Economy

Big Wave, Small Boat



The government has announced the rollout of a new Emergency Credit Line Guarantee 3.0 (ECLG) program. So finally some much-needed life support for a few of our industries.

What's Happening Here?

As the name suggests, under the scheme, businesses will be provided with emergency lines of credit so they can keep going and not have to close down because of lockdowns and COVID related restrictions.

Banks downright refuse to lend without collateral to small and medium businesses. So this scheme was launched to help these guys get through the pandemic.

The original ECLG scheme was launched in May 2020 under the newly announced ‘Aatmanirbhar’ package for economic growth. Version 2.0 of ECLG was rolled out in November 2020, and more sectors were covered under the scheme.

Unlike versions 1.0 and 2.0 of this ECLG, this time around businesses in the hospitality, travel and tourism, leisure and sporting sectors will be covered too.

But We Are Still Paying

Technically these loans will still be given out by banks, but repayment to banks will be guaranteed by the government so that there are no hesitations in lending.
The term of the loans will be 6 years and there will be a 2-year moratorium on EMI payments, to begin with.

With the rising COVID cases and such measures being re-introduced by the government, we’re having serious flashbacks to 2020. Nooooo!

Corporate

Corporate Catch Up


New Year, New Plant

Anil Agarwal’s mining giant Vedanta Limited is looking to set up a new copper smelter in India.
Since the company’s existing plant in Tuticorin in Tamil Nadu has been closed for over 3 years, it seems they’ve finally decided to try their luck elsewhere.

If you recall, back in 2018, there were major protests by local in the area against the pollution caused by Vedanta’s copper plant in TN. Unfortunately, more than 12 people lost their lives as the situation went out of control. The plant has been shut ever since.

Vedanta’s plea to restart operations at the location is still pending in the Supreme Court.
However, as global metal prices continue to surge, Vedanta feels they need to get back on track to take advantage of the situation. After all, the Tuticorin plant accounted for nearly half of India’s copper production.

So they’ve decided to spend Rs 10k crores on building a new plant and are looking for a coastal Indian state to give the company a good offer to set up the new plant there.

We’re not sure if Vedanta will still consider Tamil Nadu for the new plant 🤔
 
Acquisition Spree

Ajay Piramal’s pharmaceutical business has agreed to acquire a company called Hemmo Pharmaceuticals for Rs 775 crores

Piramal will be paying 100% cash upfront for the company and the deal should be completed over the next 4-6 weeks.

Hemmo Pharmaceuticals develops and manufactures peptide active pharmaceutical ingredients (APIs). They have a plant in Navi Mumbai which is certified by the US Food and Drug Administration.

In pharma lingo, APIs refer to the main or ‘active’ ingredient present in the drug that produces the intended effect in the user. (Read more here)

This is Piramal’s third pharma acquisition this year.
The execs at the company say that over the past few years peptide drugs have seen increased use in oncology, treatment of diabetes and obesity. And so this is an important addition to the portfolio of drugs they manufacture.

Regulations

Extended 


Some of you may have received some vague texts from your banks about standing instructions or auto-debit features.

This was related to the RBIs new rule that affects recurring payments. Thankfully the deadline has been extended now by 6 months.

What's Happening Here?

Last year the RBI launched a new rule.
They said that no merchants, including payment gateways and aggregators that process payments will be able to store card details.
Only banks will be able to do that.
Storing card details is what makes it possible for you to automatically pay for your subscriptions like Netflix.

It is not like the RBI wanted to completely stop recurring payments.
Banks were still able to do it but there were a few rules and regulations:

• Banks were needed to send a notification to us customers a day before their automatic payments are due. You'd also have the choice to opt-out.
• For recurring payments of over Rs 5,000 banks now have to send customers an OTP which they will then enter for the payment to go through. Every time. How this made it an auto-debit feature don't ask us.

Why'd you do this RBI?

You remember MobiKwiks latest hack. A major issue was how they had plenty of customers payment details saved for ease of use.
RBI was just looking to cut down the instances of hacks and data leaks. If less people have data stored less hacks and data leaks.

Everything Gets Extended

The deadline for these new rules to come in was yesterday.
But like us in college scrambling to meet the deadline for assignments banks were scrambling to meet this deadline.
By some accounts, they weren't even close.
Transactions worth over Rs 2000 crore were set to be disrupted in April.
Which is why the RBI has stepped in and decided to extend the deadline to September 30, 2021.

Let's hope banks and other stakeholders can put in the systems by then.

• An Italian mafia fugitive was caught after 7 years on the run when he accidentally appeared on a YouTube cooking channel run by his wife!
• Remember Volkswagen's US arm saying on Tuesday it was changing its name to "Voltswagen" to emphasize its electric push. Yeah turns out that just a disaster of an April Fool's stunt.

Gyst Quiz

If you have more time ...

• India's fiscal deficit between April-February was 76% of the revised estimate of Rs 18.5 lakh crores.
• The RBI has asked MobiKwik to conduct a forensic audit after reports of a massive data breach.
• Uniphore Technologies, a startup that uses artificial intelligence to improve customer service calls just raised $140 million.

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