This week - News snippets - 02/04/2022-09/04/2022

1.????HDFC Ltd. To Merge with HDFC Bank

• ?????HDFC Limited, which is India's largest housing finance company with a total AUM of INR 5.26 Tn and a market cap of Rs 4.44 Tn will merge into HDFC Bank, India's largest private sector bank by assets with market cap of Rs 8.35 Tn.
• ?????Shareholders of HDFC ltd. will get 42 shares of HDFC bank for 25 shares of HDFC ltd.
• ??????HDFC Bank will be 100% owned by public shareholders and existing shareholders of HDFC Limited will own 41% of HDFC Bank.
• The shares of HDFC and HDFC Bank, both surged following the announcement. HDFC Bank shares were up 10%, while HDFC shares were up 13%.
• ?????The merging will benefit both parties to cross sell products to a larger customer base.
• ?????The combined balance sheet of Rs 17.87?trillion and Rs 3.3 trillion net worth will enable them for even larger scale operations.
• ?????The HDFC twins now have a combined market cap of Rs 13.99 lakh crore, exceeding Rs 13.94 lakh crore of TCS, creating the second largest company in India by market capitalization.
• ????Reliance Industries remains India's largest company by a huge margin, with its market cap standing at Rs 18 lakh crore.

2.????India’s trade deficit rises 88% in FY2022: Govt. data

• ????Trade deficit is the amount by which the cost of a?country's imports exceeds the value of its exports.
• Trade deficit during FY 2021-22 was $192.41, trade deficit for March 2022 alone was $18.69 billion.
• The trade deficit amount for FY 2020-21 was $102.63 billion and for FY 2021-22 the trade deficit rose 87.5% to $192.41 billion.
• ??While total exports during last fiscal year increased to a record high of $417.81 billion, imports too soared to $610.22 billion, leaving a trade gap of $192.41 billion.

3. In UN speech, Ukraine's Zelenskiy accuses Russia of worst war crimes since World War

• ?????A veto is a negative vote which is powerful and distinguishes between a permanent and a non-permanent member of UNSC.
• ?????Permanent members of the UN Security Council can cast a veto ?any "substantive" resolution.
• ?????The resolution cannot be approved, if any one of the permanent members of the UN Security Council states casts a negative vote in a pending UNSC decision. Russia has been the most frequent user of the veto since 1992.
• ?????The most powerful organ of the international body is?The UN Security Council. It has 15 members: five permanent members (P5) and 10 non-permanent members who are elected for two-year terms. The P5 members are Russia, China, the UK, France, and the US.
• ?????The non-permanent members at present are India, Estonia, Kenya, Ireland, Mexico, Saint Vincent, Niger, Norway, the Grenadines, Vietnam, and Tunisia.
• ?????Permanent members can however block a draft resolution by using a veto in order to uphold their foreign policy or defend their national interests.
• As of February 2022, Russia has used its veto 118 times, the UK 29 times, France 16 times, the US 82 times, and China 17 times.
• During the period of 1946-1969, Russia used a high number of vetoes, because at that time majority of the Security Council was in favor of the United States, which didn’t have to cast any vetoes as they won every vote. 93 percent of all vetoes were cast by the Soviet Union during these years to block resolutions from the Western majority.
• Ukrainian President Volodymyr Zelenskiy told the United Nations Security Council on Tuesday that "accountability must be inevitable" for Russia as he accused invading Russian troops of committing "the most terrible war crimes" since World War Two.
• Zelenskiy showed a short video of burned, bloodied and mutilated bodies, including children, in Irpin, Dymerka, Mariupol and Bucha, where Ukraine accuses Russian troops of killing hundreds of civilians
• Russia's U.N. Ambassador Vassily Nebenzia then told the Security Council that Russian troops are not targeting civilians, dismissing accusations of abuse as lies. He said that while Bucha was under Russian control "not a single civilian suffered from any kind of violence."
• The resolution by the United Nations Security Council was vetoed by Russia on Friday. Russia managed to block the action of the panel of which it was the target. The United Nations Security Council is responsible for?maintaining and protecting international peace.
• The resolution was strongly against Russia’s invasion of?Ukraine, the troops were asked to withdraw immediately and provide a safe approach for humanitarian relief work. The resolution was presented and written by the United States and dozens of its allies.
• Amongst the member countries, eleven of them voted in favour of the resolution. India, the United Arab Emirates(UAE), and China abstained from voting.
• Russia being one of the permanent member had veto power and they voted against the resolution.

4.? Axis Bank managed to snag the prestigious Citi business by paying a cool $1.6 billion or nearly ?12,500 crores.

• ?Axis bank announced the acquisition of Citi India's local consumer finance businesses for Rs 12,325 crore.
• For Citi, this marks a clean exit from the India consumer business. For Axis, it's a well-priced bet that Citi’s credit card holders will give it a leg up in the retail banking business, where it stands third in the pecking order among private banks.
• Citi’s credit card business was losing steam. Customer’s credit card spending which was 11% in 2018, it had dropped to about 6% in 2021. So in 2021, they made a tough call — to exit the “retail” banking business altogether and sell this division to some other bank in India.
• A Rs 12,325-crore price tag for a credit card portfolio of 25 lakh, alongside a loan book of Rs 27,400 crore and a deposit base of Rs 50,200 crore, was mostly seen by analysts as a good deal.

4.????RBI keeps key lending rates unchanged for 11th consecutive time

• RBI’s 6 six-member Monetary Policy Committee (MPC) expectedly voted to keep the benchmark repo and reverse repo rates unchanged at record lows on Friday.
• When in need of money, commercial banks sell their bonds and treasury bills to the central bank (RBI) and borrow money.
• Commercial banks pay interest and a face value at future date to RBI for the money?they borrowed and purchase back the bonds they lent.
• ?The interest rate commercial banks have to pay the central bank is called REPO rates also known as “Repurchasing option” or “Repurchasing agreement”.
• Reverse Repo rate is the rate at which the Reserve Bank of India borrows funds from the commercial banks in the country. In other words, it is the rate at which commercial banks in India park their excess money with Reserve Bank of India usually for a short-term. Current Reverse Repo Rate as of February 2022 is 3.35%.
• When Central banks increases REPO rates, it becomes difficult for commercial banks to borrow money from Central banks as they have to pay high interest. Thus to overcome this commercial banks reduce providing loans to their customers/public and also charge high interest rate for the loans they provide, this reduces loan availability in the economy?thus reducing supply of currency. This way central banks adjust REPO rates to fight inflation.

5. Jet Airways 2.0 likely to take off by next quarter(July-September): CEO Sanjiv Kapoor

• Jet Airways 2.0, under new promoters, hopes to start operations by the July-September quarter, CEO Sanjiv Kapoor.
• The airline also hopes to operate proving flights by the April end, using a leased Boeing 737 aircraft.
• Jet Airways has to obtain its air operator certificate (AOC) from the Directorate General of Civil Aviation.
• The rising jet fuel prices is one major challenge the airline group has to overcome.