Business in Brief: RBI's plan for charges on UPI transactions could hurt

On Thursday (August 18), the Sensex opened lower with IT and healthcare stocks dragging the market following a US technology stock decline and a crude oil price slide. It was down by over 200 points at 60,0042.46 in early trading on Thursday.

UPI-based Apps

The RBI is looking to introduce charges on UPI-based fund transfers.

Impact: If the government accepts the proposal, customers transferring funds via G-Pay, PhonePay and other apps will have to shell out charges. The central bank has argued that the fund transfer is similar to IMPS, which also attracts charges. This could immediately impact such funds transfer and customers might return to carrying cash to pay for services.

Akasa Air

Akasa Air CEO Vinay Dube has said the company is well-capitalised, and has the financial means to induct all the 72 aircraft it has placed orders for. The airline had been financially backed by ace investor Rakesh Jhunjhunwala, who died earlier this week.

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Impact: Akasa Air has to demonstrate its capability to compete with two major airlines, IndiGo and Tata Sons’ clutch of airlines. The sector is highly capital incentive, and Jhunjhunwala had the capacity to infuse fresh funds into the venture whenever it was needed. The airline management will now have to look elsewhere to raise funds regularly.

Wipro

The IT services company has held back variable pay for its mid and senior-level executives for the June quarter because of margin pressure.

Impact: It indicates that the IT services sector is grappling with the ever decreasing margins. The industry’s EBITDA (earnings before interest tax, depreciation and amortization) margin declined to more than a decade low of 23.2 per cent during the first quarter of 2022-23.

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The industry will not be able to sustain such a decline in margins for long. A higher attrition rate is leading companies to raise salaries for their employees and is now becoming unsustainable.