Episode 222

Business News at 09:30 am on 4th November 2022

Listen to the latest business news by the Financial Express in which we talk about the Blow to the European Banks in India, Framework for sovereign green bonds, Voda Idea’s loss, and Services PMI inching up in October. We also talk about the finance minister’s call for greater investment in energy resources.

Today’s Latest Business News at 09:30 am on 4th November 2022.

[Disclaimer: This transcript is auto-generated]

Let’s begin. European banks operating in India may soon find it difficult to operate viably unless the Reserve Bank of India and Securities and Exchange Board of India are able to negotiate fresh terms with the European Securities and Markets Authority on oversight of counter-party institutions. Earlier this week ESMA, the EU’s financial markets regulator and supervisor, said six of India’s central counterparties would be de-recognised in accordance with the European Market Infrastructure Regulation, following an assessment conducted by it. However, to mitigate the adverse impact on EU market participants, it has deferred implementing the decisions until April 30, 2023. Should the discussions fail, European banks may need to operate with levels of capital that are 40-50 times higher than what is required today. On to the economy sector. The government may set the disinvestment target for the next financial year at a “realistic level” close to the Budget Estimate of Rs 65,000 crore for the current year, sources told FE. They said disinvestment receipts in 2022-23 could be Rs 45,000-50,000 crore, provided the proposed stake sale in Hindustan Zinc goes through. Disinvestment receipts are at Rs 24,544 crore or 38% of the annual target so far this year. This includes Rs 20,516 crore garnered from a 3.5% stake dilution in LIC through an initial public offer. The government plans to sell some of its stake in Vedanta-controlled Hindustan Zinc in the current fiscal. Its residual 29.54% stake in the integrated miner and non-ferrous metal producer is worth about Rs 36,000 crore at current market prices. The government will sell part of this stake in the current fiscal and the balance in FY24, a senior official said. The government may also look at offloading a part of the indirectly held stakes through the Specified Undertaking of the Unit Trust of India in ITC and Axis Bank in Financial Year 23. On to the market. The government will bring in a framework for its maiden issuance of sovereign green bonds in two weeks, but it isn’t planning to extend tax incentives to woo investors, official sources told FE. It aims to raise Rs 16,000 crore through such bonds in the second half of FY23. The cost of borrowing through the green bonds may be lower than the G-sec rates of comparable tenure, one of the sources said. The proceeds will be used by the government to spend on extant and new green projects executed by various departments. Currently, the framework developed by the finance ministry is being vetted by CICERO, the leading global independent reviewer of green bond investment architecture, as part of the “second-party review”, said one of the sources. The government had also sought technical assistance for this purpose from the World Bank, which has issued more than 200 such bonds since 2008. Once the framework is put forward, the Reserve Bank of India will come out with details of the timing of the issuance and the tenor of the bonds, based on the feedbacks from investors. Meanwhile. Growth in services activity in October quickened from September’s six-month low on the back of an expansion of new businesses and output. There was an acceleration in the growth of private sector activity in the services economy as well. Buoyed by the ongoing recovery in new work, the seasonally adjusted S&P Global India Services PMI Business Activity Index rose to 55.1 in October from 54.3 in the previous month. An index reading of 50 or above suggests expansion and below it points at contraction. In fact, the headline reading was above the threshold of 50 for the fifteenth month running and outperformed its long-run average, S&P Global said in a release. Moving on. Finance minister Nirmala Sitharaman on Thursday called on businesses to step up investment in energy resources, asserting that the country offers policy stability, transparency and a consultative mode of governance to promote investment. Speaking at an event to launch the sixth tranche of the auction for commercial coal mining, the minister said: “”First tranche had 64 blocks, today 141 blocks are being opened up in one go. It is a landmark development.” She stressed the need for investments in the coal sector in the wake of global geo-political tension that caused an energy crisis, as it would reduce import reliance through greater domestic exploration and mining. And lastly, Vodafone Idea on Thursday said its net loss rose 4.1% quarter-on-quarter to Rs 7,595.5 crore during the July-September quarter owing to higher finance cost and network operating expenses. In the previous quarter, the company had reported a net loss of Rs 7,296.7 crore. The telco missed Bloomberg consensus estimates which had expected its net loss to narrow down to Rs 6,974.90 crore.

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Business News at 09:30 am on 4th November 2022