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Retail Inflation Rate in India Falls to 6.58% in February

Professor of Financial Economics and Part-time Value Investor, Transfin.
Mar 12, 2020 1:33 PM 5 min read
Editorial

WHO declares coronavirus outbreak a pandemic. SBI to waive off charges for non-maintenance of average monthly balance on all savings bank accounts. SBI to invest ₹7,250cr ($980m) in Yes Bank. Retail inflation falls to 6.58% in Feb; IIP rises 2% in January.

 

 

COVID-19

WHO declares coronavirus outbreak a pandemic. After US and UK, Europe may see its Central Bank step in to counter virus. 

Corona Update

On March 11th, the World Health Organisation (WHO) declared COVID-19 a global pandemic. The novel coronavirus (What is a Coronavirus?), which originated in a central Chinese wet market and began spreading about three months ago, has now spread to over 100 countries and infected more than 121,000 people.

 

What is a Pandemic?

A pandemic is declared when a new disease for which people do not have immunity spreads around the world beyond expectations. It has nothing to do with the characteristics of the disease; rather, it is about its geographic reach.

 

How is the World Coping with COVID-19?

China and South Korea have reported a decline in the number of new cases. But the list of infections and countries affected elsewhere is meanwhile growing in the rest of the world. Italy and Iran are particularly adversely affected. The US expects the number of cases in the country to increase in the coming days and has halted most flights from Europe. In India, the latest count puts it at 73 infected.

 

Meanwhile...

Contrary to the actions of the US Federal Reserve and Bank of England, the European Central Bank (ECB) has not yet intervened to offset the inevitable consequences of the coronavirus outbreak. That will likely change this week as policymakers convene in Frankfurt for a two-day session starting Wednesday. And a stimulus package may be in the offing. [CNBC]

 

CONSUMER

SBI to waive off charges for non-maintenance of average monthly balance on all savings bank accounts.

"Satisfied Customer is the Best Source of Advertisement”

India's largest public sector lender State Bank of India (SBI) today announced that it will waive off charges for non-maintenance of average monthly balance (AMB) for all of its 44.51cr savings bank accounts.

 

Currently SBI savings bank customers are required to maintain average monthly balance of ₹3000,  ₹2000 and  ₹1000 in metro, semi urban and rural areas respectively and the bank used to levy a penalty of ₹5 to ₹15 plus taxes on non-maintenance of average monthly balance.

 

"We believe this initiative would empower our customers towards banking with SBI and boost their confidence in SBI," said officials. [Livemint]

 

Telecom operators demand fixed minimum rate - 4G data prices may increase by 10 times. 

Hole in the Pocket

Telecom operators have demanded a fixed minimum rate considering the rising losses and increasing debt. And if the proposal is accepted by the regulator, 4G data prices may rise by as much as 10 times.  

 

Vodafone Idea has proposed that the minimum data price should be fixed at ₹35 per GB, Bharti Airtel has proposed minimum price of ₹30 per GB for low data users and Reliance Jio wants the data to be priced at ₹20 per GB over time. [India Today]

 

RELIANCE

Reliance buys 2 million barrels extra of Saudi oil for April loading.

Oil for All

As per sources, Reliance Industries has bought 2 million barrels of additional Saudi oil for loading in April.

 

Meanwhile, it is still unknown which crude Reliance will replace with the additional Saudi barrels. Reliance, one of the biggest buyers of Venezuelan oil, is preparing to wind down purchases from the Latin American nation from April under pressure from US sanctions. [Moneycontrol]

 

Reliance Group says its entire exposure to YES Bank is fully secured.

We Ain't Got Any Fear

Reliance Group has no direct or indirect exposure to Former Yes Bank CEO Rana Kapoor, his wife, daughters, or any entities controlled by Kapoor or his family, the Anil Ambani-led Group said in a statement.

 

Reliance Group says its entire exposure to Yes Bank is fully secured and transacted in ordinary course of business. [Hindu BusinessLine]

 

COMPANIES

SBI to invest ₹7,250cr ($980m) in Yes Bank.

Saving Grace

SBI's executive committee of central board on Thursday approved the purchase of 725cr shares of private sector lender Yes Bank at a price of  ₹10 apiece.

 

SBI's shareholding in Yes Bank after reconstruction will be within the 49%, SBI said in a statement to stock exchanges.

 

Yes Bank will be managed and run as an independent and private sector bank by a professional board with no interference by SBI in its day-to-day affairs, said SBI Chairman Rajnish Kumar.

 

The share purchase is still subject to regulatory approvals. [Moneycontrol]

 

NCLAT dismisses CAIT plea against CCI's nod to Walmart’s acquisition of Flipkart. 

Objection Overruled

The National Company Law Appellate Tribunal (NCLAT) has dismissed a petition filed by the Confederation Of All India Traders (CAIT) against the Competition Commission of India's (CCI) approval of Walmart’s $16bn acquisition of Flipkart.

 

“We find no merit in it, accordingly the appeal is dismissed,” said NCLAT, upholding the CCI nod to the deal. [The Hindu]

 

ECONOMY

Retail inflation falls to 6.58% in Feb; IIP rises 2% in January.

In Data, We Trust

Retail inflation slowed to 6.58% in February over the previous month mainly due to easing food prices vs 7.59% in January and 2.57% in February 2019.

 

This is the third month in a row when the retail inflation has exceeded the RBI's inflation target of 4% with a margin of 2% on either side. 

 

RBI might announce liquidity-boosting measures to stabilise financial markets.  

In Other News...

Factory output - measured in terms of Index of Industrial Production (IIP) - witnessed a 2% growth YoY to 137.1 in January vs 1.6% in January 2019. [Indian Express]

 

Come to Rescue

The Central Bank is likely to announce liquidity-boosting measures to help stabilise financial markets, which have fallen sharply due to the coronavirus outbreak, as per sources.

 

The markets, which have witnessed a blood bath in the last couple of trading sessions, have been expecting an off-cycle interest rate cut. However, such a move is unlikely, confirmed officials.

 

"The RBI will look to push more liquidity in the market and ease repayment issues to sectors that have been disrupted by supply chains being broken down," noted sources. [BS]

FIN.

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