Lenders of Jet Airways led by SBI to take the carrier to NCLT, seek resolution under IBC. Facebook announces its own digital currency - Libra. US central bank leaves benchmark rate unchanged. Qatar’s sovereign wealth fund in talks to invest in ed-tech start-up Byju’s. Paytm Money plans to raise c. $1.2bn in a mega funding round, set to enter the unicorn club. Amazon in talks to invest in grocery supply chain platform NinjaCart. PE investors seek details about Yes Bank.
Moving on to the top Business news of the week.
Lenders of Jet Airways led by SBI to take the carrier to NCLT, seek resolution under IBC. Jet Airways share price falls to an all-time low. ED to question Founder Naresh Goyal in the Jet Airways privilege case.
Weighing the Options: Lenders of the grounded Jet Airways are set to meet today in order review a possible resolution for the private carrier and also discuss whether bankruptcy may be the most viable option as no serious proposal has not been received so far.
Lenders also have the option to pay INR200cr to the US Exim Bank and take charge of six Jet Airways planes, but as per experts, they are unlikely to opt for such a plan.
The Burden of Debt: After running out of cash and failing to raise interim loans from banks, the airline suspended all flights on April 17. Jet has accumulated debt of nearly INR8,500cr on its books with total liabilities of around INR25,000cr.
Share Plunge: Jet Airways share price fell to an all-time low of INR69.75 before closing at INR66.95 (-18%).
Zuck Wants Your Buck: Libra is a virtual currency that can be bought by users on platforms like Messenger and WhatsApp (owned by Facebook) and stored in a digital wallet called Calibra, which would be a standalone app.
Some Perspective: RBI had last year announced a ban on cryptocurrency in India, restricting any regulated entity from conducting business with its proponents. The draft Banning of Cryptocurrency and Regulation of Official Digital Currency Bill 2019 seeks to jail anyone who “mine, generate, hold, sell, transfer, dispose, issue or deal in crypto-currencies”.
A Loophole: However, peer-to-peer transactions of bitcoins are allowed. As per experts, If Facebook were to design the Libra to be a closed system, only to be transacted on its network and not beyond, RBI should ideally be less concerned.
Up & Up: Workplace communication software Slack, which debuted on the New York Stock Exchange yesterday, closed 48.5% up at $38.50 supported by reports that the giant had agreed to a reference price of $26 per share.
Slack’s market cap now sits well above $20bn, nearly 3 times its most recent private valuation of $7bn.
Some progressive reforms the government could push in its upcoming budget 2019. FM Sitharaman expected to discuss single point refund system at GST Council meet.
It’s Always the Right Time for Reforms: Very soon, the re-elected Modi government will present the first budget of its second term. Under the new Finance Minister Nirmala Sitharaman and five full years ahead, it is presented with an ideal opportunity to push significant reforms.
Many of these reforms, commentators hope, will be in the income tax regime, beginning with revising tax rates, which, though reduced recently for the INR2.5L-5L income bracket jumps abruptly to 20% for the next income slab (INR5L-10L).
Other possible reforms include incentivising individual investments by raising the cap on deductions, increasing HRA exemptions in metros, and boosting deductions for home loan interests and saving bank account interests.
US central bank leaves benchmark rate unchanged. This will again anger Trump, who has been attacking the Fed for not slashing interest rates.
Steady Does It: The US Federal Reserve today left interest rates unchanged at the 2.25-2.5% range, where it has been since December last year.
The Federal Open Market Committee voted 9-1 in favour of keeping the benchmark rate unaltered.
The central bank noted that while economic indicators painted a largely mixed picture, the state of the economy remained strong.
The Donald Will Be Displeased: The decision to keep rates unchanged will likely irk the White House. President Trump has been pushing the Federal Reserve to slash rates to stimulate economic growth, which has been gradually stalling.
In his press conference, Chairman Jerome Powell said that the bank would like to wait and “see more data before moving rates”. However, he did not rule out the possibility of a rate cut in the near future, predicting at least one or two cuts - but not until 2020.
And in its statement, the central bank dropped the word “patient” when talking about its approach to policy. This gives it plenty of wiggle room to change its stance should the economy go awry this year (or should Trump’s tirades actually dent the Fed’s independence).
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