The need to know is messing with fintechs

Good morning! It’s election time and that means every quizzer’s favourite company is in the news again. Yes, we’re talking about Mysore Paints and Varnish Ltd (MPVL). As per Mint, the sole manufacturer of indelible ink has been given its biggest ever order by the Election Commission of India. That’s 26.55 lakh vials of the finger marker worth ₹55 crore ($6.6 million). And since 2024 is the year of elections, MPVL also has orders from countries across the world. Now, that’s a business we can all get behind. 

🎧 The fall of Indian TV. Also in today’s edition: iPhone sales are flatlining in India. Tune in to The Signal Daily on Spotify, Apple Podcasts, Amazon Music, Google Podcasts, or wherever you get your podcasts.

Adarsh Singh and Soumya Gupta also contributed to today’s edition.

The Market Signal*

Stocks & Economy: Public share sales in India are likely to be impacted after a concerted crackdown on lenders and IPO managers by regulators. After the RBI barred JM Financial from giving out loans against shares and bonds, markets regulator Sebi has stopped it from lead-managing new debt issues. The regulatory action could hit pause for new IPOs and debt issues as other issue managers and underwriters will become cautious and go slow on their mandates. 

International gold prices scaled a new peak of $2,152 per ounce, indicating a return of investors expecting a US rate cut as well as heightened global uncertainty. US stocks were buoyant and the mood percolated to Asia, which was awash in green in Friday morning trade. Indian stock markets are closed today for Mahashivratri and will resume on March 11.  

TRADE

This FTA is All About Gold

The government may manage to sign a free trade agreement (FTA) before its term ends, Mint reports. India, it says quoting unnamed sources, is on the verge of signing an FTA with the European Free Trade Association (EFTA) comprising Switzerland, Norway, Lichtenstein, and Iceland to freely export animal products, processed foods, fish, and vegetable oils. 

It is difficult to say if this pact would help India much as the only trade that really matters is with Switzerland. India’s Swiss imports, mostly gold, were worth nearly $16 billion in FY23. Its entire exports to the EFTA countries that year were less than $2 billion. Deccan Herald reports that Switzerland has extracted a concession from India to allow a certain quota of gold imports at lower duty to make it competitive with Dubai gold. 

The EFTA nations have, however, agreed to invest $100 billion in India over the next 15 years.

GEOPOLITICS

Ocean Currents Are Shifting  

The Indian Ocean waters are getting colder for India. Maldives will discontinue a pact under which India conducted hydrographic surveys in its territorial waters. 

President Mohamed Muizzu, considered to be pro-China, has said Maldives will buy equipment to do the study on its own. China recently signed an agreement offering free military aid to the archipelago nation. 

Beefing up: India is also ramping up its naval might in the region. It has set up a second naval base on Minicoy in Lakshadweep. It is also developing a joint airfield for the navy and the coast guard, which has three stations in the island and is also planning to upgrade. 

India has increased its power projection in the Indian Ocean and now has about 10 warships deployed all the way from the Arabian Sea to the Gulf of Eden after pirates launching from the Horn of Africa became active again.

BANKING

The KYB Quandary

After the RBI’s crackdown on Paytm, India’s Financial Intelligence Unit is turning up the heat against other payment banks for alleged irregularities with KYC (Know Your Customer) compliance. Less talked about, however, is the chaos ensuing over KYB (Know Your Business).

In February, the RBI asked Visa and Mastercard—which are two of the five authorised card networks in India, the others being RuPay, Diners Club, and American Express—to pause commercial card-based payments. The banking regulator is concerned that many such transactions are routed through business payment service providers (read: fintechs), which violate the Payment and Settlement Systems Act, 2007. Fintech companies such as Zaggle, Enkash, and Paymate offer commercial credit cards that enable B2B payments.

The issue lies with KYB or due diligence. Apart from evaluating a corporate entity’s financials, banks and fintech companies must gather information on ownership structure, associated risks, and verify documents, etc.—a long-drawn process where fintech firms often stumble.

Why so?

MEDIA

Out With The Old, In With The New

The Telecom Regulatory Authority of India (Trai) wants to bring order to audience measurement. As per Moneycontrol, the regulator is setting a new audience measurement system for the television industry for better monetisation of content. 

The move is part of Trai’s new broadcast policy, which seeks to overhaul the existing methodology set by the Broadcast Audience Research Council (Barc) India. 

Problems galore: Barc’s method (aka TRP) measures the TV viewing habits of the country by taking a sample size of 50,000 homes. The small sample size, coupled with the TRP manipulation scandal, are said to be the reasons behind Trai’s move. The regulator is expected to share a consultancy paper on the same with industry members.

Additionally: The new policy will also focus on improving the public service broadcasting system, combat privacy, and grow the media sector in India.  

Meanwhile: Kerala has launched India’s first government-backed OTT platform.

TECH

This Goose Isn’t Laying Golden Eggs

A UBS analyst report underlines how bad 2024 already is for Apple, less than three months in. And India has a role to play.

In its February 28 analysis, ‘Soft iPhone sell-through in three key mkt supports a cautious stance just one month into the Mar qtr’, UBS estimates that iPhone sell-through (sales to end customers) in India declined year-on-year in January 2024, from 680,000 units to 630,000 units—a first since September 2020.

It’s likely that the RBI tightening norms for unsecured loans/consumer credit—which drove iPhone adoption in India—has a role to play. On a related note, the RBI has also directed card issuers, including banks, to let customers choose from multiple card networks for debit and credit cards.

iPhone demand is cooling in the US and China, Apple’s biggest markets. Device sales in China were down 24% year-on-year in the first six weeks of 2024.

FYI

Tax hammer: US President Joe Biden has a plan to bring down the government’s mountain of debt—a minimum tax of 21% for big corporations and 25% for billionaires. He’s expected to reveal it in his State of the Union address. 

Not cool: This February was the warmest ever for the seas. Average global sea surface temperature rose to 21.06 degrees Celsius, topping August 2023’s record of 20.98 degrees Celsius.

New runner: E-commerce firm Flipkart is launching a quick commerce venture, offering 15-minute grocery delivery to rival Zepto, Blinkit, and Swiggy Instamart, Entrackr reported. 

Sky high: IndiGo owner Rakesh Gangwal is planning to sell a 3.3% stake in the airline to raise $450 million, Moneycontrol reported; Gangwal also invested $20 million in manufacturing startup Zetwerk. 

Shape up or ship out: The US House of Representatives will fast track a bill next week to give ByteDance six months to divest from TikTok, failing which the shortform video app could be banned in the country.

More meat on this bone: Danish pharma company Novo Nordisk, maker of weight loss drug WeGovy, surpassed EV major Tesla in market valuation after it announced positive trial data for a potential new blockbuster: the pill version of experimental obesity drug amycretin.

Hello, goodbye: Singaporean telco SingTel sold 0.8% stake in Bharti AirTel for $710 million to American investment firm GQG Partners, best known for backing the Adani group. 

THE DAILY DIGIT

$58 billion

The estimated sales value of the legal cannabis industry in 2028, according to research by cannabis data firm BDSA. (Forbes)

FWIW

Cryptic signalling: Yes, crypto is back in the news again and to truly drive home that point, Binance, the world’s largest crypto exchange by volume, has a new product. The company is launching a perfume this Women’s Day to, err, get women to warm up to crypto. The perfume smells of ozone, salt, and moss and you cannot buy it… but only sample it at a mall in Bahrain. The entire point is to be “irreverent”, “fun” and “to push boundaries”. Funnily enough, this is the same company whose founder pleaded guilty to money laundering charges in the US. Just saying. 🤷🏻

So long: The farthest human-made object in space, Voyager 1, may finally be dead. First launched in 1977, it was built for a four-year trip to Jupiter and Saturn. The trip was extremely successful, with Voyager helping scientists discover more information about the Great Red Spot on Jupiter, the rings around Saturn, and the many moons of each planet. In 2012, it exited the heliosphere, the space in the solar system which is directly influenced by the Sun. Since November, the aircraft hasn’t sent any coherent data to Earth, indicating the end of its connection with our blue planet. 

A TikTok mystery: If you thought TikToks are just about lip-syncing and choreographed dancing, then this will change your mind. Meet Reesa Teesa, the platform’s latest obsession, who shot to fame over her 50-video series titled “Who TF did I marry?!?” The video is a break-by-break account of Teesa’s marriage, which was premised on lofty promises of a comfortable, deeply consumerist lifestyle that never came true. Teesa breaks down the lies and the scheming that her ex-husband did, only to find out later that he was schizophrenic. Honestly, this makes Shutter Island look pale in comparison.