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August’s industrial output falls, first since April 2019

The cumulative growth in April-August period of FY20 was 2.4 per cent compared with 5.7 per cent.

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New Delhi, Sep 30 : The output of India’s eight major industries contracted in August – for the first time since April – by 0.5 per cent from a growth of 2.7 per cent in July and 4.7 per cent in the same month last year.

The eight core industries – coal, crude oil, natural gas, refinery products, fertilisers, steel, cement and electricity – comprise 40.27 per cent of the weight of items included in the index of industrial production (IIP).

As per the data furnished by the Ministry of Commerce & Industry, the cumulative growth in April-August period of FY20 was 2.4 per cent compared with 5.7 per cent reported for the same period of the last financial year.

On a sector-specific basis, the refinery output, which has the highest weightage of 28.03, rose by 2.6 per cent in August compared with the same month of the last financial year.

However, electricity generation, which has the second highest weightage of 19.85, contracted by 2.9 per cent. Steel production, the third most important component with a weightage of 17.91, was up 5 per cent during the month under review, while coal mined, with a 10.33 weightage, was down by 8.6 per cent.

Extraction of crude oil, which has a weightage of 8.98, declined by 5.4 per cent during the month. The sub-index for natural gas output with a weightage of 6.87 edged lower 3.9 per cent.

Furthermore, cement output, which has a weightage of 5.37, decreased by 4.9 per cent, whereas fertiliser production, which has the least weightage of 2.62, increased 2.9 per cent in August.

“This is first contraction in core infrastructure output since April 2019, suggesting the weak demand conditions. All eyes are on festival demand to push industrial growth,” said Devendra Kumar Pant, Chief Economist and Senior Director, Public Finance, India Ratings & Research (Fitch Group).

“The MPC will take note of weak demand, falling growth and low inflation in its monetary policy review on October 4, 2019. Ind-Ra expects a rate cut in October monetary policy review, however, the extent of cut could depend on the assessment of growth impact of policy measures announced by the government in past few weeks.”

ICRA Principal Economist Aditi Nayar said: “The performance of the core sectors in August 2019 was disappointingly weak, with a broad-based deterioration in six of the eight constituents and as many as five sectors recording a YoY contraction in that month.”

“However, the turnaround in refinery products, which is the largest constituent of the core sector, and a small uptick in the growth of fertilisers prevented a deeper contraction in the growth of the core sectors in August 2019,” she added.

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ICICI Bank sets up presence in Nepal

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ICICI Bank

Mumbai, Dec 3: Lending major ICICI Bank on Thursday launched its operations in Nepal, via a representative office, to become the first Indian private sector bank to set up its presence in the country.

The bank opened a representative office in Kathmandu which will closely work with the domestic banks in Nepal to facilitate investment, trade, payments and treasury business between the two countries.

According to the bank, the current foray has expanded its global footprint to 15 countries including India.

“India and Nepal have significant trade and investment links between them. We believe that ICICI Bank’s on-ground presence through the new representative office coupled with its strong business partnerships with banks in Nepal, will help us further our participation in the economic flows between the two countries,” said Sriram H. Iyer, Head – International Banking Group, ICICI Bank.

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RBI asks HDFC Bank to temporarily stop issuing new credit cards

Furthermore, the filing said that these measures shall be considered for lifting upon satisfactory compliance with the major critical observations as identified by the RBI.

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HDFC Bank

The Reserve Bank has asked HDFC Bank to temporarily stop all launches of the ‘Digital Business generating activities and sourcing of new credit card customers.

The RBI’s order dated December 2 comes after outages in the bank’s online facilities or payment utilities occurred over the past 2 years, including the recent incident in the internet banking and payment system on November 21, 2020 due to a power failure in the primary data centre.

In a regulatory filing, HDFC Bank on Thursday said: “The RBI vide said ‘Order’ has advised the Bank to temporarily stop i) all launches of the Digital Business generating activities planned under its program – Digital 2.0 (to be launched) and other proposed business generating IT applications and (ii) sourcing of new credit card customers. In addition, the Order states that the Bank’s Board examines the lapses and fixes accountability.”

Furthermore, the filing said that these measures shall be considered for lifting upon satisfactory compliance with the major critical observations as identified by the RBI.

“The Bank over the last two years has taken several measures to fortify its IT systems and will continue to work swiftly to close out the balance and would continue to engage with the Regulator in this regard.

“The Bank has always endeavoured to provide seamless digital banking services to its customers. The Bank has been taking conscious, concrete steps to remedy the recent outages on its digital banking channels and assures its customers that it expects the current supervisory actions will have no impact on its existing credit cards, digital banking channels and existing operations.”

In addition, the bank said these measures will not materially impact its overall business.

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Petrol, diesel become dearer after OMCs raise retail prices

The pump price of petrol increased by 17 paisa per litre on Thursday to Rs 82.66 a litre in Delhi from a level of Rs 82.49 a litre a day earlier.

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Oil Price

Oil marketing companies on Thursday increased the prices of petrol and diesel after keeping the retail prices unchanged for the past couple of days.

The pump price of petrol increased by 17 paisa per litre on Thursday to Rs 82.66 a litre in Delhi from a level of Rs 82.49 a litre a day earlier.

Similarly, the diesel price increased by 19 a litre to Rs 72.84 a litre in the national capital as compared to Rs 72.66 per litre on the previous day.

The prices of auto fuel have also increased across the country but the level of rise has been different depending on the taxation structure in each state.

In the past 14 days, due prices have risen 11 days with petrol prices rising by Rs 1.60 per litre and diesel by Rs 2.38 a litre.

The increase has been primarily on account of firming up of global oil and product prices following news of successful coronavirus vaccine.

Petrol prices had been static since September 22, and diesel rates hadn’t changed since October 2.

Though retail pricing of petrol and diesel has been deregulated and oil marketing companies were following a daily price revision formula, the same was suspend ended for almost two months to prevent volatility in international oil markets from impacting fuel prices regularly during the pandemic.

But with crude on the boil again on news of a successful coronavirus vaccine launch soon, the patience was lost by OMCs who finally resorted to price increase to cover for their under recovery on the sale of two petroleum products.

The benchmark Brent crude has crossed $48 a barrel on Intercontinental Exchange (ICE) lately. It has remained an over $44 a barrel for most part of November.

OMCs need almost 40 paise per litre increase in retail price of petrol and diesel to cover for $ 1 increase in crude.

Going by this yardstick, product prices would have to be increased by upto Rs 2 per litre to cover under recovery on its sale.

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