The Reserve Bank of India’s Monetary Policy Committee has kept the key policy rate unchanged while admitting that inflation was on a rising trajectory through the fourth quarter of 2019-20 and its outlook remains “highly uncertain.” In a bid to boost flow of bank credit to productive sectors in a sluggish economy, the central bank also announced a cash reserve ratio (CRR) exemption on incremental retail loans in the automobile, housing and the micro, small and medium enterprises (MSME) sectors until July 31, 2020. Currently, banks are supposed to keep four per cent of deposits with the RBI as CRR which doesn’t carry any interest. The RBI move follows a deceleration in credit growth to the retail sector and the move is expected to channelise credit to areas where demand has not met with commensurate supply.
While announcing the previous monetary policy on December 5, the RBI had indicated that there is monetary policy space for future action after considering the fiscal measures in the Budget and getting more clarity on inflation. Unveiling the sixth Monetary Policy Statement for 2019-20, the RBI Committee said inflation has surged above “the upper tolerance band” around the target in December 2019, primarily on the back of the unusual spike in onion prices. The panel noted that over the coming weeks and months, while onion prices are likely to ebb as supply conditions improve, the salutary effects on headline inflation are, however, likely to be tempered by hardening of prices of other food items, notably those of pulses.
AirAsia CEO, chief step aside over bribery probe
AirAsia Group CEO Tony Fernandes and chairman Kamarudin Meranun will step aside for at least two months while the airline and authorities investigate allegations that Airbus paid a bribe of $50 million to win aircraft orders from the company. A committee comprising non-executive members of AirAsia’s board will review the allegations and take any necessary action, Asia’s biggest budget airline said. Fernandes, one of the aviation industry’s best known executives, and Kamarudin will remain advisers, however, “in view of the current difficult economic circumstances facing the airline industry”, the company added. Senior company executive Tharumalingam Kanagalingam will be the acting CEO, with the changes effective immediately. In a joint statement, Fernandes and Kamarudin denied any allegations of wrongdoing or misconduct as directors of AirAsia. “We would not harm the very companies that we spent our entire lives building up to their present global status,” they said. Shares of AirAsia and unit AirAsia X fell after the allegations by UK’s serious fraud office came to light. Malaysia’s anti-graft agency is also investigating the allegations.
Tata Steel reports £122.9 mn net loss in Q3
Tata Steel reported a consolidated net loss of £122.9 million for the quarter ended December 31, 2019, mainly due to lower sales and impairment provisions for its European operations. Tata Steel had posted a consolidated net profit of £175.3 million during the same quarter a year ago, the company said in a BSE filing. Its gross sales fell to £3.48 billion in October-December 2019 from £3.81 billion in the year-ago period. Its expenses were at £3.58 billion as compared to £3.59 billion in the preceding fiscal. The company said consolidated financial results included a provision for impairment in respect of non-current assets and restructuring provisions within the European operations. “During the quarter, NatSteel Holdings, a wholly owned indirect subsidiary of the company, disposed of its entire stake in Nat Steel Vina. The loss on disposal of the subsidiary is included within profit/(loss) from discontinued operations,” Tata Steel said.
The company said during the third quarter global economic growth further slowed down amidst heightened concerns of US-China trade war and regional steel prices were down as steel demand was affected by weaker industrial output in key markets. In Europe, the overall slowdown was more pronounced due to seasonal weakness and elevated levels of unfairly priced imports. Revenue from operations decreased to £1.38 billion during the quarter under review primarily due to sharp decline in European steel prices, resulting in loss of £95.6 million at ebitda level.
Bharti Airtel, Tata Tele merger approved
Tata Teleservices said the department of telecom (DoT) has approved the merger of its consumer mobile business with Bharti Airtel. Bharti Airtel had on July 1, 2019 announced that the consumer mobile business of Tata Teleservices has become its part. The department, however, did not take the merger on record and asked Airtel to submit a bank guarantee of around £700 million and an immediate payment of £128.8 million before it takes merger of Airtel and Tata’s consumer mobile business on record. The Telecom Disputes Settlement and Appellate Tribunal (TDSAT) on May 2, 2019 granted partial stay on around £828.7 million demand raised by the telecom department from Bharti Airtel for approving its merger with the consumer business of Tata Teleservices. The TDSAT had ordered the DoT to take on record the merger and approval of the schemes of arrangement by Delhi and Mumbai bench of the NCLT. The DoT challenged the telecom tribunal before the Supreme Court and the matter is still sub-judice.