RBI Slashes Repo Rate by 25 bps, Chicago and South Korea Launch 5G Network Services, Jio Invests in Haptik, Oyo in Japan et al.

RBI slashes repo rate by 25bps; lowers GDP estimates. Service sector PMI dips to six-month low. India is the highest taxing nation in the world, alleges Trump. US and China resume trade talks. RBI to issue revised circular on stressed assets following SC verdict. 
Chicago and South Korea launch 5G network services. Jio invests in Haptik.

 

Moving on to the top Business stories of the day. 

 

ECONOMY 

RBI slashes repo rate by 25bps; lowers GDP estimates. Service sector PMI dips to six-month low.

As Expected: Following its Monetary Policy Committee meeting on Thursday, the RBI has lowered the repo rate by 25 basis points to 6% from 6.25%, maintaining a neutral stance. The six-member committee voted 4:2 in favor of the decision.

Consequently, the reverse repo rate under the liquidity adjustment facility (LAF) stands adjusted to 5.75%, and the marginal standing facility (MSF) rate and the Bank Rate to 6.25%.

Previously: RBI in its last policy revision on February 7 had cut the repo rate by 25 basis points to 6.25% and changed the monetary policy stance from calibrated tightening to neutral.

Lowering Expectations: The RBI also lowered its GDP growth outlook for FY2019-20, with an expected growth of 7.2% for 2019-20, lower than its February projection of 7.4%.

Steady Decline: The Nikkei India Services Business Activity Index fell to a six-month low of 52 in March vs 52.5 in February, indicating a slowdown in the service industry. The fall comes on the back of slower rate of job creation that has led to weak employment rates. 

Still Growing: Despite the slowdown in growth, the services PMI was still in the expansion territory for the 10th month straight as the PMI score remained above fifty, which is the benchmark score for expansion.

Sinking Ship: The PMI data released for manufacturing also showed a dip in factory activities from 53.8 in February to a six-month low of 52.7 in March.

 

TARIFFS 

India is the highest taxing nation in the world, alleges Trump. US and China resume trade talks.

Impose: Donald Trump has accused India of being the highest taxing nation in the world during the National Republican Congressional Committee Annual Spring Dinner. 

The US President noted that a 100% tariff imposition on American products such as Harley Davidson is “not fair”.

Read more on Trump’s pushback against India’s high tariff imposition here

Meeting: US and Chinenes delegations met in Washington on Wednesday, seeking to draft a trade agreement.
 

Compromise: A proposal that is being discussed aims to clear the room for a compromise, aiming to create a timeline for a phased lifting of US tariffs upon Chinese imports.
 

What’s the Deal?: As part of the agreement, China will push US to remove tariffs on $250bn of Chinese goods immediately on signing a deal. In exchange, Beijing is ready to eliminate retaliatory tariffs on $110bn of US goods.

 

NPA 

RBI to issue revised circular on stressed assets following SC verdict. IL&FS Board releases status report.

Apologies: Following the SC decision to strike down its Feb 12 circular, the RBI has announced that it will issue a revised circular on the resolution of stressed assets.

Perspective: In its verdict on Tuesday the SC had commented that the RBI had
acted beyond its authority when it asked banks to drag a defaulter to an insolvency process if they are not able to find a resolution to a company's debt within six months.

Minor Setback: Speaking on the matter RBI governor Shaktikanta Das commented that the RBI’s powers were not under doubt, and that it remained committed to maintaining and enhancing the momentum on the resolution of stressed assets and an adherence to credit discipline.

Status Update: The Infrastructure Leasing & Financial Services (IL&FS) board has released a status report, on the company’s financial and asset monetization plans.

Performance Anxiety: The Board has revealed that the financial arm of the group (IFIN) had posted gross non-performing assets (GNPA) of 90% in December 2018 as against 5.35% in March 2018. According to them IFIN’s GNPA as a percentage of advances would be the highest by any financial institution involved in lending.

The total external exposure of IFIN was estimated INRRs 10,656cr at the end of March 2019, of which its exposure to group companies stood at INR6,849cr.

 

 WHITECOLLAR 

Carlos Ghosn arrested again over new charges.

Short Vacation: Former Nissan Chief Carlos Ghosn was arrested on Thursday on new charges. The arrest comes less than a month after he was released on bail following a 108-day imprisonment.

Pocket Change: Prosecutors accuse Ghosn of using Nissan funds for personal use. They allege that from 2015 to 2018, Nissan sent payments to an overseas dealer that was actually controlled by Ghosn. According to prosecutors, this resulted in Nissan losing about $5m.

Will not Break: Commenting on the matter Ghosn said that his arrest was outrageous and arbitrary - an attempt by some individuals at Nissan to silence him.

Hmm: Thursday’s events came less than a day after Mr. Ghosn tweeted that he planned to hold a news conference on April 11 “to tell the truth about what’s happening”.

Rewind Time: Another lengthy stay in prison, with limited access to his lawyers could make it harder for Ghosn to prepare for a trial that may start later this year.

Here’s a rundown of key developments relating to the case.

 

TECH 
 
Chicago and South Korea launch 5G network services. Jio invests in Haptik. Oyo launches operations in Japan.
 

Beginning of an Era: A week ahead of its planned date, Verizon Communications launched 5G wireless services in parts of Chicago and Minneapolis. Carriers in South Korea too deployed 5G services in the Seoul metropolitan city area the very same day.
 

Promises: South Korea’s 5G launch attempts to facilitate online experiences by eight-way video calls, holograms, virtual “star dates” with K-Pop idols and streaming live sports at a screen resolution higher than IMAX movie.
 

The services also promise to offer speed with up to 100 times faster than the current network.
 

Tap Into It: In order to use the 5G network, Verizon users will need a Motorola phone with a clip-on modem that upgrades the device from 4G network. The carrier plans to sell Samsung Electronics 5G-enabled Galaxy S10 handset in the first half of the year.
 

Investments: Reliance Industries, through its subsidiary Reliance Jio Digital has acquired 87% stakein AI platform Haptik through a INR700cr investment.
 

The total transaction size will be for about INR 700cr of which the initial business transfer is INR230cr. The rest of the outlay will be invested in growth and expansion.
 

The investment is likely to help Reliance Jio leverage Haptik’s capabilities to build India’s largest AI assistant across chat, voice and vernacular languages.
 

As part of the deal, Times Internet, which is currently a majority stakeholder in Haptik will be completely exiting the company. 
 

Commenced Operations: Hospitality chain Oyo has formed a joint venture with Tokyo based – Softbank and Softbank Vision Fund to form Out Hotels Japan. Oyo’s founding member Prasun Choudhary is set to head as the operating partner.
 

Further Expansions: Oyo is currently also expanding its global footprint by entering the markets such as that of China, the US, the UAE and the Philippines.

 

(Don't want to miss out on these End Of Day Wrap Ups? Subscribe Now to our No Nonsense Email Digest and get the day's Top 6 Business stories straight to your mailbox.)