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1st March 2021
Good Morning! 

Happy Monday and a happy first day of the month. Can you believe we are already done with 2 months of 2021?
Here is an important announcement for all of you guys:
Registration for people above the age of 60 and those above 45 with comorbidities to get vaccinated is scheduled to begin today at 9 am.
You can get more details on how to register here.
  MARKETS
 

SENSEX

49,099.99

- 3.80%

NIFTY

14,529.15

- 3.76%

US$

73.47

+ 1.44%

GOLD

45,767

- 1.03%

10-YR

6.23%

+ 4.9 bps

OIL

4,603

- 0.41%

*As of market close

  • Markets: Sensex nosedived about 1,940 points to settle just above the 49,000-level on Friday, tracking massive sell-offs in world equities. The reason was the fear of increasing inflation and tighter monetary policy that led to a sharp fall in global bond prices which spooked investors everywhere.

Tech

Paisa Hi Paisa
paisa hi paisa

Companies you'd have never assumed would team up are doing so now just so they can get RBIs NUE license.

What's Happening Here?

Digital payments have really come a long way over the past decade.

You guys have all probably used one of UPI, IMPS or RuPay. (If you haven't, seriously how do you survive man?).
So all this and more comes under the National Payments Corporation of India (NPCI).

The NPCI started in 2008 under the guidance of the RBI to grow digital payment systems here.
Now if you remember how things were in 2008, things have grown, we mean really grown.
UPI itself does more than 2 billion transactions a month.

One thing to keep in mind about the NPCI is that it has been set up as a “not-for-profit” entity.

The issue with NPCI is that it controls literally all digital transactions in the country and is kind of a monopoly.
The people at the RBI are smart which is why they realised the NPCI was becoming too big to fail.
And so they've decided to bring competition to the sector.

Time For a Challenger

With the RBI realizing they need a challenger to the NPCI last year they decided to release a framework for an NUE (New Umbrella Entity).

Here is The Gyst of what the framework is like:

  • NUE is going will be a for-profit entity.
  • No single company can have more than 40% ownership. And the minimum stake is ~10%. So you've got to team up and apply.
  • The best part is the NUE will still be able to exchange data with the infrastructure set up by the NPCI.
Back To The Present

The RBI has been taking applications since August last year and the deadline was Feb 27th.

But the companies applying are clearly as lazy as we used to be in college with our assignments.
Thankfully the RBI is like that kind professor who extends the deadline.

Paisa Hi Paisa Hoga

As you'd expect, having a stake in what is already a huge market and is still expanding would be very enticing to someone already operating in the sector - Banks, fintech companies and Big Tech.

This is why many of them are teaming up to put in their applications.

Some of the companies reportedly teaming up are pretty amazing. We won't cover all of them. You can see a list of confirmed applicants here.

Here are some interesting potential applicants:
  • Reliance is reportedly partnering with Google and Facebook.
  • Tata is reportedly partnering with Airtel Digital, HDFC and Kotak.

The Takeaway

We are excited to see who gets the license.
There are still a lot of things that need to be cleared up by the RBI like whether they are going to approve only one entity or multiple.
The new deadline is now March 31st. Let us hope this is the last extension because we are looking forward to seeing what group ends up with the license.

Acquisition

Add Future To Cart


Shopping For the Future

Reliance Industries has made another acquisition with its eye on the future. But not Future Retail - that deal is still stuck in court.

After bringing the internet to the masses with their Jio phones and data, Reliance now seems to be looking at the transportation sector.

They have acquired a controlling stake in a US-based company called SkyTran.

What is SkyTran?


SkyTran is a developer of “pod Car” transport systems. A Pod Car or Pod taxi is a driverless personal rapid transit system, which runs along a track course either through overhead suspension or magnetic levitation. This is what it looks like and how it’s supposed to work.

The idea for this was conceived way back in 1990 by American engineer Douglas Malewicki. And after testing out various systems he launched SkyTran in 2011.
The company aims to solve traffic congestion globally by creating a high-speed, scalable and low-cost transport system. It has partnered with NASA in the US and also with Israel Aerospace Industries.

Relying on Reliance

SkyTran will be taking Reliance’s help in scouting for a location to set up a prototype in India.

Mukeshbhai first invested in the company in 2018 when they bought a 12.7% stake in SkyTran. They gradually bought more and more shares and have now bought around 28% more of the company.

This takes Reliance’s ownership to 54.5%, giving them a controlling stake. They paid $27 million for this, which is around Rs 198 crores (and is probably like pocket change for RIL).

It seems RIL is shifting towards being a more environment-conscious company. It recently hived off its oil and chemicals business into a separate entity and there have been talks of the group wanting to focus more on green energy solutions rather than the traditional fossil fuels.

Foreign Tour ✈️

From Fragile Five to Troubled Trio

Eight years ago, when the taper tantrum roiled emerging markets, the so-called Fragile Five of Turkey, Brazil, South Africa, India and Indonesia suffered the most. Last week, another sharp spike in US bond yields has threatened to wreak havoc on at least three of those nations.

While India and Indonesia seem to be in a better position than in 2013, The Turkish lira, Brazilian real and South African rand are still seen to be at major risk. These 3 were the worst performing currencies last week as high interest rates in the US pulled the Dollar higher.

Read more

On a Lighter Note

If you have more time ...

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