Business News at 10:00 am on 12th February, 2024

Let’s begin, Auditors, including the Big Four, may come under stringent scrutiny by the National Financial Reporting Authority for providing “non-audit services” to the same clients of which they are the statutory auditors, according to people privy to the regulator’s plans. The NFRA’s move to evaluate the practice with a critical eye could, however, spark a fresh row, as the legal grounds of its action are seen to be contentious. Also, the Institute of Chartered Accountants of India’s guidance note, which complies with the norms of International Federation of Accountants, is rather lenient on this aspect. Currently, every auditor has to follow a code of ethics defined by the ICAI, but non-audit work isn’t prohibited under the code.

Moving on, To give a boost to regional air connectivity, the civil aviation ministry has initiated a short-bidding round under its flagship scheme, UDAN, sources told FE. UDAN 5.3 focuses on those routes whose awards were cancelled by the ministry. Now that 519 of the 750-odd routes have become operational, the new round focuses on the remaining routes. “The short-bidding provision allows for faster re-auction of non-operational routes. Till now, re-auction has been more time-consuming since the process depended on the commencement of a new bidding phase of the scheme,” the sources said. Besides, to make these routes more viable, the ministry has worked out a benchmark PLF level to make a route eligible for funding.

In other news, RBI has said that it will deploy an appropriate mix of instruments to modulate both frictional and durable liquidity. The liquidity conditions are driven by exogenous factors which RBI hopes to correct through market operations, explains Ajay Ramanathan. After remaining in surplus during April-August 2023, system-level liquidity slipped into deficit in September after a gap of four and half years. It widened to Rs 1.6 trillion in December-January from an average of Rs 42,000 crore during September-November. As of February 8, liquidity in the banking system is estimated to be in the deficit of Rs 1.96 trillion. However, the potential liquidity in the banking system is still in surplus when adjusted for cash balances.

“Meanwhile, Following the Know-your-customer or KYC guidelines has come under focus in the recent months after the Reserve Bank of India has passed strictures against both banks and fintech who have failed to do so. Paytm Payments Bank is the latest example where non-adherence to KYC guidelines, among other compliance issues, have put it in the dock. However, the process itself remains challenging, especially for players who want to expand their businesses in the tier-3 and beyond parts of the country. Fintechs say that higher costs and a weak technology infrastructure has made the know-your-customer process very difficult. In April 2023, RBI brought in an important amendment to conduct a video customer identification process or adopt an offline process.

Moving ahead, the government has asked key wheat-growing states including Uttar Pradesh, Punjab, Haryana, Madhya Pradesh and Rajasthan to commence registration of farmers and setting targets for procurement under the Minimum Support Price operations early. Sources said although wheat purchase from the farmers by the Food Corporation of India and state agencies for rabi marketing season 2024-25 officially commences from April 1, states have been asked to start preparations and commence purchase under MSP operation next month. The government is aiming to boost wheat stock held with FCI, which is likely to fall close to the buffer of 7.4 million tonne by April 1, because of aggressive selling in the open market aimed at curbing spikes in prices.

Up next, as Indian IT services firms are increasingly coming under stress in American market, there was some consolation from an unexpected quarter – a secular spurt in businesses from India and the Rest of the World region. From TCS to LTTS, including mid-tier IT firms like Happiest Minds, saw their revenue bump up in India. For TCS, India geography reported a robust growth of 23.4% year on year in cc terms. The growth driver was BSNL deal that was recently bagged by the IT bellwether. This is in sharp contrast to North America, which grew negatively at -3% for TCS. Similarly, Middle East, Africa, Latin America and the UK grew at a rate of 16%, 13.2% and 8.1% respectively.

Lastly, GIFT Nifty indicated that Indian equity indices BSE Sensex and NSE Nifty 50 may see a positive opening on Monday. GIFT Nifty traded flat as the index was up 105.50 points or 0.48% at 21,955.50 indicating a positive opening for domestic indices NSE Nifty 50 and BSE Sensex on Monday. Previously, on Friday, the NSE Nifty 50 gained 64.55 points or 0.30% to settle at 21,782.50, while the BSE Sensex closed 167.06 points or 0.23% higher to 71,595.49. Key stocks to watch in trade are JSW Steel, One97 Communication, Delhivery, ONGC, BASF India, Anupam Rasayan India, Allcargo Logistics, and AMI Organics among others.