RBI Completes Special Audit of IIFL Finance; Measures Taken to Address Regulatory Concerns and More.

RBI Completes Special Audit of IIFL Finance; Measures Taken to Address Regulatory Concerns

The Reserve Bank of India (RBI) concluded its special audit of IIFL Finance Ltd, revealing several irregularities in its gold loan operations. The audit led to restrictions on new gold loans and mandated corrective actions. IIFL has since addressed these issues and strengthened its regulatory compliance. Despite these challenges, the company remains resilient, securing ₹1,271.83 crore via equity rights and ₹500 crore through Non-Convertible Debentures. Shares closed at ₹467.90, down 0.91%.

Non-Banking Financial Company (NBFC)

A Non-Banking Financial Company (NBFC) provides financial services similar to banks, such as loans and credit facilities, but does not hold a banking license. They can’t accept demand deposits, meaning they can’t issue cheques. NBFCs are crucial in supporting sectors like infrastructure and SMEs, which may not be adequately served by traditional banks.

Source: CNBC TV18

Elon Musk’s $44.9B Tesla Pay Package Overshadows Other U.S. CEOs

Tesla shareholders approved reinstating Elon Musk’s 10-year pay plan valued at $44.9 billion, despite Tesla’s stock dropping 25% since early 2024. This compensation far exceeds the median U.S. CEO pay of $16.3 million annually. Even top earners like Broadcom’s Hock Tan, with a $162 million package, pale in comparison. Musk’s package awaits court approval but remains the largest for any U.S. public company CEO.

Median CEO Pay Package

The median CEO pay package refers to the midpoint salary of CEOs in a specific group, such as the S&P 500. It represents a typical compensation figure, not skewed by extremes. For instance, if the median pay is $16.3 million, it means half of the CEOs earn more than this amount, and half earn less. This metric helps in understanding standard executive compensation.

Source: Economic Times

Broader Market Achieves Best Two-Week Gains in 3 Years

The broader market indices posted their best two-week gains since 2021, driven by strong retail investor inflows and foreign portfolio investments. The BSE Realty index surged 10.5%, leading sectoral gains. The BSE midcap and smallcap indices rose 7.5% and 8.3%, respectively. Nifty ended 0.3% higher at 23,465.60, and Sensex closed 0.2% up at 76,992.77. Experts advise caution due to expensive valuations despite continued momentum.

Foreign Portfolio Investors (FPIs)

Foreign Portfolio Investors (FPIs) are investors who hold assets and securities in a country other than their own. These investments include stocks, bonds, and other financial assets. FPIs play a crucial role in the financial markets, influencing liquidity and market dynamics through their investment decisions.

Source: Financial Express

FD Interest Rate Hike to 9.1%: 9 Banks Revise Terms After New RBI Rule

Nine banks have revised their fixed deposit (FD) terms and rates, with some offering up to 9.1% interest following the Reserve Bank of India’s new regulation. This change aims to attract more savings and stabilize the banking sector. Investors are advised to compare the new rates and terms across different banks to maximize returns on their deposits.

Fixed Deposit (FD)

A Fixed Deposit (FD) is a financial instrument provided by banks where investors can deposit a lump sum of money for a fixed period at a predetermined interest rate. Unlike savings accounts, FDs offer higher interest rates, but the funds cannot be withdrawn before maturity without penalty. FDs are considered low-risk investments suitable for risk-averse investors seeking stable returns.

Source: Economic Times

Godavari Biorefineries Files for ₹325 Crore IPO

Godavari Biorefineries Ltd has filed its draft red herring prospectus (DRHP) with SEBI for an IPO to raise ₹325 crore through a fresh issue and an Offer-for-Sale (OFS) of 65.27 lakh shares. Mandala Capital AG Ltd plans to offload 49.27 lakh shares via OFS. The funds will help reduce debt by ₹240 crore, with the rest for corporate needs. SBI Capital Markets and Equirus Capital Markets are the lead managers.

Draft Red Herring Prospectus (DRHP)

A Draft Red Herring Prospectus (DRHP) is a preliminary registration document filed by companies planning to go public. It contains details about the company’s business operations, financials, and future strategies, but it does not include the number of shares to be issued or the price. It helps potential investors make informed decisions.

Source: Live Mint

Hyundai Motor India Files Record ₹25,000 Crore IPO, Surpassing LIC

Hyundai Motor India has filed draft IPO papers with SEBI for a ₹25,000 crore ($3 billion) offer, surpassing LIC’s previous record. This IPO is entirely an offer for sale (OFS) of 142.19 million shares, providing no proceeds to Hyundai. The listing aims to enhance brand visibility and liquidity. Hyundai, India’s second-largest carmaker, has invested $5 billion and plans an additional $4 billion investment over the next decade.

Offer for Sale (OFS)

An Offer for Sale (OFS) allows existing shareholders of a company to sell their shares on the stock market. Unlike a fresh issue, it does not provide new capital to the company but enables shareholders to monetize their holdings. This mechanism is commonly used for reducing stakes by promoters or large investors.

Source: Financial Express

Peru’s Economy on Track with 4% Growth in April, Recession Recovery Continues

Peru’s economy grew by 4% in April and possibly in May, signaling a recovery from last year’s recession. Economy Minister Jose Arista projects a 3.1% growth for 2024, driven by increased public and private spending. Peru’s inflation fell to 2% in May, within the central bank’s target range, although the benchmark interest rate remains at 5.75% due to persistent services inflation.

El Niño Weather Phenomenon

El Niño is a climate pattern that causes periodic warming of ocean surface temperatures in the central and eastern Pacific. It can disrupt weather globally, causing extreme weather events such as heavy rains, droughts, and altered weather patterns, significantly impacting agriculture, economies, and environments.

Source: Mint

Bangladesh Eyes Fresh Loans from India Amid Implementation Challenges

During Prime Minister Sheikh Hasina’s visit to India, discussions will focus on a new loan framework to address difficulties in utilizing existing loans due to strict conditions. Despite India’s $7.36 billion loan commitment since 2010, Bangladesh has utilized only 23%. The new framework aims to relax conditions and facilitate project-based loans, improving implementation efficiency. An official announcement is expected, although no new loan agreement will be signed during the visit.

Line of Credit (LoC)

A Line of Credit (LoC) is a flexible loan from a financial institution that provides a specified maximum amount of credit to a borrower. The borrower can draw on the funds as needed, repay them, and borrow again, up to the credit limit. LoCs are typically used for short-term borrowing needs, providing flexibility in financial management.

Source: The Daily Star

Karnataka Hikes Petrol and Diesel Prices by Rs 3 Post-Election

Karnataka’s state government has increased sales tax on petrol to 29.84% and diesel to 18.44%, raising fuel prices by Rs 3 and Rs 3.05 per litre respectively. Effective June 15, the hike pushes Bengaluru’s petrol to Rs 102.86 per litre and diesel to Rs 88.94 per litre. This move aims to generate additional revenue but may impact transportation and goods distribution costs. The last fuel price revision in Karnataka was in November 2021.

Windfall Profit Tax

A windfall profit tax is imposed on companies that experience significantly higher profits than usual, often due to favorable market conditions. In India, this tax, introduced on July 1, 2022, targets energy companies with supernormal profits from high oil prices. The rates are reviewed fortnightly based on average oil prices from the previous two weeks.

Source: Business Today

Hybrids Set to Surpass EVs in Market Share with 38% Growth

Hybrid electric vehicles (HEVs) are projected to grow by 38% to 22,389 units, capturing a 2.1% market share, while electric vehicles (EVs) see a slight decline. Global HEV sales are accelerating, with a potential increase of 1-2 million vehicles. HEVs offer better fuel efficiency, lower costs, and reduced emissions, making them an attractive alternative. Major automakers like Toyota and Tata Motors are boosting hybrid and multi-powertrain strategies to meet emission standards and market demands.

Hybrid Electric Vehicles (HEVs)

Hybrid Electric Vehicles (HEVs) combine an internal combustion engine with an electric motor to improve fuel efficiency and reduce emissions. They can operate in electric mode, combustion mode, or both, providing flexibility and significant fuel savings. HEVs self-charge through regenerative braking and the internal combustion engine, making them practical for consumers without access to extensive charging infrastructure.

Source: Economic Times

India’s Forex Reserves Surge by $4.3 Billion to Record $655.8 Billion

India’s forex reserves soared by $4.307 billion, reaching an all-time high of $655.817 billion for the week ending June 7, as reported by the Reserve Bank of India (RBI). This marks a significant increase from the previous week’s $651.51 billion. Foreign currency assets rose by $3.773 billion to $576.337 billion, while gold reserves increased by $481 million to $56.982 billion. Special Drawing Rights (SDRs) and India’s IMF reserve position also saw modest gains.

Forex Reserves

Foreign exchange reserves (forex reserves) are assets held by central banks in foreign currencies. They include foreign currency deposits, gold reserves, SDRs (Special Drawing Rights), and reserve positions in the IMF. These reserves are crucial for ensuring a country can manage its foreign trade, control inflation, and maintain financial stability during economic shocks.

Source: Live Mint

Latest Interest Rates on PPF, Sukanya Samriddhi Yojana, and Other Post Office Schemes

For the quarter ending June 30, 2024, the Indian government has maintained the interest rates on small savings schemes. Key rates include 7.1% for the Public Provident Fund (PPF), 8.2% for the Senior Citizen Savings Scheme (SCSS) and Sukanya Samriddhi Yojana (SSY), and 7.7% for the National Savings Certificate (NSC). These rates offer stable returns and tax benefits, attracting various investors.

Public Provident Fund (PPF)

The Public Provident Fund (PPF) is a long-term savings scheme backed by the Indian government, offering tax benefits under Section 80C. With a minimum annual deposit of Rs. 500 and a maximum of Rs. 1.50 lakh, it provides an interest rate of 7.1% per annum, compounded annually, ensuring a safe and profitable investment option for individuals.

Source: Economic Times