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RBI Board Meeting, Google News May Shut Down, WhatsApp's New India Chief et al.

Professor of Financial Economics and Part-time Value Investor, Transfin.
Nov 25, 2018 12:44 PM 3 min read
Editorial

Good evening reader,

 

The week began with the much-awaited RBI Board meeting. Through the 9-hour long meeting, the Board debated on the ongoing points of contention between the Central Bank and the Govt – Surplus, lending for MSMEs, relaxation of PCA framework and capital norms for Banks. Click here to read a concise summary of the updates from the meeting. Listen to this week’s Podcast here for a quick overview.

 

Brexit has been yet another subject of ongoing discussion. With the British Prime Minister Theresa May gaining her Cabinet's approval for the Brexit deal last Wednesday, the topic has taken to the headlines once again. Read our LongShorts here to understand Theresa May's proposal driving UK’s withdrawal from the EU.

 

This week we also spoke at length about Amazon’s speculated bid for Fox’s sports assets. Read our commentary on the deal here

 

Moving on to the Top 6 Business Stories of the week through our End Of Week Wrap Up:

 

RBI Board meets to discuss key issues of contention with the government.

 

Key points of discussion include:

 

  • Relaxation of the Prompt Corrective Action (PCA) framework wherein ailing banks face restrictions on distributing dividends, remitting profits, lending etc.
  • Easing of lending norms to Micro, Small and Medium Enterprises (MSME) sector
  • Special liquidity window for Non-Banking Financial Companies (NBFCs)
  • RBI's current economic capital framework to determine if the level of reserves it holds is excessive or not.

 

 

NPCI suspends use of eSign for automated collection of loan payments from customers; Digital lenders hit. Heads of PSBs can now issue look-out circulars (LOCs) against wilful defaulters.

 

Perspective: This is likely to result in a rise in operational costs for digital lenders as they will no longer be able to use a completely paperless model.

 

Zoom Out: This development comes shortly after the Supreme Court’s Aadhaar judgement, which disallowed private companies from asking for Aadhaar authentication for eKYC from users.

 

The Bigger Picture: Defending NPCI’s action, CEO Dilip Asbe said, "The problem with continuing eSign on eNACH is it uses eKYC infrastructure to obtain authentication from the UIDAI database. This may result in contempt of the Supreme Court order if continued."

 

The government has authorized chiefs of PSBs to request for look-out circulars (LoCs) against wilful defaulters in an attempt to prevent them from fleeing the country in cases when an FIR is yet to be filed.

 

WhatsApp names Ezetap CEO Abhijit Bose as India Head.

 
What You Need To Know: After appointing Komal Lahiri as their WhatsApp Grievance Officer, the messaging platform has now appointed Abhijit Bose as India Head following a fairly extensive search for the position. Perhaps, this appointment would also ease the Indian govt.'s push for having someone who could be held accountable for WhatsApp's operations in India.
 

The Big Picture: Appointment of Bose, who is the Co-Founder and CEO of Bengaluru-based payment solutions company, Ezetap as WhatsApp’s India Chief does indicate the messaging platform's focus on payments in India.

 

US/INTERNATIONAL

 

China approves UTC-Rockwell Collins $23bn deal. Nissan Chairman arrested for violation of Japan’s financial trading law.

 

The What: United Technologies' purchase of aircraft parts maker Rockwell Collins gets Chinese regulator's anti-trust approval, on agreement of divestiture of several businesses related to various aircraft systems by UTC.
 

Zoom Out: United Technologies currently owns Pratt & Whitney, which is a major supplier of engines and other plane parts to large aircraft manufacturers such as Boeing and Airbus.

 

Rockwell specializes in cockpit displays and communications systems for passenger jets and the military.

 

Chairman Carlos Ghosn and Director Greg Kelly of Nissan Motor have been involved in financial misconduct, as per an internal investigation by the company.

 

The Why: It is reported that Ghosn was allegedly using company assets for personal use and understating his income on financial statements to reduce the disclosed amount. He has agreed to voluntarily speak to Tokyo prosecutors. 

 

Bitcoin records lowest value in 2018 as it breached the $4,300 mark. 

 

Bitcoin’s value dropped as much as 10% driving losses to 25% within a week. It sunk as far as $4,327, which is its lowest value since October 2017.

 

The Why: Traders lay the blame on heavy selling at leveraged exchanges in Asia like OKEx and Bitmex. Some associated the fall to the "hard fork", which led to Bitcoin Cash.

 

Ripple's XRP and Ethereum's Ether also fell 14% and 16% respectively.

 

Google News may shut shop if EU’s ‘link tax’ goes ahead.

 

Google may have to shut down Google News if the EU decides to go ahead with a tax to charge search engines for displaying links of news stories.

 

Up Close: Link tax is designed to compensate news publishers and content creators for including synopsis of stories and even links to articles.

 

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