China makes another aggressive monetary policy move

China's Central Bank cut interest rates for the sixth time since November on Friday, and it again lowered the amount of cash that banks must hold as reserves in another attempt to jump-start a slowing economy.

China's monetary policy easing is at its most aggressive since the 2008/09 global financial crisis, underscoring concerns within Beijing about the health of the world's second­ largest economy.

The People's Bank of China (PBOC) said on its website that it was lowering the one ­year benchmark bank lending rate by 25 basis points to 4.35 per cent, effective from Oct. 24. "The People's Bank has delivered another jolt of stimulus," analysts at Capital Economics said in a note to clients, but added that they were "still waiting for clear evidence of an economic turnaround". 

"We are retaining our forecast that benchmark rates and the reserve requirement ratio will both be cut once more before the end of the year, with a further move in both early in 2016." Sobering economic data in the third quarter has demonstrated the daunting challenges faced by the country's leaders, not least in attaining the 7 per cent growth target set by the government. Data released on Monday showed China's economy grew 6.9 per cent between July and September from a year earlier, dipping below 7 per cent for the first time since the global financial crisis. 

The one ­year benchmark deposit rate was lowered by 25 basis points to 1.50 per cent. The RRR will also be cut by 50 basis points for all banks, taking the ratio to 17.5 per cent for the country's biggest lenders, the PBOC said in a statement. Buoyed by China's easing, which came late in the evening in Asia, European shares turned higher and the Chinese offshore yuan fell against the US dollar. The pan-­European FTS Eurofirst 300 extended gains to trade 2.2 per cent higher at 1,493.60, with miners jumping 2.9 percent in the minutes after the move. China's offshore yuan hit a four­ week low of 6.3958 to the dollar after the decision.

-- CA Kasliwal Ambar

Reference - 

• ET

Wal­mart suspected to have paid millions of dollars in bribes in India!

America's multinational retail corporation Wal­Mart is suspected to have paid bribes worth millions of dollars in India, according to a media report. In a major report, The Wall Street Journal said Wal­Mart's "suspected bribery" unearthed in India involves thousands of small payments to low ­level local officials to help move goods through customs or obtain real ­estate permits.

 "The vast majority of the suspicious payments were less than USD 200, and some were as low as USD 5, the people said, but when added together they totalled millions of dollars," the daily said. In 2013, Wal­Mart shelved plans to open retail stores in India by severing a joint venture with Bharti Enterprises Ltd and instead decided to become solely a wholesaler there, the report said. Walmart, who was pushing the previous UPA regime for opening of the multi-­brand retail sector was also involved in lobbying before the US Congress in this regard, Congressional disclosure reports have said in the past few years. According to the report, Wal­Mart's massive bribery efforts is unlikely to bring in any penalty on it as its Indian operation does not yield any profit under the provisions of the Foreign Corrupt Practices Act (FCPA) of the United States. "Because penalties under the FCPA are often connected to the amount of profit the alleged misconduct generated, the payments in India wouldn't be likely to result in any sizable penalty, since Wal­Mart's operations there haven't been particularly profitable, said people familiar with the matter," the daily reported. There was no immediate response from Wal­Mart's corporate headquarters here on the Wall Street Journal's report on its bribery in India. According to The Wall Street Journal, federal investigators "found evidence of bribery in India, centering on widespread but relatively small payments made to local officials there," during the course of its "high ­profile federal probe" into allegations of widespread corruption at Wal­Mart Stores Inc's operations in Mexico. The investigations though have found little in the way of major offenses in Mexico, and is likely to result in a much smaller case than investigators first expected, the daily said.

- CA Kasliwal Ambar

Reference -

• ET