Top 10 business headlines: Good news for borrowers, homebuyers, FPIs & more

From public-sector banks volunteering to link their lending rates to RBI's repo rate to India's falling factory output, here are the top 10 business headlines of the day

1) Public-sector banks volunteer to link their lending rates to repo

Several public-sector banks on Friday volunteered to link their lending rates to the repo rate to facilitate quicker transmission, even as some reduced their marginal cost-based lending rate (MCLR) over the past two days.

The cuts follow State Bank of India’s (SBI’s) reduction in the lending rate by 15 basis points (bps) after the Reserve Bank of India’s (RBI’s) repo rate cut by 35 bps, on Wednesday. Read more...

2) Govt may soon take a decision on tweaking FPI surcharge proposal

The government will soon take a decision on tweaking the foreign portfolio investor (FPI) surcharge proposal, which has spooked the markets since its announcement in the Budget last month.

According to official sources, changes could include exempting or ring-fencing FPIs structured as trusts or associations of person, a step which may require only a circular; reducing the impact of the tax by grandfathering their income for a few months; or making the transition from a trust structure to a company structure tax-neutral. Read more...

3) India's corporate profits one of the lowest among major economies

India’s corporate profit to gross domestic product (GDP) ratio is one of the lowest among major emerging and developed economies.

The combined net profit of BSE500 companies at $63 billion is equivalent to 2.31 per cent of the country’s GDP against 6.1 cent in the US, 4.24 per cent in Brazil, 3.63 per cent in China, 2.35 per cent in Indonesia, 3.54 per cent in Vietnam, 5.29 per cent in South Korea, and 15.9 per cent in South Africa. Read more...

4) SC upholds homebuyers' status as financial creditors in insolvency law; Big setback for developers

In a big setback for real estate developers, the Supreme Court on Friday upheld the amendments made to the Insolvency and Bankruptcy Code (IBC) that classified homebuyers as financial creditors. Holding that the Real Estate Regulation and Development Act (RERA) is to be read harmoniously with the IBC, a three-judge Bench led by Justice Rohinton Fali Nariman said while the two pieces of legislation must co-exist, “in the event of a clash, RERA must give way to the Code”.

At a time when the real estate sector is already facing a slowdown, liquidity crisis, low demand and an all-time low sentiment, it was a big jolt for the sector.

According to industry sources, the verdict — for petitions by as many as 181 builders, including Ireo, the Trump organisation’s partner in India, as well as Parsvnath Developers, Ansal Housing, and Supertech — will make things difficult for a host of developers. Read more...

5) Goyal Aide Probed over Jet Deals

Central teams probing alleged irregularities at the grounded Jet Airways questioned a chartered accountant – a former auditor and financial advisor to the carrier’s founder – about the 2007 buyout of Air Sahara and some other alleged deals that sought to evade taxes, reported the Economic times.

The Serious Fraud Investigation Office (SFIO) earlier this week questioned Rajesh Chaturvedi, a close aide of Jet founder Naresh Goyal, sources aware of the probes told ET. Chaturvedi has been an auditor to Jet since 2003, and a long-time advisor to Goyal.

6) India's factory output falls to 2% in June as manufacturing slows

Industrial output slowed to a 3-month low of 2 per cent in June compared to May’s seven-month high of 4.5 per cent, as capital goods production contracted and overall manufacturing growth slipped.

The growth rate was in line with the economists’ expectations. The index of industrial production (IIP) had last contracted in March, and is expected to remain muted, owing to weak exports, rural distress, credit constraints and uncertainty over the election outcome, according to economists. Manufacturing output, which had risen by 4.5 per cent in May, took a hit in June, rising by only 1.2 per cent, showed data released on Friday. Read more...

7) SpiceJet posts highest Q1 profit at Rs 262 cr on compensation from Boeing

Low-cost carrier SpiceJet, which was on the verge of shutting down in 2015, posted its highest profit at Rs 261.7 crore in the April to June quarter, though a compensation of Rs 114.1 crore has helped. The airline claimed this compensation amount from Boeing for the grounding of 13 737MAX aircraft, which was disputed by the company’s auditor. Read more...

8) NCLT rejects IL&FS Financial Services auditors' plea challenging 5-year ban

The National Company Law Tribunal (NCLT), Mumbai, on Friday rejected an appeal of former auditors of IL&FS Financial Services (IFIN) — Deloitte Haskins & Sells and BSR & Associates — questioning the jurisdiction of the tribunal to ban them for five years under Section 140(5) of the Companies Act. Read more...

9) H-1B Visa Denials at All-time High

Denial of work visas to employees of India’s largest IT services exporters has risen to an all-time high, according to data sourced by Economic Times from a US-based research foundation.

The country’s big four software services exporters — Tata Consultancy Services, Infosys, HCL Technologies and Wipro — have seen around half of their work visa applications rejected in the past year as the Donald Trump administration pushed for more employment and higher wages for American workers.

The visa denial rate for TCS has gone up from 6% in FY15 to 37% during the first quarter of FY19 (October-December 2018), according to a report by the National Foundation for American Policy (NFAP) accessed by ET.

10) NDTV’s Prannoy Roy, Wife Stopped from Flying Abroad

New Delhi Television (NDTV) co-founders, Prannoy Roy and his wife Radhika, were on Friday prevented from travelling abroad by the Mumbai airport immigration authorities, which had opened a lookout circular on a recent request by the Central Bureau of Investigation (CBI).

“On Friday afternoon, when the couple queued up for immigration clearance, they were asked by the officials to step aside and were made to wait in the immigration office,” an official aware of the proceedings told Economic Times.