Business News at 10:00 am on 11th July, 2024

India’s private credit market is booming, drawing a host of new players into the segment, but experts say this trend has raised concerns about the potential mispricing of risk in the market. Several players such as Vivriti Asset Management, UTI Alternatives, Neo Asset Management, and others have launched private credit funds in recent months and global players such as Cerberus Capital Management plans to expand its private credit portfolio in the country. Data published by Sebi in the second half of 2023 show at least 11 new alternative investment funds have registered with it for credit/special situation orientation and five are in the process of registration. Nine funds announced new fundraises over $2 billion in the second half of 2023.
Meanwhile, As much as 40% of the budget allocation for the flagship Mahatma Gandhi National Rural Employment Guarantee Scheme has already been utilised, implying that the government may have to increase the outlay for the demand-driven scheme from Rs 86,000 crore estimated in the interim Budget. However, it may still choose to retain the MGNREGS outlay at the same level in the full Budget to be presented later this month, as it has the option to provide supplementary funds as and when required, and account for these in the revised estimate. Till July 10, the Centre has spent Rs 34,056 crore for the scheme.
Moving on. The government has approved the sale of wheat and rice in the open market for bulk buyers from next month from buffer stocks, in a bid to improve domestic supplies and preempt rise in the prices of the two staple cereals in the coming months, The food ministry has asked the Food Corporation of India to start offloading wheat and rice at a price excluding transportation at Rs 2325/quintal and Rs 2800/quintal respectively from August 1. According to an official note, the exact quantity of grain stocks to be offloaded will be decided by FCI in consultation with the ministry after keeping the stock for requirement under the public distribution system, buffer norms and additional quantity of 2 MT.
On to the crypto world. Cifdaq, a new-age fintech company, has unveiled plans to launch its centralised exchange in August, Sanjay Saxena, CEO and co-founder of the company told FE. This launch aims to provide a platform for trading top crypto currencies and introduce a suite of other financial products. Cifdaq’s exchange will initially support trading for the top 20 crypto currencies paired with the Indian Rupee, with plans to expand to include derivatives and options trading. Further, the company plans to launch an android app and the exchange will also be supported on the website. Despite India’s cautious stance on cryptocurrencies, Cifdaq remains optimistic about its potential in the Indian market.
Next up, industry. The Cellular Operators Association of India, which represents telecom companies like Reliance Jio, Bharti Airtel, and Vodafone Idea, has reiterated its demand to abolish the universal services obligation fund levy, reduction in licence fee, exemptions on customs duty on import of telecom equipment and goods and services tax, among other things. The association has suggested these measures to the finance ministry ahead of the Union Budget, which will be presented in the Parliament on July 23. Currently, telecom operators pay 8% of their adjusted gross revenue to the government as licence fee. Of this, 5% goes to the Digital Bharat Nidhi and 3% goes in the general exchequer.
Over to economy. The government is likely to set a target of Rs 24 trillion for agricultural credit by commercial, cooperative and regional rural banks in 2024-25. Last year, the credit flows to the priority sector stood at Rs 24.84 trillion. The government has been trying to address the persisting regional imbalances by ensuring strong credit flows to the agriculture sector, the growth rates of which have been satisfactory in most of recent years, except 2023-24. The credit target is going to be kept at a relatively low level in FY25 in the wake of the apprehension whether the credit to the sector is skewed towards boosting crop production, without pushing infrastructure creation to the desired extent.
Lastly, a look at stocks in focus today. These include Yes Bank, Zydus Lifesciences, Kesoram Industries, Sula Vineyards, and SBI, among others. First Abu Dhabi Bank PJSC is reportedly considering a bid for a stake in India’s Yes Bank Ltd., potentially amounting to around $5 billion, according to sources familiar with the matter. The Middle Eastern lender is evaluating the possibility of acquiring up to a 51% share in YES Bank. The sources requested anonymity as the discussions are confidential. On the other hand, SBI has successfully raised Rs 10,000 crore at a coupon rate of 7.36% through its sixth infrastructure bond issuance. The issuance received an enthusiastic response from investors, garnering bids exceeding Rs 18,145 crore.