CORPORATE UPDATES 15.02.2019

98% BOARD RESOLUTIONS GET NOD IN CY18 DESPITE RISE IN SHAREHOLDERS' DISSENT

Nearly 98 per cent of proposals put up before the company boards got a green signal in calendar year 2018 (CY18), despite a greater level of institutional investors casting their vote against the decision, suggest a report by Prime Database. Of 716 resolutions proposed during CY18, 700 (98 per cent) got the approval even as institutional shareholders voted against them, courtesy high promoter holding in the companies, the report says. Data-wise, the number of resolutions where more than 20 per cent of institutional shareholders voted against the resolution increased by 14 per cent to 716 in 2018 from 629 in 2017 and 639 in 2016. However, resolutions where over 20 per cent of institutional shareholders cast a negative vote, for Nifty50 companies reduced to 36 in number, against 44 in the same period last year, the report says. According to Pranav Haldea, a bulk of these resolutions were related to board appointments followed by stock options and board remuneration. Among the prominent ones that were opposed by the institutional shareholders with over 20 per cent votes include re-appointment of Rajiv Bajaj in Bajaj Finance and re-appointment of Mr Craig Edward Ehrlich as an Independent Director of Bharti Airtel. Haldea attributes the trend to the e-voting facility which has been made mandatory a few years ago as also the stewardship code brought about by regulators. A 'stewardship code' is a principles-based framework that is designed to assist institutional investors and their stewardship service providers (including proxy advisors) in fulfilling their responsibilities to their clients. It is also attributable to a greater role being played by proxy firms as also a steady increase in institutional holding as a whole, Haldea adds. In contrast, there were 45 resolutions which were completely voted against by shareholders at AGMs / EGMs / Postal Ballots and Court / NCLT Convened Meetings held in 2018, the report says. Overall, a total of 12,972 resolutions were proposed to be passed in 2,478 AGMs, EGMs, Postal Ballots and Court / NCLT Convened Meetings of 1,744 companies that were listed on NSE as on January 1, 2018 – up 5 per cent from 12,341 resolutions in 2017.

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INSOLVENCY PROCEEDINGS CAN BE CLOSED BASED ON SETTLEMENT PRIOR TO COC FORMATION : NCLAT

The National Company Law Appellate Tribunal has asked the Kolkata Bench of National Company Law Tribunal to close an insolvency proceeding by accepting the settlement arrived at between the Corporate Debtor and the Operational Creditor before the Constitution of the Committee of Creditors. The Appellate Tribunal also found that there was a pre-existing dispute between the parties, and hence the application under Section 9 of the Insolvency and Bankruptcy Code was not admissible in the first place. The appellate tribunal was hearing an appeal moved by Ashish Garodia, the Director and Shareholder of 'M/s. Garodia Automobiles Pvt. Ltd'. (Corporate Debtor) against the order dated January 14, 2019 passed by the Kolkata Bench of NCLT admitting the application under Section 9 IBC. The appellant also pointed out that The parties had signed a settlement deed on January 31. However, by then, the Interim Resolution professional appointed by virtue of the NCLT Kolkata's order had constituted the committee of creditors which was supposed to hold its first meeting on February 12. The NCLAT took note of the fact that there was a pre-existing dispute and the 'Operational Creditor' accepted that the parties have settled the matter The application preferred by Respondent under Section 9 of the 'I&B Code' is dismissed. Learned Adjudicating Authority will now close the proceeding. The 'Corporate Debtor' (company) is released from all the rigour of law and is allowed to function independently through its Board of Directors from immediate effect, it ordered. The NCLAT also asked NCLT, Kolkata to fix the fee of 'Interim Resolution Professional' for the period he has functioned with direction to the corporate debtor to pay the fee. As per the law laid down by the Supreme Court in Innovative Industries Ltd Vs ICICI Bank and Ors, the moment there is a pre-existing dispute, the application under Section 9 cannot be admitted.

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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA (MEDICAL FACILITY TO CHAIRPERSON AND WHOLE-TIME MEMBERS) SCHEME, 2019

In exercise of the powers conferred by clause (zd) of sub-section (2) of section 239 read with sub-section (5) of section 189 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016) andrule 17 of Insolvency and Bankruptcy Board of India (Salary, Allowances and other Terms and Conditions of Service of Chairperson and Members) Rules, 2016, the Central Government hereby makes the following Health Scheme, namely: —

1. Short title and commencement.—

(1) This may be called the Insolvency and Bankruptcy Board of India (Medical Facility to Chairperson and Whole-time Members) Scheme, 2019

(2) This shall come into force on the date of its publication in the Official Gazette.

2. Definitions —In this scheme, unless the context otherwise requires,—

(a)                       Code means the Insolvency and Bankruptcy Code, 2016 (31 of 2016)

(b)                      family mean —

(i) self;

(ii) spouse;

(iii) dependant parents (female employee can have either her parents or her parents-in-law as dependents);

(iv) dependant sisters, widowed sisters, widowed daughters, minor brothers and minor sisters;

(v) dependant children and step-children normally residing with the employee (son up to the age of twenty-five years or till his marriage, whichever is earlier, and daughter till she gets married;

(vi) dependant divorced or separated daughters (including their minor children) and step-mother;

(c)                       Group Health Insurance policy means health insurance policy as being purchased by Insolvency and Bankruptcy Board of India for their employees.

Explanation

For the purposes of this clause, it is hereby clarified that, except for spouse, the family members must be dependent of the employee; (d)words and expressions used in these rules but not defined, and defined in the Code/CGHS and shall have the meanings respectively assigned to them in the Code/CGHS.

3. Outdoor treatment

The Chairperson and the whole-time members shall be entitled to reimbursement of expenses incurred on outdoor medical treatment, including medicines, tests, procedures, dentures and spectacles, for self and family members, as per actuals subject to maximum expenditure upto fifty thousand rupees annually if claim is supported by prescription of a registered medical practitioner or Government hospitals or private hospitals registered under the law.

4. Indoor treatment

(1) The Chairperson and the whole-time members shall be covered under a Group Mediclaim Policy with an annual cover up to seven lakh and fifty thousand rupees for self and family subject to the condition that treatment has been taken as per the terms and conditions of the Group Mediclaim Policy.

(2) The Insolvency and Bankruptcy Board of India will bear the expenditure towards premium for coverage under a family floater Group Mediclaim Policy.

5. Monthly Subscriptions

(1) The monthly subscription payable by the Chairperson and the whole-time members shall be at the rate of one thousand rupees per month.

(2) The subscription once paid shall not be refundable.

(3) The monthly subscription so received shall be utilised for payment towards purchase of Group Mediclaim Policy, referred to in rule 4, for the Chairperson and the whole-time members and other related expenses on treatment. 6. In case the beneficiary of this scheme is also the beneficiary of CGHS/other health scheme, the beneficiary has to exercise option for availing of any one scheme.

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INSOLVENCY CODE SUPERSEDES PMLA IN BANKRUPTCY PROCESS

In a landmark judgement, the Mumbai bench of National Company Law Tribunal (NCLT) has nullified the attachment notice served by the Enforcement Directorate on Baroda-based Sterling Biotech Ltd (SBL), saying that the NCLT gives speedier justice and that a new legislation Insolvency and Bankruptcy Code 2016 precedes over the existing legislation. Enforcement Directorate had attached 31 acres of land owned by Sterling Biotech after banks declared the Rs 8,100 crore loans extended to the promoters as fraud. Subsequently, the promoters left the country under suspicious circumstances. NCLT has ordered the release of this land from the ED to the resolution professional to be resolved under the IBC 2016. All the properties which were attached were in the name of the company and they should be available for legitimate distribution to various creditors for settlement, resolution or recovery of their claims, said Vishal Ghisulal Jain. The court was hearing a dispute between Srei Infrastructure Finance Ltd and Sterling SEZ and Infrastructure Ltd. It has also overruled any prosecution under the Prevention of Money Laundering Act (PMLA). SBL, a subsidiary of Sterling SEZ and Infrastructure, was engaged in the manufacturing of gelatin and listed on BSE, but now is suspended from trading. The court added that Section 63 of the IBC provides that no civil court or authority shall have jurisdiction to entertain any suit or proceedings in respect of any matter over which NCLT or NCLAT (National Company Law Appellate Tribunal) has jurisdiction under this code. The court added that if the PMLA and the enforcement directorate route is followed, it may take considerable time and the assets would be locked up in proceedings. Considering the economic actors associated with the case, the objective of both the legislations, it is advisable to take a route where assets can be utilised in a speedy manner rather than waiting and losing the value of the assets over a period of time. The court said that Since attachment order passed by the PMLA court is hit by the provisions of the Section 14 of the IBC code and considering the overriding effect of IBC under the Section 238 of the code, this tribunal is of the considered view that the attachment order under PMLA Act is a nullity and hence will not have any binding force, the order said.

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EASTERN COALFIELDS GETS RELIEF ON INSOLVENCY PROCEEDINGS AS NCLAT QUASHES NCLT ORDER

The National Company Law Appellate Tribunal (NCLAT) has set aside the National Company Law Tribunal (NCLT) Kolkata bench's order to start insolvency proceedings against Eastern Coalfields (ECL), a subsidiary of Coal India, said an official on Thursday. The state-run miner had moved the NCLAT challenging the order. The NCLAT has set aside the NCLT order and it has released us from all the rigour of the law We are allowed to function independently through our board, an ECL official told. The NCLT's city bench, in December, admitted an insolvency petition, filed by the Gulf Oil Lubricants India, against ECL under Section 9 of the Insolvency & Bankruptcy Code, as it allegedly refused to pay the interest amount at the rate of 18 per cent on the original debt to the operational creditor. ECL had already paid the Rs 84.71 lakh principal sum to the creditor. At the hearing, the counsel appearing for the operational creditor accepted that the principal was paid prior to the admission of the insolvency application. That the parties have settled the matter prior to the constitution of the committee of creditors and the adjudicating authority has failed to notice that the principal has been paid and the original plea of the corporate debtor was that no interest was payable in terms of the agreement/contract, we set aside the impugned order dated December 19, 2018 passed by the adjudicating authority, the NCLAT bench said.

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RCOM TO REPAY NCD HOLDERS ONLY VIA NCLT

Reliance Communications (RCom) said the telco and its units will pay principal and interest on non-convertible Debentures (NCD) only post the debt resolution process as directed by National Company Law Tribunal (NCLT). the payment of NCD shall be in the terms of and subject to the said resolution through NCLT, said the debt-laden telco in a regulatory filing on Thursday. The said NCDs are due to mature on March 1, this year . RCom had informed on November 6, 2017, January 5, February 9, 2018 and January 23, 2019 about not fixing any record date for payment of principal and interest on the NCD till completion of restructuring process. As announced on 1st February, 2019, the Board of Directors of the Company reviewed the progress of the Company's debt resolution plans since the invocation of SDR on 2nd June, 2017 and decided that the Company and two of its subsidiaries namely; Reliance Telecom Limited and Reliance lnfratel Limited will seek fast track resolution through NCLT, Mumbai, the telco said on Thursday. It added that this course of action will be in the best interests of all stakeholders, ensuring comprehensive debt resolution in a final, transparent and time bound manner within the prescribed time of 270 days.

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ANIL AMBANI HAS MONEY FOR RAFALE, NOT FOR US: ERICSSON

Pressing on its move for contempt proceedings against Anil Ambani for Reliance Communication's default in making payment of Rs 550 crore Swedish telecom company Ericsson rejected the industrialist's plea of fund crunch as an excuse claiming that his group had made enough profit to invest in the Rafale deal. Dushyant Dave, appearing for Ericsson, told a bench of Justices RF Nariman and Vineet Saran that the Reliance Anil Dhirubhai Ambani Group must be treated as one entity and the group should be liable to pay liabilities of RCom. He has money to invest in Rafale. But he does not want to honour the commitment given to the court (to refund Rs 550 cr), he said. Dave said RCom had, in its communication to the stock exchange in August 2018, said it had sealed the deal worth of Rs 5,000 crore with Jio to sell its fibre and other infrastructure and its share price shot up by 3% on that day. He said the deal is in addition of Rs 18,100 crore deal with Jio to sell spectrum and mobile towers. It is very unfortunate that an extraordinary citizen can take the court for ride From day one, they did not want to comply with the undertaking given to the court. You have personal assets worth thousands of crores and you have to fulfil the undertaking. They live like emperors but not willing to honour the undertaking, Dave said. He said the group had the money as it had offered to pay it on the condition that Ericsson withdrew the contempt petition. He said the lender banks were hand-in-glove to protect Anil Ambani's company. Ambani said that his failure to refund Rs 550 crore to Ericsson did not constitute contempt as his commitment to make the payment to the Swedish company was contingent upon the Rs 18,100 crore deal he was negotiating with his elder brother Mukesh Ambani's Jio, which failed to fructify. Mukul Rohatgi, appearing for Anil Ambani, said RCom did not receive Rs 5,000 crore from Jio as submitted by Ericsson and got only Rs 780 crore which was utilised by lenders to pay to the department of telecommunication (DoT) to save the telecom licence of the company. The amount was deposited in an escrow account maintained by 46 lenders led by SBI. This is the only amount which came from Jio and the lenders had given the money to DoT. I am caught between the devil and deep sea. I am nowhere today, Rohatgi said. The SC reserved its verdict after four-hour hearing.

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SC ORDERS DIRECTORS OF AMRAPALI TO SUBMIT RS 94 CRORE BY MARCH 1

The Supreme Court on Thursday directed all the directors of the Amrapali Group of companies to deposit Rs 94 crore before the court by March 1. The order came after it was alleged the money was lent to these directors by various group companies. The SC also sought explanation from Anil Kumar Sharma, chairman of the company with respect to the transfer made in favour of various family members from the funds of the company. The apex court also directed the auditors of JP Morgan to be present on the next date of hearing and handover the agreement they had with Amrapali in relation to the Zodiac project. According to the auditors, peons bought share of companies worth crore and were probably involved in the transaction with JP Morgan. It was alleged that JP Morgan had invested Rs 85 crore by purchasing Amrapali's share against which it received Rs 140 crore by selling them to the sister companies of the realty firm. The matter will next be heard on February 28.

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RELIEF TO COAL INDIA: NCLAT SETS ASIDE NCLT’S INSOLVENCY ORDER AGAINST ECL

The National Company Law Appellate Tribunal (NCLAT) has set aside an order by the Kolkata bench of the National Company Law Tribunal which allowed initiation of insolvency proceedings against Eastern Coalfields (ECL), a subsidiary of India’s largest miner Coal India. Notably, ECL had paid the principal sum of around Rs 84.71 lakh to GOLIL. The Hinduja Group company was asking the miner to pay the amount of interest at the rate of 18% per annum. In view of the fact that the parties have now settled the matter prior to the constitution of the CoC and the Adjudicating Authority has failed to notice that the principal amount has already been paid and original plea of the ‘Corporate Debtor’ was that no interest was payable in terms of the Agreement/Contract, we set aside the impugned order dated 19th December, 2018 passed by the Adjudicating Authority, the NCLAT bench, comprising chairperson justices SJ Mukhopadhaya and Bansi Lal Bhat, said in its order dated February 11.

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NCLT STERLING ORDER MAY CHEER LENDERS

There’s a ray of hope for lenders who are unable to sell properties of errant borrowers with the Enforcement Directorate (ED) having attached the assets by invoking the harsh anti-money laundering law In a case involving Sterling SEZ and Infrastructure Ltd, whose promoters have left India, the National Company Law Tribunal has ruled that the attachment order obtained by ED is invalid and the resolution professional can step in to take charge of the properties and deal with them under the Insolvency and Bankruptcy Code (IBC). Sterling SEZ is part of the Vadodara-based Sterling Biotech (SBL) group, and according to court papers, total credit facilities of Rs 8,100 crore availed by the group were declared fraud account by banks. It’s a significant order and is likely to be challenged in higher courts The ruling provides the ground to other lenders to move court to lift the attachment by ED or other government agencies, said MR Umarji, former RBI executive director and a member of the Bankruptcy Law Reforms Committee. Sapan Gupta, said, The ruling upholds the right of secured lenders as there are specific securities offered for obtaining loans. Once ED completes its process, the securities should be released to secured lenders. The ED’s contention was that as per the decision of the special court under PMLA if an asset is proceed of crime, it erodes the very title of the corporate debtor and the resolution applicant.

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JAYPEE INFRATECH LENDERS TO MEET ON FEB 18 TO DISCUSS BIDS

Debt-ridden Jaypee Infratech's lenders will meet on February 18 to discuss the resolution plans to be submitted by four shortlisted bidders by Friday to take over the realty firm and complete stalled projects. A meeting of Committee of Creditors (CoC) will be held on February 18, Interim Resolution Professional (IRP) Anuj Jain informed the stock exchanges on Wednesday. The regulatory filing did not mention the agenda of the CoC meet. However, sources said members of the CoC, comprising financial creditors and representatives of home buyers, will discuss all the proposals that would be submitted by Friday (February 15).

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NEW IL&FS BOARD PUSHES FOR ASSET-LEVEL RESOLUTION

The crisis in the debt-ridden Infrastructure Leasing and Financial Services (IL&FS) is set to be addressed by undertaking asset-level sale process first before putting in place a plan for a single group-level or vertical-level resolution sources said. This would mean that IL&FS group's equity stakes in individual assets such as road, power and renewable energy projects will be sold first as part of the exercise to restore health of the crisis-hit entity. Once this process is completed, options would be explored to resolve IL&FS at vertical and group level. The asset-level resolution plan, which has also been mentioned in the third progress report finalised by the new board under the directions of Ministry of Company Affairs (MCA) and submitted to the National Company Law Tribunal, has been favoured as it maximizes returns for stakeholders while allows transfer of title free and clear of encumbrances. The infrastructure giant has already initiated asset-level resolution by putting in block 22 road assets across its domestic road vertical IL&FS Transportation Networks Ltd (ITNL). Expression of Interest (EoI) has also been invited renewable energy projects while process is being finalized to sell group entities such as ONGC Tripura Power Company and IL&FS Paradip Refinery Water Limited.

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NPA RELIEF FOR INDIAN BANKS: BAD LOANS STABILISING; CREDIT, DEPOSIT IMPROVING

In continuing signs of improvement in asset quality of banks in India, the NPA situation in the sector has been stabilising, with the growth in bank NPAs in fiscal third quarter drastically slowing down than that a year ago, a report said. There has been an improvement in growth of credit and deposits in the economy, CARE Ratings said in a recent report. However, banks’ net profits continue to remain under pressure said the report. It further noted an improvement in credit to industry as well as services on year-on-year basis for December 2018 compared to December 2017. Gross NPAs increased at 8.4% in Q3 FY19, slowing down from double-digit growth of 30.4% Q3 FY18, said the report. This could be due to lower incremental NPAs being generated. However, it is still not clear if all legacy NPAs have been recognised by all banks, the report added.

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PSU BANKS BLEED: AGGREGATE LOSSES OF 21 LENDERS AT RS 11,605 CRORE IN Q3

Aggregate losses for a clutch of 21 public sector banks in the quarter ended December 2018 came in at Rs 11,605 crore, led by a massive loss of Rs 4,737 crore from Bank of India and Rs 4,815 crore from IDBI Bank. The aggregate losses of these 21 banks in the September 2018 quarter stood at Rs 14,716 crore. Of the 21 PSBs, 11 posted a profit, compared to seven banks in the previous quarter, data from Capitaline showed. In Q3FY18, the 21 banks had reported a combined loss of Rs 18,097 crore. The losses were down 35% y-o-y, which was led by the State Bank of India (SBI) reporting a net profit of Rs 3,954 crore against a net loss of 2,416 crore in Q3FY18. Lower slippages coupled with lower overhead expenses and write-back of mark-to-market provisions due to softening of bond yields contributed to strengthening of the bottom line, said Rajnish Kumar, chairman, SBI. Operationally, the banks fared well with the combined net interest income (NII) increasing nearly 11% y-o-y to Rs 59,505 crore. However, the pre-provisioning profit witnessed a mild reduction of 1.4% y-o-y to Rs 36,515 crore, on account of an increase in interest expense due to increased deposits. SBI’s deposits grew 6.8% y-o-y to Rs 28 lakh crore and Bank of Baroda’s deposits grew 6.5% to Rs 6.1 lakh crore. Provisions for state-owned banks fell 21% y-o-y, backed by stronger asset quality. Among the 21 banks, the steepest climb in provisions came at Bank of India (BoI), which saw the figure jump 109% y-o-y to Rs 9,000 crore. BoI said it had set aside Rs 5,000 crore additional provisions in view of uncertainty of recovery and deterioration in value of underlying assets against 331 NPA accounts. In respect of RBI-referred NCLT accounts (list 1 & 2), the bank has made a provision of Rs 572 crore during the quarter ended December 31, 2018, due to uncertainty of recovery. The provision held in respect of NCLT accounts stood at 6,939.02 crore as on December 31, 2018, representing 100% of the outstanding value, the bank said in a statement. Gross non-performing assets (NPAs) rose 7.2% y-o-y to Rs 8.3 lakh crore. Gross NPAs increased, however, at a comparatively lower rate in Q3FY19 vis-à-vis a double-digit growth in Q3FY18. This could be due to lower incremental NPAs being generated, said analysts at Care ratings. All six banks under the Prompt and Corrective Action (PCA) framework of the Reserve Bank of India (RBI) have recorded a spike in NPA numbers. Apart from the banks under PCA, Punjab National Bank (PNB) reported a 35% increase in its NPA to 77,733 crore citing exposure on account of the Nirav Modi-Mehul Choksi fraud.

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PNB TO E-AUCTION 4,000 PROPERTIES TO RECOVER LOANS

Lending major Punjab National Bank (PNB) on Wednesday said that it has decided to place more than 4,000 properties all over India on e-auction as part of its loan recovery effort. According to the bank, the action under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act (SARFAESI) will help in achieving the recovery of Rs 26,000 crore during current Financial Year 2018-19. The bank has up to December 31, 2018 recovered Rs 16,600 crore. It is expected that the scheduled e-auctions of these 4,000 properties will substantially add to the overall recovery tally of the bank, the company said in a statement. Recently, the state-owned lender reported a net profit of Rs 247 crore for the third quarter ending December 2018 over the Rs 230 crore profit after tax (PAT) reported for the corresponding quarter of 2017-18.

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FINANCE MINISTRY ASKS SIX PUBLIC SECTOR BANKS TO IMPROVE ON PCA PARAMETERS

The Finance Ministry has asked the six remaining public sector banks currently under Prompt Corrective Action (PCA), to improve on seven parameters to get the government's support for coming out of the PCA framework. We have told these banks to improve upon net interest margins (NIMs), CASA (current account savings account), RWA (Risk Weighted Assets), NPA recognisation, divergence (disparity in loan recognisation), operating profit and non-core asset selling to be able to get our support for being out of the PCA, official sources said. Out of a total of 11 banks put under PCA last year, three have already moved out while another two will merge with a stronger entity. This leaves six in the list of weak banks that also face restrictions on lending. The recent recapitalization has taken care of the banks' tier-I core capital requirements. As per Basel III norms, all banks need to meet both risk-based capital minimum Common Equity Tier 1 (CET1) requirement of 4.5 per cent and the target level CET1 requirement of 7 per cent. The government had infused capital in banks that was used to increase provisions and lower the net NPA ratio enabling RBI to lift restrictions on the three banks - Bank of Maharashtra, Bank of India and Oriental Bank of Commerce. Breaching net NPA ratio of 6 per cent is one of the conditions that trigger restrictions. The immediate impact of banks under PCA is loan growth is impacted since they cannot lend to below AAA rated corporates. CASA ratio of a bank is the ratio of deposits in current and saving accounts to total deposits. A higher CASA ratio indicates a lower cost of funds, because banks do not usually give any interests on current account deposits and the interest on saving accounts is usually very low: 3-4 per cent. Last year, while the government allocated Rs 88,139 crore for bank recapitalization (predominantly through recap bonds), Rs 52,311 crore was allocated to 11 PSU banks under PCA. Since then Bank of Maharashtra, Bank of India and Oriental Bank of Commerce have moved out of PCA and IDBI Bank has been taken over by LIC and Dena Bank is being merged with Vijaya and Bank of Baroda and are by default out of PCA. The Reserve Bank has specified certain regulatory trigger points as a part of PCA Framework in terms of three parameters -- capital to risk weighted assets ratio (CRAR), net non-performing assets (NPA) and Return on Assets (RoA), for initiation of certain structured and discretionary actions in respect of banks hitting such trigger points. Recently, when BoI, BoM and OBC were taken out of the PCA, they were falling short of meeting the RoA norms. But since none of these banks have met the requirement for 'return on assets', it appears that the trigger has been diluted. An official said the norm for RoA as per the PCA rules is that the bank should not make losses for two years straight, but a lot of banks will have to report losses for FY19 as well.

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CJI RANJAN GOGOI SACKS TWO SC STAFF FOR TAMPERING WITH ORDERS ON RCOM

Chief Justice of India (CJI) Ranjan Gogoi sacked two officers of the court who allegedly tampered with Justice Rohinton Fali Nariman's directions asking Reliance Communications (RCom) chairman Anil Ambani to make a personal appearance in a contempt case The two court masters were given marching orders for allegedly leaving out the word not while uploading the order on the top court's website. The lawyers for Ambani had sought an exemption from his personal appearance in the court, but the request had been declined by Justice Nariman. However, when the order was uploaded on the website of the court, it seemed personal appearance of the alleged contemnor(s) was 'dispensed with' despite Justice Nariman's order: personal appearance of the alleged contemnor(s) not dispensed with. After a complaint was made by the appellant, the court instituted an enquiry into the issue. A revised order was uploaded on January 9, which made it clear that Ambani would have to appear personally in the court. Following the court's revised order, Ambani had appeared in the court on Tuesday and Wednesday.

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EDELWEISS CASE: NO INTERIM RELIEF FOR ANIL AMBANI GROUP'S PROMOTER ENTITIES

The Bombay High Court (HC) on Wednesday declined interim relief to the Anil Ambani group’s promoter entities, which had moved a petition asking the court to restrain Edelweiss Financial Services from selling its pledged shares. The court has, however, admitted the petition. Anil Ambani promoter entities — Reliance Wind Turbine Installations Industries and Reliance Project Ventures and Management — sought damages of Rs 2,700 crore from Edelweiss for selling its shares illegally. The petition filed in the Bombay High Court is only against Edelweiss. The Reliance Group had said the exercise of rights to enforce the security is illegal and excessive, and against the process and requirements of the respective borrowings’ documentation. According to sources, Edelweiss, in its representation before the court, said it had tried reaching out to the Reliance Group several times to address concerns on shortfall in margins and resultant fall in collateral valuation, but did not receive adequate responses.

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FINANCE MINISTRY ON COURSE TO MEET NPA RECOVERY TARGET

The Finance Ministry is on course to meeting the NPA recovery target of Rs 1.8 lakh crore by March 31, 2019 with the recoveries already touching Rs 1.08 lakh crore and many big-ticket default cases reaching resolution. Finance Ministry sources said big ticket recoveries were due this month or in March from Essar Steel and Bhushan Power & Steel which together can fetch over Rs 60,000 crore. Aand they are just a few among the many. Recoveries have already touched over Rs 1 lakh crore in the current fiscal. Public-sector banks recovered Rs 74,562 crore from bad loans in the year ended in March 2018. The state-run banks will focus on recoveries, which will include developing an e-auction portal for auctioning properties seized by the portals. There is so much urgency among the lenders to recover their dues that not taking any chances of possible delay, SBI had put its entire Essar Steel loan exposure of Rs 15,431 crore on sale though it did not meet the desired response. In 2019, the NCLT is expected to finalise corporate insolvency resolution process of stressed assets -- Videocon Group, Monnet Ispat, Amtek Auto, Ruchi Soya, Lanco Infratech, Jaypee Infratech. In 2018, over Rs 80,000 crore was recovered from various corporate debtors under IBC, according to the Ministry of Corporate Affairs Secretary earlier.

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NCLT SHOULD INFORM REAL ESTATE REGULATOR BEFORE TAKING UP A RERA REGISTERED CASE: MAHARASHTRA RERA CHIEF

Concerned over the issue of forum shopping by some homebuyers Maharashtra RERA chief Gautam Chatterjee has suggested that if NCLT decides to take up a real estate case that is a RERA registered project, it should first refer the matter to the respective real estate regulator before it decides to address the issue. The main objective of RERA is to ensure that pending real estate projects are completed, remove the existing information asymmetry and bridge the trust deficit that exists between homebuyers and developers, he said. Admitting of a case under NCLT means moratorium under section 14 which means for six to nine months nothing in the project will happen. If a project comes under IBC it means it has become insolvent. It may not go under liquidation but experience shows that wherever projects are resolved under IBC, they have been resolved with a haircut of 30 percent to 50 percent. Are we saying that homebuyers, also creditors, go back home with a 50 percent haircut? RERA expects the house to be completed and given to the homebuyers, he said. Therefore, any matter that is being heard by RERA, if it goes to the NCLT and before NCLT decides to admit it, it should be referred to the concerned RERA, who should be given time to resolve it, he said. Without making any changes to the Act, the NCLT should be requested not to admit a RERA-registered case right away It should first ask the concerned regulatory authority to give its opinion whether they are in a position to resolve the case or not. I am a regulator and should get a chance. If RERA is able to resolve the matter within three to four months ‘good’, if not then the NCLT can take it up, said Chatterjee. RERA is well equipped to grant compensation for delay and also see that the project gets completed. Therefore, parallel forums should not be allowed, he said. Forum shopping does not mean blocking all other options for homebuyers except one, rather it refers to approaching more than one forum simultaneously. Even before RERA, homebuyers could approach the Competition Commission of India or a file civil suit for refund or go for specific performance or approach the criminal court besides the consumer court. Similarly, even now homebuyers should have the choice to approach either RERA or any other forum such as consumer forum (available in every district) or even the NCLT and it is necessary to understand that RERA has to co-exist with other laws, said Abhay Upadhyay.

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RERA ACT MUST BE MADE STRONG, EFFECTIVE, SAYS ANTONY DE SA

RERA (Real Estate Regulatory Authority-Madhya Pradesh) Chairman Antony De Sa has said that the builders fulfill their social obligations by providing houses to needy citizens in their business activities. The RERA Act intends that the allottee should get houses on time and if they are fully satisfied, the business and reputation of the developer will increase. In view of this, it is necessary to make the RERA Act strong and effective. Antony De Sa said that the RERA Act has been brought to revive the real estate sector and to bring the confidence of the general public in the sector. He said that the RERA Act is not against the builders With this change, the builders will get more buyers and market demand will also increase. He said that real estate is the second most important component contributing to the Indian economy. For the success of this sector, all components connected with the sector have to adhere to RERA rules. All projects have to be registered under RERA so that the sector can avail benefits of RERA Act. He said that after being registered it becomes easier to redress the issues of allottees. RERA has launched an award scheme for informers of unregistered projects and colonies. He said that the biggest challenge now is the prompt implementation of the orders of RERA for which there is need to make provisions in the rules. It was suggested by CREDAI that the system of giving all approvals at one place will help in the completion of projects fast Rules have to be made to make RERA registration binding, so that those who have registered under RERA can get more incentive in comparison to those who do not register. Such provisions should be made in the rules that the units built in the project cannot be transferred without registration under RERA.

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BANKS LEND OVER RS 20,000 CRORE TO NBFCS SINCE THE CRISIS HIT THE SECTOR FOLLOWING IL&FS DEFAULT

When mutual funds turn fair weather friends, banks provide the helping hand. Banks lending to Non - Banking Finance Companies rose 4.4 percent in the December quarter to Rs. 24,200 crores when mutual funds slammed the doors on them after Infrastructure Leasing & Financial Services Ltd. defaulted on bond payments. This growth compares with a shrinking of 4.7 percent in the same quarter a year ago, RBI data shows. A lot would depend on market conditions, say bankers and also the kind of NBFC they lend to which add to their lending comfort. Banks are comfortable lending to PSU backed NBFCs or even some top rated established NBFCs said C Venkat Nageswar. NBFCs could be broadly categorised as PSU backed, large business houses backed and other private NBFCs. PSU backed NBFCs like Power Finance Corporation are perceived to be safe and even some larger NBFCs like Mahindra Finance, HDFC or even L & t Finance are some top rated NBFCs, to whom bankers are more comfortable to lend. Even as banks are cautious, NBFCs are finding it difficult to get funds from other sources like mutual funds or even directly from the market through commercial paper or CPs, which has been a popular source of funding for them. As rollover of CPs was slowing down, dependence on market borrowings got shifted to bank borrowings. But lenders have become more choosy now said Pankaj Naik.

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RBI MAY CHANGE RS 10 LAKH LENDING CAP ON P2P PLATFORMS, SAY P2P PLAYERS

Peer to Peer or P2P players are hopeful that the comprehensive financial data sought by the Reserve Bank of India might help the regulator to take some major policy decisions concerning the industry. The data (sought) is very comprehensive in nature. Some P2P companies are incurring losses due to lower volumes and higher operational costs. This (review) may help RBI in making a decision on the Rs 10 lakh-cap which is a bottleneck, says Surendra Kumar Jalan. An individual can currently lend a maximum of Rs 10 lakh in a P2P platform. The industry participants believe the Rs 10 lakh cap is hurting the growth prospects of the industry. Jalan says RBI had asked for details on monthly spends, breakup of expenses for the first time since inception of NBFC-P2P. All NBFCs are required to submit their performance report to RBI. But according to some P2P players, the data submitted is more than just a report card. For the first time, PAN cards of lenders have been sought. Now, RBI can check whether a lender has lent more than Rs 10 lakh across platforms. This move will ensure compliance and bring more transparency to the P2P industry, says Raghavendra Pratap Singh. The data collected will help RBI take the required action. It may think of revising the Rs 10 lakh cap on lenders, adds Singh. Some players believe that the regulator might ask P2P companies to follow a standard procedure while displaying data on their platforms. RBI may come out with regulations on displaying information in a standardised format, says a prominent P2P player on condition of anonymity. The regulator had earlier said it would closely observe the P2P industry for a year or so, before deciding on any change its stance. P2P players believe that the RBI wants to keep a check whether P2P companies are making money and the business is sustainable.

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SEBI TO STRENGTHEN INVESTIGATIVE EFFORTS OVER ISSUES OF CORPORATE GOVERNANCE

In the backdrop of rising cases of corporate malpractice, which is followed by heavy volatility in specific stocks like Sun Pharma, DHFL, Zee and IL&FS, market regulator Security and Exchange Board of India (SEBI) has planned to ramp up its efforts to investigate such cases Sources said SEBI has planned to deploy and hire more people to look into matters of stock market fraud and cases relating to manipulation and corporate governance.

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NEW BIZ MODEL ON CARDS FOR RATING COMPANIES

The Securities and Exchange Board of India (Sebi) is planning to overhaul the manner in which the credit rating business works — scrapping the issuer-pays model that’s prevalent across the world and moving to one where the investor pays, said people aware of the matter. The immediate trigger for the move is the Infrastructure Leasing & Financial Services (IL&FS) default — which the rating agencies missed — that sparked a crisis in the non-banking finance sector. The thinking is that such a move will resolve the conflict of interest inherent in rating agencies being compensated by the issuers who raise debt, which has led to allegations of entities shopping around for a favourable grading. The regulator has sought feedback from market participants on its plan before coming up with the final rules, said the people cited above. The alternative to such a conflicted model is to move towards a user-pays model, said one of the persons. The parliamentary standing committee on finance had also called for an end to the practice. Those who use the ratings are institutional investors such as mutual funds, insurance companies, pension funds, banks and corporate treasuries. Under the proposed regime, an issuer will file a draft prospectus with the stock exchanges Credit rating agencies will make their assessment of the paper. Investors will pay to see those ratings, based on a predetermined fixed rate. The initial and subsequent fees may have to be paid through the exchange platform. If the debt paper is traded, then the new investor can continue with the same agency’s rating or choose a new one from the platform. This will ensure the issuer bias is addressed and there is transparency and consistency in credit ratings, said another person familiar with the proposal. Sebi is planning to amend its listing regulations credit rating agencies regulations and other guidelines to bring the new rules into effect, said the people cited above. A ratings company executive said that, apart from the business model, agencies often don’t have enough information to take a call.

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JET AIRWAYS BOARD APPROVES LENDERS’ DEBT RESOLUTION PLAN; AIRLINE POSTS RS 588 CRORE Q3 NET LOSS

Jet Airways’ board on Thursday approved a debt resolution plan that mainly includes infusion of funds, restructuring of debt and monetisation of assets. The lenders-led by State Bank of India (SBI) would become the largest shareholders post the debt recast, according to the plan. Board of Directors, in its meeting held, inter-alia, considered and approved a BLPRP, received from the State Bank of India CSBI), appointed as lead lender by consortium of domestic lenders (Lenders), Jet Airways said in the exchange filing. After receiving approval from shareholders at their meeting to be held on February 21, Bank led Provisional Resolution Plan (BLPRP) proposes to convert lenders debt into 11.40 crore shares of Rs 10 each, which will result in lenders becoming largest shareholders of Jet Airways. The BLPRP currently estimates a funding gap of Rs 8,500 crore including proposed repayment of aircraft debt of Rs 1,700 crore to be met by appropriate mix of equity infusion, debt restructuring, sale/ sale and lease back/refinancing of aircraft, among other things. Total expenses in the third quarter shot up to Rs 6,786.15 crore as compared to Rs 6,042.58 crore in the same quarter last fiscal, it added. Aircraft fuel expenses stood at Rs 2,387.72 crore as compared to Rs 1,840.08 crore in the corresponding period last year, while aircraft and engines lease rentals were at Rs 730.35 crore as against Rs 583.67 crore.

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65 INDIAN START-UPS SIGN UP FOR DASSAULT SYSTEMES’ ENTREPRENEURSHIP PROGRAMME

65 Indian start-ups have signed up so far for Dassault Systèmes’ Global Entrepreneur Programme, which is aimed at providing an impetus to the growing start-up community in India. The company expects over 50 per cent of these start-ups to continue using SOLIDWORKS and turn into customers, said Gian Paolo Bassi. The Global Entrepreneur Programme is open to all the Indian entrepreneurs and it is very successful as we understand that young entrepreneurs need the access to powerful technology to make their dreams happen. If they need technology and they have ideas, we can have them, Bassi told. He added that this programme is good for the business as well because if these start-ups like creating products using SOLIDWORKS’ technology, they can choose to continue with it afterwards. Currently, Bassi said that on a global level, the company sees an average of 30 per cent of these companies mature beyond the ‘start-up status’ and become commercial customers. We are very sensitive to people that need access to technologies and don’t have the means, for instance, for students, entrepreneurs and start-ups, he said. The company had announced the availability of the Global Entrepreneur Programme for Indian start-ups, entrepreneurs and makers in October 2018. It is aimed at helping Indian start-ups by leveraging Dassault Systèmes’ 3DEXPERIENCE platform, applications, online services, mentors and industry professionals. Globally, around 3,000 start-ups have signed up with Dassault Systèmes The growth is 400 per cent year-over-year, Bassi said. 21 incubators have signed up so far with the programme, and these incubators have, on an average, 10 start-ups in themselves. Right now, SOLIDWORKS is in the process of streamlining and simplifying the process to access this programme. SOLIDWORKS has also partnered with around 1,500 colleges in India that uses the SOLIDWORKS software. Apart from the need to push it to high schools too, Bassi said that there is a need to expand this further into community colleges and vocational schools in order to cover the diversity of the population. I think that the biggest strength of India is a very sharp focus on engineering, it's truly amazing, said Bassi.

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WILL REDUCE RATES ONCE MARGINAL COST OF FUNDS COMES DOWN: SBI CHIEF

Rajnish Kumar Thursday said the bank has already cut the interest rate and will reduce it further with decline in marginal cost of funding. The Reserve Bank had last week cut the repo rate by 0.25 per cent, but the country's largest lender State Bank of India (SBI) announced only a 0.05 per cent reduction in interest rate on home loans of up to Rs 30 lakh. Whatever cushion we had, we have already reduced our rates. If our marginal cost of funding comes down, then that benefit we will pass on to borrowers, Kumar told reporters. Kumar made a case for developing the corporate bond market to help fund projects with long gestation period and reduce the burden on banks for funding infrastructure projects. In India, still banks play a prominent role. Bond market is sill not developed and since bond market is not developed the dependence on banks for the capital is huge. So we need to do more to develop bond market, Kumar said.

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SOFTWARE PIRATES USE APPLE TECH TO PUT HACKED APPS ON IPHONES; MAY HIT REVENUES

Software pirates have hijacked technology designed by Apple Inc to distribute hacked versions of Spotify, Angry Birds, Pokemon Go, Minecraft and other popular apps on iPhones. Illicit software distributors such as TutuApp, Panda Helper, AppValley and TweakBox have found ways to use digital certificates to get access to a program Apple introduced to let corporations distribute business apps to their employees without going through Apple’s tightly controlled App Store. Using so-called enterprise developer certificates, these pirate operations are providing modified versions of popular apps to consumers, enabling them to stream music without ads and to circumvent fees and rules in games, depriving Apple and legitimate app makers of revenue. By doing so, the pirate app distributors are violating the rules of Apple’s developer programs which only allow apps to be distributed to the general public through the App Store. Downloading modified versions violates the terms of service of almost all major apps. Apple has no way of tracking the real-time distribution of these certificates, or the spread of improperly modified apps on its phones, but it can cancel the certificates if it finds misuse. Developers that abuse our enterprise certificates are in violation of the Apple Developer Enterprise Program Agreement and will have their certificates terminated, and if appropriate, they will be removed from our Developer Program completely, an Apple spokesperson told. We are continuously evaluating the cases of misuse and are prepared to take immediate action. Some of the pirates were banned from the system, but within days they were using different certificates and were operational again. It would require two-factor authentication - using a code sent to a phone as well as a password - to log into all developer accounts by the end of this month, which could help prevent certificate misuse.

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GOOGLE PAID APPLE $9.46 BILLION IN 2018

Apple Inc has recently come under scrutiny for its slowing iPhone sales and how the company is not doing as well as it used to do. However, a new report says that Apple could be making money in other ways. Goldman Sachs has estimated that Apple was paid nearly $9.5 billion by Google in traffic acquisition costs (TAC) in 2018. This makes up for over 20 percent of Apple’s services profit that comes from the search engine giant. The fees will continue to add large portions to Apple’s services revenue into 2019, however, it will be growing at slower rates, added the Goldman Sachs analysts. This fee was paid as Google insisted on being the default search engine on Apple’s Safari browser. This revenue adds to Apple’s budding services segment, that includes iCloud, App Store and Apple Music revenue. As iPhone sales slow down, the company sees its services revenue as the next growth driver. However, the share of this segment from Google is reducing, the analysts noted and therefore Apple would need to make up for the slowing revenue with an ‘Apple Prime’ bundle, including the original video which is expected to be released in mid-2019, the note by Goldman Sachs was published on Monday.

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FACEBOOK REMOVES PAGES, ACCOUNTS TARGETING PEOPLE IN MOLDOVA

Facebook Inc said on Wednesday it has removed a number of pages and accounts that engaged in coordinated inauthentic behavior targeting people in Moldova, where elections will be held later this month. The owners of pages and accounts typically posted about local news and political issues such as required Russian or English language education and reunification with Romania, Facebook said in a blog post. Although the people behind this activity attempted to conceal their identities, our manual review found that some of this activity was linked to employees of the Moldovan government, Facebook said. The social media company said it removed 168 accounts, 28 pages and eight Instagram accounts involved in activities that used a combination of fake accounts and some authentic accounts to mislead others about who they were and what they were doing. About 54,000 accounts followed at least one of these Facebook pages, the company said.

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Thanks & Regards,
CS Meetesh Shiroya