Thursday, 4 April 2019

CORPORATE UPDATES 04.04.2019





RBI WILL COME UP WITH REVISED CIRCULAR TO DEAL WITH RESOLUTION OF STRESSED ASSETS: SHAKTIKANTA DAS

The RBI governor said that the central bank will come up a revised circular to continue its battle against the menace of stressed assets within India's banking system. Shaktikanta Das said that the Supreme Court order struck down the February 12 circular regarding resolution of stressed assets but the validity of section 35AA of the Banking Regulation Act remains intact. He further elaborated that the RBI will issue a revised circular under section 35 AA which authorises the central bank to authorise initiation of insolvency in respect of a default. Section 35AA and Section 35AB of the Banking & Regulation Act were introduced in May 2017 to add more teeth to the RBI's fight to tackle the issue of bad loans in the system. Section 35AA authorises the RBI to issue directions on initiation of insolvency in case of a default while section 35AB deals with the issue of resolution of stressed assets.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

GOVERNMENT RETAINS POWER TO DIRECT RBI FOR REFERRING DEFAULTERS TO NCLT

The Supreme Court's order quashing the RBI's February 12 circular will give the government discretionary power to issue a direction to the apex bank for referring a defaulting company to the NCLT on the case by case basis in public interest, official sources said. The SC had upheld the constitutional validity of Section 35AA of the Banking Regulation Act, which empowers the centre to act, either directly or by directing RBI to take action against defaulters. Section 35AA empowers the central government to authorise the RBI to issue directions to any banking company or banking companies to initiate insolvency resolution process in respect of a default under the provisions of the IBC.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

SUPREME COURT USES CREATIVE INTERPRETATION TO STRIKE DOWN RBI CIRCULAR

The Supreme Court struck down the Reserve Bank of India’s February 12 Circular (RBI Circular) in totality. The Court found this Circular to be ultra vires Section 35AA of the Banking Regulation Act, 1949 (BR Act), which is one of the enabling provisions for issuance of the Circular. The only conclusive ruling on this issue before was one by the Allahabad High Court, which refused to stay the operation of the RBI Circular. The main argument was that the reason for their inability to pay the debts was on account of factors beyond their control There were two primary challenges before the Supreme Court:

1. Sections 35AA and 35AB of the BR Act were introduced in May 2017 by the means of an Ordinance. While Section 35AA permitted RBI to issue directions for initiation of insolvency in respect of a default, Section 35AB permitted RBI to issue directions for resolution of stressed assets in general. The powers under Section 35AA could only be exercised by the RBI on authorization from the Central Government. Accordingly, the Ministry of Finance, on May 5, 2017, authorised the RBI to issue directions to initiate the insolvency resolution process in respect of a default.

2. The Circular was challenged as being ultra vires Section 35AA of the BR Act. The Circular, inter alia, required that all debts with aggregate exposure of more than Rs. 2000 crore be given 180 days to resolve their accounts, failing which at the expiry of 180 days, banks will have 15 days to move the National Company Law Tribunal (NCLT) under the Insolvency and Bankruptcy Code (IBC), making it a total of 195 days. The Circular also withdrew all existing restructuring schemes of the RBI. The main challenge, however, was made to the power given to RBI to push companies into the Corporate Insolvency Resolution Process (CIRP). Senior Advocate Abhishek Manu Singhvi, appearing for the Power Sector, argued in favour of special treatment. He also argued that the RBI Circular was violative of Article 14 of the Constitution. He submitted that given it is a highly regulated sector, and that the cause of default was in fact lapses on the part of the government, such companies cannot be painted with the same brush as other sectors He further argued that it was only the private sector which faced this brutality and not the public sector, where the stressed assets amount to nil. One of the other arguments against the Circular was that Section 35A (which was introduced in 1956) cannot be the source of this power since it was introduced at a time when the IBC did not exist. He further relied on the Ministry of Finance notification, the language of Section 35AA, and the statement of object and reasons, to argue that each case has to be specifically dealt with, and that a one-size-fits-all approach cannot be adopted.

Court held
1. The Court held that ‘short of throwing mantras at manifest arbitrariness‘, none of the petitions were able to show how Section 35AA and 35AB are manifestly arbitrary The Court also noted various provisions of the BR Act to rule that there is sufficient legislative guidance for the RBI to exercise powers delegated to it. Both Sections 35AA and 35AB were found to be valid
2. Insofar as the power under Section 35AA is concerned, the Court ruled that statutes should be deemed to be ‘always speaking’. Each provision need not be interpreted in the context of the time at which it was enacted and needs to be interpreted in light of the prevalent environment, unless a contrary intention appears. Content may change, but the concept remains the same.
3. The Court found that Section 35AA sets the boundaries within which the RBI is to act, for making directions in relation to insolvency proceedings. The Court then drew a comparison with other provisions of law that enumerate the powers of the RBI vis-à-vis the Central Government. There are provisions in the BR Act which expressly require the RBI to act at the behest of the Centre, and there are provisions which give it operational independence. However, Section 35AA is one which requires express authorization from the Central Government. Thus, the Court found two essential elements for action under Section 35AA:

(i) Central Government authorization
(ii) Action in case of ‘specific defaults’ only.

Interestingly, the Court observed that prior to the introduction of Section 35AA, the RBI’s power to make such directions were broader. Whereas, upon the introduction of Section 35AA, a specific process has been carved out for insolvency-related matters. Now that a specific process is in place, it will supersede the general powers. While observing the language contained in Section 35AA, the Statement of Objects and Reasons that introduced it, the Press Note that was published when Section 35AA was introduced, and the MoF notification, the Court conclusively held that the RBI can act with respect to ‘specific cases’ only under the Section 35AA power.

The Court has not exactly clarified how the RBI needs to deal with ‘specific cases’ Arguably (as was also argued before the Court), the criteria provided under the Circular (debts with aggregate exposure of Rs. 2000 crore and above) does carve out a list of ‘specific cases’. If the same logic is to be applied to the June 13 RBI notification (which gave birth to the dirty dozen cases), it would be ultra vires Section 35AA too. The vires of the RBI-12 notification has, however, been upheld by the Allahabad High Court and six of those twelve cases have already seen a final outcome. This would, indeed, create a messy situation for the remaining cases if even one of the remaining six moved Court with the same logic. Secondly, by holding the Circular to be ultra vires, the legal position that existed prior to the Circular has been restored, as if the Circular were never in place. This means all debt restructuring schemes are restored and banks can continue to endlessly negotiate with promoters. The problem here, however, is for the cases that are already under CIRP as a result of this Circular. While the Power Sector companies may have bought time at the NCLT due to ongoing proceedings, there were many other companies (not from the power sector) which are now probably under IBC. This means proceedings against such companies are effectively terminated. Thirdly, this ruling is a departure from the judicial stance taken so far with respect to adjudicating on the validity of instruments issued by financial sector regulators. Typically, the courts rule in favour of the instrument by using the same rational upheld in Swiss Ribbons, that is of `judicial hands-off qua economic legislation’. However, this time the Court has struck down the instrument holding that the Circular was not compatible with BR Act. This heightened scrutiny is, however, more of a welcome development and less of a concern. Ultimately, the Supreme Court has shied away from expressly favouring the power sector, it has used creative interpretation to do so.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

IL&FS 6-MONTH REPORT CARD: NO CREDITOR WILL BE COMPROMISED IN DEBT RESOLUTION PROCESS, SAYS BOARD

IL&FS board maintains a reasonable approach to the resolution process and promises that no creditor will be compromised There is a need to have a meaningful resolution that adds value to shareholders, it added. Presenting a status report card of where debt-ridden company stands currently, the new board constituted six months back said that the balance sheet of the company looks strong on a standalone basis. Even as recovery ability of the loans is posing challenges the company would take care of creditors by resolving assets within India, the board added. Uday Kotak, said that a solid team is managing the entire resolution process of IL&FS. In addition to whole time board members, an operating committee has also been created, he added. Kotak further informed that Vineet Nayyar has been appointed as Executive Vice Chairman & MD, while CS Rajan has been appointed MD of IL&FS effective from this day. The board also said that 150 intervention applications have been filed against IL&FS at NCLAT. The total outstanding loan stands at Rs 99,354 crore currently, the board also informed.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

INDIA'S CRONY CAPITALISM CLAIMS ANOTHER VICTIM

The country’s Supreme Court on Tuesday struck down a controversial 2018 directive from the Reserve Bank of India, which gave lenders a 180-day deadline to resolve non-performing loans before having to refer the defaulting borrowers to a bankruptcy tribunal. The verdict is a serious blow to the bank’s officials who have been trying to tackle one of the world’s worst bad debt problems – with some early success. Yet it’s a huge relief to several Indian industries especially the country’s power-generating companies, which are saddled with stranded capacity and too many borrowings. They had sued the central bank, arguing that a 2017 law introduced to empower the central bank on corporate defaults (and thereby beef up India’s new insolvency code) was unconstitutional. Luckily, the companies failed in their broader attempt to overturn the new law. The judges ruled that it was good, and agreed that it did give the RBI greater scope to intervene on insolvencies Nonetheless, they still decided that the bank had overreached with its February 2018 circular on the 180-day deadline. The Supreme Court found that under the new law, India’s government has to instruct the RBI on specific defaults it wants settled by the bankruptcy tribunal. As such, the regulator was wrong to take sweeping, general action of its own. The verdict reduces the RBI’s dwindling authority by another couple of notches. Urjit Patel, the former bank governor, saw the 2018 circular as a potent weapon against crony capitalism. His predecessor, Raghuram Rajan, had started forcing banks to come clean about the true extent of their $200 billion-plus stressed asset problem. Still, recognition is only the first step to resolution. Under-capitalized state-owned lenders prefer to keep kicking the can down the road Take Reliance Communications Ltd., the mobile phone operator controlled by Anil Ambani, the younger brother of India’s richest man. An out-of-court restructuring of the company never got anywhere. Unpaid banks kept dithering on legal action, even as the firm closed its main business. But an overseas creditor, Sweden’s Ericsson AB, swooped in, went to the bankruptcy tribunal, and got itself a handsome settlement. State Bank of India and other lenders are still waiting to see even a partial return of capital. For politically connected industrial families, the very idea that lenders would take away their assets and sell them – perhaps even to foreigners – is unthinkable. In the face of such powerful resistance, Rajan gave up as RBI governor and went back to the University of Chicago after a single three-year term, and Patel resigned abruptly late last year. In the world of the Indian promoter – as controlling shareholders are known in the country – cronyism isn’t an aberration. Given India’s opaque sources of political funding, it’s an organizing principle of economic activity. In the end, the RBI was fighting a just but hopeless war against the cronies. We’ll know after the general elections on May 23. When Prime Minister Narendra Modi’s administration drafted the RBI into the bad debt fight, and got it to force banks to send two batches of large corporate defaulters to the insolvency tribunal, it did appear it was serious about changing the credit culture.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

GOVT, RBI WILL HAVE TO BRING NEW RULES TO ENSURE BORROWERS REPAY DEBT ON TIME, SAYS AMITABH KANT

The government and the Reserve Bank will have to bring in a new set of regulations to ensure that borrowers repay their debt on time following the Supreme Court striking down an earlier rule of the monetary authority, Amitabh Kant said Wednesday. Amidst a rash of announcements over income support schemes, the bureaucrat also stressed on the need to ensuring higher growth to fund such dole-outs With the Supreme Court striking down (the February 12, 2018 RBI circular on NPAs) as ultra vires, the issue needs to be relooked by both the RBI and government to arrive at a new regulation that will ensure that financial discipline from borrowers should continue, he told reporters. Kant said such a move ensuring timely repayment and resolution of stressed assets is essential for long-term growth. Kant said a lot of work has been done by the government and the RBI to bring in financial discipline and good regulation to end crony capitalism. In what is being seen as a jolt to the bad assets resolution framework, the Supreme Court Tuesday quashed the stringent RBI circular which mandated banks to recognise even one-day defaults and finding a resolution within 180 days failing which the account in question has to be sent to bankruptcy courts if it is Rs 2,000 crore and above. The unexpected ruling by a single judge bench of Rohinton Nariman has put a big question mark on the resolution of 70 large accounts which together owe the system over Rs 3.8 lakh crore. The ruling came on a petition filed by 34 power companies which alone owe Rs 2.3 lakh crore to banks. Legal and industry experts have voiced concern over the order, stating that there was a marked change in borrowers behaviour after the circular was issued which would now change for the worse. Meanwhile, on the rash of announcements on income support like the Congress promise of ensuring an annual income of Rs 72,000 each to 20 crore families through the Nyay scheme, which would involve an outgo of Rs 3.6 lakh crore per annum, Kant flagged the need to look at growth. You cannot have redistribution without growth. If you dont grow higher you will not have surpluses to put into these schemes, he said, adding the country needs to grow at 9-10 percent as against the present 7 percent, to generate such surpluses. While delivering his speech, he said radical reforms will be required to accelerate growth from the present levels. We will have to focus more on manufacturing that will result in higher exports which deliver higher margins per unit of sale, he said, adding such a move will also create jobs as we cannot grow without jobs. Agriculture will also need to be focused on Kant said, and called for scrapping the APMC and Essential Commodities Acts. He made it clear that agriculture cannot grow on subsidies and can develop only through market interventions. He also said the country has become data-rich before actually becoming rich economically, stressing that the vast quantum of data being generated is a big asset, leading to a slew of changes, including an end to physical bank branches and branch managers.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

SUPREME COURT RULING TO SLOW DOWN RESOLUTION OF STRESSED ASSES: RATING AGENCIES

The Supreme court ruling which relaxes RBI's February 2018 guideline on NPA resolution is expected to impact credit discipline adversely and slowdown resolution of stressed assets, according major rating agencies. Both Crisil and Moody’s have voiced their concerns on the impact of the Supreme court ruling which diluted Reserve Bank of India’s directive on its February 2018 circular on NPA resolution. The improvement in credit discipline in the past year and the expectation of quick turnaround in stressed assets resolution could come under some cloud a release by Crisil said. That’s because the RBI circular prioritised speedy resolution of stressed assets. Also, fear of losing control of their companies meant promoters worked actively with lenders to avoid referral to NCLT. The RBI circular had mandated referring stressed assets to the National Company Law Tribunal (NCLT) if the banks were not able to implement a resolution plan within 180 days from the date it became overdue. While the RBI circular intended to speed up the resolution process, the apex court’s ruling now puts the onus back on banks for ensuring timely and effective resolution of stressed assets, according to Crisil. The provisions of the Insolvency and Bankruptcy Code (IBC), though, continue to be available to them for such resolution. The provisions in the supreme court ruling is credit negative for Indian banks according to global rating firm Moody’s, as it will weaken stressed loan recognition and resolution for large borrowers, and delay the resolution process of some existing large nonperforming loans (NPLs). Following the Court judgment, banks and borrowers will regain flexibility in resolving stressed loans. In the past, this flexibility caused the recognition and resolution of stressed loans to be postponed. Hence, the voiding of the 12 February circular is credit negative, Moody’s said. But the Supreme Court ruling is not expected to have any significant impact on new NPA accretion levels, as accelerated NPA recognition by banks has resulted in most of the stressed assets being recognised. However, the pace of reduction in the stock of NPAs could slowdown, Crisil said.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

SEBI DEFERS PHASE 1 OF UPI FOR RETAIL IPO INVESTORS TILL JUNE 30

Markets regulator Sebi Wednesday extended the timeline for the implementation of phase 1 of Unified Payments Interface (UPI) as an alternative payment mechanism for retail investors buying shares in a public issue. To ensure smooth transition to UPI in ASBA (Application Supported by Block Amount) and in the back drop of the representation received from various stakeholders, Sebi said, it has been decided to extend the timeline for implementation of Phase I by 3 months i.e. till June 30, 2019. However, the timeline for implementing phase 2 and phase 3 shall remain unchanged from the date of completion of phase 1, Sebi said in a circular. It had further said the new mechanism would increase the efficiency of the existing system and curtail the need for manual intervention.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

CENTRE PAYS SOVEREIGN GUARANTEES TO ADB, KFW FOR IL&FS

In a major development in the IL&FS crisis, the government has off late paid up on sovereign guarantees to the Asian Development Bank (ADB) and KfW, a state-run bank of Germany, people in the know of the developments said. Payment of around $2 million or Rs 13.84 crore has been made to ADB at the least in the last couple of months and around Rs 5 crore has been paid to KfW, sources said. Significantly, the payment has not been disclosed at the National Company Law Appellate Tribunal (NCLAT), even thought the appellate tribunal has asked both the government and the IL&FS board to take its approval before any step regarding the cash-strapped group. In legal developments, the NCLAT last Friday told the board of the cash-strapped IL&FS to submit details of the group's dues. The matter will be next heard on April 8.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

DEVELOPERS CAN'T HAVE AGREEMENTS BIASED AGAINST BUYERS, RULES SC

In a move that could provide much needed relief to home buyers and level the field with the builders, the Supreme Court has held that real estate developers cannot have agreements which are biased against homebuyers. The apex court pointed out that such a contract would fall under unfair trade practices of the Consumer Protection Act. A two-judge Bench of Justice U U Lalit and Justice Indu Malhotra was hearing a builder’s appeal against the National Consumer Disputes Redressal Commission (NCDRC)’s judgement asking it to refund the entire cost of a flat to the buyer for inordinate delay in handing over possession of the property. While affirming the NCDRC’s judgement, the two-judge Bench said that the agreement that the builder had signed with the buyer was wholly one-sided and unfair as there were stark incongruities between the remedies available to both the parties. Builders do have such clauses in their agreements but the courts have tried to balance the equities between the builders and flat buyers from time to time. That does not change the fact that there is an over-legislation in the sector as there are many avenues available to the buyers, Simranjeet Singh, said. The buyers, Singh said, can approach Real Estate Regulatory Authority (RERA), National Company Law Tribunal (NCLT), NCDRC and other forums for redressal of their complaints. There are only a few instances, wherein builders have paid the penalty amount to buyers in case of project delays as they find some excuse, even legally, to get away from paying to buyers. If the builder fails to deliver the possession of the apartment within the stipulated time period, the buyer would have to wait for a period of 12 months after the end of the grace period and then serve a termination of agreement notice. Even after the said termination notice, the builder would have another 90 days to refund the amount, which the two-judge Bench said was in contravention of the Consumer Protection Act.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

NEARLY ALL ASSETS OWNED BY IL&FS’S LENDING ARM HAVE TURNED BAD

According to the government-appointed board of the lender, 90% of the Rs 18,800-crore assets of I-Fin, the firm's lending arm, have turned bad. The situation is so bad that it was impossible for the board to give a timeline to the creditors of group firms on when they could expect a court-imposed moratorium to be lifted and it also indicated that the sale of road assets was facing a delay. Chairman Uday Kotak said that the board has strengthened the management by appointing CS Rajan as managing director and bringing in chief executives for various verticals. Vineet Nayyar has been repositioned as executive vice-chairman. We have a solid management team to manage the resolution process, said Kotak. Highlighting the need to continue with the freeze on any payout by IL&FS, which has Rs 94,000 crore of fund-based debt, Kotak said that a period of calm was required for orderly liquidation of assets. The concept of group financial liquidation of a complex firm like this is a first of its kind. We have to ensure that there is a fair treatment to different classes of creditors as there is a wide variety of them with conflicting interest, said Kotak. He added that it was for the court to decide on lifting the freeze on payout as there were secured and unsecured creditors at different levels. We are going to look at a solution to a broad set of creditors and not just banks, which have half of the debt. We have recommended a process, which is the IBC. Finally, it is for courts to decide which way resolution and distribution will happen in public interest. There is a large amount of public money at stake here, said Kotak. Even as the board is working on a resolution, there is an investigative process going on which could lead to more criminal action. Deputy managing director Bijay Kumar said investigation is expected to reveal how money was moved out and whether there has been gold-plating in the group’s assets. According to Kotak, the bankruptcy code was not an option. The question we have to ask is, what if we had 200 companies, with significant amount of cross-lending and layering, going to NCLT? said Kotak. Given that the earliest resolution in the NCLT has taken one-two years, how does it work for 100 companies?
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

PE/VC INVESTMENTS UP 26% IN FIRST QUARTER OF 2019 AT $10 BILLION

The largest investment during the first quarter of 2019 was Canadian asset management firm Brookfield's $1.8 billion acquisition of Pipeline Infrastructure from Reliance Industries. Private Equity and Venture Capital firms invested a record $10 (across 159 deals) during the quarter ended March 2019, up by 26 per cent compared to $8 billion (across 208 transactions) in 2018. The number is higher by 39% compared to the previous quarter that saw $7.3 billion being invested across 178 transactions. Venture Intelligence data shows the latest quarter witnessed 23 PE investments worth $100 million or more ( 6 of them were valued at $500 million or above) compared to 17 such transactions in the same period last year. Infrastructure related companies (especially in Energy, Roads and Telecom) accounted for 48 per cent of the investment value during the period - accounting for $4.9 billion (across 16 deals), compared to $3.7 billion (across 13 deals) in the first quarter of 2018. The largest investment during the first quarter of 2019 was Canadian asset management firm Brookfield's $1.8 billion acquisition of Pipeline Infrastructure from Reliance Industries. The second largest investment was the $715 million investment by Singapore sovereign wealth fund GIC in mobile services company Bharti Airtel. Among the top investments in the sector was Carlyle's acquisition of a 9% stake in SBI Life Insurance for $653 million. IT & ITeS companies came in third, attracting $1.7 billion across 86 transactions. Among the larger investments in the sector, apart from FirstCry, were AION Capital's buyout of InterGlobe Enterprises' IT & Back Office unit (for $230 million); Apax Partners' $200 million investment Fractal Analytics and E-Grocer BigBasket's $150 million funding led by Mirae Asset Management, Alibaba and CDC Group. While average PE-VC deal sizes are up sharply, the fact that this has been accompanied by a rather steep fall in the number (or volume) of investments indicates selectivity, he added. In the latest quarter, deal volumes continued to fall not only in the Venture Capital segment (94 deals in the Q1'19 vs 124 deals in Q1'18), but in classic Private Equity segment (i.e., outside of Venture Capital) as well where the deal volume fell 23%.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

GLOBAL EPAYMENT FIRMS MAKE A WISHLIST FOR RBI

Creating a level playing field for the entry of retail payment networks and encouraging the formation of national bulk payment networks like RTGS (real time gross settlement) are among the handful of suggestions that global digital payment companies have made to the Reserve Bank of India. The RBI had invited suggestions on the authorisation of new retail payment networks on January 21, seeking to minimise the concentration risk in retail payment systems from a financial stability perspective and foster innovation and competition. Visa and MasterCard, two of the largest card companies, applauded the RBI’s move to open up the retail payment sector to more entities. Consider encouraging new players to participate in and promote pan-India payment platforms, such as real time payments (RTPs) and bulk and repetitive payments, to foster innovation and competition, Visa said in a note shared with the RBI. The criteria for licensing should be based on principles that allow entry in retail payment systems in an open and competitive manner to the entities having proven robust capabilities. MasterCard said in its response that it was looking at the initiative as an opportunity for new companies to enter the space and bring in innovation. This will also ensure no single payment system has an undue advantage over others – any imbalance created by regulatory arbitrage could lead to increasing systemic risk, said Visa. Also, there is a need to get companies with proven international financial standards for anti-money laundering and know-your customer requirements. The industry is also looking at a detailed technical eligibility criteria and hoping that the RBI will put forward proper net worth thresholds so that a platform’s stability is not compromised. Visa cautioned that the RBI needs to strike a balance between monopolisation of platforms offering retail digital payments on the one side and allowing a ‘multitude’ of players on the other, since it will require very serious players to be in this business.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

GOOGLE PAY LEADS IN UPI TRANSACTIONS BY VALUE

Google Pay has taken the pole position on the Unified Payments Interface (UPI) platform in terms of value of transactions by a margin of around 25% The development comes even as rival Paytm continues to be a leader in terms of transaction volumes, closely followed by PhonePe and Google Pay. Google Pay clocked payments worth Rs 43,000-Rs 45,000 crore in March, ending the financial year on a high, according to two industry executives tracking the space. Both PhonePe and Paytm are said to have done transactions worth Rs 31,000-32,000 crore each, with PhonePe being marginally ahead of Paytm. In terms of volumes, Paytm continues to be ahead of PhonePe and Google Pay, but the gap is quite narrow. Google Pay, PhonePe and Paytm, which now process 80-90% of UPI transactions, clocked 221-225 million transactions each in March out of the total 800 million. UPI sees at least 80% of its transactions being P2P. The total value of transactions on UPI was Rs 1.3 lakh crore in March 2019. During the same period in 2018, UPI saw 178 million transactions worth over Rs 24,000 crore. UPI does not give a company specific break-up of transaction volumes or the value of it, yet. Sources said Google is estimated to be spending $12-15 million on a monthly basis here for its domestic payments business. To nudge users to send money to their friends or family more often, it offers scratch cards for every funds transfer. These scratch cards then typically offer cashbacks to the users. According to BharatPe, a payments startup that helps smaller merchants — largely from offline space — accept payments via UPI QR codes, Google Pay’s average transaction value is higher by 50% compared to PhonePe and Paytm. This data was tweeted by BharatPe founder Ashneer Grover on March 25. The average ticket size on UPI is in the range of Rs 1,600-1,700.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

TRAI ASKS TELCOS TO SUBMIT SEGMENTED OFFER DETAILS IN 15 DAYS

The telecom regulator has asked phone companies to share details of all segmented tariff offers issued between April 2018 and March 2019 on a monthly basis in 15 days a move which could raise the hackles of India’s older telcos who have been opposing such a mandate. The Telecom Regulatory Authority of India Wednesday also said it wants telcos to share details of segmented offers from April 2019 onwards within 10 working days from the last day of the month. The direction comes after the Telecom Disputes Settlement & Appellate Tribunal (TDSAT) had last December dismissed its regulation that required telcos to report all segmented offers. Trai though has justified its latest direction, citing a section of the telecom tribunal’s December 2018 verdict that allows it to call for details of any segmented offer about which it may have received complaints or to assess whether such offers are truly non-discriminatory.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

THERE ARE WAYS TO MAKE BUSINESS SUCCESSFUL: RATAN TATA

The Tata group has managed to turn around some of the poorly-performing businesses successfully and not give up on them, Ratan N Tata, chairman emeritus Tata Sons and head of Tata Trusts, said. Even as a successful business creates a lot of excitement among stakeholders, one is often accused by the industry for hanging on to an under-performing one, he said. We have managed to turn them around. Deep down inside it is very difficult to give up an enterprise and people. While many will not agree with my view, there are ways to make a business successful rather than give up, said Tata. His remarks come against the backdrop of criticism the group faced in the past regarding its hospitality, automobile, and steel, among other businesses. The businesses including the passenger vehicle arm of Tata Motors and Indian Hotels Company (IHCL) have managed to wipe out losses under the N Chandrasekaran, chairman Tata Sons. Tata was responding to a question by Raymond Bickson, chairman, Bickson Hospitality group, at one of the sessions of Hotel Investment Conference – South Asia. Bickson was the MD and CEO of IHCL for close to 12 years. It was during Bickson’s tenure that IHCL acquired several overseas hotels. Under him, IHCL adopted a segmentation strategy and launched brands such as Vivanta by Taj, Gateway, and Ginger. To a question on his favorite business during his tenure as chairman, Tata said he spent disproportionate amount of time on the automobile business because it was the most exciting thing Tata Motors was doing in terms of indigenising the product. I had a great deal of interest in aviation, I still do. So, there are exciting phases and then there are times it gets boring. So you move to a new area. It’s a moving target. Giving a peek into the businesses he admires, Tata said initially Bose was a favourite but the affinities have shifted to Apple and Google.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

SUPREME COURT'S JUDGMENT ON RBI CIRCULAR PROCEDURAL, NOT A MAJOR CRISIS: ARUN JAITLEY

Arun Jaitley said the Supreme Court’s judgment striking down the February 2018 circular of the Reserve Bank of India (RBI) was not a major crisis and was procedural in nature It could be rectified through appropriate action by the central bank, he said. Jaitley dismissed the Congress election manifesto, saying the party was guided by obsolete ideas and populism. A maturing electorate will ensure the BJP gets a comfortable majority and the National Democratic Alliance (NDA) will form the next government, he said. On Jet Airways, Jaitley said its lenders had taken a decision to revive the airline in the larger public interest. I don’t see a major crisis. This judgment is really more procedural — this is not substantive, he said. A judgment which says procedure or your application of mind or your width of your power is inadequate can always be rectified by an appropriate action. The RBI will reconsider it in consultation with all stakeholders and decide on the issue, he said. You don’t question the judgment. You implement the judgment in accordance with what they have said. After all, that’s judicial review, he said. In implementing the ruling, the primacy of the RBI and its credibility will have to be maintained, while the sanctity of the IBC process will have to be preserved, he said. When the RBI reconsiders the issue, the central bank should also bear current market conditions in mind, he said. There is a difference between decisions dealing with the economy and business and municipal law. So, whoever has to decide will bear those distinctions. Let’s not question their wisdom, he said, adding that even where discretion is allowed, there can be norms on which this can be exercised. He said the Congress party’s manifesto didn’t offer a path forward for economic development. They still haven’t learnt a lesson — you have to increase resources and use them for further economic development, infrastructure creation and a large part to bring down poverty, Jaitley said. In five years, we reduced taxes — we did not raise a single tax, he said. The only chapter which is missing in this manifesto is strengthening Indian middle class. That is now a dominant section of your voter. He contrasted the record of the Narendra Modi government with that of the Congress-led United Progressive Alliance. Jaitley said he was pleased with the way IBC has shaped up. I think the maximum credit goes to the Supreme Court. It has shown exemplary discipline by deciding each case at exemplary speed, laying down the law and everything, he said. The NCLT (National Company Law Tribunal) and NCLAT (National Company Law Appellate Tribunal) have also shown some speed.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

NEW INVESTMENT PROPOSALS IN 2018-19 LOWEST IN 14 YEARS

India saw the lowest number of new investment proposals since 2004-05 during the last fiscal ended March, according to a report. A Centre for Monitoring Indian Economy (CMIE) report has said that this lowest figure of new investments recorded in 14 years added up to a dismal Rs 9.5 trillion (9.5 lakh crore). The report added that 2018-19 would be the fourth consecutive year of decline in new investment proposals which began in 2015-16. Fiscal 2018-19 ended with new investment proposals adding up to a dismal Rs 9.5 trillion. This is the lowest investment proposal recorded in a year since 2004-05, i.e. in 14 years, the report said. The estimate of Rs 9.5 trillion will be revised upwards in the coming weeks. But, this is unlikely to change the fact that 2018-19 would be the year of very poor investment interest in India. CMIE said that the new investment proposals were robust during the five years from 2006-07 through 2010-11 when they averaged Rs 25 trillion (25 lakh crore) a year. The decline, thereafter, was steep and rapid as new investment proposals dropped to just Rs 10 trillion (10 lakh crore) by 2013-14. A new and promising government in 2014-15 reversed this decline. Investment proposals shot up smartly in 2014-15 to Rs 21 trillion (21 lakh crore). Year 2015-16 was comparable with new investment proposal announcements worth Rs 20 trillion. The share of private proposals shot up to an all-time high of 67.5 per cent in 2018-19. But, there is a somewhat bizarre twist to this record. One-fifth of the private sector's investment proposals made in 2018-19 are already stalled, it added. Correspondingly, the share of services has declined from 51 per cent two years ago, to 39 per cent. The decline in the services sectors reflects a sharp drop in new investment proposals in the roads sector. The fall in roads projects alone account for half the fall in total new investment proposals in 2018-19, the report added.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

EXPECT TO COME OUT OF PCA IN SECOND QUARTER: UBI MD

City-based United Bank of India (UBI), which reported losses for the last seven quarters, is expecting to come out of the prompt and corrective action (PCA) list of RBI in the second quarter of the current financial year, a top official of the bank said. We should be coming out of PCA by the second quarter of 2019-20. Things are happening the way we have strategised, Ashok Kr Pradhan, told. Pradhan said that the bank is not growing due to lack of capital However, the government has given us capital support. Last year the bank got Rs 5000 crore which will help us to meet the regulatory requirements, Pradhan said. He said that the bank is increasing the asset book by changing the risk-weighted asset portfolio. He said that UBI had received around Rs 4500 crore through NPA resolution during the last year. Our GNPA should be in the range of 15 per cent to 16 per cent by March 2019, down from 21.27 per cent earlier.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

BOFA SEES NEED FOR BAD LOAN MANAGER AS RBI RULES QUASHED

A decision by India’s top court to quash a method prescribed by its central bank for dealing with bad loans has triggered renewed demand to set up a manager for stressed power assets estimated at $36 billion. Now that the court has voided the Reserve Bank of India’s directive on dealing with soured debt the finance ministry should be able to form a much-needed state-run manager to acquire power generating companies, according to a research note by BofA Merrill Lynch on Wednesday. Fuel shortages and insufficient demand from state distribution companies have left Indian power plants underutilized, with many struggling to generate enough cash to repay debt. The government might need about $10 billion to fund the asset manager, which was proposed by a panel in July, according to estimates in the note. For some power projects, banks have been proposing to wait out the problems in the hopes that the situation will improve. State Bank of India, Bank of Baroda and Punjab National Bank had suggested in 2018 the creation of a new company to take over management of about 10 power projects, until demand for the assets picks up.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

IN ABSOLUTE COMPLIANCE WITH NHB DIRECTIONS ON HOME LOANS: PNB HOUSING FINANCE

PNB Housing Finance has been in absolute compliance with the circulars issued by regulator National Housing Bank in relation to disbursements of home loans to individual buyers, the company said in a statement. The company has been making necessary modifications from time to time in its policy on home loan disbursements linked to the stage of construction of project, it said in a regulatory filing. Referring to a PIL filed in the Delhi high court, PNB Housing Finance Ltd (PNBHFL) said the allegations are false and that it would be filing a detailed response to the petition. The petition filed by Abhijit Mishra is at the instance of individual customers who have defaulted in repaying the home loan availed from PNBHFL and therefore has vested interest attached to it, the filing said. It further said PNBHFL follows high standards of corporate governance.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

TATA STEEL TO HAVE 10% WOMEN OF TOTAL WORKFORCE BY 2025

Tata Steel on Tuesday said it is targeting to double the proportion of women working on its shopfloor to 10 per cent of the total workforce by 2025. The Tata group company has 5 per cent of its overall 35,000 employees or about 1,750 women working on the shopfloor at present, a company official said. In a statement, the company further said it will create more avenues for women to grow in the technical/ manufacturing domain. In a fillip for the 2025 goal, the company has begun to include women working on the shopfloor in two additional shifts at the flagship Jamshedpur plant, which has helped the fairer sex be present in the factory between 6 am and 10 pm. A company official explained that women have been on the shopfloor for many years, but used to work only in the general 9 am-5 pm shift. Tata Steel had to make a slew of changes in the workplace in adherence of local rules in Jharkhand to help make it possible for women to work in shifts, he added. The Jharkhand plant has 20,000 workers, of which 1,300 are women. The women employees include 500 officers who are not on the shopfloor and 800 non-officers, including the 52, who man the shopfloor, the official explained.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

RAYMOND FORAYS INTO REAL ESTATE BIZ

Textile major Raymond announced its foray into the real estate segment on Wednesday. The Raymond group has set up a new division called ‘Raymond Realty’ for its maiden venture into the real estate sector, according to a company statement. In our continued efforts to enhance value for stakeholders, Raymond has forayed into real estate development in order to monetise the land at Thane, Gautam Hari Singhania said. The land parcel is in the heart of Thane and offers a good potential for venturing into the real estate sector, he added. First phase of the project will house 3,000 residential units across 10 towers. In phase 1, Raymond Realty is expected to achieve a top line of over Rs 3,500 crore with a profit margin of over 25 per cent during a period of five years, the company said. Raymond is a diversified group with majority business interests in textile and apparel sectors as well as presence across diverse segments such as FMCG, Engineering and Prophylactics in national and global markets. Raymond has one of the largest exclusive retail networks in the country with over 1,000 stores across 400 towns.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

VOLKSWAGEN TO MERGE THREE INDIAN SUBSIDIARIES

Volkswagen Group has announced its intent to merge its three Indian subsidiaries Volkswagen India Private Ltd (VWIPL), Volkswagen Group Sales India Private Ltd (NSC) and ŠKODA AUTO India Private Ltd (SAIPL). The restructuring is part of the ŠKODA-led ‘INDIA 2.0’ project of the Volkswagen Group. The proposed merger of the three companies will make more efficient use of the existing synergies in developing this important growth market. The Volkswagen Group brands: Volkswagen, ŠKODA, Audi, Porsche and Lamborghini, will maintain their individual identities, dealer network and customer experience initiatives. However, the brands will work under the leadership of Gurpratap Boparai with a common strategy for the Indian market. In July 2018, the Volkswagen Group confirmed investments of Rs 8,000 crore (€ 1 billion) in the ‘INDIA 2.0’ project. In January 2019 the Technology Center was opened in Pune, laying the foundation for the development of products based on the localised sub-compact MQB-A0-IN platform tailored to the needs of customers in the Indian subcontinent. In the second phase of the project, Volkswagen Group will be examining the possibility of exporting vehicles built in India.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

FLIPKART, AMAZON, OYO TOP WORKPLACES IN INDIA: REPORT

Walmart-owned Flipkart is the most preferred workplace in India followed by Amazon and Oyo in the second and third places, respectively, according to a list compiled by professional social media network LinkedIn. Internet companies dominate the top 10 spots in LinkedIn's fourth edition of the '2019 Top Companies' list for India. IT giant Tata Consultancy Services (TCS) made its debut at the seventh place, new entrants and homegrown internet and consumer services companies Swiggy and Zomato were ranked sixth and eighth, respectively. Uber, another new entrant, took the fifth spot, while, One97 Communications was at the fourth rank and Oil and Energy conglomerate Reliance Industries was at the 10th place. Others on the list include consulting firm Boston Consulting Group (BCG) at 13th, Yes Bank (14), IBM (15), Daimler AG (16), Freshworks (17), Accenture (18), Ola (19), ICICI Bank (20), PwC India (21), KPMG India (22), Larsen & Toubro (23), Oracle (24), and Qualcomm (25).
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

HOUSING MARKET AFFORDABLE IN ALL 7 MAJOR CITIES EXCEPT MUMBAI: JLL INDIA

Stable prices and lower interest rates on home loans have made housing market affordable in all major cities of the country except Mumbai, according to property consultant JLL India. Hyderabad was the most affordable housing market in 2018, followed by Kolkata and Pune, the consultant said in its annual Home Purchase Affordability Index (JLL HPAI) launched on Wednesday. The index analyses affordability across key seven cities (Mumbai, Delhi NCR, Bengaluru, Chennai, Pune, Hyderabad and Kolkata) for the period 2011 to 2018 after factoring in home loan interest rates, average household income and price of a 1,000 sq ft apartment. The index signifies whether a household earning an average annual income (at an overall city level) is eligible for a housing loan to buy a 1,000 sq ft residential property in the city at the prevailing market price and home loan interest rate. It is interesting to note that only Hyderabad out of the seven cities covered as a part of our study was affordable in 2013 whereas the situation flipped positively by 2018. In 2018, all the cities except Mumbai crossed the affordability threshold as per JLL HPAI, the consultant said.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

GUJARAT HIGH COURT NOTICES TO GOVERNMENT, RERA

The Gujarat high court on Wednesday issued notices to the state government and the Gujarat Real Estate Regulatory Authority (RERA) and sought replies to a petition filed by a real estate developer, challenging a notice issued by RERA in February. Gokuldham Developers, which built Green Park at Sanathal on an 8.22 lakh sq. m plot, complained that RERA does not have the power to take action with retrospective effect. In this case, residents of Green Park had complained to RERA about deficiency in services from the builders, and RERA issued a show-cause notice in February. The developers claimed that the houses were allotted to purchasers in 2012 and the management of the society was also handed over to the society in 2013. The RERA cannot issue notice on the basis of the RERA Act, which was framed by the government much after these transactions. A further hearing was posted for June.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

NSE TO LAUNCH EIGHT NEW AGRI-COMMODITY CONTRACTS

The National Stock Exchange (NSE) will plunge into agri commodity trading with eight new contracts that are not traded on any other exchanges, sources told. The proposed new contracts for which the exchange has sought permission from the Securities and Exchange Board of India (SEBI) include almonds, castor oil, soya degum, urad dal, toor dal and pulses. NSE’s rival, the Bombay Stock Exchange (BSE), which started agri commodity trading in February, has launched trading in guar seed and guar gum. BSE claims to have cornered more than 30 per cent market share in guar seed trading. Though the entry of NSE and BSE into agri commodity has created a buzz, the space has seen lacklustre growth for a while, as 90 per cent of commodity trading volumes in India is concentrated in the oil and metal space.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

UV ASSET RECONSTRUCTION COMPANY LIKELY TO TAKE OVER AIRCEL IF 66% OF LENDERS APPROVE PROPOSAL

Aircel is close to exiting bankruptcy proceedings, with the court-appointed manager picking UV Asset Reconstruction Company Ltd (UVARCL) to take over the telecom company including its debt of Rs 20,000 crore, people with knowledge of the matter said. Deloitte, which is managing the debt resolution process of the now-defunct telecom operator, presented the asset reconstruction firm as its choice before its committee of creditors last week, one of the persons said. More than 50-60 companies globally had been approached to bid for the operator’s assets and from there UVARCL was the final choice whose name has been sent to all the bankers, the person said. Under the Insolvency and Bankruptcy Code, approval of at least 66% of lenders based on their share in the total debt, is needed for a proposal to pass. If lenders can’t agree on any offer, the assets will go into liquidation. If the proposal is approved, the company (UVARCL) will take over the liabilities of Aircel, run a certain part of the operations and put up the rest for sale, the second person said. The asset reconstruction firm may decide to keep the fibre business or work in the bulk messaging space and sell the rest, he added. The company also waged legal battles, mainly against the Department of Telecommunications (DoT) and some operators, to recover its dues from them. It managed to recover Rs 639 crore from Bharti Airtel and DoT. The company is still fighting a battle against Bharti Airtel in the Supreme court over Rs 112 crore that it claims the larger operator still owes it.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

ARCELORMITTAL READIES INDIA TEAM TO RUN ESSAR STEEL

As ArcelorMittal SA inches closer to its first acquisition in India the Luxembourg-based steel giant is readying a crack team that can take control of Essar Steel as soon as the deal is completed. ArcelorMittal has taken up around 300 seats at CoWrks in Mumbai, two people aware of the matter said. CoWrks is a shared office space provider promoted by Bengaluru-based realty firm RMZ Corp. In Mumbai, it runs a three-storey shared office space spread over 130,000 square feet that can seat up to 2,000 people. The current occupants include Ericsson AB, Boeing Co., ZTE and Razorpay. It is unclear when ArcelorMittal plans to start operations from CoWrks and the term of its lease. The shared workspaces are typically leased for a few months to up to 10 years, said a CoWrks official, requesting anonymity. Essar Steel had 3,806 employees as of March 2018, as per its most recent annual report. It operates a 10 million tonne per year steel plant at Hazira, Gujarat. While ArcelorMittal’s takeover bid for Essar Steel has been approved by the National Company Law Appellate Tribunal (NCLAT), lenders to Essar Steel are debating how the 42,000 crore upfront cash payment offered by the buyer will be split among various parties. Anticipating this move, private steel producers are already identifying and ring-fencing their key talent and conducting risk-retention analysis. However, we’re not too sure if there will be a large exodus because Essar already has a large team in place.
   __ _ _ _ _ _ _ _ _ _ _ _ _ _  _ _ _ _ _ _ _ _ _ _ _ _ _ _ _

FACEBOOK APP DEVELOPERS EXPOSED USERS' DATA: REPORT

In yet another shocking revelation, US-based cyber security firm UpGuard has found that Facebook app developers left millions of user records including comments, likes and reactions, exposed on the Amazon Cloud servers. The third-party Facebook app developers exposed data in the public domain in two large datasets that contained 540 million users' records. One, originating from the Mexico-based media company Cultura Colectiva, weighs in at 146 gigabytes and contains over 540 million records detailing comments, likes, reactions, account names, FB IDs and more, said UpGuard in a blog post on Wednesday. A separate backup from a Facebook-integrated app titled 'At the Pool' was also found exposed to the public internet via an Amazon S3 bucket, said the researchers. The At the Pool discovery is not as large as the Cultura Colectiva dataset, but it contains plaintext (unprotected) passwords for 22,000 users. As Facebook faces scrutiny over its data stewardship practices, they have made efforts to reduce third-party access. But as these exposures show, the data genie cannot be put back in the bottle. Data about Facebook users has been spread far beyond the bounds of what Facebook can control today, said UpGuard. Combine that plenitude of personal data with storage technologies that are often misconfigured for public access and the result is a long tail of data about Facebook users that continues to leak. Once alerted to the issue, we worked with Amazon to take down the databases. We are committed to working with the developers on our platform to protect people's data, the spokesperson added. The political consultancy firm Cambridge Analytica also harvested data of 87 million users via a quiz app, leaving Facebook under heavy criticism on how it share user data with third parties. 




#For Source of Information copy and paste the heading in google.




Thanks & Regards,
CS Meetesh Shiroya

No comments:

Post a Comment