In this week's wrapup, we will talk about RBI's new guidelines for housing finance companies, India's stand against Chinese 5G technology, the challenges with the LIC IPO, the greatest scandal of 2020, and the implications of the H-1B visa suspension.
New housing finance rules
On Monday, we discussed RBI's new regulations for housing finance companies (HFCs). HFCs specialise in giving out housing loans, and play a very important role in India's financial ecosystem. But historically, these companies have been reckless in their pursuit of higher profits—so much so, that when the NBFC crisis blew up, they were among the worst affected. The RBI decided to step in. In August 2019, they took over from the National Housing Bank as regulators of HFCs.
And now, 10 months later, they want to lay down some ground rules. And here's what it means.
India says no to Chinese 5G
On Tuesday, we talked about why India is asking its state telecom operators to not use Chinese equipment for setting up 5G.
Now, the US has been raising security concerns about Chinese companies like Huawei and ZTE for a while now. Their fear is that these 5G giants will use their dominance in the telecom equipment market to spy for the Chinese government. So the US banned them from selling products in their country, and asked their allies to do the same. India, however, was on the fence.
But recently, 20 Indian Army personnel were martyred along the Indo-China border, and almost overnight, everything changed. Find out what this means for our 5G aspirations here.
How to IPO LIC?
On Wednesday, we dissected one of the biggest IPOs set to hit Indian markets: The Life Insurance Corporation of India (LIC).
LIC is India's largest financial institution. It manages around ₹31 trillion in assets, sells 3 out of 4 life insurance policies in the country and is bigger than the 23 private sector life insurance companies put together. It's also a profitable entity which consistently delivers value to its only shareholder — the government of India.
But when you try to go public, you also have to focus on other investors who might want to take part in the stake sale. And that's where things get bumpy for LIC. Find out about the biggest challenges here.
When €2 Billion went missing at Wirecard
On Thursday, we talked about the biggest stock market scandal of 2020. On June 18th, Wirecard’s auditors made a bizarre announcement- they said they couldn’t locate close to €2 Bn worth of cash reported in the company’s balance sheet. The money seemed to have vanished into thin air. Journalists started calling it the black hole in the company’s balance sheet.
But accounting scandals aren’t executed overnight and black holes don’t emerge from the void. There had to be an explanation. And here it is.
Is the American dream over?
On Friday, we talked about US President Trump's order to suspend the extremely popular H-1B visa. H-1B visas are usually used to hire skilled workers in the tech industry. They give workers the opportunity to live and work in America, and also apply for permanent residency there. But now, a lot of people will be forced to reconsider these aspirations.
But it's not just them. This move will probably be a devastating blow to Indian IT giants and Silicon Valley companies that depend on H-1B visas to hire the right talent. There are even arguments saying the decision will end up harming the US economy. You can get all the details here.
That's all, folks! Have a great weekend.