CORPORATE UPDATES 05.03.2019

GOVT LIKELY TO TWEAK IBC FOR CROSS-BORDER CASES, BILL AFTER ELECTIONS

The government is planning to promulgate an Ordinance amending the Insolvency and Bankruptcy Code (IBC) and adding a chapter on cross-border insolvency This would give comfort to foreign investors in India and vice-versa. A source in the government said, We plan to get a Cabinet nod for this soon. The Ordinance will be based on the UNCITRAL model law for cross-border insolvency. Now, only the next government will introduce a Bill for this in Parliament. A cross-border insolvency law empowers foreign creditors get money lent to Indian corporate entities Indian companies can also claim their dues from foreign companies. Currently cross-border insolvency provisions are in sections 234 and 235 of the IBC. Since they are not notified yet, they are not enforced. There are other limitations as well. For now, cross-border insolvency can be enforced only if India enters bilateral treaties with foreign governments, said an official at the Ministry of Corporate Affairs, who did not want to be named. Finalising these treaties takes long, and as each treaty is different, there is uncertainty among foreign investors. This also creates ambiguity for Indian courts and the National Company Law Tribunal (NCLT), which has to treat each case separately. The model law deals with four major principles of cross-border insolvency — direct access to foreign insolvency professionals and foreign creditors to participate in or commence domestic insolvency proceedings against a defaulting debtor, recognition of foreign proceedings and provision of remedies, cooperation between domestic and foreign courts and domestic and foreign insolvency practitioners, and coordination between two or more concurrent insolvency proceedings in different countries. The Model law has been adopted by 44 countries, including the US, the UK and Singapore.

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MALLYA'S DEFIANCE PROMPTS SEBI TO SEEK AMENDMENT IN COMPANIES ACT

Sebi has asked the government to amend the Companies Act to ensure that a director declared by it as a disqualified person should immediately vacate the position a plea triggered by defaulter businessman Vijay Mallya's reluctance to do so. Under the Companies Act, the office of a director becomes vacant in case of he or she being disqualified by an order of a court or a tribunal, among other reasons, but there is no explicit mention of an order by the Securities and Exchange Board of India (Sebi), which is mandated with regulation of thousands of listed firms in India. In a proposal, Sebi has now proposed that the Companies Act should also clearly mention that a person should vacate the office of a director if it orders his or her disqualification. Officials said the Finance Ministry is in agreement with Sebi on the proposed amendment and has asked the regulator to get it approved by its board and subsequently forward it to the Corporate Affairs Ministry, which is the nodal ministry for the Companies Act. In its proposal, Sebi has referred to its interim order dated January 25, 2017, through which the regulator had barred Mallya and six others from holding directorship in any listed company till further directions. However, Mallya did not comply with the order by not stepping down as a director of United Breweries Ltd, another listed company of his group, for months. Soon after the Sebi order, Mallya had also criticised Sebi in a series of tweets and had said the allegations of fund diversion were baseless and had alleged that he was a target of witch hunt. After refusing to quit the United Breweries Board for months, Mallya finally ceased to be its director in August 2017, presumably after pressure from other directors. In case of United Spirits, he was asked by the new owner Diageo in April 2015 itself to quit the board for alleged fund diversion. Mallya is facing a number of cases against him, including of loan default, and a court in the UK has already ordered his extradition back to India and the same was also approved by the British government last month. Subsequently, 63-year-old Mallya, who had left India in March 2016 for the UK, has also filed an application for permission to appeal against the extradition order. At present, Sebi's direction restraining a person from acting as a director is not a ground for vacation of his or her directorship under the existing provisions of Section 167 of the Companies Act, 2013. Further, Sections 164, 167 and 169 of the Companies Act, dealing with appointment, vacancy and removal of directors, are administered only by the central government through the Corporate Affairs Ministry. In view of these concerns, Sebi has proposed that the issue can be resolved by amending the Section 167 of the Companies Act to include order of Sebi as one of the grounds for vacation of office of a director.

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INSOLVENCY AND BANKRUPTCY CODE: GOVT SAYS TRUSTEES TOO CAN APPROACH IBC AGAINST CORPORATE DEBTORS

The government has allowed trustees, estate administrators, persons authorised by a company’s board of directors etc to initiate corporate insolvency resolution process (CIRP) against a corporate debtor before the NCLT, on behalf of financial creditors under the Insolvency and Bankruptcy Code (IBC), 2016. In a notification, the ministry of corporate affairs (MCA) said a guardian, an executor or administrator of an estate of a financial creditor, a trustee (including a debenture trustee) and a person duly authorised by board of directors of a company may file an application for initiating CIRP against a corporate debtor before the adjudicating authority, on behalf of the financial creditor. Analysts said the MCA notification helps clear the ambiguity regarding who can approach NCLT for CIRP. Sumit Naib said, It is important to note that this notification does not intend to amend any provision of the Act or the rules framed thereunder. Given the nature of the notification, it should be considered as a clarification issued by the ministry to address the ambiguity.

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‘TIMELY IMPLEMENTATION OF RESOLUTION PLAN A CHALLENGE’

Time-bound implementation of the resolution plans for cases under the bankruptcy code is a challenge and if not implemented in a timely manner, it would be a failure of the entire process a member of Insolvency and Bankruptcy Board of India (IBBI) said on Saturday. Mukulita Vijayawargiya, said, The challenge today is that while resolution plans are approved by NCLT, whether they can be implemented within the time frame. Market should focus on monitoring of resolution plans because if not monitored properly, it will be a failure of the entire process. As per the latest data from the IBBI, 1,484 cases have been registered under the insolvency process till the third quarter of the current financial year. Of these, 264 new cases were admitted in the October-December period. A total of 52% of all closed cases (586) were via liquidation of the corporate debtor while only 34 (13%) cases were resolved with an average haircut of 52% on admitted claims. A high number of liquidated cases and duration of resolution remain primary sources of concern among the stakeholders.

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GOVT CONTEMPLATES THIRD BENCH OF NCLT KOLKATA

The Centre is planning to open a third bench of the National Company Law Tribunal (NCLT) in Kolkata, an official said February 2. The move is part of the Centre's aim of easing the mounting pressure on the National Company Law Tribunals in the country. At present, there are two active benches of NCLT. We have been asked to scout for space for another bench, NCLT Kolkata bench registrar SP Chattopadhyay said. There are 12 benches now and one each in Cuttak and Kochi will come up soon, an official said. The Kolkata bench had cleared 432 cases since June 2016. In respect of insolvency cases, resolution worth Rs 21,000 crore had been passed till January, he said.

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IN AID OF INSOLVENCY PROFESSIONALS AND COMMITTEE OF CREDITORS INVOLVED IN THE CORPORATE INSOLVENCY RESOLUTION PROCESS

The Insolvency Professionals (IPs) and the Committee of Creditors (CoC) constitute key institutions of public faith under the Insolvency and Bankruptcy Code, 2016 (Code). The Code read with Regulations made thereunder has demarcated responsibilities of an IP and of the CoC in the corporate insolvency resolution process (CIRP) and also assigned certain responsibilities to them jointly. The emerging jurisprudence is bringing further clarity about their roles in a CIRP

·       An IP, when acting as an Interim Resolution Professional or Resolution Professional, is vested with an array of statutory and legal duties and powers He exercises the powers of the board of directors of the corporate debtor undergoing resolution. He manages operations of the corporate debtor as a going concern, protects the value of its property and complies with applicable laws on its behalf. In fact, he conducts the entire CIRP.

·       The stakeholders are required to co-operate with him in discharge of his functions. In its order dated 16th January, 2019 in the matter of Asset Reconstruction Company (India) Pvt. Ltd. Vs. Shivam Water Treaters Pvt. Ltd., the Hon’ble Adjudicating Authority held: RP (Resolution Professional) is acting as an officer of the Court and any hindrance in the working of the CIRP will amount to contempt of court

·       In its order dated 18th February, 2019 in the same matter, the Hon’ble Adjudicating Authority held: It is to be clarified that RP is discharging her duties as Court Officer and any non-compliance of the Court Officer will be deemed as Contempt of Court.

The Code shifts the control of a corporate debtor, when it is admitted into CIRP on its failure to service a debt, to creditors represented by a CoC for resolving its insolvency. The CoC holds the key to the fate of the corporate debtor and its stakeholders. Several actions under the Code require approval of the CoC. It may approve a resolution plan after considering its feasibility and viability In the judgement dated 5th February, 2019 in the matter of K. Sashidhar Vs. Indian Overseas Bank &Ors., the Hon’ble Supreme Court held: The legislature has not endowed the adjudicating authority (NCLT) with the jurisdiction or authority to analyse or evaluate the commercial decision of the CoC much less to enquire into the justness of the rejection of the resolution plan by the dissenting financial creditors. It further observed: Besides, the commercial wisdom of the CoC has been given paramount status without any judicial intervention, for ensuring completion of the stated processes within the timelines prescribed by the I&B Code. The legislature, consciously, has not provided any ground to challenge the commercial wisdom of the individual financial creditors or their collective decision before the adjudicating authority. That is made non-justiciable. There are certain matters where both the IP and the CoC have defined roles. Various actions under section 28 are taken by the IP only with the prior approval of the CoC.

·       In the judgement cited in Para 3 above, the Hon’ble Supreme Court held: The CoC is called upon to consider the resolution plan under section 30(4) after it is vetted and verified by RP as being compliant with all the statutory requirements specified under section 30(2). While specifying their roles, the Code does not envisage one assuming the role of the other. In the said judgement, the Hon’ble Supreme Court observed: The Resolution Professional is not required to express his opinion on matters within the domain of the financial creditors, to approve or reject the resolution plan, under section 30(4) under the I&B Code.

It is, therefore, necessary that the IP and the CoC have a complete and clear understanding of their roles and responsibilities in a CIRP under the Code. A charter of their responsibilities prepared in consultation with the three insolvency professional agencies is at Annexure for guidance. This charter is only indicative and meant for the sole purpose of educating the stakeholders. A stakeholder must refer to the Code and Rules/Regulations made thereunder or seek professional advice if he intends to take any action or decision in any matter under the Code.

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IBBC NOTIFIES LIST OF PERSONS WHO MAY FILE AN APPLICATION

In exercise of the powers conferred by sub-section (1) of section 7 of the Insolvency and Bankruptcy Code, 2016 (31 of 2016), the Central Government hereby notifies following persons who may file an application for initiating corporate insolvency resolution process against a corporate debtor before the Adjudicating Authority, on behalf of the financial creditor -

_(i) a guardian_

_(ii) an executor or administrator of an estate of a financial creditor_

_(iii) a trustee (including a debenture trustee)_ and

_(v) a person duly authorised by the Board of Directors of a Company_

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‘AMALGAMATE COMPANIES TO TACKLE CORPORATE DEFAULTERS’

A bench of Justices N. Kirubakaran and S.S. Sundar of the Madras High Court of the Madurai Bench on Friday ordered notice to the Ministry of Corporate Affairs on a public interest litigation petition that claimed that Section 237 of the Companies Act, 2013 (Power of Central Government to provide for amalgamation of companies in public interest) held the key to tackle corporate defaulters The petitioner, K. Nandhagopal of Virudhunagar, complained that when farmers or the common menfolk were killing themselves for default on loan payments, corporates were managing to flee the country. Certain corporate companies may be functioning poorly, but their parent / sister concerns maybe rich enough to take the burden. Under Section 237 of the Companies Act, 2013, the Central government had the power to amalgamate companies in public interest. When the Central government was satisfied that it was essential in public interest that two or more companies should amalgamate, the Central government, by order notified in the Official Gazette, must provide for the amalgamation of those companies into a single company. Also the continuation of legal proceedings by or against the company would be given effect, he said. This could be the best way to recover public monies as the liability of the parent / sister companies would become the liability of the main defaulter. This would be useful when the directors and the shareholders were common. The government had not used this as a tool to curb defaulters. Nirav Modi, Vijay Mallaya and Mehul Choksi had fled the country as a result, he said. The Companies Act gave ample power to the Centre to proceed against the defaulters. Also under Section 212 (1) (c) of the Companies Act, 2013, Serious Fraud Investigation Office could investigate the affairs of defaulting companies, the petitioner said and sought a direction to the Centre to explore invoking Section 237 of the Companies Act, 2013, to act against corporate loan defaulters.

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GRANT THORNTON AUDIT FINDS VIOLATIONS OF RBI LOAN SANCTION REGULATIONS BY IL&FS

The forensic audit report by Grant Thornton has found several instances of violations of Reserve Bank of India (RBI) regulations by IL&FS with relation to the sanctioning of loans beyond regulatory limits. According to the report, there were many instances of risk management assessment overlooked by the committee of directors, which even approved loans to such companies that were already in stress. More importantly, in several instances the loans came back to IL&FS group of companies. The report has mentioned instances of risk assessment not being registered in the system and discrepancies between the details mentioned in the manual Credit Approval Memorandum (CAM) and the system CAM, which was the base document for the sanctioning of loans. Further, the forensic auditor found five instances wherein there was no adequate monitoring with regards to the personal guarantee provided by the promoters of the borrowers. We reviewed Credit Approval Memorandum, CAM is a document which provides the details with regards to credit screening process undertaken to evaluate the prospective borrower's credit worthiness. It also highlights the basic details of the deal along with risk and mitigations factors identified by the dedicated reviewers and approvers of IFIN. There are two forms of CAM - Manual CAMs and Electronic (‘System’) CAMs and based on our discussions with the ASF team, we were given an understanding that in order to expedite the lending process, Manual CAMs were prepared first which were reviewed by the dedicated teams, post which the same were recommended / approved by the Committee of Directors('CoD'). Further, the Manual CAMs were recorded in the ERP system generating System CAM. Post facto approvals were taken in the ERP system from the dedicated teams (this process is known as 'regularization'). Hence, based on discussions, it is noted that the regularization of a manual CAM appears to be recording the details of the manual CAM in the system as it is. Based on a review of the documentation, it appears that the rear e-control lapses during the regularization of the manual CAMs and it appears unusual that the terms on which the loan sanction has been approved are potentially changed while regularizing in the system, stated the report. In most cases, a personal guarantee of the promoters of the borrowers were taken as collateral against the loan sanctioned to the borrowers. In order to ascertain if the personal guarantees of the promoters of the borrowers is adequate with regards to the loan provided, we requested for the net worth certificate of the borrower’s promoter. However, it was noted that no supporting documentation was taken from the borrowers which can help to ascertain the net worth of their promoters, as per the report. Further, as per the forensic audit report the Asset Liability Management Committee minutes and noted the details of funding gaps (i.e. funds not available for the estimated committed disbursement). Based on the details, it appears that since May 2013, IFIN was under stress to borrow funds in order to fulfill the commitment of loans already sanctioned. Further, there was a steep increase in the funding gap during the month of July 2018. Interestingly, former chairman of IL&FS group Ravi Parthasarathy resigned on 21 July 2018 while the funding gap was high. The auditor has also identified 18 instances worth Rs 2,400 crore where the committee of directors ultimately approved loans to those borrowers who appeared to be under potential stress, despite such information being available in the public domain and even a negative assessment by the Risk team. As per the report, the CRMG team provided negatives remarks or recommendations in the CAM based on their assessment of the risk profile of the borrowers. However, even after the negative remarks or recommendations , the loans were sanctioned to the companies on the basis of approval provided by the committee of directors. Even in the following instance that loans amounting to approx. Rs 1,922 crore were provided to companies which were in stress at the time of lending. Loan was given to ‘Dev Rishabh Real Estate Private Limited (ERAgroup)’. As per the remarks stated in Credit Approval Memorandum of Dev Rishabh Real Estate Private Limited dated 03 March 2017,it was mentioned that the group to which Dev Rishabh Real Estate Private Limited belongs i.e.Era Group,is facing liquidity issues. Even, there are various legal cases and winding up petition against the Era Group. Similar like loans lent to‘Shiva Shelters and Construction Private Limited(Sivagroup)’, As per the remarks stated in Credit Approval Memorandum of Shiva Shelters and Constructions Private Limited dated 26 February 2018,the group has been going through tough times which has resulted into liquidity constraints and impacted the servicing of its outstanding.Further as per the RBI report,it has been recommended to provide 100 percent provisioning to Siva Group’s exposure. Based on the analysis carried out, it appears unusual that out of Rs 390.63 crore worth of loans provided to the borrower of companies, Rs 145.33 crore were in turn utilized to repay the existing debt obligations, it said. The report also identified 15 instances where it appears that potentially no charge has been created against the assets which had been taken as collateral against the loans provided to borrowers of IFIN.

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UNABLE TO PAY UP? TOP BIDDER TO FACE PENALTY UNDER NEW RULE OF INSOLVENCY REGULATION

A new amendment to corporate insolvency regulation prescribing stringent punishment for successful resolution applicants who fail to make promised payments is likely to protect the new bankruptcy law from frivolous bidders, lawyers said. The amendment comes after recent cases of backtracking by winning bidders in taking over debtladen companies. The latest of such example is the case of Chennai-based Orchid Pharmaceuticals, which owed lenders Rs 3,000 crore. Last week, a two-judge bench of the National Company Law Tribunal (NCLT) ordered the restart of the resolution process after US-based Ingen Capital Group failed to deposit money to take over the debt-laden company. Earlier, UK-based investor Liberty House had backed out after being declared the highest bidder in the case of Amtek Auto and Adhunik Metaliks. After the amendment, Section 74 of the insolvency code prescribes stringent punishment to resolution applicant if it fails to implement a plan, said Shiju Veetil. In addition, recent amendments to the regulation make it mandatory for a successful applicant to provide performance security which can be forfeited in the eventuality of a default. The amendment also requires every resolution applicant to declare if the applicant or its related party failed to implement a plan in the past. With these safeguards, the code is now well-equipped to handle defaults in the implementation of the resolution plan. IndiaLaw was representing the committee of creditors (CoC) led by SBI in the Orchid Pharma case. In February 28 order, a two-judge bench of justices S Vijayaraghavan and BSV Prakash Kumar had granted resolution professional (RP) SV Ramkumar another 105 days to invite fresh expressions of interest and find new bidders for the company. Ingen had offered to pay Rs 1,060 crore under a resolution plan approved on September 17 within 30 days of the order. As part of this payment, Ingen had to first deposit one-third of the amount or Rs 334 crore within five days. The company failed to make the payment but instead filed a fresh petition to replace the RP. In its order, the court said the RP has received email enquiries from Divi Laboratories, Gland Celsus Biochemicals and Fidelity Trading Corp and oral enquires from ART Capital India, Everstone Group, Aion Capital, Piramal Capital and Finquest Group expressing interest. Ingen’s plan for the company of at a total of Rs 1,060 crore was at a 65% haircut to the total debt of over Rs 3,000 crore the company owes a consortium of more than 24 lenders. It remains to be seen whether any new bidder offers a higher amount. The company has around 1,500 employees on its roll. It was among the list of 28 companies that the RBI had sent to banks in August 2017 seeking a speedy resolution. These total bad loans aggregated to about Rs 2 lakh crore.

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INSOLVENCY AND BANKRUPTCY CODE MISSING TIMELINES

Insolvency and Bankruptcy Code, the new instrument brought in to address mounting bad loans has so far seen mixed outcomes with many ailing companies passing into able hands. The lenders have had to take massive haircuts in resolution in some cases while in some they have recovered the entire debt. However, infrastructure constraints and delays are creating hurdles for the process that is still evolving. The Insolvency and Bankruptcy Code (IBC) 2016, set up to cure the malaise of bad loans and defaulting promoters, has had a bumpy ride. While a few cases have been resolved, the large businesses run by high-profile promoters are still stuck in litigations. But overall, the IBC is a relief in many cases, turning companies to stronger promoters. BIFR (Board for Industrial and Financial Restructuring or the SICA (Sick Industrial Companies Act) have failed to rehabilitate companies, and the recovery was a paltry 26%. Nobody had expected that these bankrupt and debt-laden companies would get lifted out of muddy waters in quick time. The IBC had, in fact, given a time period of 270 days for a settlement that would imply ownership changing hands to new bidders and a repayment schedule agreed to by the bankers. Rajnish Kumar, said, There may be delays in some cases but India never had an option to change defaulting borrowers. For the first time, we are effecting change in management control in large companies with large non-performing assets (NPAs). It cannot be compared to earlier restructuring schemes like the SICA or the BIFR where cases once referred got into a cold storage. This is an evolving legislation which is working as an important tool for the bankers. In case of high-value corporate NPAs, which are a running concern with a state-of-the-art plant, the recoveries are as high as 125%, but the average recovery in the 60 resolved cases is around 47% as against 26% under the earlier BIFR. But bankers warn that as the high-value cases get resolved, the average recovery under the IBC will also come around 26% for the smaller cases. Among 12 high-value NPAs that Reserve Bank of India (RBI) had picked in February 2017 (now called the dirty dozen) with a total debt of Rs 3.45 lakh crore and a liquidation value of Rs 73,220.23 crore, only in two cases money has come back to the banks with a haircut. Electrosteel Steel, which had a debt of Rs 13,175.14 crore, was resolved with a 40.38% haircut with Vedanta's Anil Aggarwal paying Rs 5,320 crore to take over the debt of the company. Bhushan Steel was taken over by the Tatas with the banks taking a 63.49% haircut and receiving Rs 35,571 crore. The unpaid debt of the company was Rs 56,022 crore. With regard to Lanco Infratech Ltd and ABG Shipyard, liquidation order has been passed. Other accounts are at different stages of the process. Since it is a court-mandated resolution process, bankers say that when it comes to taking a haircut, they prefer decision-making through National Company Law Tribunal (NCLT) rather than sticking out their neck to endorse a resolution plan outside court process. Pre-NCLT solutions may clearly work out better in terms of overall recovery, but for settlement, NCLT is a good avenue. But cases are going out of the NCLT to the higher courts like the Supreme Court which is delaying the process. But that is inevitable. One has to give a promoter a right of appeal, said a banker. Siby Antony, said, IBC is a successful legislation to resolve the high-value debt. Under BIFR and SICA, the cases used to languish with the existing promoters doing little to salvage the company. In some cases like Binani Cement, the recovery for us is close to 140%; for the secured lenders also it will be over 100%. The Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest Act, 2002 (also known as the Sarfaesi Act) is good for low-value accounts but for the high-value accounts, the IBC 2016 is working to resolve many cases, added Antony. Essar Steel, the flagship steel plant of the Ruias and the one of the largest NPAs with a debt of close to Rs 40,000 crore, has been in the NCLT for the last 600 days and still counting. Ruias took the case right up to the Supreme Court after Arcelor Mittal consortium was selected as the highest bidder. The case also went to the National Company Law Appellate Tribunal (NCLAT). Nearly 9,000 petitions have been filed under IBC at NCLT until now but only 1,500 cases are admitted with a debt of over Rs 5 lakh crore. Currently, India has one NCLAT and 11 NCLT benches. All the NCLT courts together have 22 members – 16 judicial and six technical. Experts say that considering the work, each NCLT should have at least four members. The government may set up three more NCLT benches as the number of companies referred to bankruptcy court rises. It takes weeks to file a petition because the courts are packed. Many matters relating to companies are now being referred to the NCLT from the high courts, which is increasing the burden of the NCLT, said an advocate who is fighting several cases in the NCLT. Moreover, it is giving a shield to borrowers to not pay back. A recent case is that of Anil Ambani's Reliance Communications, which filed for bankruptcy after spending nearly two years convincing the banks that they were repaying a chunk of their Rs 45,000 crore debt by developing real estate in Navi Mumbai. The legislation has a provision under 66A to conduct a forensic audit but no provision to take punitive action.

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ORCHID BID: INGEN CEO WARNED OF ARREST

In an unprecedented order, a tribunal has warned the Ingen Capital’s CEO and the executive VP of contempt proceedings and arrest if they failed to respond to a showcause notice in three weeks starting March 1. Ingen Capital was the successful applicant for the Chennai-based Cephalosporin drug maker Orchid Pharma last September. The contours of the deal envisaged Ingen investing 1,000 crore into Orchid. Of this, Ingen was to pay Rs 334 crore upfront. Since the investor, continued to buy time and sought postponement of financial obligations, an NCLT bench in Chennai impugned the winning bid order on November 2 and also annulled the process last Thursday. Ingen, in the meanwhile, moved the NCLAT against the impugned order and also sought the tribunal’s help to access more documents. Orchid Pharma knocked the doors of NCLT in Chennai after its ballooning debt resulted in defaults on interest payments. A consortium of 24 banks have lent more than 3,200 crore to Orchid. Annulling the order to hand over Orchid to Ingen, the NCLT Bench in Chennai ordered restart the process all over again and granted 105 days to complete the process The Bench quoting the Resolution Professional said, Divi’s Laboratories, Gland Celsus Biochemicals and Fidelity Trading Corporation have evinced preliminary interest to take over Orchid Pharma. Other bidders who are keen to acquire Orchid includes financial investors, Everstone, Piramal Capital, Aion Capital, ART Capital and Finquest group, the Bench said

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INDU INSOLVENCY MAY ATTRACT ED CHALLENGE

The National Company Law Tribunal (NCLT) ordered an initiation of corporate insolvency process in respect of Indu Projects Ltd. The company is accused in at least half a dozen CBI and Enforcement Directorate (ED) cases in YS Jaganmohan Reddy disproportionate assets episode. However, the order is likely to result in further litigation from ED, legal experts say. The NCLT order was a result of the grievances raised by Bank of India and a host of other banks including SBI and L&T infra finance which sought a repayment of Rs 2893 crore from Indu. The company was allotted huge tracts of land a decade ago in united AP’s Anantapur (9,000 acres for setting up Lepakshi Knowledge hub), Shamshabad (250 acres for setting up Indu Tech Zone) and more than 70 acres in Hyderabad and Ranga Reddy district for developing housing projects as a joint venture with the state housing board. However, following registration of CBI cases on all these ventures, the ED had attached almost all the properties with the cases filed by it. Indu has been arguing that they could not go forward with the project due to political interference and. The adverse political situation in AP has led to a stage where we are unable to move forward, the Indu counsel said citing the attachment of the property in Anantapur. The success of any insolvency process largely depends on the money realised from the company’s projects so that it can be distributed among aggrieved lenders. In Indu’s case, however, all assets are under ED attachment. This question arose during the hearing before the NCLT judge. When he issued a notice to the ED asking it to state its stand, the banks challenged the decision at the appellate tribunal. The appellate tribunal asked NCLT to decide the pending plea in tune with the insolvency and bankruptcy code. Accordingly, the NCLT admitted the banks’ plea and commenced the insolvency process in respect of Indu. Now, ED may challenge auction of Indu assets through insolvency process. ED acts under the prevention of money laundering Act (PMLA) which will have an overriding effect on all other laws However, PMLA allows victims to claim a share in the attached property.

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L&T FIN TO MOVE SC AGAINST NCLAT’S ORDER ON IL&FS DEBT

L&T Finance is challenging in the apex court a bankruptcy appeals bench ruling that allowed Rs 16,000 crore of IL&FS debt to be categorised as ‘amber’ arguing that the contract has no room to qualify the stressed financier’s outstanding loans based on solvency. The National Company Law Appellate tribunal (NCLAT) approved three loan categories – green, amber and red — based on the ability of a particular company to repay debt and interest. L&T Finance has Rs 1,800 crore of debt exposure to the IL&FS group companies or its special purpose vehicles (SPV). SPV loans getting classified under different categories have no basis in the contract, said a source close to the development. The company is challenging the NCLAT order in the Supreme Court. The NCLAT has asked the IL&FS board to ensure that companies with positive cash flow remain as going concerns and that their operations are not disrupted. Money from escrow accounts of SPVs will remain in individual accounts after meeting the operational expenses. However, all companies of the group that fail to meet cash flow solvency test will remain under the moratorium granted by NCLAT. Approximately, the amount of loan that will fall under the Amber category is Rs 16,000 crore. Loans under ‘red’ and ‘green’ categories amount to around Rs 65,000 crore and Rs 7,000 crore, respectively. None of our six projects are in the red list, said Dinanath Dubhashi, MD of L&T Finance. The court and IL&FS have confirmed our view that none of our projects will have losses. Companies that are able to pay all obligations have been categorised as green, companies only able to meet operational payments and senior secured debt obligations are categorised as amber and those that are unable to meet obligations to even senior secured financial creditors are categorised as red. According to the plan, IL&FS can service up to of Rs 7,000 crore immediately.

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UTTAR PRADESH RERA SEEKS AMENDMENT IN ITS LAW, WANTS MORE POWERS

The Uttar Pradesh real estate regulatory (UP Rera) authority on Sunday said that it has written to the ministry of housing and urban affairs and also to the Uttar Pradesh government seeking amendments in the Real Estate (Regulation and Development) Act, 2016 According to officials, the move comes after the chairman of the UP Rera and its members realised that the newly formed authority needs to have more powers to resolve homebuyers’ issues in a time-bound manner without hindrances. As of now, the real estate regulatory body does not have the power to issue directives to the municipal, industrial or other government agencies in matters related with homebuyers’ complaints. Therefore we have written to the government of India and the state government for necessary changes in the act to enable the authority to issue directives to respective agencies involved. The provisions of the Act as of now do not allow us to issue orders to the Noida authority, the Greater Noida authority or others, which hampers resolution of a particular buyer’s issue in a timely manner of 15 days or a month. However, if the government redefines powers of the authority in the Act and make necessary changes, we can issue directives and speed up the resolution of cases, Rajive Kumar chairman of the UP Rera, said. The UP Rera has resolved at least 4,557 cases of homebuyers out of a total of 11,550 cases filed with it since the Rera’s formation.

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CENTRAL BANK PUTS RS 3,300 CR NPA ON AUCTION

Taking a cue from the SBI, the Central Bank of India on Saturday put four big accounts of NPA worth Rs 3,300 crore on sale through the SARFAESI Act, though some of the assets are currently under the NCLT resolution process. The accounts are Bombay Rayon Fashions Ltd, Alok Industries (Rs 1,251 crore), Bhushan Power & Steel (Rs 1,550.07 crore) and Essar Steel (Rs 423 crore). Frustrated over the inordinate delay in the ongoing insolvency proceedings, the State Bank of India (SBI) had put its Rs 15,431-crore exposure to the stressed assets of Essar Steel on the block. After not getting the desired response, it had to defer the date of final bidding. In terms of the bank's policy on sale of financial assets in line with the regulatory guidelines, we place these accounts for sale to Banks/ARCs/NBFCs/ FIs on the terms and conditions. However, the sale will be subject to final approval by the Competent Authority of the Bank, the Central Bank said in its notice. The final bidding date of these assets is March 20.

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NON-COMPLIANCE ISSUE: RBI IMPOSES FINE ON DENA BANK, CENTRAL BANK

RBI has imposed a monetary penalty of ₹ 2 crore on Dena Bank and ₹1 crore on Central Bank of India. Dena Bank on Saturday said the Reserve Bank of India has imposed a penalty of Rs 2 crore on it for non-compliance with the banking regulator's directions issued on February 20, 2018. The public sector bank, which along with Vijaya Bank, is set to be merged with Bank of Baroda, did not specify what directions the central bank had issued.

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BANK CREDIT TO NBFC’S GROW 48.3 PERCENT

The growth of bank credit to non-banking financial companies (NBFCs) as of January 18, 2019 stood at 48.3% year-on-year (y-o-y), which aided the overall growth in deployment of gross bank credit to major sectors to 13.1% y-o-y. Growth of bank credit to NBFCs from April 2017 to January 2018 stood at 16.1% y-o-y. On December 28, the Reserve Bank of India (RBI) had extended the facility of increase in single borrower limit for NBFCs and housing finance companies (HFC) to 15%, against 10% earlier, till March 31, 2019. With effect from April 1, 2019, banks shall be guided by the instructions contained in December 1, 2016 circular, in terms of which banks’ exposures to a single NBFC shall be restricted to 15% of their eligible Tier-1 capital base, said an RBI statement. However, analysts at Edelweiss observed that the liquidity continues to remain tight and NBFC sentiments are weak, which could test the asset quality of retail and SME (small and medium enterprise) books. The credit flow to these sectors has slowed as banks have failed to offset the slowdown in NBFC lending, analysts added.

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FIRMS SCRAMBLE TO REPLY TO DRAFT ECOMMERCE POLICY WITHIN A WEEK

 US technology companies and Indian startups are working overtime to put together a response within a week to the government’s proposed ecommerce policy, which is being touted as a digital economy policy that will have far-reaching impact on the country’s technology ambitions. The policy deals with contentious subjects such as data dominance, data sovereignty and abuse of market power by big technology companies. The proponents of the policy argue that India needs to protect its data to make it available for Indian startups while the opposing camp sees the policy as protectionist that will stifle innovation, foreign capital flow and hurt consumer choice. This policy is not about only ecommerce, there is social media, cloud and everything in between, said Nikhil Narendran, Partner at Trilegal. It’s a huge hit on consumer choice. It’s like an internet blockade. The policy proposes that all ecommerce websites selling to Indian consumers and apps available for downloading in India have a registered business entity here. These technology companies must provide government access to source code, algorithms of AI systems and are barred from sharing of sensitive data of Indian users with third party entities, even with consent. The last date for response to the draft policy is March 9. To ensure that India’s data is used for the country’s development, and Indian citizens and companies get the economic benefits from the monetisation of data, the policy proposes that antitrust regime must take into account the network effect — a phenomenon wherein increased numbers of people or participants improve the value of a goods or service. This is especially true for social media and ecommerce platforms such as Facebook, Google and Amazon, where the winner dominates the market and the runner-up is a distant second. I agree there is scope for government intervention to protect consumers because consumers sell their data for too little, said Luigi Zingales, a professor at the University of Chicago Booth School of Business. Facebook and Google get Indian data for little and make lots of money. India is big enough to form a union of suppliers and negotiate a better price for it.

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CUSTODIAN BANKS STUMPED BY DEPOSITORY OWNERSHIP QUERIES

Leading global custodian banks find themselves in a quandary over Indian companies seeking details about ownership of their global and American depositary receipts, said two people aware of the development. The custodians are required to give an official undertaking that none of the holders qualify as Significant Beneficial Owners (SBOs) of the respective companies under new Indian government norms. The banks fear that doing so without having complete information puts them in legal jeopardy. The ministry of corporate affairs (MCA) recently introduced new SBO rules under which companies have been asked to identify beneficial owners based on shareholding patterns, voting rights and control. Ascertaining the end beneficiaries of depository receipts is more difficult than with normal shareholders. Confidentiality clauses and lack of such information with the custodian banks make the process difficult. Currently, there are about a dozen Indian companies with significant equity in the form of depository receipts. For instance, ADRs constitute 17% of the total holding in Infosys, 25% in ICICI Bank and 13.6% in Dr Reddy’s Laboratories. The requirement is aimed at ascertaining who is in actual control of a company and ensuring that SBOs of companies are not concealing holdings through shell companies. There is growing concern among regulators that wealthy individuals may be laundering money through shell entities and funneling them into corporates. There are practical concerns in determining the significant beneficial ownership with respect to certain omnibus structures, which are indirect investors in Indian securities being invested through FPIs (foreign portfolio investors) or depository receipts, said Tejesh Chitlangi. On account of the confidentiality issues, international privacy norms, or the layered manner in such structures are usually operated, applying the criteria is likely to be difficult.

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FPI INFLOWS INTO INDIAN EQUITIES HIT 15-MONTH HIGH OF RS 17,220 CR IN FEB

Foreign investors poured in close to Rs 17,220 crore on a net basis into Indian equities in February this year, the highest since November 2017, amid clarity on government spending plans and positive sentiments. Foreign portfolio investors had pumped in a net amount of around Rs 19,728 crore into Indian stocks in November 2017. As per the latest data from the depositories, foreign investors pumped in Rs 1,17,899.79 crore into equities and pulled out Rs 1,00,680.17 crore in February, a net investment of Rs 11,183 crore into the stock market.

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54,000 FLATS READY FOR POSSESSION IN NOIDA, GURUGRAM BY MARCH 2019

Noida and Gurugram property markets are likely to witness a delivery of about 54,000 flats to home buyers by March 2019 with developers focusing on completing pending projects, according to brokerage firm PropTiger. Projects delays have led to several real estate developers in the national capital region struggle for their survival. However, this has also led to other developers making their best effort to deliver more, PropTiger said in a statement. According to its data, real estate developers will deliver over 30,000 housing units in the Noida property market in the last quarter of the current financial year (Q4 FY19). Builders have already given possession over 57,000 units to buyers so far during this fiscal. During the next fiscal, over 94,000 additional units are likely to be delivered in Noida property market.

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NARESH GOYAL'S SON NIVAAN LIKELY TO BE INDUCTED INTO JET AIRWAYS' BOARD

Jet Airways (India) Ltd promoter Naresh Goyal’s son Nivaan Goyal, who has been playing an active role in negotiations with lenders, is likely to be inducted into the cash-strapped airline’s board of directors, a person with direct knowledge of the matter told. Nivaan Goyal is likely to be elevated as a board member soon, said the person who asked not to be identified, adding that Jet Airways lenders and shareholder Etihad Airways PJSC have supported the elevation. Lenders don’t want a situation where only they have to deal with Etihad. This is why they supported Nivaan’s elevation to the board, the person said, adding that Nivaan Goyal could be elevated to the executive director’s position in the board in the coming days. It seems he’s (Nivaan’s) set for a bigger role at Jet Airways, the person said. I solemnly assure you to keep you updated when our CEO, Vinay Dube, and his team will ensure a fresh detailed update to be provided to you by the 18th of this month, by which time I am confident of the situation gently easing up in our favour, he said.

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LOGISTICS BOTTLENECKS HURTING COMPETITIVENESS: CII

Suboptimal road connectivity in India is a major hurdle in maintaining the competitiveness of Indian manufacturing sectors, said newly appointed office bearers of Confederation of Indian Industries (CII) in Gujarat. They also said that subsidy to industries is hurting the economy in a long run and that the emphasis to create infrastructure is a step in the right direction. The cost of transporting goods from Ahmedabad to Kolkata via road is the same as that of transporting goods to EU. This adversely affects our competitiveness, said Raju Shah. He also said that Gujarat not getting many estates of Gujarat Industrial Development Corporation (GIDC) in the past two decades has not hurt economic development of the state. Subsidies hurt in a long run. Instead, the government is focusing on the creation of infrastructure, which is a step in the right direction, he said. Tamboli said that automobiles, defence and aerospace sectors are the emerging sectors for Gujarat and the state will see lots of investment in these sectors. The provision of Offset Clause will necessitate partnering with local manufacturers. Offset requirements are also likely to rise from 30 per cent to 50 per cent of the contract value, said Tamboli. Fresh regulation in the disbursement of loans and higher fuel prices are also affecting sales. Automobile sector, in general, is passing through a phase of slowdown.

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BLAME HUBRIS FOR JAGUAR LAND ROVER'S MISFIRE

The Tata Group is exploring options for its iconic Jaguar Land Rover Automotive Plc unit including a stake sale or finding a venture partner to jointly develop cars and lower costs, P R Sanjai, Ruth David, Tommaso Ebhardt and David Welch of Bloomberg News wrote. At the rate Jaguar Land Rover was bleeding cash and eroding equity value, as I’ve written, Mumbai-listed Tata Motors had few options but to look outside the company for a solution How did it get here? A complete lack of fiscal prudence in recent years, a one-tracked focus on investing billions of pounds in technologies that haven't returned much, and a flawed and failed China strategy. The numbers are dismal: Free cash flow is in the red, debt and associated costs continue to climb, and yet the company couldn’t hold back on its hubris, continuing to spend relentlessly on future projects such as electric cars and batteries. It took a 3.1 billion pound ($4.1 billion) impairment charge last quarter, which signified more than just a non-cash loss. Operating cash flows are falling relative to capital expenditures. The reality is this has been a long time coming. With no turnaround in sight and the unit threatening to eat away any value created at the recovering Indian business of its parent, it’s cornered. A Jaguar Land Rover bond prospectus in September noted that it can ultimately tap its parent company for financial support if necessary. That the parent is now seeking outside investors means Tata Motors probably isn't willing to bail out the unit yet. Investors cheered the news, driving up shares of Tata Motors as much as 3.7 percent. It’s understandable they’re celebrating. They should also hope there’s solution on the table – soon.

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HOW BANKRUPTCY CODE CAN HELP FIX INDIA'S AGRARIAN CRISIS

Historically, farm loan waivers have been used as a quick-fix solution to agrarian distress in India. Commonly used by political parties before elections, they have a long history at both central & state levels. However, the efficiency of waivers in actually resolving the debt burden of farmers is questionable Waivers may work as a temporary remedy to provide relief from debts in times of extreme economic distress. But they don’t go far in providing any structural relief to resolve problems of the agricultural sector. In August 2017, RBI’s Monetary Policy Committee (MPC) noted that the implementation of farm loan waivers could hurt the finances of states undermine the quality of public spending, and stoke inflation. Apart from burdening the public exchequer, waivers have also been criticised for having limited benefits in practice. A 2013 Comptroller and Auditor General (CAG) report revealed large-scale mismanagement of the national Agricultural Debt Waiver and Debt Relief Scheme, 2008. Such waivers may, therefore, fail in living up to their promises due to lapses in implementation Additionally, even if implemented perfectly, waivers usually only give relief to farmers from formal sources of credit such as bank loans. So, a farmer will still have the burden of paying debts he undertook from informal sources, like moneylenders, after a loan waiver. In line with this, in December 2018, NITI Aayog pointed out that farm loans waivers essentially only benefit 10-15% of farmers, since the rest don’t have access to institutional loans. Further, the process of selection of beneficiary farmers may not be objective, making the system susceptible to leakages. Keeping all these points in mind, is there, then, a surer method of providing relief for the distressed Indian farmer? The Insolvency and Bankruptcy Code (IBC) that was enacted in 2016 could be the answer. IBC provides three insolvency procedures for individuals While the insolvency resolution and bankruptcy processes are available to all, IBC provides a ‘fresh start’ process for individuals who fall below certain asset and income-based thresholds. The aim is to enable certain debtors to get their debts waived — after adjudication under a time-bound process and taking the creditors’ views into account. A debtor who qualifies the threshold limits can file for a ‘fresh start’ order. If her application is admitted, a resolution professional is appointed to her case to examine objections that any creditor may have to discharge of the debtor’s debts. Based on this, the resolution professional submits a final list of debts to the adjudicating authority (AA). The AA can then write off these debts, giving the debtor a ‘fresh start’. However, the AA can refuse this waiver if there is any change in financial circumstances of the debtor, or any noncompliance by the debtor. Instead of being plagued with political motivations and uncertainty in implementation of farm loan waivers, the IBC’s ‘fresh start’ process provides a systematic manner of waiving debts overseen by a judicial body. It places the opportunity to access the system with an individual farmer, instead of placing it with the government. This will provide a farmer autonomy to choose the effect a debt waiver will have on his credit history. More importantly, the ‘fresh start’ process only excludes some kinds of debts from being capable of discharge. These include any fine imposed on the debtor by courts, student loans, maintenance to be paid under any law, and secured debt. So, unlike farm loan waivers, a ‘fresh start’ process may actually provide the debtor relief from most of her debts and not just bank loans. Additionally, the effect on creditors will also be considered when the resolution professional examines creditor objections to the debt waiver. Though IBC has been in operation for over two years now, the provisions relating to the ‘fresh start’ process have not been notified yet One reason for the delay could be that the designated AA for the process, the Debt Recovery Tribunals (DRTs), are currently overburdened with debt recovery cases under another legislation. To make the provisions operate effectively, GoI may consider setting up designated benches for the ‘fresh start’ process, or vesting jurisdiction with other judicial or quasi-judicial authority with local presence. Further, given that resolution professionals will play a key role in the process, GoI can consider recognising a special category of resolution professionals (who understand the microfinance and agricultural credit sectors) and develop a system that encourages them to take up ‘fresh start’ cases. The debt, credit and asset thresholds in IBC may have to be reviewed to ensure proper coverage.

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RCOM WRITES TO TELECOM SECRETARY SEEKING DOT NOC FOR SPECTRUM DEAL WITH JIO

Reliance Communications (RCom) has dialled telecom secretary Aruna Sundararajan, calling on the Department of Telecommunications (DoT) to issue a no objection certificate (NoC) to its pending spectrum trading deal with Reliance Jio Infocomm. The beleaguered Anil Ambaniled telco, in a letter to Sundararajan dated February 28, cited last week’s order issued by the Telecom Dispute Settlement & Appellate Tribunal (TDSAT) that clarified the liability of past spectrum-related dues lies with the airwaves seller and not the buyer. Here RCom is the seller and Jio is the buyer. The telecom tribunal has asked DoT to reconsider approval to RCom’s pact to sell spectrum to Jio, adding that buyer Jio cannot be held liable until the airwaves trading deal is concluded. In the event, if DoT does not clear RCom’s spectrum trading pact with Jio, the Anil Ambani-led telco might move Supreme Court soon as it’s armed with a favourable telecom tribunal order, a person with direct knowledge told.

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PUNE COMPANY SEEKS INSOLVENCY PROCESS AGAINST RAJIV SWAGRUHA CORPORATION

The National Company Law Tribunal (NCLT) in Hyderabad has directed both Telangana Rajiv Swagruha Corporation and Pune-based BG Shirke Construction Technology Private Ltd to furnish details of the arrears to be cleared, by March 8 Tribunal's judicial member Anantha Padmanabha Swamy gave this direction while hearing a petition filed by Shirke company seeking initiation of insolvency process against Rajiv Swagruha Corporation. In February 2009, united AP government's Rajiv Swagruha Corporation and Shirke company entered into an agreement to construct 6,216 flats at Jawaharnagar in Hyderabad. Rajiv Swagruha Corporation handed over the land but failed to fulfil its part of the financial commitment. As a consequence, the number of flats were reduced to 2,856 in 2012.

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SERVICING LOANS WITHOUT DEFAULT: L&T HALOL SHAMLAJI TOLLWAY TELLS NCLT

L&T Halol Shamlaji Tollway, a special purpose vehicle (SPV) of L&T Infrastructure Development Projects, has informed the National Company Law Tribunal's (NCLT's) Chennai Bench that its debt with a consortium of banks has been restructured and is being serviced properly, as against the allegations in an insolvency petition by Oriental Bank of Commerce (OBC). The NCLT has directed the Bank to submit all the documents related to the matter without fail on March 8, 2019. OBC has earlier moved the NCLT, Chennai, against the SPV under Section 7 of the Insolvency and Bankruptcy Code (IBC) 2016, under which financial creditors may file application for initiating Corporate Insolvency Resolution Process against the corporate debtor. L&T Halol has submitted its counter on Monday, with the Bench comprising of BSV Prakash Kumar, member (Judicial) and S Vijayaraghavan, technical member, saying while the consortium of banks has approved the loan in May, 2009, it was restructured in 2017 under a Strategic Debt Restructuring through which the lenders have converted part of their loans into equity. The counsel appeared for L&T Halol Shamlaji Tollway told the Bench that the debt was being services currently and there was no default as of now. However, the action is now being initiated based on the previous agreement in 2009, he alleged, challenging the petition. As a member of consortium, OBC has sanctioned a term loan of Rs 155 crore for the road project. According to an ICRA report last year, through the SDR scheme, the lenders took a 51 per cent equity stake in the project by converting Rs 406 crore of the project debt (out of total outstanding of Rs 1,004 crore) in February 2017. The consortium of lenders includes Allahabad Bank and OBC.

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RBI MUST CHALLENGE NCLAT ATTEMPT TO CUT ITS POWERS

If it wasn’t bad enough that the Essar Steel resolution continues to drag in the country’s courts—for close to 550 days now—thanks to the Ruias making a last-ditch effort to retain control of the company, the National Company Law Appellate Tribunal (NCLAT) has added another twist to the NPA saga by saying IL&FS’s loans can’t be declared as NPAs without its explicit approval If it wasn’t bad enough that NCLAT is trying to muscle in on the central bank’s territory—it is RBI that lays down guidelines on how NPAs are to be classified—the country’s Supreme Court (SC) is also examining the legal validity of RBI’s February 12 circular. Ironically, till a few years ago, RBI itself was way behind the curve in identifying NPAs. In even its December 2015 Financial Stability Report (FSR), RBI was projecting a 4.9% NPA level for March 2016 and a 5.2% level for September 2017 in the baseline scenario; the actual NPA levels, it turns out, was 7.6% in March 2016 and 10.2% in September 2017. It was only in June 2016 that the FSR started projecting somewhat more realistic numbers after the Asset Quality Review (AQR); as a result of the AQR, gross NPAs rose sharply to 7.6% of gross advances in March 2016, from 5.1% in September 2015. While RBI believes the worst of the NPA crisis is behind us—the latest FSR projects NPAs falling from 10.8% in September 2018 to 10.2% in September 2019—this assumes that several deeply indebted sectors today like telecom, steel, real estate or electricity won’t have a problem with debt repayments.

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SC TO TAKE UP PETITIONS CHALLENGING BOB, VIJAYA BANK AND DENA BANK MERGER

The Supreme Court has agreed to transfer the writ petitions challenging the constitution of an ‘alternative mechanism’ for formulating a scheme of amalgamation between Bank of Baroda, Vijaya Bank and Dena Bank, filed in various High Courts to it. The Interim application filed by our organisation has come up for hearing in the Supreme Court of India on March 1 along with other writs also. Upon hearing, the Supreme Court has agreed to transfer all writ petitions together to the Supreme Court with the directions to all petitioners to file the copies of other original writ petitions before the Supreme Court by March 6, with the respondents to file reply by March 11, said S Nagarajan, General Secretary, All India Bank Officers' Association (AIBOA). While AIBOA had filed the writ petition challenging the amalgamation of Dena Bank and Vijaya Bank with Bank of Baroda (BoB) in the Rajasthan High Court, the All India Bank Officers' Confederation (AIBOC) had filed it in the Delhi High Court. The petitions of the two officers’ unions said the scheme of amalgamation is unconstitutional for not following the due process and being in violation of Article 14 of the Constitution, and also for lacking effective consultation with the Reserve Bank of India.

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IN JUST 2 YEARS, SEBI CHIEF AJAY TYAGI GIVES A MEGA PUSH TO REFORMS

In his first two years, Ajay Tyagi, a Himachal Pradesh cadre IAS officer, hasn't shied away from implementing challenging stock market reforms or acting against high-profile corporates. Within a month of taking charge as Securities and Exchange Board of India's (Sebi) ninth chairman, he passed an order in the long-pending case against Reliance Industries (RIL), imposing a penalty of over Rs 1,000 crore. While the order was challenged by RIL, the move sent a strong message to the financial world of Tyagi's intent. In the past two years, Sebi, under Tyagi's leadership, has dealt with several cases involving Tata Sons, Infosys, Fortis Healthcare, ICICI Bank and Sun Pharmaceuticals. The senior bureaucrat was also instrumental in executing the new corporate governance code, and mutual fund (MF) reforms aimed at improving transparency and bringing down costs and tweaks to the foreign portfolio investor (FPI) framework. All of them were difficult reforms and saw a fair amount of resistance. Some of Sebi's decisions also faced widespread criticism such as overnight suspension of 331 companies for being suspected shell firms. The last-minute deferment of circular mandating companies to disclose loan default within 24 hours and the proposed curbs on foreign funds with NRI investments or fund managers also faced flak. As Tyagi enters the last year of his tenure, there are several unfinished tasks at hand. For one, Sebi now has to oversee the implementation of the new governance framework, which will require some key companies to separate their chairman and managing director posts, appoint more directors and form new committees. Sebi also has to ensure that debt MFs are able to weather the tricky situation created by IL&FS default.

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DIPAM TO SET UP ASSET-MONETISATION CELL TO HASTEN SALE OF CPSE ASSETS

The Ministry of Finance is planning to set up a special cell in the Department of Investment and Public Asset Management (DIPAM) to expedite the monetisation of non-core assets of state-owned companies. The 'Asset Monetisation cell' will also deal with cases related to the sale of immovable enemy property, which refers to the assets left behind by people who migrated to Pakistan or China and are no longer citizens of India. The DIPAM would be seeking a director level officer from the personnel department to man the cell.

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RBI'S NBFC RISK-WEIGHT MOVE TO CARVE RS 1.4 TRN FOR BANK CREDIT: CRISIL

The RBI's move to align risk weights of banks' exposure to non-banking finance companies (NBFCs) with their respective credit ratings will help banks to create a lending headroom of Rs 1.4 trillion Crisil said in a report. Firstly, the release of capital for banks should increase deployment opportunities for banks. Secondly, it enhances funding access for NBFCs, it said. So far, banks used to set aside capital assuming 100 per cent risk weight uniformly for most NBFCs, barring specific categories such as asset finance companies (AFCs), infrastructure finance companies (IFCs) including infrastructure debt funds structured as NBFCs (IDF-NBFCs) and housing finance companies, it said. The rating based approach for assigning risk weights will lead to capital savings for banks of about Rs 13,000 crore, which will create additional lending headroom of about Rs. 1.4 trillion for the banking system, it said. Of this, banks could deploy a portion towards higher rated NBFCs given the lower risk weight for these entities, it said. Bank debt to the NBFC sector has logged a compound annual growth rate of 20 per cent in the past decade and reached a high of 55 per cent as of December 2018.

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RBI IMPOSES RS 11 CRORE FINE ON 4 BANKS FOR NON-COMPLIANCE IN SWIFT OPERATIONS

The RBI has imposed a total monetary fine of Rs 11 crore on four banks - Karnataka Bank, United Bank of India, IOB and Karur Vysya Bank - for non-compliance of directions on Swift messaging software. While the RBI imposed a Rs 4 crore penalty on Karnataka Bank, it slapped a fine of Rs 3 crore each on United Bank and Indian Overseas Bank. Besides, the regulator has also levied Rs 1 crore fine on Karur Vysya Bank.

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RBI SLAPS RS 1 CR FINE ON YES BANK FOR NON-COMPLIANCE IN SWIFT OPERATIONS

Private sector lender Yes Bank Tuesday said the Reserve Bank of India has slapped a fine of Rs 1 crore on the bank for non-compliance of directions on Swift messaging software.

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MORE PROMOTERS PUT FAITH IN TRUSTS TO SAVE TAXES, PLAN SUCCESSION

Promoters of Indian companies are increasingly transferring their personal and family stakes to trusts a move that has as much to do with succession planning as with avoiding estate tax if it ever comes back, and fending off hostile takeovers. The trend is helped along by the markets regulator, which has granted open offer exemptions to as many as 47 promoters, who have sought its permission since 2013. Of these, 31 exemptions were granted since the start of 2017, a period that has seen rising concerns over a possible return of estate duty, levied on the value of assets passed on to legal heirs. With the exemption, promoters do not have to make an open offer to buy out shares from the public, a requirement that typically comes with ownership changes. The transfer of my direct and indirect holdings of Mahindra shares were done to the trusts for meeting the estate planning needs of my family. We had sought and obtained the necessary regulatory permissions in this regard, Anand Mahindra, chairman of M&M, said. (This is being done) because of taxation benefits. Suppose, if an estate duty comes, the trust doesn’t have to pay. Many countries have it. A lot of people are talking about inequality of wealth, etc. In the US, they still have an estate duty. If the government wants to do it, they are in majority, they will do it. There is so much talk about it all over, said Godrej. Till the 1980s, India levied a 90% marginal income tax and an 8% wealth tax on the income of promoters, Godrej said. The Singh family’s approach to a trust structure was driven more by a need for succession planning, the person said, asking not to be named.

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‘SEBI OPEN OFFER NORMS TO SAFEGUARD INTEREST OF MINORITY SHAREHOLDERS’

The decision by the board of the Securities and Exchange Board of India (Sebi), on Friday, to discontinue automatic exemption in respect of persons other than lenders, from making an open offer for acquisitions under debt restructuring schemes has been taken in a bid to protect the interest of minority shareholders say regulatory sources. While relevant exemptions including open offer obligations are already available under the SEBI Regulations for acquisitions pursuant to a resolution plan approved under Insolvency and Bankruptcy Code (IBC), a source close to the development said that the withdrawal of exemptions are in relation to pre-IBC resolution where the resolution may be dominated by lenders and strategic investors to the detriment of minority shareholders, and thus it is important to safeguard their interest. An automatic exemption from open offer obligations in the pre-IBC resolution could be viewed as taking minority investors for granted making them vulnerable. There is also a risk of mis-governance issues, if any, in the target company, which can also escape public attention in case of automatic exemptions from open offer obligations, said a regulatory source. A source said that, since the RBI has already withdrawn certain scheme of arrangement through its circular in February 2018, it was only logical that Sebi also changed its regulations It may also be noted that in the previous RBI frameworks prior to the February circular, there was well defined role of Indian Banks’ Association (IBA) and the RBI in the previous frameworks, through various expert committees like independent evaluation committee, overseeing committee, etc. ,which is apparently missing in the February 12 circular. India is ranked 7th in Protection of Minority shareholders.

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INFOSYS' SETTLEMENT WITH SEBI VINDICATES MURTHY’S POSITION

Recent events in large companies like ICICI Bank and Infosys has brought the issues of corporate governance to the fore. The primary role of the board is to keep the company honest. While the board needs to support the management in strategy and execution, they also need to provide the required oversight in protecting the value system of the company. In both the instances the board was overawed by charismatic CEOs thereby failing to protect the interests of its stakeholders. In both these cases, the board rushed to give clean chit to the management at the first instance. It is only later when the issues became larger and larger that proper investigations were done and action followed. It is to be noted that in ICICI’s case, the conflict of interest issues was flagged to the board by an investor in 2016. In the public markets, the PE (priceearnings ratio) of a company is a function of both earnings and the comfort factor. Investors want honesty and transparency. They understand that businesses go through ups and downs. What they don’t like are surprises and any ethical issues which will destroy the trust factor. The current ICICI board has done the right thing by conducting an investigation by a former Supreme Court judge and based on its recommendation sacked the CEO and clawed back the entitlements paid to her by the bank. In the case of Infosys, the earlier board dismissed lack of approvals by the board and its committees on the severance payment to its ex-CFO as bookkeeping issues and failed to clearly justify the reason for such high payment. Now, Infosys has paid a consent fee of ?34 lakh to Sebi, which found the severance payment was not in accordance with the remuneration policy of the company. Sebi’s investigation also found that the severance payments were made without proper approvals from the Audit Committee and Nominations and Remuneration Committee of the company. Infosys was the gold standard for corporate governance in this country. Its founder NR Narayana Murthy always put value before profits. His statement that clear conscience is the softest pillow is legendary. Despite criticism from different quarters, he questioned the board and its management as his silence would have mortally wounded the core value system of the company. People close to him clearly understood the pain he went through when Infosys was accused of mis-governance. The recent settlement clearly vindicates his position. The least the company can do is to apologise to Murthy for the communication it issued to the stock exchanges that blamed him of interference. Also, there should be accountability for such lapses by the board. Trust in the management of a company and its board is essential to build a vibrant capital market. Building long-term businesses needs a vibrant board which takes its fiduciary duty seriously and acts in the best interests of all its stakeholders.

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PFC-REC MERGER HAS DRIED UP AVAILABILITY OF FUNDS FOR DISCOMS, SAYS ASSOCIATION OF POWER PRODUCERS

In a meeting of the power producers last week, the key issues discussed were the nonpayment by discoms as well as the coal shortage. CNBC-TV18 spoke with Ashok Khurana. Today, outstandings of the private generation segment is at about Rs 40000 crore and out of which about Rs 16000-17000 crore power sold, Rs 7000 crore is for those orders, which have been made for change in law and discoms are not paying money and another Rs 17000 crore is under litigation because of deficit coal quantity we are getting from CIL and has not been made a pass-through for the last two years, Khurana said on Tuesday. According to Khurana, discoms are facing a deficit and hence cannot pay the dues and they have no liquidity to pay for the receivables. Moreover, PFC-REC merger has dried up the availability of funds for discoms, he added. Jain said, As of now nothing is moving with regards to Samadhan Scheme because outside NCLT bringing a consensus among the lenders is a difficult task. So unless stressed assets move to NCLT there would be no resolution.

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RBI SEES FINANCIAL HEALTH OF STATES IMPROVING THIS FISCAL

The financial health of States seems to be improving gradually with the overall gross fiscal deficit expected to reduce to ₹4,86,500 crore in 2018-19 from ₹5,14,320 crore in 2017-18. According to the fourth edition of the RBI’s Handbook of Statistics on Indian States — 2018-19, this will be the second year in a row of a declining gross deficit. States’ gross fiscal deficit had gone up for seven straight years from 2010-11. Bihar and Assam are expected to see the biggest decline in their fiscal deficit numbers. While Bihar’s deficit is expected to fall from ₹34,960 crore (Revised Estimate for 2017-18) to ₹11,200 crore (Budget Estimate for 2018-19), Assam’s numbers are set to improve from ₹36,600 crore to ₹9,770 crore. Andhra Pradesh and Punjab are also among the States whose fiscal deficit is projected to decline. Madhya Pradesh and Maharashtra, where the farm-loan waiver has become a drag on the State governments’ finances, are expected to see an increase in their fiscal deficit. On another positive note, the States are expected to close 2018-19 with net receipts exceeding projections. According to the RBI, all States are expected to see a revenue deficit of –(minus)₹2,920 crore in 2018-19, compared to a shortfall of ₹61,080 crore in 2017-18, thanks to net receipts being higher than projected receipts.

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NO EMI TILL STATUS GETS CLEAR: AMRAPALI BUYERS

Thousands of homebuyers on Sunday threatened to stop paying bank instalments of multiple Amrapali projects they have invested in, until they get a clear delivery roadmap of their properties The buyers claimed they have been demanding an EMI holiday for a long time, and it is imperative that such a scheme is extended to the buyers, as they are financially stressed. We have appealed to the government and the courts that buyers of Amrapali’s various projects be given financial relief, because we are left in the lurch. There is no hope of getting the houses any time soon We have decided to stop paying EMIs until construction of flats is complete and we’ve got possession, said Abhishek Kumar. Kumar Mihir who represents Amrapali homebuyers at the Supreme Court, called the buyers demand valid and said, We have appealed to the Supreme Court that the buyers are given an EMI holiday. Banks that have filed complaints against these builders are also the ones which have given loans to the buyers, so the banks are aware of the buyers’ predicament. Now, while on the one hand, they are contesting the builders in court for non-payment, on the other hand, they are asking buyers to pay EMIs for these same projects. The buyers’ demand, that they be given an EMI holiday until the flats are complete, is thus a valid one. We demand immediate stoppage of all EMIs for these projects and refund of all interest paid over the last five years. We will not commence payment until the state and central governments assure us that our investments are safe. Either we pay when the flats are handed to us, or we want official assurance from the government that we can pay in future on the basis of their guarantee, said Indrish Gupta.

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JSW GETS ₹4,970-CR TRADE FINANCE TO SUPPLY STEEL TO DUFERCO INTERNATIONAL

In the largest-ever trade finance in Indian steel sector, JSW Steel has received $700 million (₹4,970 crore) for supplying steel over the next five years to Duferco International Trading Holding, a global steel trader and distributor. Both companies had signed the advance payment and supply agreement last Wednesday. The pact will help JSW Steel part-finance its ₹19,650-crore Bhushan Power acquisition through the insolvency process. It has already accepted the letter of intent issued by the resolution professional of Bhushan Power, and is in the process of tying-up the funds. The financing structure with Duferco International provides JSW long-term funding to complement its plans for growth, secured by committed export of steel products to DITH. For DITH, the transaction assures a captive supply of various steel products from JSW over the term of the agreement. In the last 15 years, both companies had partnered in various commercial ventures. The deal will not only enable JSW raise funds at competitive rates, but also assures incremental volume of sales in export markets, he added. The DITH Group has a world-wide network of offices and processing sites in 82 countries across five continents. It has over 49,000 customers in 108 countries and recorded turnover of more than $7 billion, with sales of 12 million tonnes per annum.

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INDIA INC'S AVERAGE SALARY HIKE EXPECTED TO BE 9.7% IN 2019: SURVEY

Employees working at India Inc can expect an average pay hike of 9.7% for the year 2019, according to Aon, a professional services firm. A better outlook is based on companies expecting a positive economic outlook backed by high economic growth expectation, high domestic demand and low inflation. A decline in voluntary attrition and controlled incremental hiring continue to keep the sentiment mild. Pay increases are marginally positive compared to earlier years – a big highlight is the reducing difference in pay increases across industries year on year. A lot of the pay increase decline is also reflected in the constant drop in voluntary attrition levels across industries, said Anandorup Ghose. Sectors projecting a double-digit increment have come down over the years with only five sectors projecting a double-digit increment for 2019. These include sectors such as Consumer Internet Companies, Professional Services, Life Sciences, Automotive and Consumer Products.

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JET PLEDGES FDS WORTH ₹1,500 CRORE WITH STATE BANK OF INDIA TO STAY IN THE AIR

Crisis-hit Jet Airways (India) Ltd has pledged its fixed deposits (FDs) with various banks, totalling ₹1,500 crore, to borrow ₹225 crore from the State Bank of India (SBI). The airline has the option to borrow more from SBI with the same FDs as security.

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AIR INDIA STAFF ASKED TO SAY 'JAI HIND' AFTER FLIGHT ANNOUNCEMENTS

Air India crew have to say Jai Hind with much fervour after every flight announcement, said an advisory issued by the national carrier on Monday. The advisory is marked to all crew members of the cash-strapped carrier and is signed by Amitabh Singh, director of operations, Air India. With immediate effect, all (crew) are required to announce 'Jai Hind' at the end of every announcement after a slight pause and much fervour, said the advisory. According to officials, the advisory is a reminder to the staff, in line with the mood of the nation. Ashwani Lohani, in his first stint as Air India's chairman and managing director, had issued a similar direction to pilots in May 2016. The captain of a flight should often connect with passengers during the journey and, at the end of first address, using the words 'Jai Hind' would make a tremendous impact, he had said in a communication to his staff in May 2016. He had also asked the staff to be courteous and polite to passengers and said wearing a smile would be a good thing.

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ACTION AGAINST 4 AIR INDIA EMPLOYEES FOR 'STEALING' UNSERVED FOOD: OFFICIAL

Air India has taken disciplinary action against its four employees for allegedly stealing unserved food and dry ration from its planes, senior officials of the national carrier have said. In August 2017, Air India's Chairman and Managing Director Ashwani Lohani had issued an internal communication saying that ground staff and officers often take out unserved food and dry ration for their personal consumption on arrival of the aircraft. Officials found indulging in such practice should be summarily placed under suspension, the circular read. The official said that an assistant manager and a senior assistant in the catering department were suspended for 63 days and three days respectively after they were found indulging in the practice, the official said.

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RERA-REGISTERED REALTY AGENTS LESS THAN 5% IN PUNJAB

After one and a half years of establishment of Real Estate Regulatory Authority (RERA), Punjab, only 1,461 real estate brokers have registered themselves with the authority. With more than 30,000 property dealers in the state, the number of registered brokers is less than 5%. Concerned over the low registration by brokers, the RERA, Punjab, will compile data of unscrupulous real estate agents through their classified advertisements published in newspapers and also through information gathered from public. The authority is also planning to serve them notices. The low number of registration is a cause for concern. Recently, we had a meeting where it was decided that notices will be sent to these property brokers, Sanjiv Gupta told. According to rough estimates, there are over 30,000 real estate agents in the state. On being asked how the authority will identify the unregistered brokers, Gupta said, We will track them through newspaper advertisements, especially classified advertisements, and also compile information received from general public.

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CAN RERA AUTHORITY GRANT AN EXTENSION TO A REAL ESTATE PROJECT?

Real Estate (Regulation and Development) Act, 2016 and the rules framed thereunder has changed the legislative landscape of the real estate sector. Prior to the introduction of RERA, the real estate industry in India was largely unregulated. Allottees were mostly at the mercy of the builders with respect to their investments in a project. The allottees commonly faced problems relating to delayed delivery, lopsided contractual conditions, last-minute changes in the layout plan without obtaining prior consent of allottees, abandonment of projects. No specific dispute resolution mechanism to tackle was in place to address such concerns. With the advent of RERA from May 1, 2017, the real estate industry is undergoing a transformation. The main objectives of RERA were to infuse transparency, increase the accountability of developers towards the allottees, ensure fair-play, reduce delays and have a unified system of law regulating the real estate industry. The intention of the legislators for induction of standardisation of real estate norms was to safeguard the interest of the allottees and seek protection of their investments in the real estate projects. The promoter is required to deposit 70 percent of the amounts realised from a real estate project from the allottees, from time to time, in a separate account which shall be maintained in a scheduled bank to cover the cost of construction and the land cost and shall be used only for that purpose. Subsequently, the promoter can withdraw the amounts from the Separate Bank Account, to cover the cost of the project, in proportion to the percentage of completion of the project. Promoter is required to develop and complete the project as per plans, structural designs and specifications. RERA authority has the discretionary power to extend the registration period granted to a project under RERA. The RERA authority may, on the basis of the facts of the case, may extend the registration granted to a project, where the delay in the particular project is not due to default on the part of the promoter. However, in any circumstance, such extension shall not exceed a period of one year.

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SIX IAS OFFICERS IN 19 MONTHS: FREQUENT TRANSFERS RENDER RERA IN KARNATAKA TOOTHLESS

Within a year and a half of its existence, the Real Estate Regulatory Authority (RERA) Karnataka, which is supposed to be the sentinel guarding the interests of homebuyers, has been bogged down by frequent transfers of its top officers. Six IAS officers had been at the helm in 19 months since it was formed in July 2017. The institution also lacks the mandatory authority comprising a chairman and two members. Consequently, the principal secretary or secretary to the housing department is the acting chairman of RERA. The housing department itself has seen three principal secretaries since July 2017, while three officials held the post of RERA secretary during the period. If changes are so frequent at the top level, obviously the system can never be effective. RERA Karnataka has been the victim of this scourge, said MS Shankar. Among the many issues that Hari pointed out was inordinate delay in getting RERA registration for projects. While the rule stipulates that registration be done within 30 days of submission of the application, RERA rarely adheres to the time frame.

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UP-RERA TO DEREGISTER SIX BUILDERS IN NOIDA AREA

After issuing warnings developers whose projects have been delayed, the Uttar Pradesh Real Estate Regulatory Authority (UP-RERA) has finally decided to deregister six builders for failing to meet their commitments. We have shortlisted six developers. Notices would be sent to them by March 5 and after that we would take further action, UP-RERA chairman Rajive Kumar said. While the authority had already given strict warnings almost two months ago, this is the first time it has deregistered offending builders. The decision was taken after home buyers flagged the delays to the authority. According to UP-RERA officials, it has so far registered 11,759 cases out of which 7,076 are pending. Of these, 70 per cent are from the Noida, Greater Noida and Ghaziabad areas alone. Total cases disposed by the Greater Noida and Lucknow benches so far stand at 4,683.

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GHAZIABAD DEVELOPMENT AUTHORITY’S 5-MEMBER PANEL TO PROBE COMPLAINTS BY RWAS OF HIGHRISES

A five-member committee has been constituted by GDA to solve complaints raised by residents’ welfare associations (RWA) of highrises in the city. The committee has been mandated to look into complaints involving Rera violations and those come under the Uttar Pradesh Apartment Act. RWA members often approach the GDA office to lodge their complaints, and are seen running from pillar to post to get it registered, said Kanchan Verma. In the absence of a proper forum, the complaints usually go unattended. We’ve formed this committee to address this issue, Verma added. Verma further said that the nature of complaints usually filed by RWAs, involve construction or maintenance of civic amenities and dispute with builders. The committee will take up complaints falling under clauses of Rera and the UP Apartment Act, he said.

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TS RERA EXTENDS DATE FOR REGISTRATIONS

The Telangana Real Estate Regulatory Authority (RERA) has decided to accept applications filed for registrations on or before March 15 with a penalty of Rs 2 lakh. During a meeting held on February 28, the RERA has decided that it would not be appropriate to reject applications after the last date of February 28 with a penalty. It has decided to keep the process of registration of ongoing projects open for which permission was obtained between January 1, 2017 and August 31, 2018. After the application is filed by the promoter, RERA would communicate the same through a notice or email to the promoters, who upload their application between March 1 and 15 this year asking them to pay online penalty for late registration. If the promoter does not agree to pay the penalty, the application would be further processed as per the provisions of the RERA Act, said a press release.

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‘ORGANISATIONS SHOULD TREAT DATA AS CORPORATE ASSETS’

About 2.5 quintillion bytes of data are created each day and is exponentially accelerating with the growing Internet of Things (IoT) landscape. Given that data has become a key input for driving growth, organisations must treat it as a corporate asset for better and faster decision-making, said Snehashish Bhattacharjee. Bhattacharjee said that Big Data’ can be categorised as structured/organised (Smart Data) and unstructured. The latter is pivotal for business strategists as they hold the key to the perennial quest of where exactly is the next new customer. Currently, around 5 billion consumers interact with data every day, with a new report suggesting that by 2025, that number will be 6 billion, or 75 per cent of the world's population. Studies suggest 90 per cent of the data in the world today has been created in the last two years. Bhattacharjee said for businesses to grow and thrive, it is imperative to mine this untapped data to deliver meaningful insights, with the help of data analytics, to support business functions for desired outcomes.

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AIRTEL, RELIANCE JIO, VODAFONE IDEA UP THE ANTE WITH HIGHER CAPITAL COMMITMENTS

There are but two ways of paying debt: increase of industry in raising income, increase of thrift in laying out, said Thomas Carlyle. Indian telecom firms have tried all they could—raising revenues, cutting costs—but all of that has amounted to a few drops in the ocean when compared to their monumental debt. Bharti Airtel Ltd, the best placed of the lot, with a debt to Ebitda ratio of about 4.2 times, lost its investment grade rating last month from Moody’s Investors Service. Ebitda stands for earnings before interest, taxes, depreciation and amortization While the company already had plans to reduce leverage by selling its stake in Africa operations and in Bharti Infratel, its tower infrastructure business, it evidently believes that much more needs to be done. Airtel announced plans to raise as much as ₹32,000 crore, largely through a rights issue and selling perpetual bonds worth ₹7,000 crore. The move will bring down its debt to Ebitda to around three times, which can potentially get Moody’s to revisit the ratings downgrade, and result in better borrowing rates. The need to bring down leverage isn’t the only reason driving telcos such as Airtel to raise large funds. The capex intensity of the sector will continue to remain high. While 4G capex may be at its peak, we see 5G spends kicking in from next year, says Rajiv Sharma. While companies are now saying that the reserve price for 5G spectrum is too high to even consider bidding, analysts say companies may not ignore the chance to upgrade for too long, especially given how aggressive they have been in the recent past with regard to upgrading their networks. Vodafone Idea Ltd had earlier announced a rights issue of ₹25,000 crore. It was already walking a tightrope and now suddenly faces competition for public funds, with Airtel announcing a similar-sized issue.

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THINK TANK ASKS PANEL TO PROBE FACEBOOK'S LOBBYING PRACTICES IN INDIA

A day after The Guardian reported Facebook’s lobbying practices against data privacy legislation in several countries including India, a Centre for Account­ability and Systemic Change (CASC) has written to Parlia­ment’s standing committee on information technology (IT) to look at the lobbying activities of social media firms in India. The Guardian reported on Saturday about a secretive global lobbying operation targeting hundreds of legislators and regulators in an attempt to procure influence across the world, including in the UK, US, Canada, India, Vietnam, Arge­ntina, Brazil, Malaysia and all 28 states of the EU. These included efforts to change the European General Data Protection Regul­ation in favour of Facebook, using chief operating officer Sheryl Sandberg’s feminist book, Lean In, to bond with female Euro­pean commissioners and threatening to curb investment in countries unless they passed Facebook-friendly laws. In view of (these) revelations, the parliamentary committee must enquire into the role of Indian bureaucracy and politicians It may call for financial statements of social media companies of the last 10 years to estimate the turnover from Indian business operations, as well as the amount spent on lobbying to delay the data protection law, the think tank has said in its letter, signed jointly by K N Govindacharya, former Rash­triya Swayamsevak Sangh ideologue, and the CASC through advocate Virag Gupta.

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CS Meetesh Shiroya