As per rule 12A of the Companies (Appointment and
Qualification of Directors) Rules 2014, “every individual who has been allotted
a Director Identification Number (DIN) as on 31st March of a financial year as
per these rules shall, submit e-form DIR-3-KYC to the Central Government on or
before 30th April of immediate next financial year.Provided that every
individual who has already been allotted a Director Identification Number (DIN)
asat 31st March, 2018, shall submit e-formDIR-3 KYC on orbefore5th
October,2018.” However, the DIR-3 KYC e-form presently available on the portal
does not cater for the following:(i)Filing on annual basis, and (ii)Filing in
respect of DINs allotted post 31 March 2018. It presently caters only to those
individuals who were allotted DINs as on 31stMarch 2018 and whose DINs have
been marked as ‘Deactivated due to non-filing of DIR-3 KYC’.Stakeholders may
please note that DIN holders are requiredtofile the DIR-3 KYC form every year,
so that they are aware of and confirm the data & information as available
in the MCA21 system. With the objective of making the form more user friendly,
the form is presently being modified to enable pre-filling of data &
information so that annual filings can be done by DIN holders in a simple and
user friendly manner.The revised form, which will be shortly deployed, can be
filed without anyfee within a period of 30 days from the date of deployment.
Accordingly, DIN holders who had filed DIR-3 KYC form earlier and complied with
the said provisions may kindly await the deployment of the modified form for
fulfilling their compliance requirements
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RBI TO SEEK EC NOD FOR
REPLACING QUASHED FEB 12 CIRCULAR WITH NEW GUIDELINES
The
Reserve Bank of India (RBI) might reach out to the Election Commission (EC)
before releasing its new set of guidelines to banks that would replace its
February 12 circular that the Supreme Court quashed last week. The new set of
guidelines will come into operation soon. The matter pertaining to the issuing
a circular does not relate to elections in any way. But the Election Commission
does have a remit over any new announcement. The RBI, therefore, will seek the
EC’s permission before issuing the new circular, a senior government official told.
Earlier circular, previous restructuring programmes like Sustainable
Structuring of Stressed Assets or S4A may be brought back. S4A was the one that
was operational before the February 12 circular was issued. So technically
that's the one that should get implemented. But let's see what the RBI says,
the official quoted above said.
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OUR BANKRUPTCY CODE IS WORLD-CLASS
The endeavour of every
nation is to continuously improve business regulation to make it easier to do
business. The World Bank conducts an annual examination to gauge the ‘Ease of
Doing Business’ in nearly 200 economies and ranks them on ten sets of
parameters, which include ‘Resolving Insolvency’. India ranked 142nd in ‘Ease
of Doing Business’ for 2015. In terms of resolving insolvency, the country
ranked 137th. The government set an ambitious target of breaking into the top
50 on this index, and initiated a plethora of institutional reforms, including
an overhaul of the insolvency framework. After four years, India ranks 77th, up
by 65 places, in the aggregate rankings, and 108th on ‘Resolving insolvency’.
The Indian insolvency regime has many welcome features. Its primary focus is
revival of an ailing firm, while recovery by creditors is an incidental
outcome. The World Bank methodology, however, captures the incidental outcome.
Secured creditors have absolute priority over other claims in insolvency
(liquidation) proceedings. ‘Getting credit’, instead of ‘Resolving insolvency’
parameter captures this feature. The ongoing annual examination of the World
Bank measures the perception of stakeholders in respect of insolvency parameter
on two indicators, namely, recovery rate and the strength of insolvency
framework, as at end-December 2018. The recovery rate is a function of time,
cost and outcome of insolvency proceedings. In addition to reviving ailing
firms, the insolvency proceedings under the Insolvency and Bankruptcy Code, 2016
(Code) have returned 210 per cent of liquidation value for creditors. They are
realising on an average 48 per cent of their claims through reorganisation, as
compared to the erstwhile regime which recovered 26 per cent. The Code provides
a timeline of 180 days to conclude a corporate insolvency resolution process
(CIRP), extendable by a one-time extension up to 90 days. Probably, no other
regime in the world mandates a time-bound resolution. This push has meant that
proceedings under the Code take on average about 300 days, including time spent
on litigation, in contrast with the previous regime where processes took about
4.3 years. The insolvency resolution process cost, which includes fee of
insolvency practitioner and other professionals, and expenses related to
meetings of committee of creditors (CoC), public announcements, filings and
litigations, etc., have been 0.5 per cent of the realisation by the creditors
in contrast with a cost of 9 per cent under the previous insolvency framework.
Given the significant reduction in cost and time of insolvency proceedings the
Code has become the preferred mode for insolvency resolution of a defaulting
firm. This explains why about 15,000 applications were filed with the
Adjudicating Authority for initiation of CIRP during the last two years. There
are thousands of instances where debtors have settled their debts immediately
on filing of an application for initiation of CIRP, but before it was admitted.
There are settlements after admission of an application also. With realisation
of 48 per cent of claims through reorganisations coupled with pre-admission and
post-admission settlements, the Code has proved to be an efficacious remedy
even for loan recovery. With the Code in place, the defaulter’s paradise is lost.
The strength of an insolvency framework is a function of four indices relating
to commencement of proceedings, management of a firm’s assets, reorganisation
proceedings, and creditor participation. A threshold amount of default entitles
a stakeholder — a financial creditor, an operational creditor or the debtor
itself — to commence CIRP of the firm. A stakeholder files an application for
commencement of CIRP which may end up either with reorganisation of the firm as
a going concern or liquidation of the firm. The Code does not envisage separate
applications or processes for reorganisation and liquidation. As regards
management of a firm’s assets, the Code facilitates continued operations of the
firm during CIRP. An insolvency practitioner manages the affairs of the firm as
a going concern and protects and preserves the value of its property. He may
discontinue overly burdensome contracts and file applications with the
Adjudicating Authority for avoidance of vulnerable transactions. He may also
raise interim finance to carry on the business of the firm. The interim finance
and the cost incurred in raising such finance is included in the insolvency
resolution process cost, which gets priority over all other claims in the
insolvency proceeding. The Code prohibits discontinuation of supply of
essential goods and services to the firm during CIRP. The Code envisages a
resolution plan for reorganisation of a defaulting firm. The identification and
approval of the best resolution plan require two abilities, namely, the ability
to restructure the liabilities and the ability to take commercial decisions. In
view of their abilities, the CoC typically comprises financial creditors. Where
there is no financial creditor, it comprises operational creditors.
Irrespective of the composition of the CoC, other stakeholders have a right to
receive the agenda and participate in the meetings of the CoC and the claims of
all creditors, who are not part of CoC, are also met through reorganisation. In
sync with the objectives of the Code, a resolution plan is required to balance
the interests of all stakeholders and dissenting creditors and assenting
creditors get similar treatment. The CoC takes major decisions on behalf of the
firm under CIRP. It appoints the insolvency practitioner to run the operations
of the firm as a going concern and run the process as well. Any creditor may
seek any information about the firm’s business and financial affairs from the
insolvency practitioner. Any creditor may contest the decision of the insolvency
practitioner accepting or rejecting its own claims or claims of other
creditors. Though the Code does not envisage sale of assets of the firm during
CIRP in view of its focus on revival, it allows limited sale under stringent
conditions, with prior approval of the CoC. It is a matter of satisfaction that
within two years of the enactment of the Code, the Indian insolvency regime has
all the essential elements and practices that any mature insolvency regime
ought to have. Not surprisingly, it bagged the award for the ‘Most Improved
Jurisdiction’ for 2018 from the Global Restructuring Review. Hopefully, it will
also pass with flying colours in the ongoing examination of the World Bank.
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IN 5 YEARS, MSME LOANS JUMP 2.5 TIMES, NPAS MOVE UP TOO
The outstanding loans of
Indian lenders to the micro, small and medium enterprises (MSMEs) expanded
two-and-a-half times in five years through 2018, credit information company
TransUnion CIBIL said, while also warning about debt build-ups leading to
possible stress in the quality of assets. While the outstanding credit to MSMEs
grew to Rs 25.2 lakh crore at the end of 2018 from Rs 10.4 lakh crore in 2013
at a compound growth rate of 19.6 per cent, the consolidated non-performing
assets (NPAs) in the sector increased to 9 per cent from 7.3 per cent, CIBIL
said in a report, published in association with Small Industries Development
Bank of India (Sidbi). We have observed significant acceleration in lending in
the past couple of years, but growth of this magnitude needs to be monitored
carefully as rapid acceleration in debt build-up may indicate prospective
stress in the system, TransUnion CIBIL managing director Satish Pillai said.
While lenders should monitor their portfolios constantly for loan stacking,
leverage and debt build-up, the regulators must keep systemic risks under
check. In the reported period, while public sector banks remained the largest
lending group to the segment, their loan exposure fell to 39 per cent from 58
per cent as the central bank imposed lending restrictions on several banks that
were saddled with bad debt. CIBIL, in the report, said relaxation on the use of
trade credit data from regulated bill discounting platform TReDS for credit
scoring could help improve underwriting standards for banks, while also helping
MSME businesses and individuals get better-priced loans. India’s commercial
credit growth remained strong at 14.4 per cent year-on-year in the December
quarter, taking the overall outstanding credit to Rs 111 lakh crore, driven by
loan growth of 14.9 per cent to large companies, the report said.
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NCLT STAYS INSOLVENCY WITHDRAWAL ORDER OF STERLING SEZ &
INFRASTRUCTURE
The National Company Law
Tribunal (NCLT) on Friday stayed its previous order allowing the withdrawal of
insolvency plea against Sterling SEZ and Infrastructure at the behest of the
Ministry of Corporate Affairs (MCA), as promoters — Nitin and Chetan Sandesara
— are absconding. The MCA said Section 12A of the Insolvency and Bankruptcy
Code (IBC) was not applicable to an absconder The Enforcement Directorate (ED)
is seeking to declare the promoters as fugitive offenders under the Fugitive
Economic Offenders Act in a Delhi court. Senior counsel Sanjay Shorey
represented the MCA. The section states an application can be withdrawn by the
NCLT if 90 per cent of the committee of creditors (CoC) approves of it.
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BAD LOANS: 80 PER CENT OF WRITE OFFS IN DECADE CAME IN LAST
FIVE YEARS
With the government
stepping in time and again to bail out banks by recapitalising them with
taxpayer money, banks have stepped up writeoffs of loans taken by rogue
borrowers. They wrote off a whopping Rs 1,56,702 crore of non-performing loans
during the nine-month ended December 2018, taking the total loan writeoff to
over Rs 7,00,000 crore in the last 10 years, according to figures revealed by
the Reserve Bank of India (RBI). Bulk of the writeoffs, or almost four-fifth of
the total amount written off in the last 10 years, have accrued in the last
five years since April 2014. The RBI revealed that the total loan written off
in the last five years since April 2014 amounted to Rs 5,55,603 crore. Eager to
show lower bad loans, banks wrote off Rs 1,08,374 crore in 2016-17 and Rs
161,328 crore in 2017-18. In the first six months of 2018-19, they wrote off Rs
82,799 crore. The quantum of writeoff zoomed to Rs 64,000 crore in the
October-December 2018 quarter. Banking sources said very little is known about
the identity of the borrowers and the amount written off in the case of
individual borrowers. While banks claim that the recovery measures continue
even after loans are written off, sources said not more than 15-20 per cent is
recovered and the writeoff figures every year are rising, much faster than
recoveries and recapitalisation. Banks are required to extinguish all available
means of recovery before writing off any account fully or partly. It is
observed that some banks are resorting to technical writeoff of accounts, which
reduces incentives to recover. Banks resorting to partial and technical
writeoffs should not show the remaining part of the loan as standard asset, the
RBI had said in an earlier circular to banks. The amount of technical writeoff
is required to be certified by statutory auditors. The central bank had
explained that writing off NPAs is a regular exercise carried. A substantial
portion of this writeoff is, however, technical in nature. It is primarily
intended at cleansing the balance sheet and achieving taxation efficiency. In
‘Technically Written Off’ ‘ accounts, loans are written off from the books at
the Head Office, without foregoing the right to recovery. Further, writeoffs
are generally carried out against accumulated provisions made for such loans.
Once recovered, the provisions made for those loans flow back into the profit
and loss account of banks, the RBI had said in an explanatory note. But neither
the banking sector nor the RBI discloses the identity of borrowers whose loans
are written off by banks. I have nothing against writeoff but it’s to be done
scarcely and within a policy with all efforts to recover the money. Any asset
which is backed by tangible asset is never written off. You must be subject to
scrutiny for these writeoffs. There must be a policy. You ask any banker. They
have written off Vijay Mallya’s loan. Then how are they going to recover that
money? All I am saying is that write off the loan as per policy but that has to
be done by somebody who is authorised to do it. Use it sparingly and do it
where essential. If there’s an asset, why are you writing it off? a former RBI
official said.
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IL&FS CASE: FORMER MD & CEO RAMESH BAWA ARRESTED
The Serious Fraud
Investigation Office (SFIO) arrested former IL&FS Financial Services (IFIN)
MD & CEO, Ramesh Bawa in the case. This is the second arrest made by the
investigation arm of the Ministry of Corporate Affairs (MCA). According to a
source, Bawa was arrested late last night in Delhi. This, after the Supreme
Court (SC) recently refused to extend relief of granting him protection from
arrest. Like Sankaran, Bawa too has been arrested under section 447 of the
Companies Act that empowers the agency to make an arrest for committing fraud.
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SFIO SUMMONS OFFICIALS OF DELOITTE HASKINS OVER WHISTLEBLOWER
CHARGES
The Serious Fraud
Investigation Office (SFIO) has summoned executives of Deloitte Haskins &
Sells, the auditing arm of Deloitte Touche Tohmatsu, following allegation by a
‘whistleblower’ that the firm had helped fudge the accounts of IL&FS
Financial Services. While a partner of the firm was quizzed on Friday, another
audit partner has been asked to make himself available to join the probe, an
official in the know told. The allegation levelled in the complaint is being
studied. Explanation will be sought from all parties concerned before
concluding if the claims made are genuine or misguided, said the official. As
you are aware, there are several ongoing investigations by regulators and
agencies. Such agencies are in contact with us being the previous auditors, a
Deloitte spokesperson said. We have provided full support to their
investigations and will continue to do so. The agency has also quizzed other
audit and consultancy firms engaged by the IL&FS group. SFIO, the
investigation arm of the Ministry of Corporate Affairs, had in November
submitted an interim report detailing the alleged irregularities surrounding
IL&FS. It had then recommended the government to put restrictions on
transactions by some key managerial people at the infrastructure group. It is
now close to completing the final report, people in the know said.
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SC ORDER ON RBI
CIRCULAR: A TEMPORARY RELIEF
The
Supreme Court (SC) order on the Reserve Bank of India (RBI) circular is
certainly a temporary reprieve for the stressed power sector. The SC order
effectively postponed the immediacy of potential liquidation of the stressed
power assets, should they have gone to the National Company Law Tribunal
(NCLT). As the power sector is structurally distorted and stymied due to a
dysfunctional distribution system and compounded by systemic regulatory
problems around tariffs, power purchase agreements (PPAs) and fuel supply
agreement tie-ins, bankruptcy would have likely resulted in large-scale
destruction of value and minimal recoveries for the banks. This would have
likely had a big impact on the future stability of the power sector in a
growing economy like India. The fundamental problem of the stressed power
sector, however, remains. Such market failures need to be first corrected
through government intervention and policy before bankruptcy resolution can be
applied successfully. Restoring the power ecosystem and functioning power
markets is the first call of the day today. Interim arrangements such as
warehousing of gencos or asset pooling can be looked at till the power
ecosystem is reasonably restored. So, what kind of impact will the order have
on the banking industry? On one hand, there is likely to be an effect of
ever-greening of loans because the banks got a little bit of tailwind to kick
the can down the road a bit. That is perhaps salubrious for the banks though at
this stage because if the power assets had gone to bankruptcy and into likely
liquidation the recoveries to the banks would have been minimal. This could
have triggered a further need for recapitalisation due to the large ticket size
of these assets. The fiscal deficit effect due to this also would have been
non-trivial. If the sector is given time and the underlying systems reasonably
reformed through policy intervention, the value of these assets will increase
and also alternative out-of-court arrangements and investments can emerge
leading to better eventual recoveries for banks. However, not much impact is
likely to be on the pace of resolution of stressed assets. The bankruptcy
system is quickly getting institutionalised as a mechanism for resolution --
certainly through the court system, but also as an out of court instrument by
acting as a credible threat. However, any bankruptcy system generally works in
functioning market systems. Unlike the power sector, the stressed assets in
functioning markets like steel, cement etc, will lead to reasonable value in
use and hence better recoveries, which is an incentive to get better recoveries
either through the NCLT process or through alternative mechanisms using the
threat of bankruptcy. As long as the threat of bankruptcy and NCLT is credible
and real, both the banks and the promoters will now seek to figure out
out-of-court settlements or pre-packaged bankruptcies. This is mostly
independent of the SC judgement. The NCLT process, while effective, is
expensive, lengthy, and burdensome for both the debtors and debtee. Hence, any
logical and rational firm or financial institution would try to find out less
expensive and pragmatic win-win settlements outside the premises of the NCLT.
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BIMAL JALAN PANEL TO
DECIDE RBI’S SURPLUS RESERVES MISSES DEADLINE
The
Bimal Jalan committee, set up to decide the Reserve Bank of India (RBI)’s
economic capital framework, has missed its 90-day deadline to submit the report
The first meeting of the committee was on 8 January. Sources said the panel
report, which will quantify the desirable level of reserves to be held by the
central bank, is expected to be finalised only by the end of May and will be
submitted after the elections. We are yet to finalise the report, we are
working on it. We will hold another meeting next month, Jalan, chairman of the
six-member committee and former RBI governor, told, without divulging any
details. Sources said formulating the reserve ratio has not been easy for the
committee, with members including Mohan and Vishwanathan not being in favour of
transferring a significant portion of money to the government. Some central
bank insiders have been opposing any move to transfer larger sums of reserves
to the government.
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1,400 TOP COMPANIES IN
INDIA HIT BY IL&FS PANDEMIC
A
hapless government slap bang in the middle of getting re-elected needs to be prepared
for a harsh backlash in the eventuality that it returns to power. As of now, it
appears that Prime Minister Narendra Modi should return to power, albeit short
of a simple majority on his own. A vast multitude of white and blue collar
salaried employees will be waiting to ask challenging questions of the new
government. The Infrastructure Leasing and Financial Services (IL&FS)
contagion is now a full blown pandemic as IANS has been reporting extensively.
But the extent of the malaise finally has a fix and the numbers are staggering.
As many as 1,400 entities of all hues across the length and breadth of the
country have a total exposure of a staggering Rs 9,700 crore with lakhs of
employee provident and pension funds stuck in a lemon called toxic IL&FS
bonds. This has been revealed by the supplementary affidavit submitted on
behalf of the appellants on April 8 before the National Company Law Tribunal
(NCLAT). The exposure is spread over different IL&FS entities -- IFIN which
is the bulk with 970 companies followed by ITNL and lastly HREL. The list is a
veritable who's who of India Inc -- PSU heavy hitters and a wide variety of
corporates and entities like Army Group Insurance Fund and many more. Suffice
to say that working class savings are involved and while the matter is with
NCLAT, there is no way that IL&FS or the government is in a position to
return this money since the companies involved have gone belly up. Moreover,
the bonds in question had a 'AAA' rating till September 2018 before the company
came under the bus. It is a piquant situation and with a new dispensation on
its way on Raisina Hill which may well be the BJP in a new avatar with a
stronger coalition element, pertinent questions will be asked. Fully
understanding the nature of the brewing crisis, the NCLAT on the same day
categorically ordered a move to protect the investments of pension and
provident funds details of the investment of such funds in amber companies of
the debt laden IL&FS. The tribunal which meets again on April 16 may well
be keen to release at least some of these payments that are due to the employee
provident and pension funds.
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NINE STATES TO RAISE RS
9,800 CRORE THROUGH AUCTION OF SECURITIES ON APRIL 15: RBI
Nine
state governments, including Maharashtra, Rajasthan and Tamil Nadu, will raise
Rs 9,800 crore by selling securities on April 15, the Reserve Bank said
Thursday. The auction will be conducted on the Reserve Bank of India Core
Banking Solution (E-Kuber) system, it added. State Governments have offered to
sell securities by way of auction for an aggregate amount of Rs 9,800 crore
(Face Value), the central bank said in a notification. Tamil Nadu, Rajasthan,
and Maharashtra would auction securities worth Rs 2,000 crore each, followed by
Telangana (Rs 1,500 crore) and Gujarat (Rs 1,000 crore). Punjab would be
selling securities of Rs 600 crore and Kerala Rs 500 crore. Goa and Nagaland
plan to raise Rs 100 crore each. The Reserve Bank further said it will
determine the maximum yield/minimum price at which bids will be accepted.
Securities will be issued for a minimum nominal amount of Rs 10,000 and
multiples of Rs 10,000 thereafter. The state government securities will bear
interest at the rates determined by RBI at the auctions. For the new
securities, interest will be paid half yearly on October 16 and April 16 of
each year till maturity.
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INDIA BANKS' LOANS JUMP
13.2 PCT Y/Y IN TWO WEEKS TO MARCH 29: RBI
Loans
of Indian banks jumped 13.2 percent year-on-year, in the two weeks ended March
29, while deposits rose 10 percent, the Reserve Bank of India's weekly
statistical supplement showed on Friday. Outstanding loans rose 2.14 trillion
rupees ($30.96 billion) to 97.67 trillion rupees in the two weeks ended March
29. Non-food credit surged 2.25 trillion rupees to 97.26 trillion rupees, while
food credit dived 110.6 billion rupees to 416.1 billion rupees. Bank deposits
climbed 3.46 trillion rupees to 125.73 trillion rupees in the two weeks ended
March 29.
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PHARMA FIRM’S EX-CEO
SETTLES INSIDER TRADING
A
former chief executive officer of a subsidiary of Sun Pharmaceutical
Industries, along with his wife, has settled an insider trading matter with the
Securities and Exchange Board of India (SEBI), after the regulator found that
the couple allegedly traded in the shares of Ranbaxy Laboratories based on
unpublished price sensitive information. The capital markets regulator sent a
show-cause notice in August 2017 to Abhay Gandhi and his wife Kiran Gandhi,
after it found that the duo had bought a total of 7,224 shares of Ranbaxy
Laboratories between February and March 2014 and sold the shares in April 2014.
The share transactions happened at a time when Sun Pharma was in the midst of
talks with Daiichi Sankyo Company to acquire Ranbaxy Laboratories. Daiichi was
the promoter of Ranbaxy Laboratories. Further, Daiichi agreed to the sale of
Ranbaxy Laboratories in February, but the information was made public only in
April. At the time of the share purchase, Mr. Gandhi was the CEO of Sun
Pharmaceutical Laboratories, a wholly-owned subsidiary of Sun Pharmaceuticals,
and hence an insider as per SEBI regulations. While Mr. Gandhi purchased 454
shares, his wife bought 6,770 shares in three tranches. Mr. Gandhi is currently
the CEO of Sun Pharma’s north America business. Meanwhile, the cases have been
settled with the couple paying a total settlement charge of ₹70.13 lakh - ₹35.06 lakh each.
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HIMACHAL FUTURISTIC COMMUNICATIONS EX-DIRECTOR SETTLES GDR
MANIPULATION PROBE WITH SEBI
Himachal Futuristic
Communications former director Vinay Maloo has settled a probe with Sebi in a
matter related to alleged manipulation in issuance of global depository
receipts by paying Rs 1.36 crore towards settlement charges. Maloo was the
director of HPCL during the time of alleged violation, and the regulator had
initiated adjudication proceedings against him in June 2018. Himachal
Futuristic Communications Ltd (HFCL) had issued global depository receipts
(GDRs) amounting to USD 50 million in September 2002. Out of this, GDRs worth
USD 46.5 million were subscribed by only one entity, Roker Securities Inc. The
subscription amount for GDRs was paid by Roker Securities after securing a loan
from Lisbon-based bank Banco Efisa. However, it is alleged that the firm had
pledged the GDR proceeds to the bank against the loan given to Roker for
subscription of GDR issue, Sebi said. While the proceedings were pending, Maloo
filed an application under settlement mechanism and proposed to pay Rs 1.36
crore without admission or denying of guilt. The settlement amount proposed was
approved by a panel of board's whole-time members, the Securities and Exchange
Board of India (Sebi) said in an order dated April 11. Accordingly, the
proceedings initiated against Maloo for the alleged default are settled, Sebi
said.
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SEBI SEEKS DETAILS FROM KOTAK AMC, HDFC AMC OVER FMP WOES
The Securities and
Exchange Board of India (Sebi) has asked Kotak Asset Management Co. Ltd to
clarify under what provisions of the existing rules it has held back redemption
of fixed maturity plans (FMPs), two people familiar with the development said.
Sebi wrote to both Kotak AMC and HDFC Asset Management Co. Ltd late on Thursday
with questions on the FMPs. Two Essel Group companies, Konti Infrapower and
Multiventures Pvt. Ltd and Edisons Utility Works Pvt. Ltd, failed to repay in
full the investment of the FMPs. This led to Kotak AMC to hold back part of the
payments that were due to mature on 8 April. HDFC AMC, ahead of the maturity
date of 15 April, decided to roll over the FMPs that held the Essel paper by
more than a year. HDFC AMC needs the consent of at least 75% of its investors
before it can roll over the FMP. Till Friday evening the status of consent from
investors was not clear. Sebi has asked Kotak AMC under what provision did it
stop part redemption in one of its FMP, said one of the two people mentioned
above. The market regulator also wrote to HDFC AMC on Thursday seeking answers
on its FMP maturing on 15 April. Sebi has sought (to know) from HDFC AMC what
happens if it does not get 100% consent from investors to roll over the FMP.
How will the deal with Essel impact the FMP payment to the rest of the
investors who may not consent? The majority of investors are believed to have consented
to the rollover, said the second person.
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MORE BANK MERGERS CAN
SPUR EFFICIENCY, RBI RESEARCHERS SAY
More
consolidation in India’s struggling banking sector will help lenders lower
costs and efficiently scale their operations, said researchers at the Reserve
Bank of India. Labor cost efficiency, or output per employee, moderated across
the sector between 2005-2018, according to the recently published paper. The
authors added that state-run banks fared better than private rivals on this
metric because they slowed hiring and adopted technology, while larger banks
reaped the benefits of scale. This finding provides an additional rationale for
recent mergers of banks, both amongst public and private sector banks, and
suggests that further avenues of consolidation in the banking sphere may be
explored, they wrote. Mergers and bailouts have become a key policy tool in
India, as lenders try to clean up one of the world’s biggest piles of bad loans
after a credit spree went sour. State-run Bank of Baroda became the
third-largest lender after it was merged with Dena Bank and Vijaya Bank earlier
this month. Insurance giant, the Life Insurance Corporation of India, has also
taken over IDBI Bank Ltd. as authorities threw a lifeline to the struggling
lender. The overhang of bad debts is driving up the cost of capital and pushing
the central bank, which is also the banking regulator, and the government,
which owns state-run banks, to opt for mergers. The paper finds that while
India had 19 cost efficient banks in 2005, this number fell as low as 12 before
recovering slightly to 14 by the end of 2018.
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TCS Q4 PROFIT JUMPS 18%
TO ₹8,126 CRORE
The
country's largest software services firm Tata Consultancy Services (TCS)
reported a 17.7% growth in consolidated net profit at ₹8,126 crore for the March 2019 quarter.
This is against a net profit of ₹6,904
crore in the year-ago period, TCS said in a regulatory filing. Revenue of the
city-based firm grew 18.5% in the quarter under review to ₹38,010 crore from ₹32,075 crore in the corresponding
period last fiscal, it added. For the full year (2018-19), net profit was
higher by 21.9% at ₹31,472 crore, while
revenue increased 19% to ₹1,46,463 crore. This is
the strongest revenue growth that we have had in the last fifteen quarters. Our
order book is bigger than in the prior three quarters, and the deal pipeline is
also robust. Despite macro uncertainties ahead, our strong exit positions us
very well for the new fiscal, Rajesh Gopinathan, chief executive officer and
managing director at TCS, said. TCS Board has recommended a final dividend of ₹18 per equity share.
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INFOSYS Q4 NET UP 10.5%
AT RS 4,078 CR
IT
major Infosys on Friday reported 10.5 per cent growth in consolidated net
profit at Rs 4,078 crore for the March 2019 quarter as against Rs 3,690 crore a
year ago. Revenue of the city-based firm grew 19.1 per cent to Rs 21,539 crore
in the quarter under review from Rs 18,083 crore in the corresponding period
last fiscal, Infosys said in a BSE filing. The country’s second-largest software
services firm expects its topline to grow 7.5 - 9.5 per cent in FY2019-20 in
constant currency terms. For the full financial year, Infosys’ net profit
declined by 3.9 per cent to Rs 15,410 crore, while revenue increased 17.2 per
cent to Rs 82,675 crore. Our planned investments have started yielding
benefits. As we look ahead into fiscal 2020, we plan to deploy various measures
of operational efficiencies across the business, Infosys CEO and Managing
Director Salil Parekh said. He termed the results as strong on multiple
dimensions including revenue growth, performance of digital portfolio, large
deals and client metrics. In US dollars, Infosys saw its net profit growing 1.7
per cent to $ 581 million in the March 2019 quarter from $ 571 million in the
year-ago period, while revenues rose 9.1 per cent to $ 3.06 billion from $ 2.8
billion a year ago. For 2018-19, profit declined 11.5 per cent to $ 2.2
billion, while revenues grew 7.9 per cent to $ 11.7 billion. For the financial
year 2019, the company’s board has recommended a final dividend of Rs 10.50 per
share. After including the interim dividend of Rs 7 per share, the total
dividend for the fiscal will amount to Rs 17.50 per share, it said.
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FOREX RESERVES SWELL BY
USD 1.87 BN TO USD 413.8 BN
The
country's foreign exchange reserves rose by USD 1.876 billion to USD 413.781
billion in the week to April 5, aided by a rise in foreign currency assets,
Reserve Bank data showed Friday. In the reporting week, foreign currency assets
-- a major component of the overall reserves -- rose by USD 2.062 billion to
USD 386.116 billion. Gold reserves, which remained unchanged in the previous
week, declined by USD 182.6 million to USD 23.225 billion, the data showed. The
special drawing rights with the International Monetary Fund dipped by USD 1.2
million to USD 1.455 billion. The country's reserve position with the Fund too
slipped by USD 2.5 million to USD 2.983 billion, the apex bank said.
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GOLD PRICES DECLINE RS
170 ON MUTED DEMAND
Gold
prices Friday fell Rs 170 to Rs 32,850 per 10 gram, registering its second day
of decline due to subdued domestic demand, according to the All India Sarafa
Association. Silver also followed gold by declining Rs 350 to Rs 38,200 per kg
on decreased offtake by industrial units and coin makers.
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GOVT ACTION IS KEY TO
TELECOM PSUS’ SURVIVAL
Once
the jewels of India's telecom story, state-run telecom firms BSNL and MTNL are
struggling to meet their day-to-day expenses, including the main cost of their
employees, which run into huge numbers compared to their private sector peers.
The hyper-competitive intensity in the telecom sector has changed the dynamics
and overall structure of the industry. From 12 players, the industry is now
reduced to three private players along with BSNL/MTNL. The public sector
telecom firms' woes mainly stem from the fact that they were unable to shed the
employee flab, despite rapid changes in technologies that made the work profile
of many of its people redundant. Besides their unwillingness to adjust with the
changing times, where a quick response to the customers became a norm, lack of
network expansion also needs to be blamed. Both the companies are incurring
losses since 2009-10. The mounting problems have not occurred overnight. The
government was well aware of the difficulties. The proposal for voluntary
retirement scheme (VRS) and a possible merger between the two has been hanging
fire for the last seven-eight years. A VRS scheme – around Rs 8,000 crore for
both -- will be critical to the functioning of both as employee expenditure
stands at around 99% of revenues of MTNL and 50-55% of revenues of BSNL. The
PSUs also lag their peers in 4G services despite mobile users latching on to
the new technology rapidly. Both the firms do not have any 4G spectrum and are
awaiting government nod for allotment via an equity infusion. This would mean
another Rs 12,000-13,000 crore infusion of funds for both firms through bonds. Unless
immediate corrective steps are taken, the survival of both PSUs is a big
question mark. It remains to be seen whether the new government will be willing
to pump a huge amount of funds for their revival, without any returns.
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WITH 20 IN FRAY, RATAN
TATA-LED COMMITTEE TO PICK CEO FOR TATA TRUSTS
Twenty
professionals, both from within the country and abroad, are in the race for the
position of chief executive officer (CEO) of Tata Trusts, which own 66% of
$110.7 billion salt-to-software Tata Group. A committee headed by Ratan Tata
will be in discussions with the identified individuals, over the next
fortnight, to identify the right candidate for the post of Tata Trusts CEO,
said a person in the know of the development, without elaborating further. A
committee of trustees comprising Mr. Tata, chairman of the trusts, and Vijay
Singh and Venu Srinivasan, vice-chairmen of the trusts, has been overseeing the
operations after R. Venkataramanan relinquished responsibility as the managing
trustee of the Tata Trusts on March 31, 2019. The committee is likely to select
a chief executive for the trusts by early next month.
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IMF CHIEF GLOBAL GROWTH
SLOWING AND MANY COUNTRIES STRUGGLING WITH HIGH DEBTS
With
global growth slowing and many countries struggling with high debts now is not
the time for the self-inflicted economic wound of trade wars, the head of the
International Monetary Fund is warning. The key is to avoid the wrong policies,
and this is especially the case for trade, Christine Lagarde said. We need to
avoid self-inflicted wounds, including tariffs and other barriers. A key
guideline for policymakers at this delicate time, she said, should be- Do no
harm. Ms. Lagarde didn’t specifically mention a year-long standoff between the
United States and China, but she didn’t have to- The world’s two biggest
economies have slapped tariffs on $350 billion worth of each other’s products
in the biggest trade war since the 1930s. They are fighting over Beijing’s
drive to challenge American technological dominance an effort the U.S. says
involves stealing technology and coercing U.S. companies into handing over
trade secrets in exchange for access to the Chinese market. The trade tensions
are coming at an especially bad time. The outlook for the global economy has
deteriorated. A year ago, Lagarde was talking up a world of shared growth- 75%
of the global economy was enjoying a synchronized upswing. Now, she says, 70%
of the global economy is enduring slower growth. The IMF this week downgraded
its forecast for growth this year in the United States, Europe, Japan and the
world overall. The fund’s economists expect global growth to decelerate from
3.6% last year to 3.3% in 2019 tied with 2016 as the weakest performance since
the recession year 2009. World trade is expected to expand just 3.4%, a sharp
slowdown from the 4% the IMF had expected when its previous forecast in January
and down from 3.8% trade growth in 2018.
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90% OF INDIAN ENGINEERS
LACK KEY SKILLS: REPORT
More
and more studies seem to confirm what Infosys cofounder Narayana Murthy flagged
in 2018— acute lack of adequate skills of Indian freshers. Now a report by
talent assessment firm Aspiring Minds shows a grimmer picture of the ability of
Indian IT engineering graduates. Only 10%, the report claims, have adequate
coding skills Only between 3% and 4% are fit to fill roles like product
engineer or startup engineer
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DEVELOPERS FIND RELIEF
IN COMMERCIAL PROPERTIES AS RESIDENTIAL REALTY LAGS
Browbeaten
by various factors, including demonetisation, consumer-centric initiatives like
Real Estate (Regulation and Development) Act, goods and services tax,
Insolvency and Bankruptcy Code, and Benami property law over the past four
years, the battle-fatigued real estate sector is finding relief in the
high-stakes commercial real estate game Commercial space absorption has been
high at close to 40 million square feet (sq ft), as more developers scamper to
build office spaces, new-age co-working joints, specialised e-commerce-specific
buildings. According to experts, exposure to commercial development has
increased to over 40 per cent and in some cases close to 50 per cent. According
to industry leaders such as Niranjan Hiranandani, the need for commercial space
was always there, but most players missed the opportunity to develop Grade A
spaces for global firms. We saw it well in time and effectively lead the
market. A few years back, industry pundits, especially global consultants, were
only talking about residential real estate as the only profitable option. The
trend of corporates consolidating across different locations to a single place
and expanding workspaces was something we tapped into much earlier. When dearth
of good commercial spaces became noticeable, we managed to score high, he said.
Beginning with the largest commercial deal with Brookfield, IT deal with Tata
Consultancy Services, an additional 1 million sq ft under construction at
Thane, Powai, Panvel, and Navi Mumbai, the Hiranandani Group has developed
nearly 5 million sq ft in the past three years, compared to corresponding
development over the past 14 years. The company plans to increase its
commercial real estate development to almost 50 per cent of the total
construction being done. New segments are coming up in commercial real estate
such as co-working spaces, organised retail, and integrated townships with
light industrial and logistics. We believe the ratio of residential and
commercial in the near future should be 50:50, give or take 5 per cent
variation, added Hiranandani. According to industry experts, in the case of
outright sale of commercial properties, the top line of the developer
immediately goes up. It is the reverse in the case of the lease model. Here,
the builder’s bottom line is better because of a steady rise in rental income
over the years. Also, the fact that they can now easily exit via real estate
investment trusts is a major draw for a few builders. Hence, the supply is
expected to gain significant momentum in 2019 as well. According to the Anarock
data, commercial segment saw a total PE inflow of nearly $2.8 billion in 2018,
up from $2.20 billion in 2017.
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TWITTER LIMITS ACCOUNTS
THAT YOU CAN FOLLOW FROM 1,000 TO 400
Twitter
has announced that it is lowering the number of accounts users can follow per
day from 1,000 to 400 to strengthen their spam-fighting systems. Follow,
unfollow, follow, unfollow. Who does that? Spammers. So we’re changing the
number of accounts you can follow each day from 1,000 to 400 Don’t worry, you’ll
be just fine, the official handle of Twitter Safety tweeted late on Monday.
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FACEBOOK SPENDS $22.6 MILLION TO KEEP MARK ZUCKERBERG AND HIS
FAMILY SAFE
Facebook Inc more than
doubled the money it spent on Chief Executive Officer Mark Zuckerberg's
security in 2018 to $22.6 million, a regulatory filing showed on Friday.
Zuckerberg has drawn a base salary of $1 for the past three years, and his
other compensation was listed at $22.6 million, most of which was for his
personal security. Nearly $20 million went towards security for Zuckerberg and
his family, up from about $9 million the year prior. Zuckerberg also received
$2.6 million for personal use of private jets, which the company said was part
of his overall security programme. Facebook has in the past few years faced
public outcry over its role in Russia's alleged influence on the 2016 US
presidential election and has come under fire following revelations that
Cambridge Analytica obtained personal data from millions of Facebook profiles
without consent. Chief Operating Officer Sheryl Sandberg took home $23.7
million in 2018 compared to $25.2 million last year. Separately, Facebook said
Netflix Chief Executive Officer Reed Hastings would vacate his seat on the
social media company's board and not be nominated for re-election. Hastings'
departure comes as the Menlo Park-based company beefs up its push into videos.
Hastings has served on Facebook's board since 2011.
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WHATSAPP BLOCKS NUMBERS FOR IMPROPER POLL CONTENT SPREAD
WhatsApp, the
Facebook-owned messaging service, has started blocking or disabling chats for
mobile phone numbers that are proved to be circulating fake news or
objectionable election-related content that has been flagged by the Election
Commission of India. The first WhatsApp number was deactivated before voting on
April 11. It wasn’t immediately clear when or if the disablement would be
lifted. WhatsApp said in a recent communication to the Election Commission of
India that it will block or disable its chat service on phone numbers provided
that the poll panel shares screenshots of the objectionable content or fake
news with it. Apart from WhatsApp’s action, 500 Facebook posts and links and
two posts on Twitter were taken down during the 48-hour silent period before
the first leg of polling. After social media companies agreed recently to
follow a voluntary code of ethics to take down ‘problematic content’ and bring
‘transparency in political advertising,’ industry observers had raised concerns
over how WhatsApp would address the issue, given that the platform cannot
remove messages.
#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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