Economy round-up: OPEC to cut output; govt tightens screws on errant bank chiefs
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In what could have a bearing on India’s current account deficit, the Organization of Petroleum Exporting Countries (OPEC) on Wednesday agreed to cut crude output by 700,000 barrels a day to support falling oil prices.

This is the first such deal since 2008 and comes after Iran re-entered the international oil market following a landmark nuclear agreement with the US and other world powers.

Although the cut is modest, it could see oil prices inch up and impact countries such as India which depend on imports for most of their energy needs. The decision had an immediate impact, with oil prices jumping 5% to trade at $48 per barrel.

Meanwhile, as state-owned banks struggle with burgeoning bad loans, the government is set to tighten the screws on errant chiefs. The Economic Times says that a former chairman of the State Bank of India and at least two serving executive directors at other banks are being probed for various violations.

The report did not name these former and current officials but said that these probes are on in consultation with the Central Bureau of Investigation and the Central Vigilance Commission.

Earlier this week, the government sacked Sushil Muhnot, the chairman of Bank of Maharashtra, without giving any reasons, the report noted. At least two other former top banking officials—SK Roy, former chairman of Life Insurance Corp of India, and United Bank of India’s Archana Bhargava—are already being probed in separate cases, the report said.

This comes even as the capital markets regulator Securities and Exchange Board of India (SEBI) has asked the National Stock Exchange (NSE) to appoint a third-party auditor to probe allegations that a few trading firms had unfair access to its data and trading systems. This, at a time the exchange is preparing for its own Initial public offering (IPO). The Mint newspaper notes that, effectively, the regulator may have asked the bourse to probe itself in the matter, as the auditor will have to send its action-taken report to the NSE itself.

Meanwhile, the Employees Provident Fund Organisation (EPFO) will invest 8-10% of its annual incremental corpus into the stock market this year, another report in Mint says. This will see the EPFO pumping in about Rs 14,000 crore into equity markets.

This is a significant uptake from the Rs 7,000 crore the pension fund manager invested into equities last year, which was 5% of its annual incremental corpus. Exposure to equities helped the EPFO earn a return of more than 13% on its equity investments last year, as against 8.6% on its debt portfolio, the report said.

India’s chief economic adviser Arvind Subramanian has said that with inflation coming down, there is space for monetary easing. In an interview to Business Standard, the finance ministry’s top economist said that in his view, in the medium term, there is no tradeoff between inflation and growth. His comments are significant as they come just days before the Reserve Bank of India unveils its bi-monthly monetary policy on 4 October.

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