Banking, Financial and Economic Awareness of 1 and 2 July 2020

1. RBI's special liquidity scheme for NBFCs/HFCs

• Special liquidity scheme for NBFCs/HFCs through a Special Purpose Vehicle was recently announced by RBI.
• To manage the operation of the scheme, SBICAP has formed a Special Purpose Vehicle (SPV), named as SLS Trust.
• SBICAP is State Bank of India's subsidiary.
• Short-term papers will be purchased by SPV and proceeds will be used by NBFCs/HFCs for pay for their current liabilities.
• Earlier, centre has announced an Rs 30,000-crore special liquidity window for NBFCs/HFCs.
• The eligibility criteria for the scheme are given below:
  • NBFCs and MFIs should have BBB and above rating or should be investment grade.
  • Investment grade MFIs should have minimum CRAR/CAR of 15% and 12% on March 31, 2019.
  • Net non-performing assets should not be more than 6%
  • Should be profitable in any one of the previous financial years (2017-18 and 2018-2019).

2. Improvement in Manufacturing Purchasing Managers’ Index (PMI) of June

• Manufacturing PMI has improved from 30.8 in May to 47.2 in June.
• IHS Markit has said that though manufacturing PMI has improved, business conditions are becoming worse.
• IHS Markit has also said that recent increase in number of COVID-19 cases may weaken demand and economic recovery.
• The survey also finds that despite the increase in manufacturing PMI, the health of manufacturing in India has declined for third continuous month since April.
• Manufacturing contributes 15% to India's GDP.

3. Lummus Technology jointly acquired by Haldia Petro and Rhone Capital

• US based Lummus Technology jointly acquired by Haldia Petrochemicals Ltd (HPL) and Rhone Capital.
• Lummus Technology has been acquired from McDermott International.
• $2.725 billion is the estimated enterprise value of the deal. HPL's investment is 57% of the enterprise value. The lead banker in the deal is State Bank of India.
• As HPL's net debt may rise due to acquisition deal, HPL's long-term issuer rating was downgraded from IND AA to IND AA- by India Ratings and Research (Ind-Ra), a wholly owned subsidiary of the Fitch group.
• Haldia Petrochemicals Ltd (HPL) is the Chatterjee Group's flagship company and Rhone Capital is a global private equity firm.

4. AI-powered software launched by TCS

• Tata Consultancy Services (TCS) has launched AI-powered software for making enterprises safe for employees returning to work in the middle of Covid-19.
• The software will also help in making enterprises safe for customers doing business with them.
• With the help of software, infection risks can be monitored at locations and action can be taken immediately.
• The IUX for Workplace Resilience helps enterprises in maintaining optimal in-house and remote staff.

5. $750 million MSME Emergency Response program approved 

• $750 million MSME Emergency Response program has been approved by the World Bank.
• The programme will provide funding to MSMEs affected by Covid-19 pandemic and improve funding capacity of Small Finance Banks (SFBs) and NBFCs for MSME sector.
• The loan has maturity period of 19 years, which includes five year long grace period.
• Between July 2019 and June 2020, World Bank has given USD 5.13 billion to India. This is the maximum money given in a decade. Out of the total money, USD 2.75 billion was given in three months for COVID-19 pandemic.

6. A Joint Venture Agreement (JVA) signed between IOC and RR Holdings

• A JVA has been signed between Indian Oil Corporation (IOC) and RR Holdings of Beximco group.
• Through the JVA, IOC aims to expand its business in Bangladesh.
• The JVA will help in promoting LPG use in Bangladesh and bring socio-economic change by increasing access to clean cooking fuel in Bangladesh.
• Indian Oil Corporation (IndianOil):
  • It is India's largest commercial oil company.
  • It is owned by Government of India.

7. NPPA allows increase in price of heparin by 50%

• National Pharmaceutical Pricing Authority (NPPA) has allowed increase in the price of heparin by 50 % until December.
• NPPA has cited shortage of the raw material used for making heparin and increasing costs of the raw material from China.
• Health Ministry has notified heparin and other drugs as essential medicines to be kept in stock as India fights against Covid-19.
• Heparin is an anticoagulant or blood thinner drug. It decreases clotting of blood.  

Read Banking Awareness PDF - 1 and 2 July 2020