Transfin.

Debit and Credit Cards to be Disabled for Online Transactions if not Used Before, Says RBI

 

Debit, credit cards to be disabled for online transactions if not used before, mandates RBI. AirAsia CEO and top management summoned by ED. Exports contract for fifth straight month in December, imports shrink 8.8%. OYO might cut more jobs.

  

PERSONAL FINANCE

Debit, credit cards to be disabled for online transactions if not used before, mandates RBI.

Who Moved My Card?: In a bid to enhance the security features of debit cards and credit cards, the RBI has mandated that while issuing and reissuing debit and credit cards, banks must ensure that all debit cards and credit cards are enabled only for domestic transactions at ATMs and point of sale (PoS) terminals.

 

If customers want to use their cards for online transaction, international transactions and contactless transactions, they have to separately apply for these services. If any individual has not used his or her cards for online transaction, international transactions and contactless transactions before, their card will be disabled for these services, RBI noted. Financial Express

 

Demand for personal loans and credit cards rises amidst slowing in the Indian economy. 

Borrow Today, Pay Tommorrow: As per India Retail Credit Trends report by TransUnion Cibil, consumer credit grew (at lower rates) in Q3 of CY 2019 on the back of increase in financial products such as personal loans and credit cards.

 

Credit card balances and number of accounts increased by 40.7% compared to 29.8% during the same time last year, suggestive of the fact that people are borrowing to meet their everyday expenses.

 

However, overall balances across all consumer loan products increased only by 13% compared to 23.2% last year. Demand for auto loans, home loans and loans against property fell between July and September 2019, while demand for consumption lending products increased. Livemint

 

AVIATION

AirAsia CEO and top management summoned by ED.

ED Calling: The Enforcement Directorate (ED) has summoned AirAsia Chief Executive Officer (CEO) Tony Fernandes and the top brass of the private carrier on January 20th in an ongoing probe against the airline. Summons have been issued under the Prevention of Money Laundering Act (PMLA). 

 

The case relates to an alleged violation of norms by Group President Tharumalingam Kanagalingam, former Chairman S Ramadorai, Senior Group Executive Naresh Algan and ex-CEO Mittu Chandiliya for relaxation of the 5/20 rule to secure a licence to operate internationally as well as a violation of Foreign Investment Promotion Board (FIPB) rules for its Indian venture Air Asia India. Moneycontrol

 

Good to Know: The 5/20 rule is a norm of the Indian Aviation Ministry under which national carriers are required to have five years of operational experience and a fleet of minimum 20 aircraft to fly overseas.

 

Synergy Group and Prudent ARC submit EoIs for Jet Airways.

Swipe Right: South America-based Synergy Group and India-based Prudent Asset Reconstruction Company have submitted Expressions of Interest (EoI) to acquire grounded Jet Airways as the deadline ended on Wednesday. 

 

As per sources, Hinduja Group had also explored investing in the beleaguered airline, but backed out later because it found no value. A Dubai-based fund, too, had showed interest in investing in the grounded airline, but did not submit an offer.

 

This is the second time that the lenders to Jet called for EoIs. The first round of bidding did not result in any resolution plan for the revival of the airline. Jet had shut operations on April 17th last year. It was admitted under the insolvency process in June. CNBCTV18

 

INDIAN ECONOMY

Exports contract for fifth straight month in December, imports shrink 8.8%.

A Mixed Bag: Exports from India shrank 1.8% to $27.36bn in December - contracting for the fifth straight month, on the back of lower receipts of processed petroleum exports and ongoing broad-based decline plaguing all major foreign exchange earning sectors. 

 

Meanwhile, imports were down 8.83% to $38.61bn - higher than the 0.3% fall in November, bringing down the trade deficit to $11.25bn during the month under review. BS

 

India's financial health much worse than what has been reported, says former Finance Secretary.

It Only Gets Much Worse: Shubash Chandra Garg, Former Secretary at the Ministry of Finance in a blogpost has said that India's financial health is much worse than what has been portrayed. 

 

The recently retired bureaucrat said that the government has left many of its expenses hidden, amounting to over ?4L cr ($57bn). He also revealed that India’s fiscal deficit for 2017-18 is at least 0.9% more than what was reported. Business Insider

 

COMPANIES

Goldman Sachs reports drop in profits as it prepares for hefty 1MDB fine.

All Hands On Deck: Goldman Sachs reported a drop in fourth-quarter profits following a mixed performance in its operating businesses. A big portion of Goldman's increased expenses came from the $1.1bn it set aside in anticipation of settlements on the 1MDB scandal.

 

The bank’s operating expenses rose 42% in Q4 and 6% for the full year. 

 

As for the 1MDB scandal, which has already dramatically remade Malaysian politics and led to the indictments of two ex-Goldman bankers,  Chief Executive David Solomon has said that settlement talks with US and Malaysian authorities are "progressing and remain active...We are working hard to bring closure to this matter as quickly as possible." CNA

 

ICYMI: The 1MDB scandal is a scandal surrounding the activities of a Malaysian government investment fund (1MDB), from which former Malaysian PM Najib Razak was accused of channelling over $700mn to his personal accounts. Goldman Sachs was the investment bank that advised 1MDB on bond sales and acquisitions, and has been accused of ignoring red flags while billions of dollars were looted from its client. (Click here to read more on the 1MDB scandal.)

 

OYO might cut more jobs.

To Fire or Not to Fire: Meanwhile at OYO, senior company executives say job cuts are likely to intensify. Company spokespersons, on the other hand, deny any further retrenchments in the offing. Click here to read more.

 

WORLD

US, China sign massive purchases deal but US tariffs remain.

Rejoice...: The US and China have signed Phase One of a trade deal which is expected to see sharp increases in sales of US goods and services to China. The eight-part agreement will also see Beijing further open its markets to foreign firms and agree to new protections for trade secrets and intellectual property. This represents a truce in a two-year trade war that has roiled global markets and businesses.

 

...For Now: But the deal leaves in place US tariffs on about $370bn of Chinese goods - ot three-quarters of Chinese imports to the US. Possible tariff reductions will be left to later negotiations, which will cover many controversial issues like Chinese subsidies to domestic firms and its oversight of state-owned firms. US President Donald Trump has said the remaining tariffs “will all come off” if future talks produce a second agreement, although this is not expected to happen before the US Presidential election this November. WSJ

 

How does China steal trade secrets?

Made in China (After Stealing From Elsewhere): Accusations that China steals US technology has been the central driver of the trade war. But does China do this? What's the Chinese playbook to steal trade secrets? One way is hacking and outright theft of corporate secrets. Another is buying secrets through corporate deals. And sometimes China requires foreign firms to form joint ventures with local companies in other to do business in the country.

 

One case study is wind energy. Before 2005, Gamesa, a Spanish engineering company, was the wind turbine market leader in China. But that year, the Chinese government mandated that 70% of each wind turbine installed in China has to be manufactured in China. Gamesa then trained more than 500 Chinese suppliers to manufacture every part of its turbines.

 

This policy was questioned as a violation of World Trade Organisation (WTO) rules and China withdrew it - but only after it had acquired all the tech processes and secrets from Gamesa. Soon, Chinese state-controlled enterprises began to assemble turbines using the same suppliers Gamesa had tutored. China is now the world’s biggest market for wind turbines, and they are mostly made by Chinese companies. NYT via ET

FIN.

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