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RBI Likely to Cut Repo Rate in the Upcoming MPC Meeting

Professor of Financial Economics and Part-time Value Investor, Transfin.
Mar 19, 2020 4:46 AM 5 min read

RBI likely to cut rates in the upcoming MPC meeting. S&P lowers India's growth forecast to 5.2% in 2020. Supreme Court says self-assessment of AGR dues won’t be entertained, says all dues must be paid. RBI rolls out new guidelines for non-bank payment aggregators, gateways. US Treasury Secretary Steven Mnuchin expected to seek a new round of coronavirus-related economic stimulus worth $850bn.




RBI likely to cut rates in the upcoming MPC meeting.

Light at the End of the Tunnel?

The possibility of the RBI cutting rates in the next MPC meeting to be held from March 31st to April 3rd is only getting stronger as Central Banks across the globe have undertaken rate cuts to provide liquidity to their respective economies.


"I'm not ruling out any possibility on the rate cut. We are estimating the impact of Covid-19 and we will give our growth estimates in MPC. India is relatively insulated from the global value chain, but there will be some impact," RBI Governor Shaktikanta Das said in a press conference held recently. 


However, only time will tell if a rate cut would be able to uplift investor sentiments dampened by the bloodbath in the stock market on fears of the coronavirus outbreak. [Moneycontrol]


S&P lowers India's growth forecast to 5.2% in 2020. 


S&P Global Ratings has lowered India's economic growth forecast to 5.2% from earlier projected 5.7% for 2020, stating the global economy is entering a recession amidst the coronavirus pandemic.


The news comes shortly after Moody's Investors Service lowered India's economic growth forecast for 2020 to 5.3% from 5.4%. [Livemint]


Extra Crunch

Amidst the rising cases of coronavirus, most brokerages have begun trimming earnings estimates for India Inc. for the next financial year 2020-21 (FY21).


For instance, analysts at Jefferies suggest that the markets are already pricing in a 15% drop in earnings given the current valuations. Within Nifty 100, they believe, 63% stocks, including HCL Technologies, Infosys, ITC, Hero MotoCorp, Marico and Petronet, are building in a higher earnings downgrade of over 20%.


The earnings cut potential for select companies in the auto, energy, financials, industrial, materials and metals, technology and the utility sector could be higher between 25-45%, it added. [BS]



Supreme Court says self-assessment of AGR dues won’t be entertained, says all dues must be paid.


Today, a three-judge bench of the Supreme Court held that no further objections would be allowed against payable dues of telecom companies. Additionally, it said that no self-assessment by the companies themselves would be entertained.


However, the apex court also said that it would consider the Solicitor General’s plea seeking reasonable time on the next date.


“All dues as per our judgement will have to be paid, including interest and penalty. The Solicitor General had filed a plea seeking reasonable time, we will consider this plea on the next date,” the court order stated. [Moneycontrol]


 You Know You Want To

Want to read a brief background of the AGR dues controversy and how much each telco owes the Government according to the Supreme Court and the companies themselves? Read this article.


Reliance Jio bats for minimum rates while BSNL and MTNL seek tariff war. 

The Tables Have Turned

Reliance Jio, which disrupted the telecom industry with free data, free calls and dirt-cheap prices, is now reportedly batting for minimum rates for phone calls and data services.


The Mukesh Ambani-owned telco wants a minimum floor price and no exceptions. Airtel and Vodafone Idea are onboard with this – but two new challengers are not. BSNL and MTNL are hoping to make a comeback after shedding employee weight and the Government’s capitalisation, and they want telecom operators with less than 15% market share to be exempt from minimum rates. [Business Insider]



Top 10 tax saving investments under Section 80C.

 Investing Essentials 

The financial year is coming to an end. Sorting one’s finances, understanding tax saving instruments and investment products can be…taxing.


Section 80C of the Income Tax Act provides a deduction of up to ₹150,000 ($2,027) in the aggregate for specified investments/expenditure. Here's a look at the top 10 tax saving investments under Section 80C. [Financial Express]



As per an ET report, in last couple of days indirect tax officials have issued several summonses to companies and banks asking them to clear their position on certain tax disputes including mismatch in input tax credit to taxability of certain goods and services.


However, these companies have responded to the summons stating that none of the executives would be able to meet the revenue officials due to the COVID-19 scare.


“It should be noted that to comply with the summons proceedings, our personnel will be required to travel...COVID-19 is an imminent life-threatening disease and travel of company personnel, unless absolutely unavoidable, is discouraged,” one of the notices served to indirect tax officials by an automobile major reads. [ET Policy]



OYO gets infusion worth $807m from SoftBank and RA Hospitality Holdings.

Money Games

Hospitality platform Oyo Hotels & Homes has received a capital infusion of about ₹5,976cr ($807m) from existing investor SVF India Holdings and RA Hospitality, the Ritesh Agarwal-controlled investment entity, as part of its ongoing $1.5bn funding round.


SVF India Holdings Limited has invested about $507m, while RA Hospitality Holdings has put in about $300m. Following the infusion, SoftBank will hold 50.6% sake in the hospitality unicorn through SVF India Holdings, while RA Holdings will have 25.87%. [Yourstory]


RBI rolls out new guidelines for non-bank payment aggregators, gateways.

Rules of the Games

The RBI has released guidelines for regulating payment aggregators and payment gateways, detailing governance, shareholding, technology, security and operational requirements all payment aggregators and gateways need to comply with.


The guidelines come nearly six months after it first proposed regulating these entities in a discussion paper.


Here's a quick look at the guidance:

  • The new guidelines say that a payment aggregator (entities that facilitate e-commerce sites and merchants to accept various payment instruments) should be a company incorporated in India under the Companies Act
  • Non-bank entities offering payment aggregator services will have to apply for authorisation on or before June 30th 2021
  • Ecommerce marketplaces providing payment aggregator services will have to be separated from the marketplace business and they will have to apply for authorisation on or before June 30th 2021
  • Existing companies with net worth less than ₹15cr ($2m) will get one year to continue operations
  • New entities over ₹15cr ($2m) that secure authorisation have also been told to attain a net worth of ₹25cr ($3.3m) by the end of third financial year



US Treasury Secretary Steven Mnuchin expected to seek a new round of coronavirus-related economic stimulus worth $850bn. 

Desperate Times, Desperate Measures

US Treasury Secretary Steven Mnuchin is expected to seek a new round of coronavirus-related economic stimulus of $850bn. Mnuchin is also discussing the prospect of combining it with a relief package the House passed over the weekend. [Bloomberg]


V for Volatile

The stock market swung upwards on hopes of the package. S&P 500 closed up 5.2% while Nasdaq gained 6.2% and the Dow Jones Industrials climbed 4.1%. [Fortune]


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