Issue: 1349
· Fairfax expects IDBI Bank
transaction to complete by Q1 2027, says CEO Prem Watsa.
· 'Heading to be net
debt-free': Akash Ambani reveals Jio's post-IPO plan.
· SEBI seeks IRDAI coordination
to make insurance details available on e-CAS.
· Mutual funds suspend bulk
subscriptions to gold ETFs ahead of festival season.
· STT collection surges 52% in
FY27 amid market volatility; net direct tax collection grows 13%.
· WTO raises 2026 goods trade
forecast to 3.9% on AI boom, supply chain resilience.
· Over 54% of urban households
say economic conditions worsened, finds RBI survey.
· Fairfax Financial plans to
merge Digit, IIFL Capital with IDBI Bank.
· India's current account
deficit narrows to $5.2 billion in August.
India's trade with West
Asia returns to near-normal levels: A little over six months into the West Asia war,
India’s trade with the region has returned to near-normal levels. India’s
exports to West Asia stood at $5.56 billion in September 2026, only marginally
lower than the $5.94 billion recorded in September last year.India's imports
from the region stood at $13.64 billion last month, broadly in line with the
$13.76 billion recorded in September 2025. India’s exports to West Asia in
June, July and August this year were higher than in the corresponding months of
2025, while imports were lower.
(Business Today)
World economic growth to
slow to 2.6% in 2026, UN trade body says: Global economic growth will
likely slow to 2.6% in 2026, down from 2.9% ?last year, as the energy shock
from the crisis ?in West Asia is putting ?the global economy to the test, the ?United Nations agency for
trade and development said on Friday. Trade in goods and services is expected
to ?expand by 4% in constant prices, after global trade reached a record $35
trillion in ?2025, but the projected rise is driven ?by ?higher energy prices, UNCTAD
said in its ?trade and development report.
(Business Line)
India’s September exports
jump 23% to $44.4 billion; trade deficit narrows to $30.2 billion: India’s goods exports surged
23.04 per cent year-on-year in September 2026 to $44.40 billion, propelled by
key sectors such as engineering goods, chemicals, petroleum products and
electronics, according to quick estimates shared by the Commerce Department on
Thursday.The trade deficit narrowed to $30.21 billion in September 2026,
compared with $33 billion in the same month last year, as imports grew at a
slower pace of 8 per cent to $74.61 billion. However, the deficit was higher
than the $26.86 billion recorded in August 2026.
(Business Line)
RBI ups real GDP, CPI
inflation forecasts for FY27 amid repo rate hike: The Reserve Bank of India has
revised upwards its real GDP growth projection for FY27 to 7.10 per cent from
the earlier 6.70 per cent, as the economy is expected to remain resilient even
as it hiked the repo rate by 25 basis points to 5.50 per cent. It also raised
its CPI inflation projection for FY27 to 5.2 per cent from the earlier 5 per
cent, as the near-term inflation outlook points to continued supply-side
pressures due to a deficient Southwest monsoon, El Niño conditions and high
volatility in international oil prices.
(Business Line)
Yes Bank 'actively offered'
high-risk AT-1 bonds to individual investors in violation of RBI rules: Supreme
Court: The
Supreme Court on Thursday (October 15) flagged Yes Bank’s practice of actively
offering high-risk Additional Tier 1 (AT-1) bonds to individual investors,
observing that the bank’s direct sales to individuals fell outside the purview
of SEBI regulations. The court noted that the
Reserve Bank of India’s (RBI) regulatory framework specified the classes of
investors to whom AT-1 instruments could be offered, including mutual funds and
insurance companies. Describing the instruments as high-risk securities, it
said they were required to be offered only to institutional investors. “However,
we find that YES BANK not only permitted but actively offered these instruments
to individual investors in violation of the Master Circular,” the court
observed.
(Moneycontrol)
RBI eases confusion over
20% forex reserve rule, but banks must still park cash with central bank: The Reserve Bank of India
(RBI) has clarified the scope and calculation of its 20 per cent Foreign
Exchange Risk Reserve (FERR), including exemptions for certain hedges and the
treatment of options and rolled-over contracts. It has, however, retained the
requirement to maintain the reserve in cash, leaving banks’ concerns over
liquidity and hedging costs unresolved. RBI said FERR would apply to
user contracts exceeding $2 million equivalent in which the user purchases
foreign currency against the rupee to hedge current-account transactions.
Contracts involving the sale of foreign currency against the rupee, as well as
those hedging capital-account transactions, are excluded. The
central bank also clarified the treatment of interest on external commercial
borrowings (ECBs), coupons on debt instruments held by non-residents, and
dividends payable to non-resident investors. Although these are current-account
payments, they arise from underlying capital-account transactions. “Accordingly,
foreign exchange derivative contracts undertaken by users to hedge such flows
shall be excluded from the requirement of FERR,” the RBI said.
(Moneycontrol)
IDBI Bank employees and
pensioners have nothing to fear: DIPAM Secretary: The service conditions of all
existing employees of IDBI Bank will be fully protected in the proposed
strategic restructuring of the lender, said Arunish Chawla, Secretary,
Department of Investment and Public Asset Management. "The service
conditions will be fully protected. The bank also has pensioners. Their pension
benefits will be protected, there is a dedicated pension fund set aside for the
purpose," Chawla told BT in an interview.
(Business Today)
Fairfax gets 15 years to
reduce stake in IDBI Bank to 26%: Fairfax Financial Holdings
will acquire a 60.72% stake in IDBI Bank and reduce its ownership over 15
years. The Reserve Bank of India has allowed Fairfax to decrease its stake to
26% eventually. Fairfax has two years to decide the future of CSB Bank,
including merger or sale options. The group aims to transform IDBI Bank into a
comprehensive financial services entity.
(Economic Times)
Demand for bank loans rises
amid hardening yields: Canara Bank and Indian Bank
reported a total corporate loan pipeline of Rs.1.10 lakh crore between them.
The banks are experiencing steady credit demand from corporate clients amid
rising bond yields. Canara Bank expects to maintain around 19% credit growth,
while Indian Bank targets a 14-15% growth rate. Both banks highlighted the
importance of improving deposit growth to narrow the credit-deposit gap.
(Economic Times)
US sanctions Cuban Bank
among 10 entities, 16 individuals over alleged ties to Iran: The United States has imposed sanctions on Cuba's
Banco Internacional de Comercio S.A. (BICSA) over its alleged financial links
to Iran, placing the bank among 10 entities and 16 individuals targeted in
Washington's latest measures aimed at intensifying economic pressure on Tehran. According to news agency
AFP, the US Treasury Department announced the sanctions on Thursday, accusing
BICSA of maintaining ties with Iran's Karafarin Bank, which has been under US
sanctions since 2020. Washington alleges that the Cuban bank maintained these
links from at least 2022.
(Moneycontrol)
No more input tax credit
block for companies buying insurance cover: Businesses will now be able to claim input tax
credit (ITC) on health and life insurance bought for employees, as the GST
Council has recommended easing several restrictions on blocked credits. The
changes are aimed at ensuring that taxes paid on genuine business expenses do
not become an additional cost. Under the current rules, a business cannot claim
credit for GST paid on insurance cover provided to its employees. Now, only
individuals buying health or life insurance for themselves and their families
will continue to get no such credit, since they are consumers, and not
businesses.
(Business Line)
India-US trade deal nearing
finish line, but tariff clarity remains key: The first tranche of the
India-US bilateral trade agreement has been finalised and is undergoing legal
drafting, Union Commerce and Industry Minister Piyush Goyal said on Thursday.
He added that it would be operationalised once India secures a comparable
tariff advantage. “The first tranche of the US bilateral trade agreement has
been finalised. It is going through the final contours and legal drafting, and
we hope to finalise it soon and operationalise it once we secure a comparable
or competitive advantage over our peer countries… These remarks are consistent
with exactly what I said yesterday, a week ago and three months ago. So, there
is nothing new in that,” Goyal said.
(Business Today)
SEBI retains 30-minute VWAP
for derivatives expiry settlement, revises closing auction timings: SEBI issued final framework on Closing Auction
Session (CAS). SEBI has retained the 30-minute volume-weighted average price
(VWAP) methodology for determining expiry-day settlement prices of index and
stock derivatives, while revising the timings and operational framework of the
CAS in the equity cash market. For expiry settlement, index derivatives will use
the underlying index value calculated from constituent stocks' VWAPs during the
last 30 minutes of the cash market's continuous trading session. Stock
derivatives will use the underlying stock's VWAP over the same period across
all exchanges. Exchanges will disseminate indicative values in real time.
(Moneycontrol)
Govt withdraws tax benefit
for banks on gold, silver, platinum imports: The Indian ?government did not extend ?a tax
benefit ?for banks ?on imports of gold and
other precious metals ?and they have been ?paying a ?3 per cent ?integrated goods and ?services tax since April, local media reported ?on
Friday, citing ?the revenue secretary. The government informed the Goods and ?Services
Tax Council, a ?body of federal and ?state government officials, about the change on ?Thursday.
(Business Today)
Centre's net direct tax
collection rises 13.2% to Rs.13.38 trn till Oct 14: The Centre’s net direct tax collection rose
13.21 per cent annually to Rs.13.38 trillion as of October 14, supported by
strong corporate tax collection growth and a sharp jump in Securities
Transaction Tax (STT), even as refunds accelerated, provisional data released
by the income-tax department on Thursday showed. Gross direct tax collections
stood at Rs.16.03 trillion during the period, registering an annual growth of 14.89
per cent. Refunds increased 24.22 per cent to Rs.2.65 trillion, compared with Rs.2.13
trillion in the corresponding period last year. Corporate tax collections
remained robust, with gross collections rising 17 per cent to Rs.7.53 trillion,
while net collections increased 20.6 per cent to Rs.5.99 trillion after
refunds.
(Business Standard)
CROWDING OUT EFFECT
§ A
situation when increased interest rates lead to a reduction in private
investment spending such that it dampens the initial increase of total
investment spending is called crowding out effect.
§ Sometimes,
government adopts an expansionary fiscal policy stance and increases its spending
to boost the economic activity. This leads to an increase in interest rates.
Increased interest rates affect private investment decisions. A high magnitude
of the crowding out effect may even lead to lesser income in the economy.
§ With
higher interest rates, the cost for funds to be invested increases and affects
their accessibility to debt financing mechanisms. This leads to lesser
investment ultimately and crowds out the impact of the initial rise in the
total investment spending. Usually the initial increase in government spending
is funded using higher taxes or borrowing on part of the government.
RBI KEY RATES
Repo
Rate: 5.50%
SDF:
5.25%
MSF
/Bank Rate: 5.75%
CRR:
3.00%
SLR:
18.00%
FOREX RATES (RBI REF. RATE)
INR
/ 1 USD : 95.0691
INR
/ 1 GBP : 125.8715
INR
/ 1 EUR : 106.5655
INR
/100 JPY: 60.1900
EQUITY INDEX
Sensex:
74315.61 (+1533.72)
NIFTY:
22997.35 (+374.65)
Bnk NIFTY: 55810.50 (+494.50)
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