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<ul><li>The Reserve Bank of India (<keyword id="30067" type="ORGANIZATION" weightage="20" keywordseo="RBI">RBI</keyword>) has announced a set of measures to pump more liquidity into the economy, especially for small and medium businesses. </li><li>In addition to extending ₹50,000 crore to government institutions, RBI also changed the rules of classifying assets. </li><li>This means that even if a small company can’t meet its payments, it won’t be degraded. </li><li>However, there’s a catch. </li></ul> The lockdown has been tough on the economy, and the problems of big corporations have taken the spotlight. However, according to the Reserve Bank of India (<a href="https://www.businessinsider.in/india/news/rbi-governor-shaktikanta-das-speech-highlights-on-april-17/articleshow/75193359.cms">RBI</a>), the disruption has had a more severe impact on small and medium-sized businesses. While these businesses need more lending, those who generally lend to them - non-banking financial companies (NBFCs) and microfinance institutions (MFIs) - have been stressed for over a year. Apart from extending ₹50,000 crore to government institutions that will pass it on to shadow banks, RBI also changed the rules of classifying assets. It extended the period for the resolution plan of stressed assets by 90 days from 60 days currently. It means shadow banks or NBFCs will get a breather, as they have been facing a credit crunch of their own as fewer banks were lending to them ever since IL&amp;FS went into a crisis of <keyword id="142154" type="PERSON" weightage="20" keywordseo="bad-loans">bad loans</keyword>. <keyword id="2377116" type="PERSON" weightage="20" keywordseo="asset-classification">Asset classification</keyword> standstill During its first set of relief measures announced on March 27, the central bank said that payment on loans will be deferred for the next 90 days — from 1 March to 31 May. That meant that they would not turn into non-performing assets (NPAs). But that didn’t necessarily mean that they wouldn’t be ‘reclassified’ for missing their payments. Today, April 17, <a href="https://www.businessinsider.in/india/news/rbi-governor-shaktikanta-das-speech-highlights-on-april-17/articleshow/75193359.cms">RBI governor Shaktikanta Das clarified</a> that the 90-day NPA norm shall exclude the moratorium period. This means that asset classification will be halted for all such accounts from 1 March 2020 to 31 May 2020. Even if a small company can’t meet its payments, it won’t be degraded. “The market should consider this favourably as this will ease liquidity and credit classifications issues,” said Rajosik Banerjee, a partner and head of financial risk management at KPMG India. But there’s a catch Just because a bank does not call it a bad loan does not mean that it isn’t heightened risk. In order to balance that out, banks are now required to maintain sufficient buffers. This means that they have to maintain a higher provision of 10% on all such accounts under the standstill, which will be spread out over the coming two quarters. “NBFCs that are now required to report under Ind AS, will have to take this into account while performing their expected credit loss calculations, together with the positive effect of all other governmental support measures targeted directly at the borrowers, whether, retail or corporate,” said Sai Venkateshwaran, partner and head of CFO advisory at KPMG India. “This will remain an area of key judgement for NBFCs, and will have a direct impact both on their earnings as well as their lending ability,” he explained. To further address the problems faced by small and medium businesses, the RBI announced a slew of measures to ease their liquidity crunch — like targeted long-term repo operations (TLTRO), refinancing facilities for All India Financial Institutions (AIFIs), and a reduction of the reverse repo rate. A welcome immediate relief not only to these institutions but also to their borrower base,” said Sanjay Doshi, head of Financial Services Advisory at KPMG India. See also: <a href="https://www.businessinsider.in/india/news/rbi-governor-shaktikanta-das-speech-highlights-on-april-17/articleshow/75193359.cms">RBI Governor opens up a ₹50,000 crore lifeline to flailing small businesses</a> <a href="https://www.businessinsider.in/business/corporates/news/exclusive-genpact-puts-over-200-employees-in-india-on-the-bench-hoping-to-find-them-a-role/articleshow/75198685.cms">EXCLUSIVE: Genpact puts over 200 employees in India ‘on the bench’ – hoping to find them a role</a> <a href="https://www.businessinsider.in/defense/news/the-us-accuses-china-of-conducting-nuclear-tests-after-blaming-it-for-the-covid-19-pandemic/articleshow/75198330.cms">The US accuses China of conducting nuclear tests after blaming it for the Covid-19 pandemic</a>

The road to being classified a bad loan just got longer with RBI’s relaxation

<ul><li>Global commercial air traffic is now only at 29% compared to pre-Coronavirus levels.</li><li>In India, the drop is even more dramatic as only evacuation and relief flights are allowed to fly.</li><li>Pictures show how the flurried skies now lie empty as governments around the world restrict international air travel and go into lockdown.</li></ul>The first industry to get hit as Coronavirus started to spread across the world was aviation. Most countries initially placed restrictions on international air travel followed by a ban on domestic air travel as well. Global commercial air traffic fell from an average of 103,397 flights a day to a mere 31,214 flights a day between March 1 to April 7, according to the flight tracking app, <a href="http://www.flightradar24.com/">Flightradar24</a>. Global commercial air traffic has now stabilised at around 29% of its previous levels. <div type="image" title="flightradar24 global commercial flights" msid="75074418" hostid="261"></div> The Indian government banned all international flights starting March 22 causing a dramatic dip in air traffic — only evacuation and relief flights are now allowed to take to the skies. A large part of India’s airline fleet, nearly 80%, now remain parked at six of the busiest airports in the country, an official from the Airports Authority of India (AAI) told <a href="https://economictimes.indiatimes.com/industry/transportation/airlines-/-aviation/covid-19-impact-flying-ban-lands-80-of-indian-aircraft-at-top-six-airports/articleshow/74976734.cms?from=mdr">ET.</a> <div type="image" title="indiaairgif" msid="75074375" hostid="261" caption="&amp;lt;p&amp;gt;Drop in commercial air traffic in India&amp;lt;/p&amp;gt;"></div> The situation is not very different in other parts of the world, except perhaps the United States where the decline is noticeable — but not nearly as substantial in the parts of the world. <div type="image" title="global air traffic" msid="75074377" hostid="261" caption="&amp;lt;p&amp;gt;Drop in commercial air traffic globally&amp;lt;/p&amp;gt;"></div> China, where the first case of Coronavirus was reported on 31 January 2019, saw a decline of nearly 60% from normal levels. <div type="image" title="chinagif" msid="75074380" hostid="261" caption="&amp;lt;p&amp;gt;Drop in commercial air traffic over China&amp;lt;/p&amp;gt;"></div> Coronavirus and its impact on Indian aviation sector Indian aviation industry is the fourth largest in the world. It provides employment to around 8 million people in the country and contributes around $72 billion to India’s GDP. Furthermore, it is also a considerable contributor to the tourism industry, which accounts for nearly 9.2% of India’s GDP. The ban on international and domestic flights will hurt the states of Maharashtra and Kerala the most according to KMPG’s report of Covid-19’s impact on the Indian economy. The overall threat is greater than what it was during the global financial crisis of 2008 or the 9/11 attack on the World Trade Centre. It’s not just airlines that have to worry but other stakeholders like airports, ground handlers, cargo operators, fuel suppliers and more. The revenue loss could be as massive at $252 billion in the financial year of 2021 as per International Air Transport Association’s (IATA) estimates. However, IATA also notes that recovery may be possible on the basis of India’s strong domestic industry provided the pandemic is brought under control. KMPG recommends that the Indian government should treat all tourism entities, which includes aviation, as a priority sector for lending. The credit allowance to airlines should be increased and ventures in distress should receive funding from the government. In the short run, as the world waits of the pandemic to play itself out, the government should incentivise airport operators to defer lease rentals and, in turn, should also get relief on revenue share that’s payable for at least the next 12 months — or until air travel volumes return to pre-Coronavirus levels. Additional support for regional carriers can be carved from the Regional Connectivity Fund (RCF) for at least the next six months. See also:

Before and after pictures show how the Coronavirus travel ban brought airlines to a grinding halt since March

<ul><li>ASCI introduces new guidelines to make real-money gaming advertising safer.</li><li>The advertisements will not be allowed to present ‘Online gaming for real money winnings’ as an income opportunity or an alternative employment option now.</li></ul>The Advertising Standards Council of India (ASCI) has introduced guidelines to make real-money gaming advertising safer and more responsible. The guidelines have been developed to ensure that such advertising makes users aware about financial and other risks that are associated with playing online games with real money winnings. As per a recent KPMG study, online gaming grew 45% in FY20 with the user base surpassing 365 million by March 2020 on real-money games (RMGs). The card-based and fantasy segments both achieved strong traction. As India is a mobile-first country, more than 90% of online gamers play games on their phones. The online gaming market, worth more than $500 million now, could be worth $1.1 billion by 2021. In 2019, around 5.6 billion mobile gaming apps were downloaded in India – the highest in the world and representing nearly 13% of gaming apps globally. Internet penetration in India is 31% and KMPG expects it to reach 53% by 2021 – which would give over 700 million people access to the internet and its wealth of gaming options. The rapid growth, and the real danger of the negative impacts of RMG advertisements, prompted ASCI to develop <keyword id="10323569" type="UNKNOWN" weightage="20" keywordseo="advertising-guidelines">advertising guidelines</keyword> to ensure users are aware of the financial and addiction risks. The government, via the Ministry of Information &amp; Broadcasting, The Department of Consumer Affairs as well as Ministry of Electronics &amp; Information Technology, have given these <keyword id="10323570" type="UNKNOWN" weightage="20" keywordseo="asci-guidelines">ASCI guidelines</keyword> their full support and backing to comprehensively address growing concerns about the potential misleading and harmful advertisements in the sector. The guidelines will be effective from the 15th of December 2020, and apply to advertisements that are legally permitted. The guidelines: <ol><li>No gaming advertisement may depict any person under the age of 18 years, or who appears to be under the age of 18, engaged in playing a game of ONLINE GAMING FOR REAL MONEY WINNINGS, or suggest that such persons can play these games</li><li>Every such gaming advertisement must carry the following disclaimer: a. Print/static: This game involves an element of financial risk and may be addictive. Please play responsibly and at your own risk Such a disclaimer should occupy no less than 20% of the space in the advertisement It should also SPECIFICALLY meet disclaimer guidelines 4 (i) (ii) (iv) and (viii) laid out in the ASCI code b. Audio/video: “This game involves an element of financial risk and may be addictive. Please play responsibly and at your own risk.” Such a disclaimer must be placed in normal speaking pace at the end of the advertisement It must be in the same language as the advertisement For audio-visual mediums, the disclaimer needs to be in both audio and visual formats</li></ol>3. The advertisements should not present ‘Online gaming for real money winnings’ as an income opportunity or an alternative employment option. 4. The advertisement should not suggest that a person engaged in gaming activity is in any way more successful as compared to others. Manisha Kapoor, Secretary General of ASCI, said: “We have observed gaming advertisements target youth and families by suggesting that these can become sources of income and livelihood for them. We have noted concerns about such advertisements, both from consumers as well as the government. The key fact that is completely suppressed in most of these advertisements is the real possibility of losing money. Millions of users of these apps come from lower income families, who can ill afford to lose their hard earned money. The frequent use of celebrities in many of these advertisements make them more attractive to consumers, and consumers tend to trust their heroes and role models blindly. Combined with the fact that these games are highly addictive, these advertisements end up being not just misleading, but also harmful to individuals and society. And therefore, they are violative of the ASCI code. The idea of framing specific guidelines for advertisement of such games is to inform advertisers as well as members of the public what criteria we will use to scrutinize advertisements against which we receive complaints. While the government will take a decision on the legal issues surrounding the sector, we believe these advertising guidelines will make the online gaming for real money winnings more transparent and safer. We are particularly happy with the wholehearted support and backing of the government to ASCI in implementing these guidelines, and this is yet another demonstration of the belief in the strength of self-regulation. We hope that these guidelines will usher in an era of more responsible and truthful advertising in this sector.”

No gaming advertisement may depict any person under the age of 18 years, or who appears to be under the age of 18: ASCI

<keyword id="6357120" type="UNKNOWN" weightage="20" keywordseo="PayTM">Paytm</keyword> wants to strengthen its payments bank operations and is on a hiring spree in the same regard. India's largest mobile payments platform, Paytm, is poaching talent across industries and is even looking to hire around 3,000 employees for the new business, which has a starting budget of Rs 400 crore. 
 
For the starters, Paytm hired former Airtel executive Saurabh Sharma, who was heading market operations at Airtel Money, as vice-president and will handle merchant and agent acquisition. 
 
Paytm also brought Dhruv Dhanraj Bahl from Bain &amp; Company as assistant vice-president and he will lead the branch designs and their roll out across the country. 
 
Neha Gupta from KMPG will join in as deputy general manager soon and will handle business operations,. 
 
"We've shortlisted people for the CEO position and hopefully we should be able to communicate it when the RBI gives us a go ahead," Paytm chief executive officer Vijay Shekhar Sharma told ET, adding “We've decided to put the budget for the payments bank at Rs 400 crore for two years.” 
 
Over 20 senior and mid-management level executives have been hired to kick-start the payments bank operations. 
 
Paytm will decide on what to offer as a part of payments bank operations, including cardless credit card backed by a bank. 
 
RBI, in last year August, granted payments bank licences to 11 applicants including Paytm, Reliance Industries, Bharti Airtel and Vodafone.

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The road to being classified a bad loan just got longer with RBI’s relaxation

Prabhjote Gill

Before and after pictures show how the Coronavirus travel ban brought airlines to a grinding halt since March

Prabhjote Gill

No gaming advertisement may depict any person under the age of 18 years, or who appears to be under the age of 18: ASCI

BI India Partner

Jobs galore: Paytm on a hiring spree, poaches talent across industries!

BI India Bureau

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