The Core Report

#860 Impact of Increased Ethanol Blending in Petrol

27 min

This episode of The Core Report discusses India's financial landscape, focusing on the proposed increase in ethanol blending in petrol to E85 and E100, and the implications for vehicle readiness and feedstock supply. It also delves into the Reserve Bank of India's new Expected Credit Loss (ECL) framework for banks, a transformative step aligning with global standards for credit risk assessment. Other market updates include a small cap revival, rising gold prices, and foreign investor outflows.

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✨ Key Takeaways

1

Ethanol Blending Expansion

India aims to increase ethanol blending in petrol to E85 and E100, building on the successful E20 implementation, but faces challenges with feedstock supply, especially with potential monsoon impacts.
2

RBI's ECL Framework

The Reserve Bank of India is implementing a new Expected Credit Loss (ECL) framework by April 2027, shifting from standard provisioning to risk-based assessment, which will significantly impact bank balance sheets and improve transparency.
3

Gold as a Safe Haven

Deutsche Bank predicts gold could reach $8,000/ounce in five years, driven by declining USD share in central bank reserves; India's investment demand for gold has surpassed jewelry consumption for the first time.
4

Market Dynamics & Geopolitical Impact

Indian small and mid-cap stocks are outperforming large caps despite geopolitical concerns, while foreign investors have pulled over $20 billion from Indian equities. Rising crude oil prices due to US-Iran tensions and UAE's exit from OPEC are pressuring the Indian rupee and increasing costs for industries like chemicals.

💬 Notable Quotes

"The new framework of course is a very transformative step taken by the idea. It's a massive step forward in terms of the quality of credit risk models which the habeas requesting banks to now make and accordingly flow through to the permissioning."
"So clearly, I think India has again done that. They were able to implement E20 much before the real official timeline, which was 2030, 2,20030 planned earlier."
"So it's very proactively tracking the risk and adjusting provisions based on."