MCA
Stakeholders are requested
to please note that Filing of affidavits (from each of the subscribers to the
memorandum and from persons named as the first directors, if any, in the
articles that he is not convicted of any offence in connection with the promotion,
formation or management of any company, or that he has not been found guilty of
any fraud or misfeasance or of any breach of duty to any company under this Act
or any previous company law during the preceding five years and that all the
documents filed with the Registrar for registration of the company contain
information that is correct and complete and true to the best of his knowledge
and belief) as per Section 7(1)(c) of the Companies Act, 2013 read with rule 15
of the Companies (Incorporation) Third Amendment Rules has been dispensed with
vide the Companies (Amendment) Act,2017- from 27th July 2018. Only declaration
by first subscriber(s) and director(s) in INC-9 is mandatory and affidavit is
NOT required to be filed Stakeholders may kindly note the above provisions
while filing SPICe forms for incorporation of Companies.
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ORDER HOLDING CS GUILTY OF MISCONDUCT SET ASIDE FOR NON
OPPORTUNITY ON QUANTUM OF PUNISHMENT
The allegation against the
appellant company secretary was that she had committed Professional Misconduct
having issued three Secretarial Compliance Certificates all on a single day to
a Limited company which was in gross violation of the law. The Disciplinary
Committee of the Institute of Company Secretaries of India (ICSI), after
considering the material on record and the nature of issues involved and in
totality of the circumstances of this case and the in the light of the
Respondent pleaded guilty, formed the opinion that the appellant was guilty of
Professional Misconduct under item (7) of the Part-I of the Second Schedule to
the Act which says that a company Secretary in practice shall be deemed to be
guilty of professional misconduct if he/she does not exercise due diligence, or
is grossly negligent in the conduct of his professional duties. Accordingly,
the Disciplinary Committee passed the final order awarding the punishment of
removal of her name from the Register of Members for a period of 60 day and
fine of Rs. 35000 Before the Appellate Authority (AA), the appellant submitted
that she had admitted her guilt after receipt of an advice from the Members of
Disciplinary Committee to plead guilty so as to get rid of proceedings in this
matter further under impression that she will be awarded only lighter monitory
punishment. The Appellate Authority noted that the Order passed by the
Disciplinary Committee itself stated that the punishment was also announced to
the CS on the order being reserved for announcement, to save her from the
efforts and cost of making yet another visit to Delhi. The AA also went through
the provisions of the Company Secretaries Act, 1980 (the Act) and the the
Company Secretaries (Procedure of Investigations of Professional and Other
Misconduct of Cases) Rules, 2007 and found that the provisions of the Act as
well as Rules do not empower the Disciplinary Committee to dispense with the
mandatory requirements of providing an opportunity of being heard on account of
quantum of punishment on the ground of saving effort and cost of the respondent
in the Disciplinary proceedings. However, the Disciplinary Committee had not
followed the due procedure as prescribed statutorily as no opportunity of being
heard was provided to the appellant on the question of quantum of punishment
irrespective of her admission of guilt conveyed by her letter. The AA quashed
the impugned order and remanded the matter back to the Disciplinary Committee
of the Institute of Company Secretaries of India with the directions to hear both
the parties afresh on account of guilt as well as in respect of quantum of
punishment in accordance with the applicable provisions of the Act, and Rules
and pass a fresh order.
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CARMAKERS CAN NOW TAKE CCI TO NCLT OVER LANDMARK RS 2,544-CR
ANTI-CONSUMER FINE
In a potentially
far-reaching move, the Delhi High Court allowed car companies in India to move
NCLT challenging Competition Commission of India's Rs 2,544 crore penalty on
them. The penalty pertains to a high-profile case that had alleged 14 car
companies of abusing their dominant position vis-a-vis component makers, which
it said was helping these companies make exorbitant profits at the cost of car
owners. The companies have been given six weeks' time to approach the NCLT over
the matter. It was in August 2014 that the CCI had imposed the combined penalty
on 14 carmakers for indulging in unfair practices in the spare parts market, in
an almost unprecedented verdict in India's corporate history. Tata Motors had
been slapped with the maximum fine of Rs 1,346 crore, followed by Maruti Suzuki
at Rs 471 crore, Mahindra & Mahindra at Rs 292 crore, General Motors at Rs
85 crore and Honda Car India Rs 78 crore. CCI had held that these auto indulged
in anti-competitive practices as they did not make genuine spare parts freely
available in the open market.
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LIST OUT STEPS FOR IMPLEMENTATION OF ESSAR STEEL RESOLUTION
PLAN: NCLAT TELLS ARCELORMITTAL
The National Company Law
Appellate Tribunal (NCLAT) directed ArcelorMittal to list out the steps for
implementation of its Rs 42,000 crore resolution plan for Essar Steel. The same
has to be filed in the form of an affidavit, the Appellate Tribunal stated. A
two-member Bench of the NCLAT led by Chairperson Justice SJ Mukhopadhaya also
said that it might direct ArcelorMittal to deposit the money promised in the
resolution plan in a separate account, on the next date of hearing. The NCLAT
was hearing a batch of appeals moved against the approval of ArcelorMittal’s
resolution plan for Essar Steel. Reiterating that the Appellate Tribunal would
not set aside the approval granted to ArcelorMittal, Justice Mukhopadhyay
remarked that only changes with respect to the discriminatory distribution of
money amongst creditors would be made. The NCLAT has thus directed the
financial creditors, operational creditors, and other intervenors in the appeal
to submit the details of their claim made to the Resolution Professional and
the amount/percentage approved in the resolution plan. The Committee of
Creditors for Essar Steel also informed the NCLAT that it has decided not to
increase the share of money given to Standard Chartered as per the resolution
plan. Standard Chartered Bank had challenged that March 8 order of the NCLT,
Ahmedabad Bench approving ArcelorMittal’s resolution plan for Essar Steel, on
the grounds that the approval process adopted by the CoC was illegal and that
the plan was discriminatory. The three erstwhile Directors of Essar Steel –
Prashant Ruia, Dilip Oommen, and Rajiv Bhatnagar – also moved the Appellate
Tribunal against the approval of ArcelorMittal’s resolution plan. NCLAT has
already given a conditional nod to ArcelorMittal’s resolution plan for debt-ridden
Essar Steel.
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NCLAT MAY ASK ARCELORMITTAL TO DEPOSIT RS 42,000 CR BID AMOUNT
FOR ACQUIRING ESSAR STEEL
The National Company Law
Appellate Tribunal Tuesday said it may direct global steel major ArcelorMittal
to deposit Rs 42,000 crore bid amount for acquiring Essar Steel in separate
accounts during next hearing on April 23. A two-member bench headed by Chairman
Justice S J Mukhopadhaya said that ArcelorMittal may have to deposit the money
in a separate account either before the NCLAT or NCLT Ahmedabad-bench. The
bench also asked ArcelorMittal to file an affidavit before it, detailing the
steps to be taken for implementation of the resolution plan of debt ridden
Essar Steel. ArcelorMittal India, successful resolution applicant, would file
an affidavit for implementation of plan, the bench said. It further said, The
Appellate Tribunal may direct the successful resolution applicant to deposit
money in one or another account in next date of hearing. The bench also said
that original plan approved by NCLT Ahmedabad has to be implemented. The bench
also directed the operational creditors and financial creditors of Essar Steel
to file a chart next week, detailing their claims approved by resolution
professional and CoC.
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NCLAT BARS PROMOTER FIRM FROM PLEDGING OMAXE SHARES
Omaxe promoter entity
Guild Builders has been restricted from further pledging of its shares in the
realty firm as the NCLAT Tuesday modified the order passed by the NCLT in a
dispute between the company's CMD Rohtas Goel and his younger brother Sunil
Goel. l had approached the National Company Law Appellate Tribunal (NCLAT)
against the order passed by the Chandigarh bench of National Company Law
Tribunal (NCLT), which had directed Guild Builders not to create pledge on 1.48
crore shares of realty firm except for top-up or margin calls. He had contended
that the figure of 1.48 crore was not correct as Guild Builders in December
last year informed bourses that 7.32 crore shares were pledged out of total
11.44 crore shares held by it in Omaxe Ltd. Hearing the appeal, a two-member
NCLAT bench headed by Chairman Justice S J Mukhopadhaya modified the NCLT order
by deleting the figure. We find that NCLT while dealing with the defence of the
Respondent Company (Guild Builders) did not consider that the Company under the
Regulations was filing information with the BSE and also NSE which did not
match with the defence which was being taken, said NCLAT. It further added that
it was an incomplete information and the figure 1.48 crore used by NCLT in the
Impugned Order is deleted and the Impugned Order dated 15th March, 2019 stands
modified accordingly.
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POWER PRODUCERS OUTSTANDING DUES ON DISCOMS SPIKE 20% TO
NEARLY RS 41K CRORE IN JANUARY
Outstanding dues of power
producers on electricity distribution utilities have increased by more than 20
per cent to Rs 40,804 crore in January 2019 compared to the year-ago month,
adding to the woes of the stressed sector. According to PRAAPTI portal, discoms
owed a total of Rs 33,848 crore to power generation companies in January 2018. In
January this year, total overdue amount, which was not cleared even after 60
days of grace period offered by generators, stood at Rs 26,052 crore against Rs
20,264 crore in same month in 2018. Power producers give 60 days time to
discoms for paying bills for the supply of electricity. After that the
outstanding becomes overdue and generators charge penal interest on that in
most of the cases. The data on the portal indicates that the outstanding as
well as overdue amount has also increased over the preceding month. In December
2018, the total outstanding on discoms was Rs 39,400 crore while the total
overdue amount was Rs 24,262 crore. Maharasthra tops the list with 610 days to
make payments, followed by Rajasthan (608 days), Tamil Nadu (606 days), Madhya
Pradesh (593 days), Karnataka (580 days), Uttar Pradesh (575 days) and Delhi
(575 days) in that order. Overdues of public sector thermal power companies
amount to over 52 per cent of the total overdue of Rs 26,052 crore on discoms.
NTPC alone has overdue amount of Rs 8,200 crore on discoms, while NHPC has Rs
1,596 crore and Damodar Valley Corporation at Rs 1,131 crore. To address
delayed payments by discoms, a high-level committee headed by Cabinet Secretary
P K Sinha had recommended that public finance institutions (PFIs), such as REC
and PFC, may discount the receivables from discoms and make an upfront payment
to the generators. Against that, the PFIs will realise their dues from discoms
in due course of time and charge interest for the period of delay in payment by
discoms.
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PROBE RED FLAGS CLUB EARNINGS FROM HIGH FEES
An investigation by the
corporate affairs ministry has red-flagged violations of the Companies Act in
the elite Gymkhana Club, in particularly the manner in which it has been continued
to earn interest from accumulation of membership entrance fees deposited by
applicants who can, given the long waiting period, become members currently
only after 15 years and which can also stretch up to 30-35 years. The club has
been increasing the entrance fee for applicants under government and
non-government category, which they need to deposit at the time of submitting
application. There has been an increase in the entrance fee for non-government category.
The preliminary findings refer to an increase from Rs 5,000 in 2000 for the
government category to Rs 1.5 lakh in 2016. On the other hand, the registration
fee of non-government applicants was increased from Rs 5,000 in 2000 to Rs 7.5
lakh in 2016. Gymkhana Club is registered as a company under the Companies Act.
The ministry in its report said that the receipt of money by the company from
the applicants for more than 365 days tantamount to acceptance of deposits and
amounts to violation of provisions of the Companies Act. The report also says
that the company was collecting or accepting huge registration fees over the
years and investing them in interest bearing securities or for earning income
from the fee of those who are yet to be admitted as members. In view of the
same the directors of the company have failed to act in accordance with the
articles of the company and also failed to exercise their duties with due and
reasonable skill and diligence and violated provisions, the report said. The ministry
has shared the findings with the club last month and had sought its response.
When asked, a senior functionary of the club said, We will give a comprehensive
reply and we have sought some more time since we have to get response from all
the board members since 2000. We are contesting the deposit of entrance fees
which the ministry has said in the report. These are not deposits. He pointed
out that almost every club charges such fees from applicants. While the club
has said that the general committee (Board of Directors) has been revising the
entrance fee by passing resolutions, the ministry has said the article of
association (AoA) does not provide for revision of registration fees for the
membership of the club. The revision of fees by the GC by passing resolution in
Board Meeting over the years is ultra vires to the AOA of the company and voi
ab initio, thus bad in law.
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LENDERS AGREE TO STERLING SEZ'S OFFER FOR A ONE-TIME
SETTLEMENT
Public sector banks have
decided to withdraw bankruptcy proceedings against a second Sterling group
company — Sterling SEZ and Infrastructure — even as the fate of a similar one-time
settlement (OTS) offer is yet to be decided by the National Company Law
Tribunal (NCLT) in the case of Sterling Biotech. The Mumbai Bench of NCLT will
hear on Wednesday the lenders’ petition regarding the offer made by Sterling
SEZ. The firm was referred to the NCLT in July 2018 for debt resolution under
the Insolvency and Bankruptcy Code 2016. As on date, credit facilities to the
extent of Rs 8,100 crore have been availed by the group and this has declared a
fraud account by the concerned banks.
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AMRAPALI PAID UP TO 30% OF FLAT COST AS COMMISSION TO AGENTS:
AUDIT
In a startling revelation,
the Supreme Court-appointed forensic auditors told the court that the Amrapali
group used to pay exorbitant commission of up to 30% of flat cost to various
marketing agents and companies to sell the flats while crores of home-buyers’
money was diverted by the promoters and directors for personal gain. In a
voluminous report, auditors Pawan Kumar Aggarwal and Ravi Bhatia, who were
given the task to conduct forensic audit of 46 registered companies of the
group and other shell companies set up by the company, said over Rs 25 crore of
home-buyers’ money was used by top officials of the company to invest in LIC,
mutual funds and shares. The report said CMD of Amrapali group Anil Sharma had
transferred around Rs 11 crore to his various family members over the years.
Appearing before a bench of Justices Arun Mishra and U U Lalit, Aggarwal told
the court that he was also examining the role of other very important persons
who were beneficiaries of diversion of home-buyers’ money by the Amrapali group
but said they were not co-operating with him. He said in some cases 30 percent
of flat cost was paid as commission to agents and told the court that he will
file a supplementary report after examining the others. The report said various
marketing agents such as investor clinic which has got flats in lieu of
commissions and other vendors who have got flats for barter should be asked to
surrender the flats which should be sold to recover the funds. Referring to the
report, counsel for home-buyers M L Lahoty told the court that money siphoned
off by the company officials should be recovered by taking away their personal
assets. He said there are 11 projects of Amrapali which could be completed with
the money raised from selling unsold units and by getting the dues from
home-buyers. The forensic report mentions documentary evidence which show that funds
were transferred to more than 100 shell companies outside the Amrapali group
through dubious transactions. The bench, after examining the report, said the
case had been pending for more than a year and posted it for April 30 for final
hearing. It asked the auditors to file their supplementary report before the
next hearing.
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SC IRKED OVER CIRCULATION OF FORENSIC AUDITORS' REPORT ON
AMRAPALI BEFORE FILING
The Supreme Court Tuesday expressed
annoyance over circulation of forensic auditors' report among lawyers on the
embattled Amrapali Group before it was submitted to the court. The top court
said it will hear from April 30 the pleas of home buyers on whether the
property titles can be given to them. It will also look into the ways their
money diverted to other ventures by Amrapali can be realised and the the
stalled projects be completed. It said that if anyone has to benefit from the
Amrapali case it is the hassled home buyers who invested their earnings but
were not given the flats. A bench of Justices Arun Mishra and U U Lalit said
that it was taking serious note of the circulation of the report of forensic
auditors among the lawyers even before it was submitted in the court and this
should not have happened. It directed that the forensic report be kept in
sealed cover. The bench took on record the final report comprising nine volumes
submitted by the two court appointed forensic auditors and directed them to
finish their work by April 28.
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NBCC SEEKS MORE TIME TO REVISE BID FOR JAYPEE INFRATECH
State-run construction
company NBCC has sought an extension of more than two weeks from the Committee
of Creditors (CoC) overseeing Jaypee Infratech’s insolvency resolution process
to submit a revised bid for the company, said two persons with direct knowledge
of the development. This may lead to further delay in the insolvency process of
the troubled real estate developer even as the stipulated 270-day deadline for
CoC to decide on a winning bid ends on May 6. The extension sought by the
company is in the wake of its CMD Anoop Kumar Mittal’s term coming to an end
last week, said one of the sources. This may result in some more delay in the
entire process as NBCC was earlier seen leading the race.
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HIGHER PROVISIONING OVER IL&FS EXPOSURE COULD DRAIN BANK
BALANCE SHEETS
Lenders may have got a
temporary breather, being allowed to defer classifying of IL&FS loans as
Non-Performing Assets (NPA), but such a move could affect bank balance sheets
if they are too long in denial, according to brokerages. In February, the
National Company Law Appellate Tribunal (NCLAT) ruled that no financial
institution will declare non-payment of dues by IL&FS or its subsidiaries
as NPAs without prior approval of the appellate tribunal. However, last month,
the RBI filed a review petition challenging NCLAT’s order. The spotlight will
yet again be on IL&FS exposure and the recognition of and provisions
against it, pointed out HDFC Securities in a note. For instance, IndusInd Bank,
which has an exposure of over Rs3,000 crore, set aside Rs500 crore till
December 2018, but will likely increase its provisioning to Rs700 crore for the
March 2019 quarter, denting its profitability. Likewise, Punjab National Bank,
which has an exposure of Rs 2,300 crore, too could face the music. Provisioning
will keep earnings under pressure. Asset quality excluding IL&FS will be
stable, noted Kotak Institutional Securities. For Bank of Baroda, the
just-concluded quarter could have been good but for its exposure to the ailing
infrastructure giant. The bank, which lent over Rs4,680 crore, could see
slippages and higher provisions against IL&FS exposure, leading to downside
risks. Ditto for Union Bank of India. Brokerages are drawing attention towards
its treatment of IL&FS loans and provisions being made thereof. Notwithstanding
the breather from NCLAT, analysts, and to an extent banks themselves, aren’t
ruling out the underlying risks against IL&FS loans. Evidence of this came
from new IL&FS board last week, which revealed that out of the 340-odd
IL&FS group entities, just about 50 had enough capital to continue
servicing debts.
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SIX MONTHS ON, 'MISSION IL&FS' IS PROVING TO BE MORE
DIFFICULT THAN THOUGHT
A week before Lehman
Brothers foundered in the autumn of 2008, the US Treasury had stepped in to
bail out Fannie Mae and Freddie Mac, the ultimate backstops in America’s
mortgage-lending market. Initially, $100 billion was the authorized bailout
package that surged to $187 billion over time. And the Treasury’s emergency
intervention was based on the premise that Washington must do its bit to
reconstruct a financing ecosystem underpinned by trust. Exactly ten years
later, Mumbai’s policy and money-market mavens sat around oak-panelled
boardrooms to decide the fate of a troubled financier that, although nowhere as
large as the embattled leaders in US housing securitisation, owns and runs
arterial roads, ports and warehouses across India. Hence, reviving IL&FS
and shepherding its turnaround is as crucial to infrastructure - and
capital-deficient India as was Washington’s challenge to reengage the mortgage
securitisation market stateside. By way of federal intent and urgency, the
similarities are evident. But that is where they appear to have ended, at least
for now. Fannie Mae and Freddie Mac earned the Treasury $58 billion in profits
over the next decade, on tax-dollar investments of $187 billion in bailouts. To
be sure, New Delhi has not promised a bailout package or forgiven loans to the
defaulting group, replacing instead the management at IL&FS with a new
board. The premise here is that IL&FS owns sufficiently attractive assets
that could be sold to help retire liabilities and enhance recoveries. While the
first part of the argument is not in question, at least in theory, the second
seems to have been rather optimistic – especially in the light of about Rs 1
lakh crore in outstanding debt. So, six months later, IL&FS remains as much
an enigma as it was in the autumn of 2018. It has high gearing, with consolidated
debt to equity of 10:1, and glaring asset liability mismatches, pointing to the
likelihood of significantly lower loan recoveries than earlier thought. Of
course, the subprime reference has never been too far away from IL&FS. In
August, when it ran out of money and was unable to repay debt obligations, it
drew comparisons with the Lehman crisis. From an original debt burden of Rs
91,000 crore, the situation has worsened because of delays in infrastructure
projects, eroding the value of many operating assets. Earlier, the assessment
was that special purpose vehicles (SPVs) were covered by their own cash flows,
but now banks are making provisions on SPVs as well. I am not sure if the whole
episode was handled well after and prior to the crisis, said TT Ram Mohan. The
new board and management are taking very long to get a grip on the numerous
businesses of the group. To some extent, this is, perhaps, inevitable since
they are new to the businesses. It would have been helpful if the board had
quickly prioritised 10-12 assets that could be sold off so that liquidity could
be infused into the other businesses. IL&FS Financial Services, with a loan
book of over Rs 18,000 crore, saw non-performing loans reach 90%. The
management has recovered 10% of the doubtful exposure in six months. The recoverability
of the loans either by IFIN or to third party is posing a challenge both in
terms of timelines and the amount of money that can be possessed, said N
Sivaraman. Clients IFIN lent to are weak, which could have an impact on what we
recover. The management is trying to address operational challenges such as
securing the release of O&M payments, termination notices from authorities,
coercive action from international creditors, and litigations renewing critical
bank guarantees. It has developed a liquidity management framework using a
12-month, cash flow based solvency test. The group has several types of
creditors. They include banks, NCD holders, provident funds, mutual funds,
foreign banks and financiers that funded ECBs. The company has more than 150
intervening applications from companies across sectors. It has appointed Cyril
Amarchand Mangaldas and Shardul Amarchand Mangaldas as its legal advisors. The
company has prepared a list of companies under the Red category, where
liquidation appears to be the most appropriate goal. It has decided to pay
creditors under the Green category, while exposure under the Amber category is
under dispute. If we do not have a calm period, we will not have the management
bandwidth for the task because we would not know whether to handle litigation
or resolution, said Sivaraman. The management wants IL&FS to be maintained
as a going concern. It has received binding bids for the energy business.
Between the energy and road verticals, the company plans to recover Rs 30,000
crore of debt. A large number of road assets are part of the sale process. If
the resolution process is allowed to stretch beyond a particular point, bankers
and other creditors are going to see a steep value erosion. The new management
can now only do the best of a bad job and minimise the loss to creditors.
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ICICI HOLDING UP CRUCIAL INFORMATION, DELAYING PROBE AGAINST
CHANDA KOCHHAR, RUES ED
The Enforcement
Directorate (ED) on Tuesday accused the ICICI Bank if delaying the probe
against Chanda Kochhar. The bank has not yet shared information on details of
loans forwarded to NuPower and Videocon, the investigative agency claimed.
According to ED sources, the agency had sought from the ICICI Bank management
certain information, including specific dates and the amount of loans
sanctioned to NuPower, Essar and Videocon Group. The request for the
information were sent back long time ago. The agency had also sent a formal
request letter two weeks ago, but there has been no response yet from the bank.
This is causing unnecessary delay to the probe, an ED official told this
publication. According to officials, the information is important to establish
facts because different versions had arisen during the questioning. The agency
had specifically asked for the date of meeting held with NuPower, details of
the sanctioning committee, their attendance during the meeting, agenda,
decisions and discussions and the exact date when the loans were sanctioned to
these companies. It was just to establish the discrepancies in the statement
recorded so far, the official said.
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RS 10 LAC FINE ON MAHILA VIKAS CO-OP BANK, AHMEDABAD
The Reserve Bank of India
has imposed a monetary penalty of Rs 10.00 lakh on The Mahila Vikas
Co-operative Bank Ltd. Ahmedabad (Gujarat) (Non-scheduled UCB) in exercise of
the powers vested in it. The UCB was found guilty of violation of RBI instructions
and guidelines relating to ceiling on unsecured advances, loans and advances to
directors, relatives and firms/concerns in which they are interested and
KYC/AML guidelines.
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TATAS COMPLETE TAKE OVER OF USHAM MARTIN'S STEEL BUSINESS
Tata Sponge has said it
has completed the acquisition of Usha Martin's steel business undertaking
including captive power plants, on Tuesday, April 09, 2019. The deal was
completed pursuant to a cash consideration of Rs 4094 crore payable to UML
after adjustment for negative working capital and debt like items, Tata Sponge
said in an official notification to the exchanges. This is subject to further
hold backs of Rs 640 crore, pending transfer of some of the assets including
mines and certain land parcels, the Tata Sponge statement added. Tata Sponge is
Tata Steel's chosen vehicle for acquistion of UML steel division. Tata Steel
had entered into an greement for acquiring UML steel division in September
2018.
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FOREIGN FUNDS WANT TO COMPLETE MERGERS OFF MARKET, SEBI SAYS
NO
The Securities and
Exchange Board of India (Sebi) has put the applications of at least six foreign
funds seeking buyout approvals which are part of their global plan, on hold,
said two people privy to the development. These funds had asked the capital
market regulator to allow the transfer of shares as part of the acquisition
through off-market transactions because of the costs of doing these transaction
through the stock exchanges. But, Sebi is insisting that these funds buy and
sell the shares through the bourses to ensure transparency. The reluctance of
the regulator to allow such off-market transactions could impact global fund
buyouts and mergers, including acquisition of Oppenheimer by US based Invesco
and merger of OceanRock Investments with Canadabased Northwest & Ethical
(NEI) Investments. A leading European bank is in the process of acquiring fund
house Janus Henderson. It will also impact the fund consolidation activity
happening in Europe where FPIs such as Amundi and Columbia Threadneedle are
undertaking cross-border mergers. All these funds have exposure to Indian
stocks. Their total India holdings could not be ascertained but people in the
know said they could be worth at least $2 billion. Foreign funds are wary of
transferring the shares through stock exchange platform since they would be
subject to taxes including Securities Transactional Tax (STT) and capital gains
tax, thereby increasing the cost of acquisitions. These funds, which have
significant exposure to several blue-chip stocks, have told the regulator that
selling and buying shares on the exchange could trigger volatility in the
markets. Market regulator Sebi has been opposed to off-market transactions,
which has been traditionally misused by market participants to structure opaque
deals and avoid tax outgo. The regulator has expressed its discomfort over such
waivers since the entities would not be paying any tax even as they are
undergoing a change in control, said one of the sources cited above.
Intelligence agencies are also wary about transactions that happen off the
regulatory radar, both in listed and unlisted space. Foreign funds are pushing
Sebi to grant them the same benefits that companies get for share transfers.
For instance, if a company acquires another company, transfer of the shares
from one company to another can be done off-market. Inter se transfer of shares
— done within promoter groups — are also allowed to conduct off-market deals.
However, there is no specific exemption if the transaction involves two trusts.
All major FPIs are structured in form of trusts. The mergers and acquisitions
of global funds in progress have already received regulatory approval in their
home jurisdictions and all these funds are based out of either the US or Europe
In addition to Sebi, the central government too has been wary of such
off-market transaction as promoters of several investors have used the route
for tax avoidance and money laundering purposes. In the Union Budget FY18, the
government withdrew all the tax benefits for off-market transactions including
the benefit of LTCG tax. During that time, LTCG on listed entities was nil if
the investor had paid STT. In the Union Budget FY19, the government
reintroduced LTCG for listed entities. However, it is more expensive to do an
off-market transaction since they attract 20 per cent LTCG tax compared to 10
per cent if the transaction is done on exchange platform and STT is paid for.
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DABBA TRADING RACKET BUSTED, ONE ARRESTED WITH RS 75,000
A 42-year-old resident of
Puna was arrested by crime branch sleuths from his shop in Magob area of the
city for doing unauthorized trading in stocks through his dabba trading network
on Tuesday. Police seized cash and computer equipment worth Rs75,000 from
accused Sunil Dangra’s shop in Citadel Complex. He was produced in a local
court which remanded him in police custody for six days. Police are to yet
question him about his associates in the illegal enterprise. Dangra was running
the trading terminal without required permissions and licences. He did not pay
taxes to the government for the transactions, police informed. Dangra was
booked for gambling under Indian Penal Code and Securities Contract
(Regulation) Act and also under the Securities and Exchange Board of India Act.
Dangra told police that he was earlier doing textile business in Mumbai along
with his father. He invested some money in the stocks through authorized brokers
and gradually gained knowledge in stock trading. Meanwhile, the family shifted
to city where it started textile business in 2009. He started unauthorized
stock trading to make quick money after suffering a loss of Rs8 lakh in the
business.
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OPEN OFFER FOR FEDERAL MOGUL SHAREHOLDERS REACHES SAT
The open offer for
shareholders of Federal Mogul Goetze has reached the doors of the Securities
and Appellate Tribunal (SAT) with the acquirer filing an appeal in response to
the directive by the Securities and Exchange Board of India (Sebi) to hike the
offer price. Tenneco Inc is making the open offer for 25% shares of the Indian
entity following its global acquisition of Federal Mogul. Sebi, in its final
observation letter in response to the draft letter on March 20, directed a
revision of the offer price to Rs 608.46 from Rs 400 mentioned in the open offer
on March 20. The acquirer company, through its merchant banker CKP Financial,
filed an appeal on April 1 before SAT. The determination of the next steps of
the open offer will be subject to the proceedings before SAT, the target
company said in a filing. In November 2018, Sebi had appointed Haribhakti &
Co to undertake an independent fair valuation of the equity shares of Federal
Mogul Goetze based on which the new price has been communicated. Federal Mogul
Goetze had said that the basis and the valuation methodology used to arrive at
the revised offer price had not been provided in the communication by Sebi.
Therefore, neither the acquirer nor Federal-Mogul Goetze (India) has been
granted an opportunity to review or verify the underlying methodology of any
report or other analysis that was relied upon by Sebi in directing the acquirer
to revise the offer price, Federal Mogul Goetze said. It had sought details of
the valuation from Sebi. Shareholders of Federal Mogul Goetze had represented
to Sebi on the open offer price, citing the fact that its shares are
infrequently traded and the valuation needs to factor in that. In a note on the
open offer last year, proxy advisory firm Stakeholders Empowerment Services
(SES) had said: In cases of open offers where shares are infrequently traded,
regular formula of 60 trading days volume weighted average is not applicable
under SAST Regulations. In fact, as it turns out in case of Federal Moghul
Goetze, the market price doesn’t play any role in determining offer price. Commenting
on the revised price communicated by Sebi, JN Gupta, managing director at SES,
said: I am happy at Sebi’s intervention in the matter, which is a step in right
direction. This plugs the loophole that could have been used to deny minority
investors their rightful dues, he said. While I would still like Sebi to revise
definition of infrequently traded shares so that need for Sebi’s intervention
on case by case is avoided. A wide difference between valuation arrived at by a
truly independent valuer appointed by Sebi vs value arrived at by company
appointed valuer exposes the weakness of the system, Gupta added. SES had said
in the advisory note that not only Federal, but 114 out of Top 1,000 companies
fail to meet this benchmark and in case these companies were to make open
offer, they will be able to make open offer at non-transparent price.
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FORTIS PUTS UP RHT STAKE FOR SALE, THREE MONTHS AFTER
ACQUISITION
Fortis Healthcare Ltd is
in talks with potential buyers to sell its stake in Singapore-listed Religare
Health Trust (RHT), three months after it completed the acquisition of RHT’s
assets for ₹4,650 crore. RHT Health Trust Manager Pte. Ltd (in its
capacity as trustee-manager of RHT Health Trust (RHT) wishes to inform
unitholders of RHT that it has been notified by Fortis Healthcare International
Ltd (FHIL), a controlling unitholder of RHT, and Stellant Capital Advisory
Services Pvt. Ltd, the sole shareholder of the trustee-manager, that they have
each commenced discussions with various parties to explore the possibility of
sale of their interests in RHT and the trustee-manager, respectively, Fortis
Healthcare International, a unit of Fortis Healthcare, said in a regulatory
filing on Monday. The proposed transaction will help raise funds to fulfil the
needs of Fortis Healthcare as its acquisition by Malaysia's IHH Healthcare Ltd
is in limbo. The Supreme Court had in December ordered a status quo on the
Fortis-IHH deal, following Japanese drug maker Daiichi Sankyo’s contempt plea
against the Singh brothers.
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HOW IS GOOGLE'S GPAY OPERATING WITHOUT AUTHORISATION: DELHI HC
ASKS RBI
The Delhi High Court on
Wednesday asked the Reserve Bank of India (RBI) how Google's mobile payment
app, GPay, was facilitating financial transactions without the requisite
authorisation from it. A bench of Chief Justice Rajendra Menon and Justice A J
Bhambhani posed the query to RBI while hearing a PIL which claimed that GPay
was acting as a payments system provider in violation of the Payments and
Settlements Act as it has no valid authorisation from the central bank of the
country to carry out such functions. The court issued notice to RBI and Google
India seeking their stand on the issue raised in the plea by Abhijit Mishra,
who has contended that GPay does not figure in RBI's list of authorised
'payment systems operators' released by the central bank on March 20, 2019.
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SOME REFORMS IN INDIA SHOW BENEFITS OF DIGITALISATION: IMF
Some reforms in India have
shown the benefits of digitalisation which has also reduced the opportunities
for discretion and fraud, the IMF said in its latest report on Wednesday. The
introduction of e-procurement in India and Indonesia has also increased
competition and led to better quality of construction, the International
Monetary Fund (IMF) said in its latest edition of the fiscal monitor report
released ahead of the its annual spring meeting with the World Bank. Some
reforms in India show the benefits of digitalisation and reducing opportunities
for discretion and fraud, the International Monetary Fund (IMF) said in its
latest edition of the fiscal monitor report released ahead of the its annual
spring meeting with the World Bank. The introduction of e-procurement in India
and Indonesia also increased competition and led to better quality of
construction, it said. External scrutiny by Supreme Audit Institutions (SAIs),
parliaments and civil society helps safeguard the integrity of public finances
and hold civil servants and elected officials accountable, the IMF said, adding
that focused audits can help fight corruption by identifying waste and
miss-management. IMF staff projections are that the achievement of the federal
government deficit target of three per cent of GDP will likely be delayed and
that the debt target of 40 per cent of GDP will be achieved after 2024, it
said. On the other hand in China, the government plans a more proactive fiscal
stance for 2019 that would include reductions in the value-added, personal
income and corporate income tax rates. General government debt is projected to
rise over the medium term to over 72 per cent of the GDP by 2024, the IMF
added.
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ESSEL WOES: KOTAK AMC MAY NOT FULLY REPAY INVESTORS IN
REDEEMED FMP
In a written communication
to investors of Kotak FMP Series 127 that matured on April 8, Kotak Mahindra
Asset Management Co said that it may not be able to pay the entire redemption
amount to its investors. The scheme said it may face a delay in recovering its
money that it had invested in the non-convertible debentures (NCD) of two of
Essel group companies, namely Edisons Utility Works Pvt Ltd and Konti
Infrapower & Multiventures Pvt Ltd. As a result, investors may get their
part redemption proceeds upon the scheme’s maturity and the rest will come to
them as and when the fund house recovers the money from the companies, Kotak
AMC said. The FMP was launched around November 2015. Although the NCDs are
backed by equity shares of Zee Entertainment Enterprises Limited (Zee), most of
the lenders and mutual funds who had lent money (in other words, bought the
debt securities) to the Essel group had chosen to not sell the shares to
recover the money if there is any default. Lenders have granted this moratorium
till around September 2019 by which time they, including Kotak AMC, expect the
group to repay all its dues.
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DIGITAL GOLD ACCOUNTS CROSS 80 MILLION, MORE THAN TWICE DEMAT
ACCOUNTS
Digital gold accounts in
the country have risen significantly, taking the customer base past the 80
million mark by March end. This is more than twice the total number of demat
accounts in the country. The two national depositories had 35 million demat
accounts between them at the end of 2018 and are estimated to have 40 million
by end of 2019. Demat of shares was first launched in 1997. While first digital
gold account was launched some fifteen years later in 2012-13. Digital gold or
gold purchased online on various platforms, including PayTm or Google Pay, and
stored in online accounts, has seen a surge the past one year. In the past two
years PayTm, a wallet and SafeGold, (a brand with Digital Gold, a Joint Venture
between the Private Equity firm Invent Capital and the World Gold Council} are
offering the precious metal in digital form. Augmont, an integrated entity
engaged in everything -- from refining of gold ore to retailing of pure gold --
started offering digital gold or Digi Gold in 2012. Industry estimates 8-9
tonnes of gold is sold a year on these platforms and some tonnes are delivered.
Online sale of gold jewellery and coins is catching up faster and increase in
customer base of digital gold has only added to the worries of physical
jewellers, especially mom-and-pop stores. Online players are offering physical
delivery at the doorstep and free storage and are also allowing account holders
to convert gold held digitally into jewellery. MMTC-Pamps delivers and keeps
aside gold sold by wallets like PayTm, Google Pay and PhonePe. Its official,
who didn't wish to be named, said, We expect sharper growth in digital accounts
opened as now Google Pay has also started offering them.
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BANKS TO POST BETTER PERFORMANCE IN FY20
With banks firm on the
recovery track, the fourth quarter is likely to see improved performance and
lower non-performing loans Most analysts believe fiscal 2019-20 is set to bring
in better tidings, barring a few uncertainties such as the Supreme Court ruling
on the February 12 circular and continuing concerns at the IL&FS Group.
Private sector lenders such as RBL Bank and HDFC Bank are set to announce their
results for the quarter ended March 31, 2019, as well as for the financial year
2018-19 from next week. While RBL Bank’s results will be announced on April 18,
HDFC Bank has scheduled it for April 20, and Axis Bank, which has its board
meeting on April 25 and 26. ICICI Bank, as well as other public sector lenders,
are set to announce their results later in May. Most analysts believe that the
period of stress and the bad loan cycle is now coming to an end, with more
focus on resolution and credit and deposit growth. Post elections, it is
expected that there will be further improvement, as there is likely to be more
credit demand. Banks are likely to head into a steady fourth quarter and
continue to see improvement in asset quality metrics with low stress and
constant provisioning, leading to high provision coverage ratios. Though the
recent large resolutions are not likely to reflect in the fourth quarter, they
should not even attract ageing provisions, stock broking firm Prabhudas
Lilladher said in a recent report. Kotak Institutional Equities said the
government’s recent capital infusion programme will help some banks make
aggressive provisions and lower their bad loans to less than 6 per cent,
allowing them to exit the Prompt Corrective Action framework. Most of our
discussions with banks in recent times suggest that the unrecognised stress in
corporate loans is negligible, especially after IL&FS. Risks emanating from
real estate are not too high, it said, adding that resolution through the IBC
has slowed, as several high-profile cases could not reach a conclusion as anticipated
earlier. However, progress continues outside through settlements, upgradation,
and write-offs, it said.
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HARD TIMES FOR NON-OIL CPSES, LIKELY TO REPORT LOSSES FOR
SECOND YR RUNNING
The last five years have been
the worst for listed central public sectors enterprises (CPSEs) in 15 years.
For the first time since FY04, 38 CPSEs, excluding oil marketing companies, are
expected to report a net loss for a second consecutive year in FY19. With this
non-oil government companies would be in red for three out of last five
financial years. These listed CPSEs are expected to report a net loss of around
Rs 21,700 crore during the year ending March this year based on their
performance during April-December 2018 period down from a combined net profit
of around Rs 63,700 crore during FY14. These listed CPSEs together reported net
losses of Rs 16,279 crore during the first nine-months of FY19. In comparison,
non-oil CPSEs' combined net profit grew at a compounded annual rate (CAGR) of
8.4 per cent during the two terms of United Progressive Alliance (UPA), while
the combined net profit of listed CPSEs (including oil companies) expanded at
an annualised rate of 7.5 per cent during the period. Public sector banks
(PSBs) have been the biggest losers in the last five years. They are on track
to report losses for the fourth consecutive year in FY19 based on their
earnings during the first nine-months of FY19. Listed PSBs, together, reported
a net loss of around Rs 31,600 crore during April-December 2018 period. Public
sector companies also continue to struggle with poor revenue growth. The
combined revenues of non-oil CPSEs are likely to grow at a CAGR of 2.7 per
during FY14-18 down from 11.6 per cent annualised growth during FY09-14 and
17.2 per cent annualised growth during FY04-09. The combined revenues for all
listed CPSEs, including energy companies, is likely to grow at a CAGR of 1.7
per cent in the last five years as against 12.2 per cent CAGR growth during
UPA-II and 18.3 per cent CAGR growth during UPA-I. The analysis is based on
annual finances of a sample of 44 listed CPSEs across sectors. Some of the key
CPSEs in the sample include State Bank of India, Bank of Baroda, NTPC, Bharat
Heavy Electricals and Power Grid Corporation among others. The combined net
profit of public sector oil & gas companies is likely to grow at a CAGR of
7.7 per cent during FY09-14 against nine per cent annualised growth during
FY09-14 and 3.8 per cent annualised growth in earnings during FY04-09. Poor
show by CPSEs has a negative implication for government finances as well.
Dividend from CPSEs has been an important source of non-tax revenues for the
central government which has nearly dried-up now hitting the overall public
finance, says Madan. Most experts don’t see an immediate turnaround in CPSEs
finances. It will take at least two years of strong growth in the industrial
sector and a surge in investment rate in the economy to pull government owned
companies from their current slump, says G Chokkalingam.
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URBAN MIDDLE CLASS UPBEAT ABOUT NEXT 12 MONTHS: HSBC SURVEY
Notwithstanding concerns
about a slowdown, a new survey by HSBC has found a majority of the Indian urban
middle class to be positive about the next 12 months, including their future
income and spends. The survey also threw up some interesting consumption
trends. Recent comments by some consumer companies have suggested that there
will be some slowdown in the consumer sector in the coming quarter. Our survey
results suggest that urban consumers are upbeat about the next 12 months, and
the relative slowdown could be temporary and may not last for the entire year
2019, said the survey, India: Anatomy of the Consumer. As part of the exercise,
it surveyed 1,000 members of the urban middle class living in major cities who
have an annual household income above ₹7 lakh. They were asked 50
questions about their consumption habits. Concerns over slowdown have emanated
due to factors such as rural distress, lukewarm urban demand, and liquidity
issues in the trade channel, which has led to destocking and the base effect
from last year, HSBC said, adding that this is probably affecting the lower end
of the consumer market. Given that this is an election year, there is a focus
on boosting rural and lower middle-class incomes a theme we believe will
continue after the election, it further noted. The survey found that 80 per
cent of the respondents are optimistic about the economy for the next 12
months, while 45 per cent are very optimistic. Similarly, 41 per cent expect
their income to increase by more than 10 per cent, and another 39 per cent
expect an increase of at least 5 per cent over the next 12 months.
Interestingly, the survey also threw up some insights into consumer trends .
For instance, with food delivery apps now available, 77 per cent of the
respondents believe they have increased the number of food orders over the last
two years, with 44 per cent having food home delivered at least once a week.
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HOME BUYERS ALERT! RERA LIMITATION LEADS TO 72 PCT DELAYED
REAL ESTATE PROJECTS IN MMR, NCR
Around 72 per cent of the
delayed projects in India are in Mumbai Metropolitan Region (MMR) and
Delhi-NCR. The industry insiders say it has happened despite the setting up of
a regulatory mechanism, countless homebuyers have been left in the lurch by
their builders because these projects don't fall under the ambit of RERA.
Tightening credit crunch is also a reason for such delay, say realty experts.
Detailing over the delayed projects in MMR and NCR Anuj Puri, Chairman –
ANAROCK Property Consultants said, As per ANAROCK data, the top 7 cities
currently have a total stock of 5.6 lakh delayed housing units worth a whopping
Rs 4,51,750 Cr. These units were launched either in 2013 or before that. Lakhs
of buyers across top cities – particularly MMR and NCR - have been left in
limbo, leading to inconceivable mental stress and financial pain. Puri went on
to add that the top cities like NCR and MMR collectively account for 72 per
cent of the total stuck housing units across the top 7 cities worth Rs 3,49,010
Cr – nearly 77 per cent of the total worth of the stuck projects. In
comparison, the main Southern cities of Bengaluru, Chennai and Hyderabad
together account for a mere 10 per cent of the overall stuck housing units of a
total worth of Rs 41,770 Cr. The Southern cities have predominantly been driven
by service-class end-users, leaving limited scope for developers to be
unprofessional. Interestingly, among the two major IT destinations, Bengaluru
is far better off than Pune in terms of the total number of delayed/stuck
projects. The Silicon Valley of India has less than half of the total delayed
stock in Pune (of 86,700 units). Chennai has the least project delays during
this period, with around 8,650 units worth INR 5,620 Crore, said Anuj Puri of
ANAROCK Property Consultants. Elaborating upon the reason for such a whopping
number of delayed inventories in MMR, NCR Rakesh Yadav, CMD, Antriksh India
Group said, Besides some developers' lack of real will to complete their
projects and preference for funds diversion, the tightening credit crunch has
been one major factor contributing to this mounting problem. It has become a
'chicken and egg' situation - buyers have understandably stopped releasing
funds to builders, and builders claim they have no funds to complete
construction. Also, every delayed project results in cost overruns which
compound the funding crunch even further. Lack of project clearances for
whatever reason also contributes to the piling up of housing stock. In the
pre-RERA era, many builders launched greenfield projects without the requisite
approvals in place, resulting in their projects getting stuck. Yadav said that
the government-owned NBCC has been roped in to complete some stalled projects
in NCR. This is a significant move which, if applied in larger numbers, can
have a real impact.
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VODAFONE IDEA, AIRTEL PAY UP RS 9,000 CR DUES FOR SPECTRUM
Vodafone Idea, India’s
largest telco by subscribers, and second-ranked Bharti Airtel, have paid
spectrum dues worth over Rs 9,000 crore to the government recently, officials
in the Department of Telecommunications said. Vodafone Idea paid Rs 6,277 crore
for the spectrum it had bought in auctions, while Bharti Airtel paid about Rs
2,800 crore, a senior DoT official said. Vodafone Idea borrowed money to help
clear the dues after the department rejected its request for a moratorium on
spectrum payments. It proposes to repay the loans after a rights issue this
month. Our company has arranged a short-term bridge loan of Rs 3,000 crore from
HDFC Bank, Vodafone Idea said in its rights issue document filed with the stock
exchanges on March 26. Our company will re-pay this short-term bridge loan from
the net proceeds (of the rights issue). Vodafone Idea’s rights issue to raise
Rs 25,000 crore opens on April 10. The company said it planned to take
short-term loans for the remaining amount of Rs 3,277.1 crore or finance it
through internal accruals. The last date of payment for the three private
sector operators, including Reliance Jio Infocomm, is April 10.
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WHATSAPP PLANS THIRD-PARTY AUDIT FOR ITS PAYMENT SYSTEM
WhatsApp has identified a
third-party company to audit its payments system for data-localisation
compliance, the popular messaging platform has told the Supreme Court in
response to Reserve Bank of India’s (RBI’s) affidavit last month. In its
response to the apex court on Tuesday, WhatsApp said it has also submitted a
‘confidential revised data-localisation plan’ to all stakeholders. WhatsApp did
not name the auditor it has chosen for compliance check. Incidentally, sources
in the regulatory body National Payments Corporation of India (NPCI) said
WhatsApp, which has over 200 million active users in the country, is yet to
commit to an official timeline to be fully compliant with RBI’s
data-localisation norms. While WhatsApp will need NPCI’s nod to roll out
full-scale payments to its over 200 million monthly active users in India,
MeitY (ministry of IT and Technology) — which has been involved in the matter —
would also need to be convinced of WhatsApp’s complete compliance with Indian
rules. The original deadline to comply with RBI’s diktat was October 15 last
year. There is no specific timeline that has come from WhatsApp on compliance.
After RBI’s response in an affidavit became public, they have said they are
aiming for compliance, much like their earlier communication, a person aware of
the matter said, adding that compliance needs to be in place before an audit.
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1 IN 2 INDIANS RECEIVING FAKE NEWS VIA FACEBOOK, WHATSAPP
Despite tall claims made
by Facebook that it is removing 10 lakh fake accounts a day in India, a survey
revealed on Tuesday that one in two Indians has received fake news in the last
30 days and Facebook and WhatsApp are the platforms which are being used
excessively to misinform the users. The survey by online startup Social Media
Matters and New Delhi-based Institute for Governance, Policies and Politics
found that over 53 per cent of Indians received fake news related to the
upcoming elections over various social media platforms. Nearly 62 per cent of
the population believes that the upcoming elections will be influenced by the
misinformation that the users are receiving, the findings showed. The 18-25 age
group that led the conversation constituted 54 per cent of the sample
population. Facebook and WhatsApp are the leading platforms being used to
disseminate misinformation. The survey stated that 96 per cent of the sample
population received fake news via WhatsApp, the findings showed. An estimated
900 million voters (including 9.4 per cent new voters) are battling the
influence of fake news as India goes to the polls from April 11.
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PSES TO STAY PSUS EVEN WITH BELOW 51% GOVERNMENT STAKE
The government is planning
a major overhaul of the definition of state-run companies where an entity will
continue to qualify as public sector enterprise (PSE) even if the government
holding falls below 51 per cent. Sources in the Department of Public
Enterprises said the change in definition is being discussed with the Finance
Ministry, and an announcement could be made by the new government. There is a
thinking that PSU definition should be maintained with government holding of,
say, 40 per cent or 26 per cent in case of certain non-strategic entities. This
will not only give flexibility to PSU boards in decision-making but also allow
more room for the Centre to raise additional revenue from disinvestment, said a
top PSE official aware of the proposed changes. Under the present definition,
CPSEs are companies in which the direct holding of the central government or
other CPSEs is 51 per cent or more. It can be brought down to, say, 40 per
cent. It will still allow the Centre to be the largest shareholder especially
in companies like NTPC, Powergrid, BHEL, where public shareholding is already
very high. The changes will also facilitate consolidation among PSUs in
different sectors. For example, the Power Finance Corporation (PFC) that has
bought entire government equity in REC, now wants to merge the entity with
itself. But this will bring down government shareholding in the merged entity
to just about 42-43 per cent, taking the company outside the PSU-fold. If the
threshold of the government holding is lowered, such consolidation will be
promoted without companies fearing to lose their PSU character. This would be
wonderful change that will allow PSU boards to be widely represented. The fear
of a possible hostile takeover of companies with reduced government equity is
also unfounded as the government with 40 per cent will still have substantial
stake that can also rise if state/owned institutions, like LIC, also hold a
sizeable share, said an industry expert. The government is already taking steps
to reduce its stake in various PSUs. In the case of banks, the aim is to first
reduce government shareholding to about 52 per cent, and then further down. In
others, this exercise can be pursued rapidly. Market regulator SEBI also wants
PSUs to increase public float to at least 25 per cent. The government has
surpassed the FY19 disinvestment target of Rs 80,000 crore by Rs 5,000 crore.
It has set a conservative target of Rs 90,000 from disinvestment in FY20. If
the PSU definition is changed, it would be easier for the government to
mobilise funds even in a choppy market as PSUs could be asked to buy back
government shares. If markets are good, higher number of government shares in
PSUs can be offered at a premium.
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THE FACEBOOK WAR ROOM THAT BATTLES FAKES IN POLL SEASON
Over half a dozen dashboards
hang from a wall showing trends and live charts related to hate speech,
misinformation and violent content in the elections operation centre at
Facebook’s Menlo Park headquarters in California. The centre, apart from
similar ones in Dublin and Singapore, is crammed with 30 workstations that
detect and report troublesome content on Facebook, WhatsApp and Instagram, part
of amassive election monitoring machinery that keeps an eye on India. With the
first phase of India’s general elections starting on April 11, Facebook is
keenly watching how its efforts over the last 18 months are paying off. As
Indians prepare to vote Facebook and our family of apps continues our efforts
to help make sure the elections are fair and free from interference, both foreign
and domestic, said Ajit Mohan. The social media giant did some detailed
planning and risk assessment across its platforms, including WhatsApp and
Instagram, before undertaking the exercise. Preparations involved trips to not
only New Delhi’s power corridors but also to rural India to understand
linguistics, product consumption behaviour and awareness levels. These helped
the social media giant modify its product features to suit linguistics and
low-bandwidth needs. Facebook has about 300 million users in India, according
market research portal Statista. For the operations centres, it’s not going to
be an easy task. Its three global operations centres, which take down one
million accounts every single day, are backed up by an army of 40 teams that
include experts from data science, threat intelligence, linguistics, law
enforcement and research. These centres can also depend on the services of
about 30,000 content moderators across the company. When Facebook started work
here, it realised that Indian users consume social media differently from users
elsewhere.
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
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