Topic: Indian Economy
1. Rupee continues to lose against US Dollar while currencies of other emerging economies continue to rise.
- Rupee is continuing to lose against US Dollar while currencies of other emerging economies are continuing to rise from April 2020.
- In 2020, Rupee has lost 3.59% against the greenback (informal term for dollar) and performed worst among Asian currencies such as China’s Renminbi, the Philippines’ Peso, Taiwan’s dollar and Korea’s won.
- These currencies appreciated by more than 4% against the dollar. Monetary easing by US Federal Reserve has caused the greenback index (US Dollar index) to move down by over 10% from its peak in March 2020.
- Between March and October, Rupee also appreciated from 76.3 to 72.7. But, it depreciated in the last two months.
- Rupee is continuing to lose despite heavy inflows from Foreign Portfolio Investors (FPIs) over the last two months.
- Foreign Direct Investments (FDIs) have been 25% higher in April September 2020 from that of the same period last year.
- In April-September 2020, the average monthly merchandise trade deficit remained at $3.9 billion. In April-September 2019, it remained at $12.9 billion.
- Weakening or depreciation of rupees is mainly due to RBI’s interventions in the currency market.
- In March and April, RBI sold dollars. Since then, it is purchasing dollars as visible from data available for July to September and from the rise in forex reserves from around $540 billion to $575 billion since October.
Topic: Regulatory Bodies
2. IBBI Chairman says that resolvability index should be developed for companies.
- In IBBI’s latest quarterly newsletter for July-September 2020, IBBI Chairman MS Sahoo has said that a resolvability index should be developed for companies.
- IBBI Chairman has also said that a legally decided minimum threshold of resolvability will prevent viable companies from closing and facilitate more credit flow to companies.
- Resolvability shows the readiness of companies to implement strategies to rescue them from financial stress.
- Companies with a higher resolvability index will be preferred in the market and have better access to credit.
- Insolvency and Bankruptcy Board of India (IBBI):
- It was established on 1 October 2016 under the Insolvency and Bankruptcy Code, 2016.
- It is responsible for the implementation of the IBC code.
- It is a unique regulator that regulates a profession as well as process.
- Chairperson of IBBI: M.S. Sahoo
Topic: Banking System
3. RBI advises writing off of Rs 318-crore worth tier-II bonds of LVB.
- RBI has advised writing off of Rs 318-crore worth tier-II bonds of Lakshmi Vilas Bank (LVB).
- RBI had earlier decided to write off ₹8,400 crores worth Additional Tier 1 (AT1) bonds of Yes Bank in March 2020.
- AT-1 bonds are Basel-III compliant. They have a loss absorbency clause. This allows their writing off or conversion into equity in case of stress to banks.
- Loss absorbency clause or writing off of bonds is triggered when Common Equity Tier 1 (CET1) falls below 5.5% prior to March 2019 and then below 6.125% later.
- At the request of RBI’s order, the bonds can also be written off in case of a point of non-viability (PONV) event. PONV refers to a situation in which a bank is no longer viable.
- Writing off of Additional Tier 1 (AT1) bonds of Yes Bank was triggered by PONV. Basel III Tier 2 bonds can also be written off in the case of PONV.
- Bank is also considered non-viable if it is reconstituted or amalgamated with another bank under section 45 of the Banking Regulation Act, 1949.
- In October, LVB’s Tier 2 bonds were given B- rating by Care ratings. It means a high risk of default.
- SEBI has recently allowed only Qualified Institutional Buyers (QIBs) to participate in AT 1 bond.
Topic: Regulatory Bodies
4. Central government may bring Competition amendment bill in winter session of Parliament.
- Central government may bring Competition amendment bill in the winter session of Parliament.
- The Competition amendment bill may give the Competition Commission of India (CCI) power to appoint the head of its investigative arm.
- Currently, the Centre appoints the head of investigative arm of CCI, Director-General.
- The Competition amendment bill may also bring in new settlement and commitment mechanism for quick disposal of cases.
- The experts think that the appointment of the head by CCI itself may affect DG’s autonomy.
- Under the new settlement mechanism, the firm may reach an agreement with CCI for faster disposal of the case by stopping anti-competitive conduct and paying fines. Resolved cases would not be open to appeals.
- Competition Commission of India (CCI):
- CCI was formed on 14 October 2003 under the Competition Commission Act, 2002.
- It has a chairperson and six members. It is a quasi-judicial body.
- The chairperson and members are appointed by the Central government
- It aims to eliminate practices that affect competition in the Indian market and protect the interests of the consumers.
- Current Chairperson: Ashok Kumar Gupta
Topic: Indian Economy
5. Index of Eight Core Industries for October 2020 released
- Office of Economic Adviser releases Index of Eight Core Industries for October 2020 and combined Index of Eight Core Industries stood at 124.2 in October 2020.
- Index of Eight Core Industries in October 2020 declined by 2.5% in comparison with the index of October 2019.
- In the data released for October 2020, the final growth rate of Index of Eight Core Industries for July 2020 has been revised to (-) 7.6%.
- The index for November 2020 will be released on 31 December 2020. Eight core industries carry 40.27% weightage in the Index of Industrial Production. The weightage for Eight Core Industries is summarized below:
- Refinery Products production – 28.04%
- Electricity production – 19.85%
- Steel production – 17.92%
- Coal production – 10.33%
- Crude Oil production – 8.98%
- Natural gas production – 6.88%
- Cement production – 5.37%
- Fertilizers production – 2.63%
Topic: Indian Economy
6. FM holds 5th meeting to review Capital Expenditure (CAPEX) of CPSEs in current financial year.
- Finance Minister Nirmala Sitharaman held the 5th meeting to review Capital Expenditure (CAPEX) of CPSEs in the current financial year.
- The meeting was held through Video Conference and Secretaries of the Ministries of Power, Mines and Department of Atomic Energy participated in the meeting.
- The Chairman-cum-Managing Directors (CMDs) of 10 Central Public Sector Enterprises (CPSEs) of these Ministries also participated in meeting.
- Ministry of Finance has said that 24 thousand 227 crore rupees capital expenditure has been done against the target of 61 thousand 483 crore rupees for 2020-21.