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Business News/ Mint-lounge / Mint-on-sunday/  RBI rate cut, Mphasis sale and Panama Papers leak
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RBI rate cut, Mphasis sale and Panama Papers leak

RBI eases monetary policy; Blackstone to buy 6.5% stake in Mphasis; and offshore accounts of the rich and famous exposed

Photo: BloombergPremium
Photo: Bloomberg

1. RBI cuts repo rates

The Reserve Bank of India (RBI) cut its benchmark lending rate, the repo rate, by 0.25% to 6.5%, the lowest in five years. In order to ensure that the rate cut is actually transferred to end-consumers, the central bank also reduced the cash proportion of banks’ reserve requirements to 90% from 95%. RBI also said it will be increasing liquidity by purchasing bonds through open market operations or by buying dollars and selling rupees every month. The cut has been positively received by banks, though the stock market declined.

2. Blackstone to acquire IT firm Mphasis

Private equity firm Blackstone has agreed to buy a 60.5% stake in IT services provider Mphasis. Blackstone will buy the shares from Hewlett Packard Enterprise (HPE) at Rs430 per share. Mphasis is expected to record higher growth under its new parent—it is assured of $990 million business from HPE over the next five years; additionally, Mphasis can now focus on winning business from new clients, much of which is expected to come from Blackstone’s portfolio of companies.

3. Panama Papers shine light on tax evasion

The leaking of more than 2.6 terabytes of confidential data on ownership of offshore accounts has shaken the world. The data from Panama-based Mossack Fonsecka, which is the world’s fourth biggest offshore law firm, has shown a money trail that has led to the world’s richest and most powerful. Iceland Prime Minister Sigmundur Gunnlaugsson has resigned in the wake of the revelations that he had benefited from offshore accounts. British Prime Minister David Cameron has also admitted to benefiting from an offshore account set up by his father.

4. HRD ministry ranks educational institutes

The human resource development ministry’s ranking of universities saw Indian Institute of Science, Bangalore, emerge as the winner. Jawaharlal Nehru University and the University of Hyderabad emerged third and fourth in the rankings, respectively. Among management institutes, IIM Bangalore took the top spot, with IIM Ahmedabad and IIM Calcutta coming second and third, respectively. IIT Madras was judged the best engineering college. The results were from the National Institutional Ranking Framework, which was launched by the ministry in September.

5. Finance Commission recommendations officially adopted

The recommendations of the 14th Finance Commission were formally adopted by the Union cabinet on Wednesday. The government agreed to allow fiscally disciplined states (those states whose fiscal deficit was within 3% of GDP) greater leeway; the cap on fiscal deficit has been relaxed for these states by half a percentage point. In 2014-15, the total borrowing of state governments stood at Rs2.4 trillion. Only those states that have a debt-GSDP (gross state domestic product) ratio of less than 25% and interest payments-revenue receipts ratio less than 10% in the past two years will be allowed to increase their fiscal deficits.

6. Private sector activity grows

The Nikkei India Composite PMI (Purchasing Managers’ Index) Output Index, a measure of private sector activity in the manufacturing and services sectors, rose to a 37-month high of 54.3 in March. Both the manufacturing PMI as well as services PMI rose during the month. The Business Expectations Index, a sub-index of the Nikkei India Services PMI, rose to 60.6, the highest in nine months. The data also shows a rise in output prices in both manufacturing and services sectors.

7. Mallya ordered to disclose asset details

The Supreme Court has ordered businessman Vijay Mallya to disclose all assets held by him and his family after his offer to pay banks about Rs6,000 crore of his existing debt was rejected by the consortium of 17 banks. A bench comprising judges Kurian Joseph and Rohinton F. Nariman also sought information on Mallya’s return to India. The banks had also demanded that Mallya should deposit a substantial amount upfront on order for any dialogue to commence.

8. Bihar becomes a dry state

In keeping with his poll promise, Bihar chief minister Nitish Kumar has announced a blanket ban on the sale and consumption of Indian-made foreign liquor in the state. Data from the National Family Health Survey 4 shows that about 35% men in Bihar consume alcohol, which is not a large number when compared to states such as Telangana, where more than 50% of men consume alcohol. Kumar had made the promise to win over female voters who had demanded that Bihar be declared a dry state due to rising alcoholism and related violence.

9. Diabetes risk rises in India

A study by the World Health Organization (WHO) and medical journal The Lancet has stated that the number of adults with diabetes worldwide has risen almost four times from 108 million in 1980 to 422 million in 2014. About half of them live in India, China, the US, Brazil and Indonesia. Diabetes is increasingly prevalent in low- and middle-income countries such as China, India, Indonesia, Pakistan and Mexico. India has a high incidence of diabetes-related risk factors: 21.4% of Indians are overweight, 4.7% are obese and 12.1% are physically inactive.

10. WTO cuts trade growth forecast

The World Trade Organization (WTO) cut its forecast for world trade in 2016 to 2.8% from 3.9%. At 2.8%, the WTO expects the growth in trade to remain the same as in 2015, but said that global trade growth could rise to 3.6% in 2017. It cited a possible slowdown in the Chinese economy and financial market volatility as possible downside risks to the forecast. WTO director-general Roberto Azevedo noted that although the volume of global trade has grown, its value has fallen because of shifting exchange rates and the fall in commodity prices.

Graphics by Ajay Negi and Prajakta Patil.

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Published: 09 Apr 2016, 11:14 PM IST
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