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Moody’s cuts India GDP growth to 2.5% from 5.3% in 2020

NEW DELHI, Mar 27: Moody’s Investors Service has slashed its estimate of India’s economic growth forecast to 2.5% during 2020 calendar year from an earlier estimate of 5.3% amid the rising economic cost of the coronavirus pandemic.

Moody’s said it expects the growth to bounce back to 5.8% in the calendar year in 2021 and expects a gross domestic product (GDP) growth of negative 0.5% in CY20 at the global level, before bouncing back in CY21.

Moody’s said, at the 2020 estimated growth rate, a sharp fall in incomes in India is likely, further weighing on domestic demand and the pace of recovery in 2021. This compares to 5% growth in 2019.

“The governments of India (Baa2 negative) and South Africa (Baa3 negative) have announced 21-day lockdowns. We expect these measures to dampen economic growth in both countries this year. For India, we are now projecting growth rates of 2.5% in 2020 followed by 5.8% next year,” Moody’s said in its Global Macro Outlook.

“In India, credit flow to the economy already remains severely hampered because of severe liquidity constraints in the bank and non-bank financial sectors,” it said.

The government had earlier projected GDP growth at 5% in 2019-20 as compared to 6.1% in 2018-19. Q3 had witnessed a 4.7% growth.

India on Thursday announced a 170,000 crore coronavirus relief package focused on additional food transfers at no cost, cash for vulnerable segments, concessions on government schemes aimed to help households reduce their expenditure, and support those on the frontline of the battle against the pandemic.

We Have Entered Recession: IMF Chief

WASHINGTON, Mar 27: The coronavirus pandemic has driven the global economy into a downturn that will require massive funding to help developing nations, IMF chief Kristalina Georgieva said Friday.

"It is clear that we have entered a recession" that will be worse than in 2009 following the global financial crisis, she said in an online press briefing.

With the worldwide economic "sudden stop," Georgieva said the fund's estimate "for the overall financial needs of emerging markets is $2.5 trillion."

"It is now clear that we have entered a recession. We project a rebound in 2021, but only if we contain the virus and prevent liquidity problems from becoming a solvency issue."

Governments in emerging markets, which have suffered an exodus of capital of more than $83 billion in recent weeks, can cover much of that, but "clearly the domestic resources are insufficient" and many already have high debt loads.

Over 80 countries, mostly of low incomes, have already have requested emergency aid from the International Monetary Fund, she said.

"We do know that their own reserves and domestic resources will not be sufficient," Georgieva said, adding that the fund is aiming to beef up its response "to do more, do it better, do it faster than ever before."

"Global growth in 2020 will dip below its last year's levels," says International Monetary Fund chief Kristalina Georgieva, "but how far it will fall and how long the impact will be, is still difficult to predict."

The IMF chief spoke to reporters following a virtual meeting with the Washington-based lender's steering committee, when she officially requested a increase in the fund's fast-deploying emergency facilities from their current level of around $50 billion.

She also welcomed the $2.2 trillion economic package approved by the US Senate, saying "it is absolutely necessary to cushion the world's largest economy against an abrupt drop the economic activities."

US stocks trade halted for 15 minutes due to crashing oil prices, coronavirus worries

NEW YORK, Mar 9:Trading on Wall Street was temporarily halted early Monday as US stocks joined a global rout on crashing oil prices and mounting worries over the coronavirus.

The suspension was triggered after the S&P 500’s losses hit seven percent. Near 1340 GMT, the broad-based index was down more than 200 points at 2,764.21.

The Dow Jones Industrial Average sank 7.3 percent to 23,979.90, while the tech-rich Nasdaq Composite Index fell 6.9 percent to 7,987.44.

Sensex nosedives over 1,500 pts on global equity rout, coronavirus fear

MUMBAI, Mar 9: Equity benchmark Sensex plummeted over 1,500 points in opening session on Monday led by deepening rout in global markets amid volatility due to rapidly spreading coronavirus and free falling oil prices.

Global oil benchmark Brent crude futures plunged nearly 30 per cent to USD 32.11 per barrel after top exporter Saudi Arabia launched a price war in response to a failure by leading producers to strike a deal to support energy markets.

Continuing its downward spiral, the 30-share index was plunged 1515.01 points, or 4.03 per cent, to 36,061.61. The NSE Nifty too cracked 417.05 points, or 3.80 per cent, to 10,572.40.

In the previous session, the 30-share BSE barometer settled 893.99 points or 2.32 per cent lower at 37,576.62. Likewise, the Nifty tanked 279.55 points or 2.48 per cent to close at 10,989.45.

On a net basis, foreign institutional investors sold equities worth Rs 3,594.84 crore, while domestic institutional investors bought shares worth Rs 2,543.78 crore on Friday, data available with stock exchanges showed.

ONGC was the top laggard in the Sensex pack, nosediving up to 11 per cent, followed by IndusInd Bank, RIL, PowerGrid, Tata Steel, L&T, SBI and Tech Mahindra.

Sun Pharma was the sole gainer.

According to traders, investor sentiment took fresh beating tracking the heightened volatility in global markets amid concerns over the rapidly spreading coronavirus and sinking crude prices.

Incessant foreign fund outflow also spooked market participants, traders said.

Bourses in Shanghai dropped over 2.41 per cent, Hong Kong 3.53 per cent, Seoul 3.89 per cent and Tokyo cracked up to 5.65 per cent.

As oil prices plunged nearly 30 per cent, adding to Global crude prices tanked after Saudi Arabia on Monday cut its price for April delivery by USD 4-6 a barrel to Asia and USD 7 to the United States, with Aramco selling its Arabian Light at an unprecedented USD 10.25 a barrel less than Brent to Europe, reports said.

Back home, the Yes Bank crisis has raise concerns over the stability of the country’s banking system, adding to the woes of domestic investors, traders said.

The rupee, meanwhile, was trading flat at 73.89 against the US dollar in morning session.

RBI caps Rs 50,000 withdrawals from Yes Bank

NEW DELHI, Mar 5: Crisis-ridden private banking company Yes Bank’s online banking website became non-functional within hours of a Reserve Bank of India notification putting a cap of Rs 50,000 on withdrawals from the bank till April 3, 2020, came into effect at 6pm on Thursday.

The website said the disruption was due to “heavy traffic”, however, it was not clear if the RBI imposed withdrawal limit was the real reason.

“Dear Customer, due to heavy traffic on our NetBanking, we are temporarily unable to process your request. Please try again later or use the YES mobile app to carry out your transactions,” the message flashed on the bank’s online banking page said.

Account holder in the bank said they were unable to withdraw money from ATMs as well.

“Dear customer, your magstripe debit card has been stopped as per RBI direction,” the message flashed on the Yes Bank ATM kiosk.

The Reserve Bank of India has, however, said that it would soon find a solution to the present financial crisis faced by the bank by exploring a plan for the bank’s reconstruction or amalgamation, which it hoped to finalise well before the period of moratorium ends. The moratorium came into effect at 6 pm on Thursday.

The notification said, the financial position of Yes Bank Ltd. (the bank) has undergone steady decline largely due to “inability” of the bank to raise capital to address potential loan losses and resultant loan downgrades.

Assigning further reasons for the decline, the notice says the bank has also faced “serious governance issues’ and practices in the recent years.

The crisis has triggered withdrawal of deposits from the bank, it added.

The RBI has been in constant touch with the bank management to find ways to improve its financial condition. The notice said that several private investors who had shown interest backed out after holding discussions with the RBI.

The RBI notification says that the RBI had “no alternative” but to apply to the central government for imposing a moratorium under section 45 of the Banking Regulation Act, 1949.

The Board of Directors of Yes Bank Ltd has also been superseded for a period of 30 days and Prashant Kumar, ex-senior official of the State Bank of India has been appointed as the administrator.

Eight state-owned banks announce share swap ratios for mergers

NEW DELHI, Mar 5: With the March-end deadline for the biggest-ever amalgamation scheme is approaching, eight state-owned banks on Thursday announced swap ratios for the proposed mergers.

Punjab National Bank (PNB) in a regulatory filing announced the share exchange ratio in accordance with the scheme of amalgamation, as it is set to merge Oriental Bank of Commerce (OBC) and United Bank of India (UBI) into itself with effect from April 1.

PNB's board in its meeting on Thursday has approved for amalgamation of OBC and UBI, Punjab National Bank said in a BSE filing.

According to the swap ratio, 1,150 equity shares of PNB are to be exchanged for every 1,000 equity shares of Oriental Bank of Commerce, while 121 equity shares of PNB are to be swapped for every 1,000 equity shares of UBI.

A Grievance Redressal Committee headed by Vijay Kumar Vyas, retired judge of Rajasthan High Court, has been set up to address the grievances of shareholders. The committee is intended to address those shareholders who either individually or collectively hold at least 1 per cent of the equity capital of any of PNB, OBC or UBI; or 100 shareholders acting collectively, of any of PNB, OBC or UBI.

"The board of directors of the bank...have fixed Wednesday, March 25, 2020, as record date for issuing and allotting equity shares of the PNB to the shareholders of OBC and UBI as per the share exchange ratio," PNB said in the filing.

Meanwhile, Andhra Bank on Thursday also announced the swap ratio for its merger, it said in a filing. Andhra Bank and Corporation Bank are to be amalgamated into Union Bank of India with effect from April 1, 2020.

Andhra Bank said, "Further, the board of directors of the bank at its meeting held on March 5, 2020, has approved the equity share exchange ratio for amalgamation of Andhra Bank into Union Bank of India for 325 equity shares in Union Bank of India for every 1,000 equity shares in Andhra Bank."

Union Bank in a separate exchange filing said its board at its meeting on Thursday has also approved the equity share exchange ratio. It includes 325 equity shares of Union Bank of India for every 1,000 shares in Andhra Bank and 330 shares in Union Bank for every 1,000 equity shares in Corporation Bank.

Also, for Syndicate Bank's merger into Canara Bank, the share swap is 158 equity shares of Canara Bank for every 1,000 equity shares of Syndicate Bank.

The lenders in their respective filings to the exchange said their boards have approved the amalgamation of Syndicate Bank into Canara Bank.

For these two banks, an expert committee (Grievance Redressal Committee ) is to be headed by K N Keshavanarayana, former judge of the High Court of Karnataka, to address the grievances of minority shareholders.

The Union Cabinet on Wednesday had okayed the amalgamation of 10 public sector banks to create four large state-owned lenders with effect from April 1, 2020.

According to the mega consolidation plan, OBC and UBI will merge into PNB; Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank.

After the mergers, there will be seven large public sector banks (PSBs) and five smaller ones.

Last year, Dena Bank and Vijaya Bank were merged with Bank of Baroda. Prior to this, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with the State Bank of India.

The anchor bank Punjab National Bank will become the country's second largest bank, with business size of ₹17.94 lakh crore, after SBI which has business of over ₹52 lakh crore.

Bank of Baroda will become the third largest bank, followed by Canara Bank, Union Bank of India, Bank of India, and Indian Bank.

The other PSBs are Central Bank of India, Indian Overseas Bank, UCO Bank, Bank of Maharashtra, and Punjab and Sind Bank.

Stock of PNB on Thursday closed at ₹44.90 on the BSE, up 1.01 per cent from the previous close, while Union Bank of India's shares jumped 8.25 per cent to ₹39.35 apiece. Canara Bank rose marginally by 0.40 per cent to close at 139.45 apiece.

 

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