In this week's wrapup, we will talk about the recent change in India's FDI policy, how the RBI is trying to rescue NBFCs, why oil prices dropped below $0, Facebook's investment in Reliance Jio and the struggles of India's beleaguered power industry.
Let's get started then!
You shall not pass
On Monday, we talked about India's new FDI policy, specifically targeted at China.
When Chinese companies invest in businesses around the world, there's always the fear that they are acting on behalf of the state machinery- aka the communist party of China. And the thing is, the likes of Xiaomi, Tencent, and Alibaba have been making some big investments in India.
Now, these transactions aren't explicitly suspicious, but even so, policymakers have been trying to figure out how to limit Chinese influence with some kind of government intervention.
And now, it looks like they've found a way. Find out how they're going about this whole matter here.
The NBFC Rescue Plan
On Tuesday, we talked about how the RBI is trying to rescue Non-Banking Financial Companies in India.
While regular banks are responsible for a lot of things— including savings accounts, cheques, credit lines, etc, NBFCs specialise in certain niche areas like gold loans, housing loans, consumer loans, etc. And these institutions are extremely important, as they cater to customers that are largely ignored by the mainstream banking institutions.
Unfortunately, NBFCs have been in a spot of bother for a while now. And because of the nationwide lockdown, their problems have metamorphosised into a systemic risk for the entire banking industry.
But the RBI isn't giving up on these guys. Instead, they've gone on and tried to stitch together a rescue plan to help them tide over this crisis! And if you want to know the details about the deal, go ahead and click right here.
Where no oil has gone before
On Wednesday, we talked about how oil prices breached the sacred $0 mark.
If you've been reading Finshots these past few weeks, you know about the bitter price war between Russia and OPEC- the one that forced oil-producing nations to flood the market. You also know that oil has been trading at dangerously low levels since there's practically no demand to.
But to fully understand how we saw oil go to -$37, you probably need more context and trust us, you don't want to miss this one.
Jio and Facebook— A match made in heaven?
On Thursday, we talked about Facebook's investment in Reliance Jio. A few days ago, the social media giant shelled out $5.7 Billion to acquire a 9.99% stake in Jio, knocking up the value of Mukesh Ambani’s star-child to almost $66 Billion!
And though this news made waves across the internet, it was a highly unusual bet for the social media giant, who usually invests in other media and online companies. So what are they hoping to gain from the deal? Also, what's in it for Jio?
We've answered all your burning questions here.
On Friday, we talked about the problems plaguing the power industry. India's power industry is primarily run by three kinds of institutions— Gencos who generate power, transmission companies who transport it to the states, and Discoms who bring the electricity to your home. And as long as they work together, things run smoothly.
Unfortunately, Discoms have seen their debt burdens ballooning for a while now, because of things like leakages in supply, non-payment of bills by customers, and interference by state governments. And now, this crisis is threatening to blow up the entire sector,
So if you want a more detailed exposition on the matter, you can read our full draft here.
Anyway, this is where we say goodbye. Have a great weekend and we will see you Monday.