. Several mutual funds sold top-rated debt securities while investors are reportedly pulling money out of credit-risk schemes or bond funds holding lower-rated papers. [ET Markets]

 

PMS investors looking for top-ups face ticket size hurdle.

Obstruction Ahead

A decision market regulator SEBI took in January to raise ticket size is proving to be a hurdle to investors in portfolio management services (PMS) seeking to top up their investment in a falling market. More on this here. [BS]

 

COMPANY MATTERS

At least 328 companies have applied for a loan moratorium.

Company Talk

As per data compiled by rating agency Icra Ltd., at least 328 firms have applied for a loan moratorium granted by the RBI as a relief measure on March 27th. This list of companies includes large ones like JSW Steel Ltd, Tata Power Ltd and Piramal Enterprises Ltd. [Livemint]

 

India’s largest engineering and construction firm Larsen and Tourbo has lost ₹12,000cr ($1.58bn) in revenue one month into the nationwide coronavirus lockdown. More details here. [Financial Express]

 

Banks could ask Government to suspend all IBC cases for two years.

As of December 2019, there were 1,961 cases under the Insolvency and Bankruptcy Code (IBC) pending before the National Company Law Tribunal (NCLT). Now, citing sharp fall in valuations and lack of demand for bankrupt companies, banks are considering asking the Government to suspend all IBC proceedings for two years. [BS]

 

Facebook launches drop-in video chat feature Rooms.

Zuck in the House

Facebook is looking to enter the video calling scene currently dominated by Zoom and, at least since lockdowns began around the world, Houseparty. The social media giant today launched a feature called Rooms on mobile and desktop in English-speaking countries. It allows you to create a video chat window that your friends can discover via a new section above the News Feed or notifications and join thereon for a spontaneous hangout via video call.  For now, up to eight people can join, but that limit could rise to 50 in coming weeks. [TechCrunch]

 

COVID CRISIS

4cr Indians may be left without mobile phones due to lockdown.

Phone Away from Phone

Dreams of a Digital India could be hit and stalled due to the coronavirus lockdown. According to the India Cellular and Electronics Association, about 4cr mobile phone users in the country could be left without handsets due to faults and breakdowns amidst the restriction on the sale of phones and spare parts and the general economic downturn. [HT]

 

US FDA approves first at-home COVID-19 test kit.

Stay at Home, Test at Home

The US Food and Drug Administration (FDA) has announced that it has approved the first at-home COVID-19 test kit. It was developed by LabCorp, a US company, and costs $119 in the States. [The Hindu]

FIN.

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