QBiz: IndiGo Cancels Pay Cut; Banks Give TLTRO 2.0 a Cold-Shoulder
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1.Govt’s Wish: IndiGo Rolls Back April Pay Cut for Most Staff
Low-cost airline, IndiGo on Thursday rolled back the salary cuts for April that it had announced earlier in what it called in “deference to the government’s wishes”. However, IndiGo CEO Ronojoy Dutta, who informed the same to employees via an e-mail, said that since executive committee members and senior vice presidents have volunteered to take a pay cut this month, the rollback won’t apply to them.
“For everyone else, you can expect your April salaries to be paid without the pay cuts,” Dutta said in the mail.
The company had announced on 19 March that the airline was instituting pay cuts for senior employees and he would himself take the highest cut of 25% amid the COVID-19 pandemic that has hit the aviation industry hard.
(Source: Financial Express)
2. SEBI Cuts Time Gap on Capital Raising After Buyback to Six Months From One Year
The Securities and Exchange Board of India (SEBI) on Thursday cut restriction on fresh fundraising by companies after the buyback to six months from one year earlier in light of the coronavirus pandemic.
Such relaxation will be applicable up to December 31 and will come into effect immediately. The relaxation is based on representations made by various industry bodies and is expected to help businesses that have been severely impacted by the pandemic.
Earlier this week, the market regulator granted a one-time relaxation in its primary market fund-raising norms to make it easier for companies to raise capital amid the current gloomy scenario.
(Source: The Economic Times)
3. Tax Relief for Recovery: GST Concessions Can Go a Long Way in Supporting Businesses
Various measures have been taken by the government to tide over the COVID-19 storm. It has announced relief via relaxations in GST compliance. Price controls have been imposed on various essential commodities.
Recently, it also announced exemptions on customs duties and health cess for some products. GST rates should be suspended/reduced on critical items, including surgical masks, disposable gloves, ventilators, hand sanitisers, etc.
Hospital services are exempt from output GST.
However, hospitals routinely incur several input taxes, including huge GST outlay on capital procurement of equipment, and recurring GST on medical devices/ items/drugs and services such as rent/marketing/R&D.
As ITC facility is not available for exempt-supply, these credit costs are built into the price. Hospital services can be ‘zero-rated’ allowing refund of such ITC. This would reduce the cost of service and deliver benefits to patients. Similarly, private healthcare premiums are currently taxed at the 18% rate. Through the exemption/reduction of GST, private insurance can also be made affordable.
(Source: Financial Express)
4. COVID-19 Impact: Life Insurer's New Business Premium Declines 32% in March
The new business premiums of life insurance companies declined 32 percent in the month of March, owing to the disruption caused by the spread of coronavirus (COVID-19) and the subsequent lockdown enforced by the government to contain its spread.
For the month of March, the new business premiums of life insurance companies stood at Rs 25,409 crore compared to Rs 37,459 core in March 2019. The private life insurers, 23 in total, saw their new business premiums decline by 34.21 percent in March 2020 at Rs 8,342 crore compared to Rs 12,682 crore in the same period of the last financial year.
Similarly, state-owned life insurance behemoth – Life Insurance Corporation (LIC) – saw its premiums decline by 31.11 percent in the reporting month. In March 2020, it collected new business premiums to the tune of Rs 17,066 crore compared to Rs 24,776 crore in March 2019.
(Source: The Business Standard)
5. Coronavirus Impact: RBI's TLTRO 2.0 Gets Cold-Shoulder From Banks
The Reserve Bank of India (RBI) has received bids for only about half the Rs 25,000 crore it offered under its revised Targeted Long Term Repo Operations (TLTRO), indicating that banks are reluctant to lend to non-banking financial companies (NBFCs). Banks put in 14 bids worth Rs 12,850 crore for the three-year money offered.
In a similar auction on April 9, 18 bids were received for Rs 1.14 trillion as against the Rs 25,000 crore on offer. In the first version of the TLTRO, there were no conditions attached, except that the money had to be deployed within 30 days. It was later increased to 45 days.
The latest auction was part of the TLTRO 2.0, through which the RBI planned to infuse liquidity up to Rs 50,000 crore, to begin with.
(Source: The Business Standard)
6. Reliance Capital Misses NCD Payment on 22 April
Reliance Capital failed to make payment for non-convertible debentures (NCDs) maturing on April 22, the company informed the stock exchanges through a release. According to PRIME Database, Reliance Capital needed to make payment of Rs 1,070 crore for NCDs maturing on Wednesday.
The company also cautioned investors that there will be a delay in debt servicing. “It is expected that the debt servicing of the company in relation to the accelerated amounts and otherwise will be delayed,” Reliance Capital further said in its release.
In September 2019, CARE Ratings had downgraded Reliance Capital’s Rs 17,000-crore debt to default grade ‘D’. The agency attributed its action to the company delaying by a day its payment on several NCDs it had issued. However, Reliance Capital maintained that the delay in payment was due to a technical glitch on bank servers.
(Source: Financial Express)
7. Govt Pushes Lending, Asks Banks for Daily Reports on New Loans
India's government has redoubled efforts to push state-run banks to boost lending and it has demanded that lenders submit a daily report detailing the volume and scale of loans sanctioned, according to industry sources and documents seen by Reuters.
The finance ministry, in a letter dated April 17 and seen by Reuters, asked banks to furnish detailed data on new loans, including particulars on what sectors were getting them.
The push comes after a recent 75 basis point rate cut by the Reserve Bank of India (RBI), and at a time when the banking system is flush with liquidity pumped in by the RBI to spur new lending and revive flagging growth.
(Source: Livemint)
8. Apple Offers Exclusive Brand Stores Financial Support; COs Like HUL and ITC Extend Payment Term
Apple has paid its 500-odd exclusive stores in India to cover two months of their rent and salaries for store staff, apart from providing an additional credit period of 60 days to help them tide over business disruptions due to COVID-19.
Others like Hindustan Unilever LtdNSE -2.88 %, ITC, Samsung, Marico, and Godrej Consumer Products are also extending payment periods and other support to their trade partners and retailers.
Most retailers are grappling with low or intermittent sales in FMCG and no business in categories like mobile phones and consumer electronics, but are burdened with high overheads such as employee wages.
(Source: The Economic Times)
9. DA Increases Frozen Till July 2021; Centre, States to Save at Least Rs 80,000 Crore in FY21
After the Centre’s budget expenditure was cut to the tune of Rs 1.4 lakh crore in Q1FY21 to reduce the fiscal stress, the finance ministry on Thursday froze the dearness allowance (DA) increases for the central government staff and dearness relief (DR) for pensioners for the period between January 2020 and July 2021.
As a result, the Centre would save Rs 25,000 crore in FY21 itself.
The states, which conventionally follow the Centre’s pattern on DA/DR, are expected to save another Rs 55,000 crore among themselves in the current fiscal, taking total savings for general government budget in FY21 to a considerable Rs 80,000 crore. Another Rs 40,000 crore savings are expected for both the Centre and states in FY22.
(Source: Financial Express)
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