Monthly Archives

January 2022

Nationalization of banks in comparison to Covid effects on the Indian economy

By Economy No Comments

Nationalization of banks in comparison to Covid effects on the Indian economy

 


If there are two things that have grabbed the political attention of the masses in India, it has to be the odious covid 19 pandemic that ravaged the already battered economy and the nationalization of the public assets.

Public assets, time and again have been a touchy subject for the masses of India. This is especially is true given the widespread notion or belief that government assets are invariably and emphatically public assets.

The government assets have been the talk of the town for two specific reasons. First is the selling off of the public’s property and heavy corporatization of the banking sector and secondly, the government’s close relations with the Ambani-Adani. With outrage pouring in from the masses the idea has become a contentious issue of debate.

nationalization
Government’s inspiration

But what exactly inspired the government’s decision for disinvestment in the economy? The answer to the question lies in the arrival of the pandemic which severely affected and crippled the finances of the government.

With the need for robust public finance and expenditure in the economy, lower expenditure and finances spelled trouble for the battered economy. Thus, in order to finance the needs of the economy, the government innovatively thought of disinvestment of the public assets on which it could cash on.

But is disinvestment such a bad though Afterall? It is to be noted that privatization might actually ramp up the efficiency of the asset which had been reductant under the government’s rule. With higher NPAs in the public banking sector, the introduction of healthy competition can lead to the revamping of the banking sector.

What more pertinent reason for such a disinvestment spree can be? Given, the circumstances of the pandemic which the banking sector weathered, NPAs were reported to surge. Mortarium on payments and easy lending had put immense pressure on the banking sector.

Though many banks did reduce their NPA ratio, that was merely due to the act of writing off of the loans from the financial books.

As a matter of fact, RBI’s Financial Stability Report of 2020 effectively and emphatically foresaw a huge surge in the Gross NPA ratio of the banking sector. This was projected to be at a significant 13.5 percent for the month of September for the financial year 2021. The NPAs were projected to heavily surge from 7.5 percent in September 2020.

nationalization
What made the Indian banking industry suffer the wrath of the covid more than the other countries was due to India’s despicable legacy of bad debt even before the COVID-19.

Thus, one can strongly argue that as the odious variants of the virus despicably assailed the country which had pervasive and floundering health sector, the already battered pre-pandemic financial infrastructure, cracked and worsened.

The aforementioned situation is even more exacerbated for the public sector, which is inefficient even under normal circumstances. Thus, the government’s solemn decision to privatize certain banks and cash on them has some merit to it.

With increased efficiency and losses, one can effectively expect the better performance of the sector in the economy which is in the nascent stage of recovery.

However, taking an ill view of the banking sector too can be a biased opinion. With strict, increased monitoring, the immense increase in market capitalization in the stock market, and the introduction of stimulus packages, there is hope that green shoots for the sector and the economy are a possibility.

nationalization
This can be effectively corroborated by the fact that throughout 2020-21, SCBs’ RoE and RoA sustained a positive rise of an impressive 6% in March 2021 on their CRAR. In fact, the GNPA and NNPA ratios too displayed signs of stability over a period of time, which spells good for the economy.

As aforementioned, last year, the moratorium on compound interest, which was sanctioned by the RBI, had a despicable effect on the bank’s finances. But it is to be noted that contrary to the earlier inferences, banks are now much better equipped to manage profitability.

Their resilience in terms of higher recoveries and as higher capital buffers too has been improved. Thus, one can maintain that the moratorium and the pandemic did have a silver lining for the banking sector.

Thus, in totality, disinvestment, which has been a petulant topic for the public, can be a step in the right direction for the industry. Given the immense importance of the banking sector in the economy, which drives the demand and the investment, its timely resolution is the need of the hour.

If this required extreme means, one should brace themselves for the inevitable. Thus, one should not be much abrasive or unappreciative of the scheme the government is concocting for the banking sector. As for the future, one can only be patient to witness what the scheme will offer for the industry and how will impact the economy in the long run.

understanding mobility laws

Understanding Mobility Laws in India

By Other No Comments

Understanding The Mobility Laws

India has been changing. Recent digitalization bears testimony to the fact that India is digitally and electrically transforming itself in this era. Amongst all digitalization, electrification, and mechanization, which will bore fruits for the economy, Electric mobility has caught the fancy of the government.

lawSuch a claim can be corroborated by the fact that diesel and petrol automobile purchase in India is dropping and the conventional market is facing tough competition from its electrical competitors.

One major reason for try hype the same is that the adoption of EVs serves to solve and address the problem of air pollution, noise pollution, dependence on fossil fuels. On the other hand, the public has been discarding age-old conventional automobiles due to increasing inefficiencies like high maintenance of such vehicles and urban decongestion in India.

The government has been providing incentives to the public to initiate the process of booming EV market acceptance in India. For this, a notification was released on August 12, 2020. This was effectively released by the Ministry of Road Transport and Highways which had pompously permitted the effective sale and registration of 2-3-wheeler electric vehicles, which did not process pre-installed batteries.

It is to be noted that in this notification release, the government had adhered to the recommendations that were made by the industry. The recommendation included a strategy to delink the cost of the battery which emphatically accounts hefty, by 30 to 40 percent of the EV cost.

Thus, it can be stated that in order to reduce the upfront vehicle cost, the government had gone ahead with the scheme. This, in fact, quite positively shows the commitment of the government to adhere to its greener promise for the future.

electric mobilityFurther, it is to be noted that this scheme will be emphatically carried on the welcoming lines of how subsidies under EV policies can be availed of. What needs to be paid attention to is the fact that how will government implement the subsidy implementation plan?

This is due to the fact that under the Faster Adoption and Manufacture of Electric Vehicles policy, EV purchase attracts direct subsidy. This is effectively linked to the battery capacity of the vehicle.

Is the policy being updated and implemented by various states? It is to be noted that the Delhi government has too emphatically launched a new EV policy for the next 3 years. To induce the public to embrace the change, the policy had offered many additional benefits over and above the FAME-II policy that was devised by the Central Government.

But what do these investments include? These incentives include financial incentives that will be provided in the form of direct subsidies for EV purchases in order to induce customers to opt for EVs. At the same time, the government is trying to disincentivize the usage of combustion vehicles by effectively scrapping the incentives for cars with internal combustion engines.

Other enticing offers that are being provided entail exemption from road tax, interest waiver on loans for various commercial buyers, and waiver of the registration fee.

Also in pursuit to develop infrastructure that is viable for the EV market in India to boom, the government has also been trying to invest in the infrastructure for charging batteries and increasing the network of charging stations. This has also led the government to promote EV usage on various ride-hailing service providers by effectively granting the rights to effectively operate electric 2-wheeler taxis.

Thus, one can effectively state that in addition to the central government, the state governments are also extensively trying to appeal to the fancy of the masses with advertisements and concessions. On the other hand, one can also scrutinize that the policy in Delhi appears to show a paradigm shift in policy in comparison to other states that are seeking to incentivize the manufacturing of EVs.

Another state that has too positively come forward to greatly incentivize the adoption of EV is the state of Telangana. Unlike the Delhi government, one can witness the change in policy as it has taken the route of supply rather than demand appraisal. According to the policy that has been unveiled, one can state the main thrust of the policy contains instruments to incentivize the manufacturing in the state by the effective and emphatical establishment of energy and EV parks.

human mobilityThe major call for such incentives was seen when provisions were made for 775 acres of land for EV manufacturing facilities. On top of this, it was also witnessed that some preferential market access for EV manufacturers was also being provided for the enticement process for further manufacturing.

I a major policy alteration, the Telangana government had gone as forward as to state that the sale of the first 2,00,000 and first 5,000 units of two-wheelers and four-wheelers respectively will procure 100% exemption of road tax and registration fee.

Thus, one can state that the Telangana government has based its policy on the model of effectively leveraging the existing electronics manufacturing facilities to f\drive investments in the burgeoning sector. Additionally, the policy also includes the tint of usage of supply chain advantages to make the prospects of investments more attractive for the investors.

Though no one can deny the fact that with the automobile sector, the EV market too was affected by the pandemic, with the aforementioned policies and incentives one can state that the government is trying its level best to signify institutional intent to focus specifically on electric mobility.


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medius

Medius

By Other No Comments

Medius

History bears testimony to the fact that India’s economic and financial woes bear a long arduous history and complications. With the pandemic right here to inflict economic and humanitarian woes, India yet again stands at a point where such economic and financial anguishes will be exacerbated.

Not only has the pandemic contributed immensely to the problem, but it can be rightfully claimed that the government’s preventive strategies have been contributing to such an impending debacle.

medius technologies private limitedAs it is quite widely known that the banking sector is booming as the Indian economy is gaining momentum. But with the rise of credit, delinquency is on the rise too. But here it is worthy of mentioning that Medius, using its Predict-Act-Reduce technology (P-A-R) is successfully attempting to mitigate the NPA crisis in the Indian banking sector.

Medius gains are all the more relevant given various detestable predictions like the detestable NPAs all set to increase from 11.3 percent in March 2020 to 15.2 percent in March 2021.

Consequently, highly odious predictions like an increase in stress assets to 16.3 percent under a very severe stress scenario do not spark much confidence in the post-pandemic rueful world. Thus, given the debacle that is in making,

Medius through its P-A-R technology has been cautiously and strategically predicting historical bank data and generating borrower information, which is the prerequisite demand to tackle the NPA crisis.

medius technologiesOn the other hand, the problem is all set to be exacerbated by the moratorium that was provided by the government on bank loan repayments.

It is quite true that the banking sector is already in troubled waters but the moratorium that had been provided to ease the pains of one sector will definitely lead to the accentuating of the other.

With already crippled finances of the public, the probability of repayment at the moment is at an all-time low. Thus, preventive measures that are being effectively provided by the Medius are the crucial and immediate need of the hour.

It has been quite rightly stated that prevention is better than cure. With an increasing number of curative mechanisms existing in the economy, the preventive measures by the finance ministry are quite numbered. Medius, the AI-based platform is the one-stop solution to the detestable problem of bad debts of the financial sector.

Through the AI preventive technology of Medius, bad debts can be deciphered in the early stages of its debacle. Given, timely resolution and recovery of loans is the Achilles heel of the bad bank’s industry, Medius unties the knotty situation with its strategic AI technology of early detection and suspension of the same.

with its AI technology strategic resolution are provided are highly accurate and can be trusted. Lastly, the usage of legally integrated workflows is used to strategically resolve disputes and due accounts.

One attribute that sets Medius apart from the crowd is its committed goal to provide AI structured timely resolution to recover the value of money for investors. Given, that the stakeholders have the most to lose in the bad debt revival process, Medius’s strategic functioning gives paramount importance to tending to such problems and needs.

It is no news that AI technology is the future of the banking sector. This makes Medius a forward-future-looking venture that pays attention to innovation and strategic technology usage to craft fruitful solutions. Thus, Medius is a future-oriented venture that has immense potential for growth and relevance.

In fact, Medius can be rightly hailed to have ushered the AI technology usage in the banking industry for the resolution of the predicament of the sector. Given, Medius is the first-ever AI-based venture specializing in the resolution of the odious problems that plague the banking sector, Medius can be conferred the title of “the forerunner of change”.

medius softwareMedius also emphatically believes in reducing inefficacies and reductant human participation in the bad debt resolution sector as these are the very reason for the uninformed, odious and inefficient debacle. It is no news that with the plummeting relevance of the IBC in effectively dealing with the NPA crisis in the economy, due to its falling robust edifice of the timely resolution, Medius has rightfully descended in the industry with its preventive technology for the survival of the sector.


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asset reconstruction company

RBI Panel Highlights The Role of Banks in Asset Reconstruction Company Failure

By Banking No Comments

The Role of Banks in Asset Reconstruction Company Failure

India’s NPA history has been a sad one. With the piling of bad loans and lower consumer and investors’ confidence, the future looks quite bleak too.

Though many reforms have been initiated to mitigate or at least manage the crisis. But to state that they have been successful will be a false judgment.

It can be perhaps the rules or the management that were stacked against them, or maybe it was the operating framework that was not really helpful, but it stands quite true that the measures have not been able to achieve what they ought to. This is true in the case of IBC, insolvency, and bankruptcy code and especially in the case of ARC, Asset Reconstruction Company.

national asset reconstruction company
ARC works on the model of restructuring debts by acquiring them. The recovery is made when the bad loans’ underlying assets are sold to make a recovery.

Though the ARCs cash on the management fees that they earn, the recovery rate of these assets has been abysmally low. according to the reports, all these years, the results of reconstruction through ARC have been below par. Thus, one can state that there have been few instances of actual resolution or turnaround of companies.

Such a claim can be corroborated by the fact that RBI has articulated recommendations to re-invigorate the ARC ecosystem. Thus, it can be maintained, with some certainty that the operating framework in actuality suffers from some frailties.

But is ARC, individually to be blamed for the low recovery on assets? Probably no. Banks play a part by delaying the sale of stressed assets to a point where much of the value is already lost or destroyed. Thus, it wouldn’t be wrong to state that banks do help exacerbate the problem of recovery.

The problem with such delays is the fact that it is much more arduous for the ARCs to revive the business or get a good price for it. Though one might be of opinion that this is a display of inefficiency on the part of ARC, the right judgment will be to design a business to address the problem.

Taking this viewpoint into consideration, the panel too has recommended aptly incentivizing banks to sell their bad loans early or timely, to allow

asset reconstructionARCs recover a part of the asset.

Reviving the accountability

The committee has suggested that for loans that are worth Rs 100 crore and more, where effectively the borrower has been found to be a defaulter and the resolution plan is being worked on, the possibility of the sale or an auction to the ARC should be made a possibility.

Given, that such a suggestion was made recently, it can be conjured that it was not being carried out previously by the banks, which raises the question about the management of the firms.

Additionally, in order to improve the accountability of the banks, the committee has effectively suggested that two-year-old NPAs, with no resolution plan being pursued nor the bad assets being put on the sale list, the banks must emphatically put on record the reason for such a scenario.

Such suggestions by the panel confirm and reinstate the fact that if ARCs have not weathered well throughout the years, partially banks too have been the exacerbator of the problem.

Another problem that has cropped up in recent years is that of consortium arrangement. Many lenders have actually made it difficult to aggregate the debt and thus have delayed resolutions.

Thus, in order to mitigate such a problem, the panel has emphatically suggested that if as much as 66 percent of the lenders, by value, have decided to accept an offer, the resolution will have to be carried forward and will need to be closed out within 60 days of it being approved.

Given that a timeframe will be given to other lenders to comply with the offer, if they fail to do so, they will have to provide fully for the exposure. Thus, the principle of accountability not only on the level of organization but also on the lenders’ level has been incorporated.

Additionally, the suggestions also have brought to the forefront the idea that the NARCL will not suffer from disaggregation on the organizational or lenders level. The panel has also ensured that NARCL will ensure that it will take care of the problem of enforcing the security to back each of the assets

Finally, the panel has also suggested that it will be a good idea to have a couple of external valuers who would do a valuation exercise to come up with both the fair market value and the liquidation values.

This certainly and immensely helps in fixing the reserve price which consequently will ensure a better price discovery at the auctions.

Given that transparency and accountability will be fostered and embedded in the system through synchronization of banks and ARC. Though it is to be noted that every reform and process has its failings, the objective to make it infallible and adaptive shouldn’t be given up.

Thus, one can state that through the participation and synchronization of banks and ARC, it is a high possibility that the bad debt crisis of India can be mitigated by a large proportion.


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south asia

South Asia

By Others No Comments

South Asia

The ”occasional dimness” issue is one that torments huge pieces of South Asia in long stretches of dry season (for a new outline, see Lim and Johnston, 1999).

The repeat of the El Nino Southern Oscillation (ENSO) peculiarity is likewise accepted to have drawn out the dry season also strengthened the inescapability of woods fires.

Singapore has encountered especially extreme negative natural effects of this problem, particularly in the later long periods of 1997, in the early long stretches of 1998, and in mid-1999.

The worry among Southeast Asian nations has reached a higher-than any time in recent memory level both in the public and private areas.

southeast asia The examinations done on the 1997 murkiness found that the expense for Singapore alone arrived at US$163.5–US$286.2 million, with the best effect on the travel industry during the time of the murkiness.

Table 1 shows that wellbeing expenses and misfortune in the travel industry account\ for US$3.8–US$4.5 million and US$136.6– US$210.5 million, separately.

Backhanded expenses in the type of loss of perceivability, grand perspectives, and sporting exercises are likewise huge, in the region of US$23.2–US$71.2 million.

Furthermore, these quotes might be a misjudgment of the genuine expenses since not everything is probably going to be represented.

If the recurrence of the fog scenes increment, the related expenses are probably going to increment. Henceforth, it is basic to focus on the issue brought about by the fog in Singapore.

The significant reason for this ”occasional murkiness” issue is backwoods, shrubbery, and field fires in the islands of Kalimantan and Sumatra in Indonesia, and less significantly in Sabah, Sarawak, furthermore different pieces of Malaysia.

southeast asia Practically these fires currently appear to be preventable, since they are intentionally set to clear land for development.

Hypothetically, the public authority specialists at focal, commonplace, and neighborhood levels in these nations ought to be liable for controlling exercises in their domain that cause widespread harm and pain, not just among their own populace yet additionally across their borders in adjoining nations.

Practically speaking, in any case, air contamination control through regulatory arrangements and practices is remarkably hard to carry out and keep up within a situation of this sort in agricultural nations, especially during a period of devastating financial mishaps, the new Asian financial emergency, and political vulnerability in Indonesia.

The worldwide academic local area has been checking and estimating enormous scope land and backwoods fires in various districts for numerous years, helped by refined recognition advancements.

Nino and its dry season creating impacts in Southeast Asia would empower watchful organizations in the district to plan all the more wisely in light of previous experience.

However, nobody proposes that the present lacking strategy reaction to the issue is expected principally to an absence of essential logical information about the issue.

A further logical examination of this sort is significant all around the world, yet the exploration cost is anything but a significant piece of the expenses of avoidance that ought to be met around here.

On the substance of things, a reformist (or even coalitionist) system in Indonesia may be relied upon to put generously in dimness-related research, yet with weighty reliance on worldwide wellsprings of specialized help.

Such an approach should embrace a management-directed research technique, which would comprise of two essential elements.

To begin with, this technique ought to mirror a genuinely genuine and efficient work to coordinate the many disciplines, both hard and delicate, that add to land use and sane asset the board in the fire-related spaces of the district.

Second, the logical research methodology for the battling area and woods flames ought to underscore remote detecting and GIS-related strategies for data gathering and handling. All things considered, any authorization regime will require close checking of the situation just as following methods and results.

These would seem, by all accounts, to be the two most financially savvy kinds of examination to be pushed to strategy producers in the area, however, they do experience the ill effects of specific weaknesses. Remote detecting, for instance, can just catch flames to a certain extent.

Assuming that the region impacted is little, there is a lot more modest possibility of location. This number and exactness of the factors utilized, which might incorporate the size of flames, region impacted, the thickness of overcast cover and climate conditions, decide the helpfulness of GIS-related strategies, and the Indonesian specialists may experience issues in social occasion precise data to utilize the GIS strategy.

stakeholders approach Hence, other significant sorts of logical examination additionally merit proceeded with help from outside sources. The haze resulting from the fires in Indonesia has caused severe economic and environmental damage in the region and will continue to do so if no prompt and effective measures are taken.

This study has reviewed the related issues and suggested policy responses from different perspectives, and some incentive mechanisms for preventing or reducing the effects of the fires have been discussed. A ‘‘stakeholders approach’’ to sharing the costs of certain programs to combat the fires has been suggested.

 


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lic ipo news

LIC IPO News

By Corporate Law No Comments

                                                     LIC IPO News

LIC is all set for its IPO which will emphatically raise the valuation of the company surpassing that of the Reliance industry.

  • This shows the significant nature and importance of the IPO that is all set to hit the market. The IPO of LIC will be game-changing as it will help the government garner from Rs. 50,000 crore to Rs. 1 lakh crore for its divestment policy which is crucial for raising funds for the functioning of the government.

In fact, the sale of 5-10 percent government stake in the company will give the company better returns on its investment. This is due to the fact that independent directors and investors will be able to raise questions on economically viable decisions that will be lucrative and strategic for the growth and performance of the com

LIC’s embedded value as of September 30, 2021, has been estimated at 5.39 lakh crore. Currently, private insurance companies trade at a multiple of 3-4 times embedded value.

However, embedded value is only an estimation of value based on several assumptions, and the multiple attribute to an insurer could vary based on several qualitative factors.

LIC

Considering its size, and dominant position in the market with 66 percent market share in new business premium, its growth rate may not match up to some of the nimble-footed private insurers.

A range of embedded values multiple between 2-3.5 throws up a valuation for the corporation ranging from Rs 10.7 lakh crore to Rs 18.7 lakh crore. Based on the total equity capital of 632 crore shares, the issue size for a 5% offer for sale works out from Rs 53,500 crore to Rs 93,625 crore.

The per-share price thus works out from Rs 1693 to Rs 2962. Against this, the government’s average cost of acquisition of shares stood at Rs 0.16 as LIC went through a capital rejig ahead of the IPO.

LIC’s initial capital, when it was incorporated, was Rs 100 crore. Since LIC was a collective, and not envisaged as a public limited company, there were no shares allotted. To transform the corporation into a corporate structure with shareholders ahead of the public issue, the original capital of Rs 100 crore infused by the government during the inception of the corporation was converted into share capital by allotting shares of face value Rs 10 for an equivalent amount.

In September 2021, the corporation then allotted an additional 62.24 crore equity shares at the same face value against the free reserves outstanding in LIC’s book as of March 31, 2020.

Then again, another 560 crore equity shares of the same face value were allotted against the retained share of a surplus of the government of India for fiscal years 2020 and 2021. LIC’s total capital now stands at Rs 6,324 crore.

Cadila Healthcare Ltd on Monday said group firm Zydus Pharmaceuticals (USA) Inc has received final approval from the US health regulator to market its generic version of Roflumilast tablets in the strength of 500 mcg indicated to reduce the risk of chronic obstructive pulmonary disease (COPD) exacerbations.

Zydus, being one of the first applicants for Roflumilast Tablets, 500 mcg, is eligible for 180 days of shared generic drug exclusivity, Cadila Healthcare said in a regulatory filing.

The US Food and Drug Administration (USFDA) has also given tentative approval for Roflumilast tablets, 250 mcg, the company added. The drug will be manufactured at the group’s formulation manufacturing facility at the SEZ, Ahmedabad.

LIC’s embedded value as of September 30, 2021, has been estimated at 5.39 lakh crore. Currently, private insurance companies trade at a multiple of 3-4 times embedded value.

However, embedded value is only an estimation of value based on several assumptions, and the multiple attribute to an insurer could vary based on several qualitative factors.

ipo of licConsidering its size, and dominant position in the market with 66 percent market share in new business premium, its growth rate may not match up to some of the nimble-footed private insurers.

A range of embedded values multiple between 2-3.5 throws up a valuation for the corporation ranging from Rs 10.7 lakh crore to Rs 18.7 lakh crore. Based on the total equity capital of 632 crore shares, the issue size for a 5% offer for sale works out from Rs 53,500 crore to Rs 93,625 crore.

In September 2021, the corporation then allotted an additional 62.24 crore equity shares at the same face value against the free reserves outstanding in LIC’s book as of March 31, 2020.

Then again, another 560 crore equity shares of the same face value were allotted against the retained share of a surplus of the government of India for fiscal years 2020 and 2021. LIC’s total capital now stands at Rs 6,324 crore.

 

 


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data privacy in china

Legal Regime of Data Privacy in China: Handle for Foreign Tech Firms

By Other No Comments

Legal Regime of Data Privacy in China

It is no news that business and legal clarity in any country is the crux for a viable business environment and management. But in a recent turn of events, China has failed to provide the same for the companies that operate on its soil.

To corroborate such a claim, Yahoo has recently decided to effectively shut its operations in China. The reason cited for the same was an “increasingly challenging” business environment that is brewing in China. Additionally, the legal environment too has been the source of contention for the company.

The enormity of the deterrent-like legal and business environment can be conjured from the fact that Yahoo has ended a long-standing relationship of about 22 years because of the same.

but has such a scenario not worked in favor of just Yahoo? Apparently not. As a matter of fact, recently, the professional networking platform LinkedIn, which is owned by Microsoft, has stated that this year, it rolls down on the Chinese version of the site.

in fact, in a jolt to China, its video game operator Fortnite, which was China’s biggest gaming company, has too decided to pull out its operations from the Chinese market.

this gives rise to an important question what actually is leading firms to curtail their production and move out of China? What environmental or legal factors are contributing towards such abrupt departure of companies from Chia?

It turns out that the pulling out or downsizing of firms is due to the strict data privacy laws that have been put in force by the Chinese government. It is to be noted that the Data privacy laws emphatically specify how the data is to be collected and stored by the companies, affectingly directing them to function and perform in a certain manner.

China has been trying to mitigate the storage of data of its users by the company, so much so that it had rolled out the Personal Information Protection law that lays down the standards for the storage of data.

Additionally, it also effectively and emphatically restricts the amount of information that is actually allowed to be collected by the companies.

Unlike various other countries, where not much restriction is placed on companies to obtain consent from its users, China has been making the operations of the companies difficult through its hardcore rules of consent.

Even though the topic of data privacy has been a blazing issue that has been raised by the world stage, China has been the first country to stringent crack down on companies for violating its user privacy.

In addition to the aforementioned restrictions, the law has also made it mandatory for the companies to provide the users with an option of opting out of data sharing.

but what are the discrepancies that arise for the company that abides by such laws? It is to be noted that through the introduction of such stringent, crippling laws, the costs of compliance have increased. In addition to higher costs, the companies have also started to feel the threat of regulatory uncertainty that China is providing.

Thus, given that more is at stake than what can be gained by sticking in the market, the foreign companies have decided to opt-out of China.

What adds to the discrepancy is the fact that the law makes non-compliance penal in nature. Thus, this could lead the companies to pay up to a whopping 50 million yuan or 5% of the yearly revenue for the violation of the law.

china data protection lawThough, it is to be noted that the laws introduced to effectively prevent the misuse of the user’s data, such laws have effectively led to the curtailment of business in China.

But has the motive of China been on the basis of welfare for its citizens? Probably not and perhaps that is the biggest flaw of the program. This is merely due to the reason that the law effectively does not stop the government from accessing the citizen’s personal information. Thus, the people in China will remain under surveillance, but under the government’s surveillance.

but does the new obsessive surveillance scheme has to do anything with the trade war? Probably not. Given the rising tensions between US and China, one can emphatically maintain that the new regulatory regime has also been affected by US’s various restrictions that were inflicted on Huawei and other Chinese tech companies.

lastly, it is to be noted that the newer policy is an added stringent measure to China’s already existing “Great Firewall”. The great firewall effectively uses laws and technologies to enforce censorship on social media content that it doesn’t consider feasible according to Chinese laws.

It is no news that social media networks like Twitter and Facebook have already been facing increased scrutiny under Chinese laws due to the Great Firewall for a long time.

china personal information protection lawThus, given the enormity of discrepancy and nonaccommodative environment that is brewing in China, it is perhaps time that China starts deep introspection of its laws that are not helping the business environment.

This gains all the more important given the fact that the Chinese economy was severely crippled by the pandemic. Thus, a nonaccommodative business environment will only add to the existing woes of the Chinese economy and it is time that China revises its stance on its data privacy laws.

 


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corporate borrowers in india

Large Corporate Borrowers in India Return to Banks as Economy Shows Revival

By Corporate Law, Others No Comments

Why Corporate Borrowers in India Return to Banks?

Given the uncertainty that has been imposed by the pandemic on the countries around the world, lower bank credit is the most visible consequence of it.

According to the reports, bank credit to industry has been mute for quite some time now, having fallen 1.7% in the year to date. But under current circumstances and a growing economy, bankers are highly expecting a revival in corporate loan growth. ‘

This can be emphatically possible due to the economy opening up, demanding a higher flow of credit in the market. What would make this a strong business case is the act that high recovery will guarantee high economic prospects in the future, which will ramp up the need for capital expenditure in the economy and hence higher borrowing.

talking about performances of different kinds of loans in the market, chunky industrial loans, which effectively make up about 30% of non-food credit, witnessed mild reactions and demand in the financial year 2021.

This severely underscored a trend among companies to conserve cash. On the other hand, retail credit demand in the economy expanded emphatically. What makes this expansion surprising is the fact that it expanded through the period of episodic lockdowns and curbs that were placed by the authorities on mobility.

but given the gloom that the banking sector had witnessed in the financial year 2021, higher growth prospects are making analysts believe that credit demand will now pick up.

the corporate borrowers in indiaA fact that is backed by an organization of consequence carries weight. Hence, to add weightage to the argument stated above, the Japanese leading investment bank, namely Nomura. Has strategically stated that growing optimism in the market and abundant liquidity should boost loan demand in the future.

with the high performance of the retail sector, what other sectors will encounter loan growths in the future? It is to be noted that other than the retail sector, the manufacturing and services sector will encounter growth and liquidity.

If the last, unconventional year is to be scrutinized, uncertainty had provided that better judgment of the investors and had forced the infrastructure and various sectors to close down in the economy.

This had severely affected the business environment, which in return has exhibited muted credit demand from traditionally asset-heavy industries. But this gives rise to a pertinent question with heavy stimulus running through the economy and lower interest rates, shouldn’t investment and spending be on the rise?

The answer is more complicated than a layman might anticipate it to be. Instead of undertaking newer investments in the market and emphatically adding more debt to their balance sheets, several companies in the asset-heavy sector effectively and strategically sought to deleverage.

corporate business loansThis was done by harnessing cash flows in the economy to heavily improve their debt profiles, which had been faltering throughout the pandemic.

But was the pursuit to improve the debt profiles of the companies the only reason for the enactment of such a plan of action? It is to be noted that a good business practice is that when two motives can be achieved through one strategy, one should go for it and what certainly can be better than that?

And that is what had motivated the companies and corporations to go along with the plan to deleverage. It is to be noted that the better, debt-free profiles of the corporations should now encourage many companies to add debt to their portfolio as they undertake expansion of capital. Thus, with improved profiles, the extra room has been created for undertaking more expansion in the future.

Thus, one can effectively argue that after undergoing a strenuous and arduous phase of deleveraging over the past few years, the companies will be in a better position for re-leveraging. In fact, as a matter of fact, Indian financiers have emphatically and effectively saddled themselves with ample liquidity also known as capital buffers to tap the emerging opportunity.

Another reason that had led to smaller bank credit growth was the cheaper rates in overseas and the local bond markets that were looked upon by the companies as their source for their short- and medium-term funding needs.

What corroborates the claim that the loans will be on the rise is the fact that the banks are already seeing an uptick in demand from city gas, road projects, and renewable energy projects. Thus, given that one is witnessing such a strong demand even when the econom6 is struggling with a newer variant, one can definitely anticipate higher demand for loans in the future.

corporate term loanin totality, it can be stated that industry growth will emphatically emerge as a key driver to boost credit growth in the economy. Though, a word of caution is necessary that states that though India will witness an increase in loan demands, lags would still be prevalent.

This merely will be due to fact that the economy can be highly unpredictable mainly due to covid variant mutations and unorganized consumer and investors’ confidence. Though, even though lags might fraught the process, government spending and revival in consumer demand can be the potential triggers.

 


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e-commerce regulations in india

India’s E-commerce Regulatory Contradictions: P2B Regulatory Blind Spot

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India’s E-commerce Regulatory Contradictions

Despite excessive e-commerce regulations in India, one can emphatically maintain that much is yet to be rectified. This needs to be specifically done in the P2B sector also known as the platform to the business model.

Owing to regulatory lacuna or void, several allegations have been registered regarding unfair trade practices. Allegations against E-marketplaces have surfaced which involve allegations like skewed placements and ranking, self-preferencing, and opacity and regulations in terms of the use of consumer data.

Thus, given the fact that the e-commerce sector is garnering more and more important, it is quite crucial that regulatory rules are played attention to.

Given the unprecedented last year, the domestic e-commerce market in India has flourished. One might even say that the digital revolution had been ushered by the onset of the pandemic.

this was mainly due to the fact that many individuals were forced to return to their home environment where the usage of e-commerce platforms and digit platforms became an inevitability.

In fact, the increased internet access and high smartphone penetration have fastened the process of digitalization of India. On the other hand, an immediate push for “digital India” by the Modi government has also contributed to the digitalization of India.

the e-commerce regulations in indiaIf the statistics are to be scrutinized, the pandemic inflicted woes on India’s retail sector that had shrunk by a significant 5 percent. But on the other hand, this opportunity was relished by the e-commerce sector which recorded a growth of a staggering 5 percent. This significantly had ramped up the valuation of the sector to a total valuation of $38 million.

If you are an avid online shopper, chances are you have increasingly heard about e-marketplaces. It can be rightfully stated that e-marketplaces can be seen as the new emerging trend in the Indian market. It is to be noted that – marketplaces connect sellers and business users with consumers but virtually.

E-marketplaces have garnered much popularity and have been presenting a tough fight to the physical retail sector that is still recuperating from the aftereffects of the pandemic. with the fall of the physical marketplaces and due to the variety of perks that were being offered by the e-commerce sector, such as massive discounts, home delivery, variety of products, etc. e-marketplaces have garnered much attention.

The tech giants that had the most to gain were namely Flipkart, Amazon, and food delivery aggregators namely Zomato and Swiggy.

As aforementioned, due to the stiff competition being provided by the e-commerce sector, there has been a growing unease for business users that sell their services offline.

Due to this trend, various allegations have surfaced like that of extremely unfair practices and trade which have been undertaken by presenting deep discounting and preferential treatment of platforms for its own offerings.

These allegations gain importance since the state of competition in the Indian e-commerce market tells the story of the concentration of immense power in the hands of a handful of e-marketplaces.

The unfair practices and growing share of a handful in the market have made it unavoidable for small businesses to partner with them. This is usually due to the fact that various small businesses want to set their foot in the market.

This detestable attribute has put the e-commerce giant in an indispensable position. This is due to the fact that the circumstances have arguably accorded them the status of being ‘gatekeepers’ within the sector.

On top of it, owing to the vast bargaining power imbalances that have cropped up into the system, the business is at a severe disadvantage to not be able to negotiate with such e-marketplaces giants. Thus, this has led to the practice of unfair practices and unfair treatment in the sector.

e-commerce rules and regulations indiaTalking about the regulation of the e-commerce sector in India, it is to be noted that e-commerce in India does not pertain to a particular sector. Due to this analogy, different aspects of e-commerce are particularly regulated by various other regulators in a particularly fragmented manner.

Now one might argue that various e-commerce regulations are in places like the Competition Act, passed in 2002, or the Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules, 2021 and the consolidated Foreign Direct Investment Policy, that have been significantly drafted for the convenience of the sellers. But it is a fact that all the aforementioned laws are quite toothless in the face of seller woes.

To put the analogy in perspective, it is sagacious to anise the Competition Act, 2002. According to the law, it is to be noted that it allows for significant and effective intervention only if the unfair practices are carried out by some ‘dominant’ entity.

It is due to this detestable attribute that various entities that actually relishing the fruits are left scot-free. Given the nature of the Indian e-commerce market, it is concentrated with a few big players, and not by a clear dominant player.

india e-commerce regulationIt is due to this attribute that the Competition Commission of India has been not been effectively and significantly be able to intervene in regulating such oligopolistic concentrations that are much more crippling in nature.

Thus, the need for regulation is immense in the Indian e-commerce sector given the character of the market. Thus, newer regulations and alterations to the existing ones are the need for the hour. But will the government take cognizant of the e-commerce regulations is it something we’ll have to wait and watch?

 


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regulation of cryptocurrency in india

India Must Regulate Cryptocurrencies in Consumer Interest

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The Regulation of Cryptocurrency in India

Call it the world’s greatest invention or the contentious asset of worry, you cannot deny the fact that cryptocurrency has wrapped investors around their fingers.

The fancy of the investors is quite justified given the high returns they earn in comparison to other assets in the market. Of all the investors around the world, Indian investors particularly have been largely invested in the concept.

According to the reports, the Indian Crypto asset industry witnessed tremendous, exponential growth over the last five years.

In fact, one can argue that the popularity of the asset had touched such heights, that authorities and great personalities have joined the debate. It is no news that financial literacy in India is mainly a farfetched concept, with many having little to no knowledge about it. But given the statistic, still more than 15 million Indians effectively now hold digital currencies.

Given the humungous support that has been received by the contentious digital asset, cryptocurrencies, like any other financial asset, also need to be regulated.

This needs to be emphatically done to effectively protect consumer welfare and to highly promote innovation as well.

the regulation of cryptocurrency in indiaCertainly, if you are a finance enthusiast or a market spectator, chances are that you know that the government is not particularly kind to the digital member of the financial asset family.

In fact, one can quite rightly describe the government’s demeanor towards cryptocurrency as belligerent.

But even given the central’s tough arduous stance on the digital asset, crypto assets, no matter what, are likely to form the basis of future forms of the internet. In fact, this is quite evident as the world of cryptocurrency in India is growing at an appreciable, astronomical pace.

For the crypto investors, recent weeks have been a roller-coaster ride.

This is due to the fact that the popularity of the crypto comes at a time when New Delhi is specifically aiming to introduce a bill to regulate the asset.

Her, it is worthy of mentioning that experts argue that the crypto market will be the future of the financial sphere in India.

Therefore, one can conclude that India, in future and present terms, is well placed to capitalize on this due to its burgeoning private crypto market. Given the aforementioned argument, it would be extremely unwise to place a ban on private crypto assets.

This will apparently lead to a significant revenue loss to the government. As a matter of fact, if the government even tries to censor the private currency, there are emphatically high chances of clandestine activities to be conducted and to force the nascent industries to operate illegally.

Thus, in lieu of normalcy, it is highly advised that a balanced regulatory approach be followed. It is imperative that the regulatory approach should effectively addresses concerns of money laundering, regulatory certainty, fiscal stability, and investor protection.

This all should be achieved while strategically preserving innovation. This suggestion garners all the importance due to the fact that the financial health of the economy and citizens is not too sound at the moment, any immediate, crippling regulation will certainly lead to financial shock in the economy, something that India can ill afford at the moment.

As a matter of fact, adoption of such a technique should not be an arduous task for the government as most of the aforementioned regulatory necessity to address the policy concerns related to crypto-assets, namely foreign exchange management, investor protection, tax evasion, and money-laundering and tax already exists in the financial legislation. What the need of the hour is the need for adaptation to accommodate an emerging technological paradigm.

Talking about an effective crypto regulatory framework, it should specifically include innovation-friendly, technology-neutral, and consistent to effectively and emphatically harness the full potential of India.

In fact, the prerequisite demand for a consistent, emphasizing framework is that it must lay down clear definitions to strategically and smartly identify the relevant regulatory bodies.

This will systematically help in clearing the ambiguity around the framework structure and operations of the government with respect to crypto. It is no news that in the finance world, one thing that is most certainly detested is uncertainty.

cryptocurrency regulation in indiaThus, clarity on the laws and propaganda of the government is needed. It should also provide crypto asset service providers with safe harbor–protection from liability for the actions of investors on their platform.

Finally, one cannot deny the fact that where there are profits there is avarice for higher incomes and thus a high propensity for conduction of illegal activities.

To address this irregularity or inconsistency, the Government should emphatically adopt a co-regulatory approach.

In the co-regulatory approach, various other regulatory authorities and associations like RBI, SEBI, and the Ministry of Finance should be brought into the picture for sharing responsibility for oversight and regulation.

But is supervision and scrutinization by the regulatory authorities enough? To monitor the private players, incentivizing industry whistleblowing is important.

legal cryptocurrency in indiaThis is necessary as the players within the crypto-market will work to keep a check on each other’s activities, which will emphatically reaffirm the government’s idea of regulation.

Thus, given the aforementioned arguments, it is quite imperative for the government to alter its stance to ban private currency in the market. In order to avoid clandestine, illegal activities, the government will have to be mindful of the investors’ choices and decisions as well.

 


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