RBI cuts repo rate by 25bps, lowers GDP forecast. Ex-MD of PMC Bank arrested. PayPal backs out of Facebook's Libra Association. WeWork withdraws IPO filings.
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It's a Cut!: As per popular consensus, the RBI today cut the repo rate by 25bps from 5.40% to 5.15%. All members of the RBI's MPC voted to reduce the policy repo rate, while continuing with an accommodative stance. RBI
This is the fifth consecutive time RBI has cut the lending rate this year, taking the cumulative cuts so far this year to 135bps.
Zooming Out: The rate cut comes as an attempt to spur the slowing Indian economy and boost subdued domestic consumption and private investment, especially in the backdrop of weakening global economic activity and reduced crude oil prices. RBI Press Release
Cut...Cut...Cut: The RBI also cut GDP growth forecast for the current fiscal year to 6.1% from 6.9% earlier.
The What: Suspended Managing Director of Punjab and Maharashtra Cooperative (PMC) Bank, Joy Thomas was arrested yesterday in the INR4,355cr scam. ToI
Previously: The news comes days after promoters of debt-ridden Housing Development and Infrastructure Ltd (HDIL) Rakesh and Sarang Wadhawan were arrested on Thursday on charges of financial fraud for their role in the scam.
Ghost from the Bank: PMC Bank allegedly extended privileges to the promoters of HDIL, including allowing them to operate ghost accounts through which loans were extended to at least 44 borrowers linked to HDIL. These were then camouflaged using another 21,049 fictitious accounts. ET Banking
Minor Relief: RBI gave minor reprieve to the customers of PMC bank. The apex bank relaxed withdrawal limits to INR 25,000 but retained the six months limit. It further explained that a customer can either withdraw the said amount in one go or can do so over a period of six months. India Today
RBI previously has put a limit of INR1,000 on withdrawals from the PMC Bank, on the back of increasing defaults which was later increased to INR10,000.
Stepping Back: Office-sharing startup, WeWork has withdrawn its S-1 filing.
Since the announcement of going public, WeWork has been in deep waters. The company revealed that it had incurred massive losses ahead of its IPO filing. In addition to this, they have been multiple speculations regarding the $47 bn valuation given by Softbank. Matters worsened when public investors revalued the company at $10 bn.
Although co-CEOs of the company remain positive stating “ We have every intention to operate WeWork as a public company and look forward to revisiting the public equity markets in the future.” CNBC
Forever In My Heart: This Sunday Forever 21 filed for bankruptcy. The teenage clothing brand is going to file for shut down of 178 stores out of 800 stores although nothing has been decided on which stores will close down. Executive Vice President, Linda Chang while addressing the issue stated, “an important and necessary step to secure the future of our Company, which will enable us to reorganize our business and reposition Forever 21."
Forever 21 is the most recent brand that has fallen to the rise to the rise of online shopping, although high debt cost and rent costs have also added to the woes of traditional retailers. CNN
Trouble Brewing: In a blow to Facebook’s ambitions of reinventing money and disrupting global finance, San Jose-based payments company PayPal has decided to withdraw from the Libra Association, the 28-member nonprofit organization formed to oversee Facebook’s cryptocurrency project.
Zooming Out: The development comes days after reports of other financial partners reconsidering their involvement in the project following a backlash from US and European government officials surfaced. The Verge
You’ve Got A Match: Uber Technologies has launched a new app - Uber Works aimed at pairing businesses with gig workers. The move is perhaps “an effort to bring in more revenue as the company struggles to turn profitable amidst increasing legal and regulatory attack." TechCrunch
Currently launched in Chicago, the app is designed to match workers such as chefs and cleaners with companies looking to fill a temporary opening.
Silver Lining: In a minor relief to the US economy amidst concerns of a deepening slowdown on the back of the ongoing US-Sino trade war, the jobless rate in the US dropped to a 50-year low of 3.5% in September from 3.7% in August with the economy adding 136,000 jobs last month. The previous lowest rate was recorded in December 1969 when it also logged in at 3.5%. BBC
The FTSE 100 climbed 0.7% to 7126.46 as the news came in. Morningstar
WTI Crude was up 1.22% at $53.09, and Brent Crude was trading up 1.73% at $58.71. OilPrice.Com
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