RBI Set to Tighten Liquidity Mismatch Limits for NBFCs, Bidders of Jet Airways Reluctant, Show No Expressions of Interest, Saudi Arabia Pledges to Boost Oil Output, If Needed et al.

RBI set to tighten liquidity mismatch limits for NBFCs. Global factory activity recovers in April, but remains sluggish overall. India's manufacturing sector growth lowest in 8 months in April. Saudi Arabia pledges to boost oil output if needed, as US seeks to ban all Iran oil exports. Bidders for Jet Airways reluctant, show no expressions of interest.  

 

Moving on to the top Business stories of the day. 

 

 RBI 

RBI set to tighten liquidity mismatch limits for NBFCs.
 

Sky is the Limit?: The Reserve Bank of India (RBI) is set to impose new limits on the liquidity mismatches that non-banking financial companies (NBFCs) operate with, in an attempt to build them into more stable sources of funding.
 

The move seeks to align NBFCs’ asset-liability mismatch norms with those of banks, which are stricter.
 

The new guidelines are expected to be introduced in a phased manner, covering both systemically important non-deposit taking, and all deposit taking entities, and take into account the sectors they operate in.
 

Here’s a closer look at how the new guidelines are likely to make life ahead tough for NBFCs. 
 

Safe No Matter Who Wins Vote: RBI Governor Shaktikanta Das, as an ex-career bureaucrat, has worked under administrations led by both Prime Minister Narendra Modi’s Bharatiya Janata Party and the opposition Indian National Congress. And because of his prior engagement with both the parties, it is likely that Das would stay put whatever be the results of the elections. A quick overview of his previous engagements with the two parties here
 

Last Opportunity: Despite multiple reminders from the SC, RBI continues to reject requests for information from the public about banks that had violated rules and had been caught and fined by the banking regulator during annual supervisory reviews. A recent rap from the apex court has already prompted the regulator to revise its disclosure policy. But can a leopard change its spots? Read more here.

 

 ECONOMY 

Global factory activity recovers in April, but remains sluggish overall. India's manufacturing sector growth lowest in 8 months in April. 


 
Slow Recovery: Global factory activity recovered marginally in April, but is still showing signs of struggle, on back of weak demand and lingering concerns around trade protectionism.
 

In the euro zone, business survey data pointed to a third straight month of contraction. In the US, while manufacturing might still be growing, it missed expectations by a wide margin. The picture was similarly gloomy across much of Asia.
 

Manufacturing Blues: India’s manufacturing sector performance dropped to an eight-month low of 51.8 in April 2019 vs 52.6 last month, below market expectations of 52.5, as new business growth moderated, amid cash flow difficulties and competitive pressures.
 

Chart: India’s Manufacturing PMI here.

 

 IBC 

Chief Economic Adviser Krishnamurthy Subramanian shares his views on the slowdown in the Indian economy, unemployment, the controversial jobs data and the Bankruptcy Code. 
 

Today’s Pick: Chief Economic Adviser Krishnamurthy Subramanian says that the Insolvency and Bankruptcy Code is a big reform that is changing credit behaviour and calls for incentives for young businesses rather than small businesses. In an exclusive interaction with the Economic Times, the CEA shares his views on the slowdown in the Indian economy, unemployment, the controversial jobs data and the Bankruptcy Code. 
 

A Review: It’s been three years since the implementation of the Insolvency & Bankruptcy Code. Here’s a review.

 

 JET 

Bidders for Jet Airways reluctant, show no expressions of interest.  

Staring At An Obituary: With only ten days to go for final submission of bids, three of the four qualified bidders — Etihad Airways, TPG Capital and Indigo Partners — have not signed nondisclosure agreements, a must for conducting due diligence. 

The burden of reversing the grounded carrier’s negative net worth before it can fly again is the biggest challenge for any potential investor, as per SBI, the lead creditor of Jet Airways.
 

Within this backdrop, no stakeholder is hopeful of a revival plan for the private airline which was suspended operations last month. 

Clutching at StrawsMeanwhile, Jet Airways is in talks with the likes of Adani, Mahindra, Tata Group and RIL seeking investment to fund a plan of letting Jet comeback to the runway at half its original size, with at least 50 planes. But seems like none of it is working.
 

Approaching Deadline: The airline has time till May 8 to repay its debt raised to finance six Boeing 777 planes. Failure to do so will lead to a repossession of planes by the US Exim Bank. The deadline for submission of binding bids to take over control and ownership of Jet Airways is 10 May. 

 

 US 

Saudi Arabia pledges to boost oil output if needed, as US seeks to ban all Iran oil exports.
 

Showdown: Saudi Arabia has pledged to boost oil output if needed, as the Trump administration seeks to ban all Iran oil exports.
 

Riyadh and Washington could potentially face a weeks long showdown over the number of extra barrels the kingdom would supply to global markets to keep crude prices stable.
 

The US is pushing to restart production in a field shared by the kingdom and Kuwait that could unlock half a million barrels a day. 
 
However, at the same time, Saudi Arabia is lobbying within the OPEC to change the way the cartel calculates whether the market is adequately supplied as a way to show the US that no more oil is needed, in need of higher oil prices to keep its state budget balanced. 
 

The Trump administration last month had said that it would end the exemptions it granted to Iran’s oil buyers, aiming to bring its exports to zero. While Iran has remained defiant in the face of the sanctions and vowed to overcome them, but the substantial impact they have had on the country is clear. Here are six charts that show how hard US sanctions have hit Iran.