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Thursday,06-August-2020

Business

Airtel, Jio gain revenue market share, VIL lags: Report

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Jio

Telecom majors Bharti and Jio further gained Revenue Market Share (RMS) while Vodafone Idea continued to lag on AGR basis, according to a report by EMkay Research.

VIL’s AGR logged a healthy 5 per cent qoq growth, driven by growth in some of the key circles. However, RMS contracted further to 26.2 per cent (-102bps qoq).

Clarity on ongoing AGR issue is key, along with other operational targets like 4G coverage and network integration. AGR for the industry (including NLD revenues) rose 9 per cent qoq and 13 per cent yoy to Rs 363 bn in Q3FY20. This sequential rise was driven by healthy growth in the revenues of Bharti and Jio, sequential revenue growth by VIL after 13 quarters of losses, and a 21 per cent qoq rise in BSNL’s revenues.

VIL continued to lose market share with a 102bps contraction in RMS, the report said.

For Jio, AGR, including NLD, grew 10 per cent qoq to Rs 129 bn in Q3FY20. RMS expanded 40 bps qoq and 554 bps yoy to 35.4 per cent. Jio continues to enjoy a strong position in B and C circles and commands number one position in 17 circles, increased from 16 circles in the last quarter.

NLD revenues jumped 72 per cent sequentially. Jio’s faster-than-industry growth should continue to add RMS gains, although at a slower pace.

Bharti Airtel (including TTSL) Inclusive of NLD, AGR rose 10 per cent/15 per cent qoq/yoy to Rs 117.5 bn. In addition, Compared with the previous quarters, revenue decline was recorded only in one circle (J&K) which can be largely attributable to the socio-political issues present there, the report said.

Vodafone-Idea (VIL), After 13 consecutive quarters of declines in AGR (inclusive of NLD), VIL finally posted a 5 per cent sequential gain, albeit reporting a 7 per cent yoy decline. AGR revenue, including NLD stood at Rs 95.2 bn, driven by growth in some of the key circles. RMS contracted 102 bps qoq and 542 bps yoy to 26.2 per cent.

Of the 22 telecom circles, 6 circles reported yoy revenue declines.

Business

RBI to set up innovation hub for financial sector

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The Reserve Bank of India (RBI) will establish an “Innovation Hub” in the country to promote innovation across the financial sector by leveraging technology.

In its “Statement on Developmental and Regulatory Policies”, the RBI on Thursday said that the hub will act as a centre for ideation and incubation of new capabilities which can be leveraged to create innovative and viable financial products and services to help achieve the wider objectives of deepening financial inclusion and efficient banking services among others.

“The Reserve Bank has constantly endeavoured to encourage responsible innovation by entities in the financial services sector. In order to further promote and facilitate an environment that can accelerate innovation across the financial sector, the Reserve Bank will set up an Innovation Hub in India,” said RBI Governor Shaktikanta Das.

The Innovation Hub is expected to support, promote and hand-hold cross-thinking spanning regulatory remits and national boundaries.

It noted that areas such as cyber security, data analytics, delivery platforms, payments services and so on, remain in the forefront in terms of innovation in the financial sector.

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Business

Headline inflation to remain at elevated level in Q2FY21: RBI Governor

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RBI-Governor-Shaktikanta-Das

Headline inflation is expected to remain at elevated level in Q2FY21, but is likely to ease during the second half of the current fiscal aided by a favourable base effect, RBI Governor Shaktikanta Das said on Thursday.

The Governor said the Monetary Policy Committee (MPC) was of the view that supply chain disruptions on account of the COVID-19 pandemic persists, with implications for both food and non-food prices.

“A more favourable food inflation outlook may emerge as the bumper rabi harvest eases prices of cereals, especially if open market sales and public distribution offtake are expanded on the back of significantly higher procurement. Nonetheless, upside risks to food prices remain,” Das said while delivering the decision of the MPC on monetary policy.

“The abatement of price pressure in key vegetables is delayed and remains contingent upon normalisation of supplies. Protein-based food items could also emerge as a pressure point.”

Consequent to the high retail inflation, the MPC decided to retain the RBI’s key short-term lending rates, but maintained its growth oriented accomodative stance.

Accordingly, the repo rate, or short-term lending rate for commercial banks, was retained at 4 per cent.

Like wise, the reverse repo rate stands unchanged at 3.35 per cent.

The MPC voted to maintain accommodative stance, thus opening up possibilities for more future rate cuts.

It was expected that the MPC might hold rates as recent data showed that retail inflation has been at an elevated level during June.

The retail or consumer price index (CPI) stood at 6.09 per cent in June.

The urban CPI stood at 5.91 per cent and rural at 6.20 per cent.

As per the data, retail inflation level has reached the upper limit of the medium-term CPI inflation target of 4 per cent.

The target is set within a band of +/- 2 per cent.

Besides, Das in his address pointed out that higher domestic taxes on petroleum products have resulted in elevated domestic pump prices and will impart broad-based cost push pressures going forward.

“Taking into consideration all these factors, the MPC expects headline inflation to remain elevated in Q2:2020-21, but likely to ease in H2:2020-21, aided by favourable base effects,” Das said.

“Given the uncertainty surrounding the inflation outlook and extremely weak state of the economy in the midst of an unprecedented shock from the ongoing pandemic, the MPC decided to keep the policy rate on hold, while remaining watchful for a durable reduction in inflation to use available space to support the revival of the economy.”

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Business

Covid Relief: RBI extends scheme for MSME debt restructuring

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Reserve Bank of India (RBI) logo.

The Reserve Bank of India on Thursday extended a scheme whereby stressed MSME borrowers will become eligible for restructuring their debt, provided their accounts with lenders were classified as ‘standard’ as on March 1, 2020.

Accordingly, the existing loans to MSMEs classified as ‘standard’ will be re-structured without a downgrade in the asset classification.

“A restructuring framework for MSMEs that were in default but ‘standard’ as on January 1, 2020 is already in place,” Das said while delivering the decision of the MPC on monetary policy.

“The scheme has provided relief to a large number of MSMEs. With COVID-19 continuing to disrupt normal functioning and cash flows, the stress in the MSME sector has got accentuated, warranting further support.”

According to the RBI Governor, this restructuring will have to be implemented by March 31, 2021.

The Reserve Bank placed eligibility conditions such as the limit of aggregate exposure, including non-fund based facilities, of banks and NBFCs to the borrower should not exceed Rs 25 crore as on March 1, 2020.

Besides, the borrowing entity is GST-registered on the date of implementation of the restructuring. However, this condition will not apply to MSMEs that are exempt from GST-registration.

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