CORPORATE UPDATES 25.04.2019

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ACTIVE DEADLINE EXTENDED, COMPANIES GET TIME TILL JUNE 15 TO MEET NEW DISCLOSURE NORMS

The government has extended the deadline for uploading photos of business premises to June 15, giving corporates more time to comply with a provision aimed at spotting shell companies. It has been decided to extend the date to June 15, confirmed a corporate affairs ministry official. The move came after the ministry received representations from industry associations with many companies yet to comply. Startups have, in particular, pointed out that many of them operate out of homes or shared premises or office suites.

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DEPOSITORS CAN TRACK UNPAID DUES VIA MOBILE APP, WEBSITE

The government is set to launch a new mobile application and a website to help those with money parked in deposit schemes, many of which are unauthorised, and chit funds as part of its efforts to clamp down on defaulters, some of whom are raising funds in an unregulated manner. The move to collect primary data comes along with a recent ordinance that bars unregistered entities, including jewellers and real estate companies, from accepting deposits. Over the next two-to-three weeks, the Investor Education and Protection Fund (IEPF) Authority set up by the ministry of corporate affairs will put the mobile and the web tool in place. All that an individual has to do is download the app, share details of the company and submit a proof showing that he had made deposits. In case of the website, a one-time password will be sent to the mobile number of the depositor, which will have to be punched in before the documents are uploaded, a source told. In case of unpaid deposits with any of the regulated deposits, the IEPF Authority will forward the cases to the registrar of companies, the RBI or Sebi for action, while states will be approached for action by the police in case entities are collecting funds in an illegal manner. There have been many instances of people depositing money in chit funds and other deposits, where they stop getting returns after a while or cannot reach them. All such people can now alert us and we will act, said an official. In several cases, the official acknowledged, companies that were accepting deposits were not filing returns.

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RBI ASKS BANKS TO DISCLOSE THEIR IL&FS EXPOSURE

The RBI has directed banks to disclose loans outstanding to Infrastructure Leasing & Financial Services and the provisions required to be made against the exposure, in their notes accompanying their fourth-quarter financial results. The RBI wants banks to disclose the total loans outstanding as well as the percentage of loans that are non-performing as per the Income Recognition and Asset Classification (IRAC) guidelines but not yet classified as NPAs. The RBI directive, posted on its website, comes after the National Company Law Appellate Tribunal (NCLAT) put a moratorium on financial institutions classifying loans linked to IL&FS as NPAs. How the IL&FS loans are treated is crucial because the company, which has defaulted on some payments, is estimated to have outstanding debt of about Rs 1 lakh crore. Banks will also need to disclose the provisions that have to be made as per the IRAC rules and the provisions actually made as of March 2019. Banks which have already declared their fourth-quarter results also will have to make this additional disclosure. IL&FS’ consolidated debt to equity has shot up to 10:1, which together with its asset liability mismatches points to the likelihood of significantly lower loan recoveries than earlier thought. From an original debt of Rs 91,000 crore, the situation has worsened because of delays in infra projects eroding the value of operating assets.

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CORPORATE AFFAIRS MINISTRY PLANS TO START GATHERING 'PRIMARY DATA' FROM INVESTORS

The Ministry of Corporate Affairs plans to start gathering primary data from persons who have put in their money in chit funds and deposit-taking schemes, an official said April 23, amid continuing efforts to clamp down on illicit fundraising activities. The Investor Education and Protection Fund (IEPF) Authority, under the ministry, would seek information from investors including proof of investment and identity details. A mobile application, as well as an online platform for investors who have put in their money in deposit-taking schemes and chit funds would be introduced early next month. This is aimed at collecting primary data from the investors, the official said. Investors who have pending dues even after maturity period of their investments have been completed, before January 2019, would be allowed to provide details through the platform, the official added. Further, the official said that such a system would help in having an understanding about entities taking deposits as well as curb illicit money raising activities.

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URGENT ADVISORY FROM ICSI

It has been brought to our notice by Ministry of Corporate Affairs, Government of India that some of the members of ICSI are not maintaining updated Contact Details with the Institute. The same is leading to mismatch in information as is available with the Ministry of Corporate Affairs through various online forms. As you are aware pursuant to Regulation 3 of The Company Secretaries Regulations, 1982, members of ICSI are advised to communicate to the Institute any change in their professional address, within one month of such change. It is advised that all members should immediately update their Professional / Residential Address / Email / Mobile number.

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DEBT RECOVERY: BACK TO SQUARE ONE FOR RBI

The Supreme Court on April 2, struck down the Reserve Bank of India’s revised framework on Resolution of Stressed Assets, popularly known as the ‘Feb 12 Circular’. The circular had revamped much of the framework that was in place for identification and resolution of stressed assets and directed banks having exposure to entities with large stressed assets to take certain mandatory steps to resolve these exposures within 180 days, failing which they would have to initiate insolvency proceedings against the defaulting entities in terms of the Insolvency and Bankruptcy Code (IBC). In doing so, the circular also removed recourse to out-of-court restructuring schemes such as CDR, SDR, S4A and the JLF. In the absence of the Feb 12 Circular, there is, at present, no framework for resolution of stressed assets This is antithetical to the RBI’s aim to facilitate quick and efficient identification and resolution of such stressed assets. In response, the RBI will have to move fast, and come up with a framework that avoids the pitfalls that have become evident from the failure of the February 12 Circular. One of the main pitfalls of the circular was that the RBI required the institution of IBC proceedings for all companies whose NPAs (non-performing assets) were not resolved within a fixed timeline. Companies in sectors such as power, sugar, textiles and shipping challenged the circular as being arbitrary, as it prescribed a one-size-fits-all approach and refused to recognise that the circular would not resolve distress when applied to sectors that were suffering due to extraneous factors linked to governmental policy. The companies argued that they would be unable to come up with a resolution plan to standardise their bad debts within the 180 days provided by the circular, and so they would have to undergo the IBC process. While the IBC has brought in a paradigm shift in the recovery and resolution of bad debt, anecdotal evidence indicates that due to the inherent problems faced by these sectors, very few buyers would be interested in these assets. This raised questions about the suitability of IBC proceedings for resolving them. Apart from such concerns that are more rooted in policy, the RBI’s use of the legal framework to issue the Feb 12 Circular was also found to be flawed. The Supreme Court pointed out that the RBI’s powers to regulate stressed assets can only operate independent of the IBC, and that any separate direction to initiate the IBC process could be brought only against single, specific entities, that too, only with prior government authorisation. A more objective, and in retrospect — legally valid approach — would therefore be for the RBI to allow for a separate identification of companies (like in the case of the so-called ‘dirty dozen’) that should go through the IBC process, after balancing the interests of banks, debtors and the public at large. This also indicates that there is a need to have a well-considered, out-of-court resolution framework, that is an alternative to the IBC process. The Feb 12 circular provided for a restructuring framework that had extremely strict timelines, and required approval of all the creditors. This made it practically impossible for a resolution plan to be approved within the strict time period of 180 days provided by the circular as it created opportunities for hold-outs by creditors. The mechanism also did not provide a framework for lenders and borrowers to coordinate with governmental authorities and sectoral regulators. This, therefore, offered no alternative mechanism for resolution of distress for entities that require a more nuanced approach that even the IBC is not entirely well suited for. Had the RBI circular done so, perhaps the court would not have seen such an immediate challenge from entities from the power, sugar and other such sectors. This ruling presents the RBI with an opportunity to go back to the drawing board and redesign its framework for resolution of stressed assets. In designing this new framework, the RBI must balance two competing concerns — the need to create the right incentives for banks to resolve their bad loans promptly (in a cost-effective manner), and the need to maintain sufficient flexibility to enable the framework to effectively resolve stress caused by different factors. If the RBI is able to design a such a framework it would afford better prospects of resolution to struggling sectors and entities than a one-size-fits-all approach.

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ERICSSON MOVES SUPREME COURT AGAINST RETURNING RS 580 CRORE TO ANIL AMBANI’S RCOM

Swedish telecom network company Ericsson has moved the Supreme Court against potentially having to return Rs 580 crore to Reliance Communications according to an NCLAT observation if the Anil Ambani-led firm resumes insolvency proceedings. The Supreme Court will hear Ericsson’s plea in July this year. Ericsson had received the sum of Rs 580 crore from RCom as a Supreme Court-monitored settlement, pending insolvency proceedings on RCom in NCLT (National Company Law Tribunal, Mumbai). RCom’s last-minute payment to Ericsson saved chairman Anil Ambani from going to jail. The insolvency proceedings upon RCom initiated by Ericsson in May 2018 were put on stay, with RCom promising to pay Rs 550 crore to Ericsson. Now that RCom has decided to vacate its stay application and resume insolvency proceedings, the NCLAT (National Company Tribunal of Law Appellate) said that Ericsson may have to return the money in this case. Meanwhile, NCLAT will hear RCom’s plea on vacating the stay on insolvency on 30 April 2019.

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ACG CAPSULES SEEKS NCLT RE-LOOK AT ITS BID FOR STERLING BIOTECH

This comes amidst the lenders moving an application seeking to withdraw the bankruptcy plea on Sterling Biotech. The tribunal had fixed April 26 as the next date of hearing on the plea seeking to take the company out of bankruptcy proceedings, but has not fixed a date for hearing the plea to reconsider the bid from ACG. It’s not known how much ACG has agreed to pay for the crippled company, while the absconding promoters have offered to pay Rs 3,100 crore to an Andhra Bank-led consortium by June 2019, sans interest and penalties on a debt of Rs 7,500 crore. The bidder’s counsel said it is better for a company to remain operational than going for liquidation.

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MEDIATION MAY HELP IRON OUT GLITCHES IN INSOLVENCY PROCESS

This refers to the Amendments in IBC to provide for mediation (April 22). The government's move to amend the Insolvency and Bankruptcy Code (IBC) by making provisions for mediation and prepackaged resolution is of immense importance that may help iron out the glitches in insolvency proceedings experienced over the past few years. In many cases, these proceedings could not be completed within the stipulated time frame due to multiplicity of litigations This has restricted the IBC in fully achieving its intended objectives. Mediation as a tool for exploring mutually beneficial solutions is a low-cost option that also saves precious time for both the parties. This must be given a chance before actually resorting to insolvency proceedings. Similarly, prepackaged resolution that stipulates preparation of a financial reorganisation plan by the stressed company with the approval of at least two-thirds of the creditors before filing an insolvency application at the National Company Law Tribunal is also a good proposal and must be seriously considered. This is likely to provide swift resolution and with less legal hurdles as the plan will have the approval of a majority of the creditors right from the beginning and therefore, should ensure smooth sailing.

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PANEL ON ECONOMIC CAPITAL FRAMEWORK TO SUBMIT REPORT IN MAY-JUNE: BIMAL JALAN

The report by the expert committee on economic capital framework (ECF) that is expected to spell out details regarding how the Reserve Bank of India (RBI) should handle its reserves and whether it can transfer its surplus to the government will now be submitted during May-June, missing its April deadline. The report is also expected to detail the amount the central bank should transfer to the government. The report will be finalized in May-June, Former RBI Governor and head of the panel Bimal Jalan said. The panel was constituted at a time when the government and the central bank were at loggerheads on the issue RBI’s surplus transfer to the government. The expert committee would review status, need and justification of various provisions, reserves and buffers presently provided for by the RBI; and review global best practices followed by the central banks in making assessment and provisions for risks which central bank balance sheets are subject to, according to the terms of reference of the committee.

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LOANS TO MSMES GREW 21% Y-O-Y IN Q3FY19: STUDY

Loans to micro, small and medium enterprises (MSMEs) grew 21% year-on-year (y-o-y) in the quarter ended December 2018, according to a study, which also showed private banks and non-banking finance companies (NBFCs) gaining market share over public sector banks (PSBs). Most of the growth in Q3FY19 came from private banks and NBFCs, with their market shares in MSME loans rising 400 bps and 300 bps y-o-y, respectively. PSBs have been consistently losing their dominance in the market as their share came down to 39% in Q3FY19 from 58% in Q3FY14. However, experts say this could change in the months ahead. Kotak Institutional Equities (KIE) said in a note on Tuesday that PSBs could recoup some of the lost ground. Going forward, we expect this trend to moderate as more PSU banks come out of the PCA (prompt corrective action) framework and the impact of liquidity issues show up in the numbers for NBFCs, the broking firm said. MSME lending, including loans to individual-led MSMEs, constituted 23% of all loans in India at the end of December 2018. It has been growing between 20% and 25% y-o-y in recent quarters. MSME loans to individuals recorded a 25% y-o-y growth in Q3FY19 and accounted for 41% of the aggregate MSME book of Rs 25.2 lakh crore. On the other hand, lending to entity-based MSMEs grew 16.5% y-o-y during the quarter under review.

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SHAREKHAN PAYS NEARLY RS 3 CR TO SETTLE TWO CASES WITH SEBI

Sharekhan has settled two cases with market regulator Sebi by paying nearly Rs 3 crore towards settlement charges for violation of norms pertaining to trade practices and stock broking. Sharekhan was allegedly indulged in front-running activity through its proprietary trading account thereby making personal gains, a Sebi order said. It was also alleged that Sharekhan facilitated certain entities to carry out the front-running activity disregarding the alerts received from the stock exchange.

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JAYPEE SEEKS HOME BUYERS' SUPPORT FOR FRESH JIL BID

Promising to construct over 20,000 incomplete flats in four years time, the Jaypee Group has written to home buyers that it would submit a fresh resolution to get back Jaypee Infratech and has sought their support for the withdrawal of the insolvency case. In its resolution plan, Jayprakash Associates, a group company of which Jaypee Infratech is a subsidiary, promised a minimum haircut to banks, offered 2,000 equity shares out of promoter holding and to set up an overseeing committee consisting of a retired Supreme Court judge. The Jaypee Group in April 2018 also had submitted a ₹10,000 crore plan before the lenders to revive Jaypee Infratech, which was not accepted. Our revised offer for settlement under Section 12 A of IBC shall address minimum haircut to banks and will reflect our intent and commitment to complete homes in transparent manner, address delayed compensation to the extent this company can endeavour, FD holders are paid (all what has been annexed to this mail is now part of the JAL submission under section 12A), said Manoj Gaur. This will validate that with resolution of JIL under the IBC, while banks will receive their dues with minimum hair cut, concerns of other stakeholders too, are addressed/resolved amicably, it said. The letter, dated April 22, 2019, comes after Gaur met around 1,000 home buyers on Friday (April 19) and requested them to support the fresh resolution. On April 19, around 20 home buyers were also on hunger strike in protest against the Jaypee Group. According to the company, there were 20,524 incomplete units as of April 1 and in the first two years, it would complete 9,762 units including all the units in Noida. In the third and fourth year, it would complete construction of the remaining 10,760 units. As per the resolution plan, Jaypee Associates would infuse ₹1,500 crore up front to cover deficit in cost of completion of homes. In a letter mailed to Gaur, accessed by IANS, a section of the home buyers refused to support his resolution plan. The Committee of Creditors (CoC) would finalise the best bidder on April 30 as the deadline for resolution of JIL ends on May 6.

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RBI MAY OFFER MORE TIME FOR BANK-LED RESOLUTION OF NPAS

The RBI is likely to adopt a more accommodative approach towards resolution of stressed assets when it issues a revised circular, replacing the controversial February 12 circular quashed by the Supreme Court. Sources said the major contention in the Resrserve Bank of India's (RBI) controversial February 12, 2018, circular, including the one-day default norm, that was challenged in the court leading to its quashing, will be done away with in the new circular. Instead, banks will be given 30 days time from the first default to identify and qualify an account as a bad debt (special mention account or SMA) and initiate a resolution exercise. Besides, the 180-day period given for completing the bank-led resolution will start only after an account is declared an SMA I thirty days from first default, with RBI likely to accede to a suggestion given by the Indian Bans' Association (IBA) to allow individual banks to grant additional 60 days time for approval and implementation of a resolution plan (RP). So, instead of having 180 days time for a bank-led resolution from day one of default, under a new RBI circular, banks could get up to 270 days to resolve an asset without taking it to the National Company Law Tribunal (NCLT) for resolution. Sources said that the RBI is being guided by suggestions earlier given by the IBA on classification of non-performing assets (NPAs or bad loans) and their resolution. The IBA has made a presentation to the RBI Governor on April 10. The central bank is expected to retain the main contours of its February 12, 2018, circular while also making the referral to the NCLT non-compulsory. Also, the RBI could relax norms for approval of a bank led resolution plan Instead of requiring the unanimous approval of banks, lenders may now get to approve a resolution plan with 90 per cent voting. The changes in the circular could also relax stringent provisions relating to restructuring for compromise settlements. Instead of classifying a compromise settlement as restructuring, if the settlement amount payment period extends beyond 90 days requiring a complex rating procedure (RP4), the changed norms could follow the IBA's suggestion of extending the period of settlement amount payment to 180 days. Also, for a compromise settlement, IBA has suggested that RP4 provision should be withdrawn and only income recognition and asset classification (IRAC) norms used once an account is considered as being restructured. The IBS has also suggested that an account should be upgraded if 10 per cent of the sustainable debt portion is paid, instead of the current provision requiring payment of 20 per cent of outstanding principal and interest. This will benefit large infrastructure projects having big exposure to banks.

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A RISE IN DEMAND FOR INSOLVENCY COURSES

The rise in instances of companies undergoing restructuring and resolution under the Insolvency and Bankruptcy Code seems to be driving the demand for insolvency professionals (IPs), who constitute one of the four key pillars of the insolvency regime. The rise in awareness is driving the need for specialised programmes for training professionals such as Chartered Accountants, Cost Accountants, Company Secretaries, advocates, or those with a post-graduate degree in major subjects such as economics, finance, commerce and management in the field of insolvency resolution. The Indian Institute of Corporate Affairs, through its Centre for Insolvency and Bankruptcy, has come up with a two-year Graduate Insolvency Programme (GIP) for training professionals. The certificate programme is approved by the Insolvency and Bankruptcy Board of India (IBBI). According to MS Sahoo, Chairperson, IBBI, the programme is aimed at tapping the potential of young aspirants who have the dynamism and ability to excel in the field of insolvency resolution. A student who completes the GIP will be eligible for registration as an insolvency professional without having to wait to acquire the minimum 10-year experience as required by the code at present, Sahoo told. The programme, which is to be rolled out from July 2019, is tailored to align with the requirements of the industry. GIP’s advisory board will consist of practitioners, regulators, judiciary, and other eminent personalities who will oversee the development of curriculum. At present, there is no shortage of IPs in the country. The purpose behind rolling out such a course is to create an opportunity for aspiring individuals, said Sahoo. There are close to 2,500 insolvency professionals at present. We had invited for some expression of interest; as and when it comes, it will be processed. The IICA programme will commence in July 2019, and in the next one year we will learn how and where to improve, said Sahoo.

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CHANGES, CHALLENGES AND INTERPRETATION OF BANKRUPTCY LAW

In the winter of 2016, New Delhi sought to root out this practice, and extricate about Rs 10 lakh crore stuck in debt in industries as diverse as steel, cement, infrastructure financing, housing and jewellery. In its scope, therefore, the Insolvency and Bankruptcy Code (IBC) was not only the most well-intentioned, but also ambitious piece of economic legislation in the country. To be sure, its record has been rather mixed since its birth in May 2016. From vested interests and protracted litigation to periodic reinterpretations of the law, the IBC mechanism has been slow in extricating cash stuck in unviable projects. Among the most prominent examples of this chequered journey for the IBC is the Essar Steel insolvency. It has been more than 600 days since the Rs 50,000-crore account entered the IBC. Initially considered a showcase for the success of the new mechanism, this resolution programme has come to typify the delays in what was a long-awaited judicial reform. IBC mandates that an insolvent asset must be resolved in 270 days If an insolvent asset does not find a buyer within that period or if the committee of creditors, the decision making body on these assets, is not happy with the bids, the asset should be liquidated at the minimum value assessed by the resolution professional managing the asset. According to details released by the Insolvency and Bankruptcy Board of India (IBBI), out of the 1,484 cases admitted for the corporate insolvency resolution process (CIRP), 586 have been closed till December 2018. That marks a hit rate of about 40%. There are cases like Essar awaiting court judgement. Then there are others seeking admission, like Visa Steel, filed in December 2017 following the banking regulator’s nudge. Visa Steel is pending for admission in the Kolkata NCLT as the promoters have challenged SBI’s right to take them to the bankruptcy court on the premise that the company owed lenders less than the ?5,000-crore, the cut-off set by the Reserve Bank of India (RBI). Cases in Kolkata are notorious for delays as judges had to juggle between Kolkata and the other two eastern centres — Guwahati and Cuttack. A new judge has now been appointed to share the workload of about 2,400 pending cases, including 865 CIRPs. Missing the 270-day deadline is a misnomer says KR Jinan. The code does not specifically mention whether time due to any unforeseen circumstances or justified reasons can be excluded while computing the 270 days. This has been a subject matter in a number of cases before the NCLT and NCLAT. Giving a verdict in the Quinn Logistics India vs Mack Soft Tech case, NCLAT held that if an application is filed by the resolution professional or committee of creditors or any aggrieved person for justified reasons, it is always open to the adjudicating authority/appellate tribunal to ‘exclude certain period’ for the purpose of counting the total period of 270 days, if the facts and circumstances justify exclusion in unforeseen circumstances. Unforeseen circumstances could be:

i) if the CIRP is stayed by ‘a court of law or the adjudicating authority or the appellate tribunal or the Supreme Court, or

ii) if no resolution professional is functioning for some reason, such as delay in taking charge or removal during the CIRP.

In order to create a balance between both the speedy disposal and the delivery of justice so that companies are not liquidated merely due to the expiry of the timeframe we exclude the unutilised period for enabling the committee of creditors to approve a resolution plan, Jinan says. The IBC is aimed at early corporate debt resolution and value maximisation of the assets of the debtor. But gaps in the IBC ecosystem and infrastructure bottlenecks have slowed the process. India has 14 NCLTs and two are yet to start functioning. The government had a couple of years back announced to set up 24 bankruptcy courts. The NCLT judge roster shows 27 members have been sharing the workload against the target of appointing 60 judicial and technical members. Delhi and Kolkata are sharing the workloads of Jaipur, Chandigarh, Guwahati and Cuttack benches. The government is learnt to have finalised a list of new members, although there is no official communication. The lack of supporting judicial infrastructure — clerks, paralegals and stenographers — has enhanced the challenge for the system. Delays in judgement, admission of cases and interruptions in the whole process, besides the gaps in infrastructure, have compromised the IBC mechanism, said KP Sreejith. In the Orchid Pharma case, the entire resolution process must restart after the resolution applicant failed to infuse money. There have been cases where orders are pending for many months. Then there are winning bidders, such as the Liberty House Group in the case of Amtek Auto and Adhunik Metalics, who hyave failed to pay. All these factors are raising concerns that IBC will meet the same fate as DRT and SARFAESI and banks will eventually lose confidence in IBC, said Sreejith. The recent Supreme Court order setting aside RBI’s decision to send all power companies to the NCLT has also set a wrong precedent. The recent agreement signed by lenders with Reliance ADA Group and Essel prevents them from selling pledged shares because it will lead to a sharp fall in these companies’ share prices and lead to lower recovery.

According to the Code, applications are to be admitted within 14 days The court held that these 14 days will be directory and not mandatory. This interpretation allowed for filing of replies by corporate debtors and endless legal arguments. Currently, pending cases have not been admitted for more than a year said Sapan Gupta. One of the biggest positives for IBC was timely resolution — which is not true in absolute terms but in relative terms to DRT or winding up, it is probably better. However, the fear of IBC has worked in favour of banks where more and more defaulting borrowers are paying loans to avoid IBC proceedings. The impact of IBC is more visible outside IBC than in IBC, Gupta says. Out of the top 12 cases listed by RBI involving around Rs 2 lakh crore, only five cases have been resolved so far. Apart from delays due to legal disputes, there have been issues that are being settled as the law, still in its infancy, requires interpretation when it comes to the spirit of the legislation. A recent intervention in the IBC process was a suggestion in the Essar Steel resolution from the NCLAT that why not the committee of creditors consider the redistribution pattern that they have voted on. While the opinion whether the NCLAT has the right over the distribution pattern or not, it unintentionally has become one of the many hurdles in the resolution of the steel company. Last year, the government proposed an ‘inter-creditor agreement’ where a majority of creditors, say 66%, had the control over resolution making it difficult for the dissenting creditors to air their views. Furthermore, there have been instances of bidders like the Liberty Group of the UK, which won the race in bidding process, but failed to pay up raising doubts about the soundness of the system. According to the World Bank, before IBC, the time taken to resolve stressed loans was 4.3 years and recovery rate was 26% for financial creditors. Two years into IBC, this has improved to 48% recovery, which takes about 1-1.5 years through the IBC (79 resolution cases). I would say there has been a marked improvement in the recovery process which is already leading to billions of dollars being invested in the country due to the protection of creditor rights. Compared to other markets, the pace at which we have achieved this is also noteworthy. In the US, for example, it took 10 years (from 1978) for the bankruptcy law to attain some stability. At one point, they were even considering repealing it. The progress in India has been remarkable by global standards, Shah says.

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ESSAR STEEL COC CANNOT DISCRIMINATE BETWEEN OPERATIONAL CREDITORS, OBSERVES NCLAT

The National Company Law Appellate Tribunal (NCLAT) on Tuesday observed that the Committee of Creditors of Essar Steel cannot discriminate between operational creditors of the debt-ridden firm. The CoC of Essar Steel has divided operational creditors of the company into two types -- one with claims under Rs 1 crore and another above Rs 1 crore. During the proceedings, the NCLAT bench headed by Chairman Justice S J Mukhopadhaya said that the operational creditors cannot not be treated differentially We have said that you cannot discriminate among the same set of creditors. You can not discriminate among operational creditors on the basis of their dues, the NCLAT said. According to the resolution plan of ArcelorMittal approved by CoC on October 24, 2018, operational creditors having claims below Rs 1 crore will get their dues and those with claims of over Rs 1 crore will receive almost zero. Financial creditors would get an upfront Rs 41,987 crore payment against their admitted claims of Rs 49,395 crore while operational creditors are getting Rs 214 crore against their dues of Rs 4,976 crore. Later, the CoC decided to allocate an additional Rs 1,000 crore to operational creditors after the NCLT and the NCLAT suggested it to rework on the distribution of funds. According to advocate Anand Verma, who is representing operational creditors, the banks, which are financial creditors, are getting almost 90-92 per cent of their dues. Moreover, the offer of additional Rs 1,000 crore given to the additional creditors has no meaning in law, as it requires equal treatment to financial and operational creditors, he said. However, senior advocate Gopal Subramanium, representing the CoC said that the Supreme Court in a judgement has said that financial creditors and operational creditors could not be treated at par. The NCLAT would continue the hearing in the matter Wednersday.

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HIGH COURT ASKS NCLT TO HEAR OUT BHUSHAN POWER PROMOTERS

The Punjab and Haryana high court has asked the bankruptcy court to hear the promoters of Bhushan Power & Steel Ltd. who claimed that the lenders did not provide them with the details of a resolution plan involving JSW Steel’s offer for the company. The court passed ex-parte orders on April 18 directing the National Company Law tribunal to hear the plea of the BPSL promoters. JSW Steel, which offered about Rs 19,300 crore for BPSL, is awaiting approval of the plan. It emerged as the winning bidder for BPSL after a hard-fought contest that saw Tata Steel and Liberty House competing for the stressed steel asset. BPSL director Ravi Prakash Goyal said in the petition that the company’s board of directors was not provided complete details of JSW’s resolution plan despite directions from the appellate tribunal. At a hearing on Tuesday, the NCLT heard Mukul Rohatgi, advocate for BPSL promoter Sanjay Singal, and reserved its orders in the matter. JSW Steel is following the developments closely, a company official said. The Sajjan Jindal-led group trumped other bids for BPSL by putting up the Rs 19,300 crore offer in addition to provisions for paying operational creditors and statutory dues of the company. BPSL owes Rs 47,151 crore to a consortium of 34 banks. In a formal letter to the two main creditors, State Bank of India and Punjab National Bank, on January 29, Singal offered to pay the company’s entire dues in a staggered manner. However, the creditors rejected the offer because there was no upfront payment.

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ITC TAKES HOTEL LEELA TO NCLT OVER 'OPPRESSION' IN JM ARC, BROOKFIELD DEALS

Barely a month after Canadian private equity player Brookfield closed a deal to buy four hotels and a property of Hotel Leelaventure, ITC, which has a 8.72 per cent stake in the hospitality firm, has filed a petition in the National Company Law Tribunal (NCLT), accusing the company of oppression and mismanagement. The confectionery-to-tobacco giant, which is classified as a public shareholder in the beleaguered hotel, has also filed two applications seeking urgent hearing and the waiver of the requirement of minimum threshold of 10 per cent shareholding, Hotel Leelaventure said in its stock exchange filing. According to sources, ITC has petitioned for cancelling the issue and allotment of 163.9 million equity shares in September 2017, which constitute 26 per cent of the issued capital of Hotel Leelaventure (Leela), to JM Financial Asset Reconstruction Company (ARC). JM Financial ARC had converted part of its loan amounting to about Rs 275 crore. ITC has also sought the removal of Leela promoters Vivek Nair and Dinesh Nair and directors Vinay Kapadia and Vijay Sharma from the board. Further, ITC wants the appointment of an administrator to conduct and manage the affairs of Hotel Leela. ITC has also sought mandatory injunctions restraining Hotel Leela, its promoters, directors and JM Financial from the implementation of the decisions taken at Leela’s board meeting on March 18, where it approved the sale and transfer of assets of four hotels and one property to Brookfield for Rs 4,250 crore. The proposed transaction with Brookfield, according to ITC's petiton, is skewed in favour of the promoters and JM Financial ARC and opposed to other shareholders, including itself. The petition goes on to say the proposed transaction would have the effect of transferring a substantial part of Leela's assets in favour of Brookfield. Of this, Rs 2,950 crore would be paid to the lenders while Rs 1,960 crore was being paid to JM Financial, and Rs 300 crore would go to the promoters. According to the ITC petition, Leela's revenue stream was being diverted to Brookfield and it would be left with no real business prospects while it retained large liabilities, which it would not be able to service. ITC has sought inspection of the documents and agreements referred to in the postal ballot notice and the explanatory statement, but said it was allowed inspection of only some documents. Proxy advisory firm SES advised shareholders to vote against the sale of Leela’s assets to Brookfield as it has not provided a valuation report on how the consideration for the slump sale was arrived at. It said there was lack of clarity on the future of the company and cast doubts over parallel transactions between the buyer and promoters. According to SES, the promoters should not cast their vote on the resolution as a good governance practice. Under the Companies Act, a minimum shareholding of 10 per cent is required to file a petition for oppression and mismanagement. If the petition goes through it could lead to an injunction and a potential spanner in the works for the deal, said one corporate lawyer who declined to be named.

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SEBI BARS LEELAVENTURE FROM SELLING HOTELS TO BROOKFIELD AS ITC MOVES NCLT

Cash-strapped Hotel Leelaventure Wednesday said capital markets regulator Sebi has barred it from selling its four hotels and other assets to Canadian investment fund Brookfield Asset Management. On March 18, Hotel Leelaventure Ltd (HLVL) had announced sale of its four hotels located in Bengaluru, Chennai, Delhi and Udaipur, and a property to Canadian investment fund Brookfield for Rs 3,950 crore. It has sought shareholders approval and voting is scheduled to end on April 24. The Securities and Exchange Board of India (Sebi) in its letter to Hotel Leelaventure said it has received representations from diversified group ITC, which has also moved the National Company Law Tribunal against Hotel Leelaventure alleging oppression and mismanagement, and minority shareholder Life Insurance Corporation. Representations/allegations against HLVL, as received by Sebi in relation to the issue, concerns the interest of the investors in the security market. While representations are being examined by Sebi, in paucity of time involved and in the interest of investors in securities, you are advised to ensure that none of the transactions proposed in the postal ballot notice dated March 18 are acted upon till further directions from Sebi, Hotel Leelaventure said in regulatory filing.

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ETIHAD COMPLETES DUE DILIGENCE FOR JET AIRWAYS

Etihad Airways has completed the due-diligence process ahead of placing its financial bid for acquiring Jet Airways. Two other potential bidders — TPG Capital and the National Investment and Infrastructure Fund (NIIF) — have also begun the due diligence and may put in a joint bid with Etihad. SBI Caps had opened the window on Monday for the potential bidders to vet the books of Jet Airways. The lenders have fixed May 10 as the last date for submitting binding financial bids. Jet Airways has provided a data room where all the necessary documents, information and data related to the airline’s assets, debt, costs, governance information and information on employee strength among other things have been opened up for the bidders, said a source close to the lenders, adding that all the four shortlisted players continue to be interested in acquiring a stake in the airline. As far as we are concerned, the bidding process is going on and none of the shortlisted entities has told us that it is withdrawing, said the source.

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INDUSIND BANK ADDS 2% ON NCLT NOD FOR MERGER WITH BFIL

Shares of IndusInd Bank added nearly 2 percent intraday on April 24 after National Company Law Tribunal (NCLT) reportedly approved merger with Bharat Financial Inclusion (BFIL). The merger will be completed within 2-4 weeks. Post-merger, BFIL will become a subsidiary of the private lender.

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ITC MOVES NCLT AGAINST HOTEL LEELAVENTURE

Diversified group ITC has moved National Company Law Tribunal against Hotel Leelaventure alleging oppression and mismanagement ITC's current plea was mentioned before the Mumbai bench of the NCLT, which has posted the matter for hearing today, Hotel Leelaventure said in a regulatory filing. ITC, along with the petition has also filed two application seeking waiver of the requirement of minimum threshold of 10 per cent shareholding, it added.

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LENDERS TO IL&FS WIND ARM WILL NOT TAKE HAIRCUT

In a positive move, lenders of IL&FS Wind Energy Ltd will not have to take any haircut for the loans extended to the beleaguered company's wind assets. On Monday, Gail (India) Ltd emerged as the highest bidder for IL&FS's wind assets portfolio with its offer of approximately Rs 4,800 crore for 100% enterprise value for the seven operating wind power projects. Gail's offer contemplates no haircut to the debt of the special purpose vehicle, aggregating to approximately Rs 3,700 crore, read an announcement from IL&FS Group. Around 24 companies had submitted the expression of interest for the debt-laden group's seven operating wind power plants at 12 different locations in India. As per the plans to monetise the renewable energy projects, a total of 873.5 mw of operational wind power assets and 104 mw of under construction wind power generating plants was put out for sale. The proposal was unanimously approved by the Committee of Creditors of IL&FS Wind Energy Ltd, the majority owner of the SPVs. Engagement with ORIX Japan, the other shareholder in the SPVs, with regards to the proposal is currently in progress, read the statement issued by IL&FS. The deal is expected to be closed in the next three weeks.

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SEBI REDUCES MINIMUM SUBSCRIPTION REQUIREMENT FOR REITS, INVITS

Sebi has reduced the minimum subscription requirement as well as defined trading lots for Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs). REITs have to offer their units in lots worth at least Rs 50,000 in initial and follow on public offers. The minimum value of a single lot should be Rs 1 lakh in the case of InvITs. Markets regulator Sebi on Tuesday came out with guidelines for determination of allotment and trading lot size for REITs and InvITs. Sebi norms pertaining to REITs and InvITs were amended on April 22. The said amendments have, inter-alia, for publicly offered InvITs and REITs, reduced the minimum subscription requirement and has defined the trading lot in terms of the number of units. Further, limits for aggregate consolidated borrowings and deferred payments, net of cash and cash equivalents, have been increased to seventy per cent of the value of the InvIT assets, the regulator said in a circular. The amendments are aimed at providing flexibility to the issuers in terms of fundraising and increasing the access of these investment vehicles to investors. Moreover, the trading lot has been defined in terms of a number of units. Further, the leverage limit for InvITs has been increased to 70 per cent from the current 49 per cent. Such InvITs which are increasing their leverage beyond 49 per cent will have to make additional financial disclosures along with specific details of available asset cover, debt-equity ratio, debt service coverage ratios, interest service coverage ratios and net worth. While making an initial public offer and follow-on offer, the minimum subscription shall not be less than Rs 1 lakh for InvITs and Rs 50,000 for REITs. Allotment to any investor shall be made in the multiples of a lot. For an initial listing, a trading lot should be of 100 units and during follow-on offer, each lot shall consist of a such number of units in its trading lot as it had at the time of initial offer.

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NAGARJUNA OIL CASE: NCLT DISMISSES HALDIA PETROCHEM PLEA TO APPOINT NEW VALUER

The National Company Law Tribunal (NCLT), Chennai, has dismissed an application of Haldia Petrochemical Ltd (HPL) to appoint one of the valuers registered with the Insolvency and Bankruptcy Board of India (IBBI) to value Nagarjuna Oil Corporation Ltd (NOCL) and submit a report. HPL had proposed the names of RBSA Valuers, GAA Advisory and Protocol Insurance Surveyors & Loss Assessors Pvt Ltd. It had also sought a direction to NOCL’s Insolvency Resolution Professional (IRP) to provide support to the valuers. The ₹3,500-crore NOCL project in Cuddalore, Tamil Nadu, was to go on stream in 2012 but various delays escalated the cost by nearly three times before the project coming to an abrupt a halt in December 2011 following a cyclone. A consortium of 17 banks that funded the project brought in an additional ₹7,000-crore debt as part of a restructuring plan, which, however, did not materialise. Insolvency proceedings were initiated against NOCL. However, Mohd Sharief Tariq, Member, (Judicial), NCLT-Chennai, in his April 16 order, rejected HPL’s claims, saying sound procedure was followed by the IRP.

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IBA, POWER SECTOR SPAR ON RBI NORMS FOR STRESSED ASSETS

The power sector and Indian Banks Association have locked horns over threshold for approving resolution plan for stressed assets in tune with the Indian Bankruptcy Code in the revised circular on stressed assets being redrawn by the RBI after the Supreme Court on April 2 struck down its earlier circular. In their recommendations to the RBI, the IBA has recommended that lenders should agree on 90% of the value of any resolution plan against 66% sought by the industry in line with IBC. IBA has suggested that meeting should be called to seek approval of the resolution plan by 90% of all lenders. The power sector is opposed to this move since it feels that agreement among 90% of lenders is highly improbable and would result in a large number of stressed assets getting referred to NCLT under IBC, eroding value for the stakeholders. The IBA has recommended that resolution plans be finalized after stock audits, forensic audits, creation of security interest, completion of documentation within 180 days from the reference date. It has also suggested that additional 60 days may be considered for approval. In contrast, the power sector is demanding at least of 360 days for preparation, approval and implementation of the resolution plan. This is because the power and infrastructure projects involve large lending consortia, involving number of banks and financial institutions. Missing the 240-day timeline will lead to large number of stressed assets getting referred to NCLT under IBC, again eroding value for the stakeholders. Industry representatives say power and infrastructure sectors are heavily regulated and regulatory resolutions are inordinately delayed for one to three years. Besides, the government counter-parties are unable to provide even contractually permissible relief while resolution of regulatory matters are pending.

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SEBI SLAPS RS 20 LAKH FINE ON 3 ENTITIES FOR FRAUDULENT TRADES

Sebi has imposed fines totalling more than Rs 20 lakh on three entities for indulging in fraudulent trades in the illiquid stock options segment on the BSE. The watchdog conducted a probe into trading activities in the illiquid stock options segment on the BSE from April 2014 to September 2015, after observing large-scale reversal of trades. From the trading pattern, Sebi noted that 81.38 per cent of all the trades that were executed in the segment were non-genuine. The three entities were also found to have indulged in such trades. The manipulative trades created an appearance of artificial trading volumes, Sebi said. The pattern of placing buy and sell orders in a synchronised manner within few seconds of each other, reversal of the trades within a short time on the same day with wide variation in prices without any basis for such wide variation, indicate that the trades executed by the three entities were not genuine, the regulator noted.

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SEBI SLAPS RS 30 LAKH FINE ON GEOJIT FINANCIAL SERVICES FOR VIOLATIONS OF STOCK BROKER NORMS

Sebi on Tuesday imposed a fine of Rs 30 lakh on Geojit Financial Services Ltd for various violations of stock broker norms including non-settlement of clients' accounts. During the inspection, the regulator found that the broker made a delay of more than 7 months in formulating the anti-money laundering (AML) policy whereas it was required to put in place the policy in a month after Sebi issued a circular in January 2006. Besides, as part of AML policy, it was required to identify beneficial ownership at the time of account opening. However, the broker on four instances failed to do so. In a 50-page order, Sebi said the entity had not settled accounts of its inactive clients in seven quarters during the inspection period. the total amount not settled during the quarter ranged from approximately Rs 1.50 crore to approximately Rs 2.59 crore and the number of such clients ranged from 1,278 to 1,962, Sebi said. Further, the entity did not file suspicious transactions report to financial intelligence report within the stipulated time. Moreover, it failed to take adequate steps for redressal of investor grievance within one month of receipt of the complaint as required under Sebi norms.

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RBI TO BUY RS 25,000 CRORE OF BONDS IN TWO INSTALMENTS VIA OMO IN MAY

The Reserve Bank of India (RBI) plans to buy Rs 25,000 crore worth of bonds in two installments from the secondary market in May, it has notified. The first such open market operations (OMO) for the fiscal year 2019-20, amounting to Rs 12,500 crore, will happen on May 2. The date for the second auction has not been given. This would be on top of the dollar swaps that the central bank is undertaking. The system liquidity was short of Rs 1.4 trillion as on Monday. This is despite the central bank buying bonds worth Rs 3 trillion in the last fiscal year and infusing another about Rs 70,000 crore through two dollar swaps. The OMO plan is in continuation with the central bank’s practice in the last financial year. The RBI had spelt out how much of bonds it would purchase from the market through monthly calendars. In the OMO, the central bank would be buying bonds maturing between 2020 and 2032, it said in its notification.

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SHAKTIKANTA DAS’ POSER ON RATE CUT MAY SIGNAL RBI INTENT TO USE COMMUNICATION AS POLICY

Shaktikanta Das is caught between a rock and a hard place. When he took over last December, expectations of a rate cut were high and bowing to market demands, he reduced policy rates by 25 bps in February. Two months later, those expectations continued to be perched on top, with added hopes of entering a rate easing cycle. Das once again complied, delivering another 25 bps cut, but banks punctured all hopes of lower rates on the ground by passing on a mere 10-20 bps to customers instead of 50. This seems to have got him thinking as to why central bank policy changes should be in multiples of 25 bps? If the unit of 25 bps is not sacrosanct and just a convention, monetary policy can be well served by calibrating the size of the policy rate to the dynamics of the situation and the size of the change itself can convey the stance of policy, Das said. A 10 bps cut, he noted, would signal the intent and would be better than two separate moves — one on the policy rate, wasting 15 bps of valuable rate action to rounding off, and the other on the monetary policy stance. In a situation where the central bank prefers to be accommodative but not overly so, it could announce a cut in the policy rate by 35 bps if it has judged that the standard 25 bps is too little, but its multiple — 50ps — is too much, he explained. According to SBI Research’s Sowmya Kanti Ghosh, Das’ comments signify RBI’s intent to use communication as a policy in itself, rather than the policy statement being the vehicle for communication, and reduce disconnect with the markets. Like the US Fed, which modified the language of its policy statement during the financial crisis to communicate better, RBI too could use the rate change in non multiples of 25 bps, he noted. But, it’s not that simple. The problem of rate cuts of smaller magnitudes could lead to policy transmission issues and clarity in communicating with markets unless properly decoded. Should there be a table of rate changes mapped to policy stance? Ghosh wondered. Citing precedents, he observed that until October 2010, China has been experimenting with rate changes (27 bps was its number of choice besides unconventional ones like 18 bps, 54 bps, 144 bps etc). So did the European Central Bank. The advantage of the 25 bps construct is in its simplicity in connecting with the market, but is it sacrosanct? When banks didn’t budge with a 50 bps cut, how will a 10 or 15 bps cut serve the purpose? Ghosh — perhaps agreeing with Das — believes that sometimes communication, instead of being a vehicle for policy, can be the policy itself.

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RBI APPROVES PROPOSAL OF HDFC FOR HOLDING 9.9 PC STAKE IN BANDHAN BANK

The Reserve Bank of India (RBI) has given its nod to HDFC Ltd for acquiring up to 9.9 per cent stake in Bandhan Bank following the Gruh Finance deal. Gruh Finance, the affordable housing finance arm of HDFC Ltd, was taken over by Bandhan Bank in a share-swap deal in January. The RBI on Monday granted approval to HDFC to acquire shareholding of 9.9 per cent or less of the paid-up capital of Bandhan Bank upon the effective date of scheme of amalgamation, it said.

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RBI SETS HIGH CUT-OFF AT FOREX SWAP AUCTION, FORWARD RATES JUMP

Reserve Bank of India on April 23 set a cut-off at its second dollar/rupee swap auction at a much higher than expected premium, in a sign that the system is flush with dollar liquidity that banks are struggling to find buyers for. The Central Bank set a premium of 8.38 rupees at the three-year buy-sell swap auction and accepted the entire planned $5 billion up on offer. The RBI has been conducting the auctions in a bid to absorb the dollars in the system and prevent a sharp rise in the currency while also providing rupee liquidity to the banks. The central bank received a total of 255 offers worth a total of $18.65 billion and it accepted only five offers worth a total $5 billion, it said in a release. $5 billion is a very big volume for the market to absorb. Everyone is in the same boat, someone has to try to find a way to get out, a senior foreign exchange trader at a private bank said. This new tool is meant to give the central bank greater flexibility in managing banking system cash while helping soak up any potential large dollar inflows that could make the rupee rise sharply.

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MFIS TO CONTINUE THEIR GROWTH TRAJECTORY, MAY SEE MORE MERGERS AFTER INDUSIND-BFIN: ICRA

Microfinance Institutes (MFIs) have registered a robust 28 per cent growth in credit in calendar year 2018 despite a liquidity squeeze in the non-banking financial which caused many NBFCs to curtail their loan book expansion, ICRA said. The credit rating agency also expects more mergers and consolidations in this sector subsequent to the impending IndusInd-Bharat Finance merger which was given the NCLT nod. These companies which lend small ticket retail loans mostly to consumers having difficulty securing loans from bigger banks, are expected to carry forward the growth momentum in 2019 as well with the rating agency expecting a credit growth in the tune of 20 to 22 per cent on the back of improving asset quality and recovery margins. The Indian microfinance market stood at Rs. 2.4 lakh crore at the end of December 2018, the report showed. However, the growth in credit disbursements has more been a factor of elevated average ticket size than an increase in active customer base, ICRA said. While overall pace of growth was good, a reversal was observed in the trend with rise in ticket size outpacing the growth in client base in the post-demonetisation period, greater focus has been on client retention by offering larger loans and eliminating delinquent clients, which has slowed down the pace of client growth for the sector, Supreeta Nijjar, told. The growth of the sector would largely depend on the availability of funds from investors, the rating agency further said, with the lenders needing capital in the range of Rs.1800 to Rs.2000 crore in FY19, and between Rs.3500 crore and Rs.4700 crore over the next three fiscals. The industry raised Rs.4350 crore as credit costs from banks went up by 50 to 75 basis points in the aftermath of IL&FS defaults which caused NBFCs to scamper to debt and retail investors for funds. However, 90 per cent of the capital raised during this period were by companies with assets under management (AUM) greater than Rs.1000 crore. This implies that larger entities have been able to attract capital while the smaller less-diversified entities continue to struggle on this front, Nijjar said. The rating agency upgraded 18 of the 38 MFI companies under its coverage owing to improved scale and geographical diversification, while downgrading two companies in their FY20 rating. The median long-term rating for the sector was BBB.

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GOVT RAISES AUTHORISED CAPITAL OF ALLAHABAD BANK TO RS 8,000 CR

State-owned Allahabad Bank said Tuesday the government has increased its authorised capital by Rs 5,000 crore to Rs 8,000 crore. The central government after consultation with the Reserve Bank of India has increased the authorised capital of the bank from Rs 3,000 to Rs 8,000 through Gazette Notification, Allahabad Bank said in a regulatory filing. The increase in authorised capital will help enable the bank to raise further fund up to a maximum ceiling of Rs 8,000 crore.

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RISING CRUDE PRICES TO ADVERSELY IMPACT CAD, RUPEE, INFLATION: REPORT

A possible increase in fuel prices due to the US sanctions on Iranian crude exports can have adverse impacts on the current account deficit (CAD), the rupee and inflation, warns a report. The country meets a tenth of its crude demand from Iran--making it the third largest customer for the Persian country - and the immediate challenge is to find alternate suppliers who will be able to deliver it at competitive prices as Tehran offers after May 2, Care Ratings said Tuesday. It can be noted that the US had on Monday decided to do away with exceptions on sanctions to countries like India who are importing oil from Iran from May 2. Following this, the government said it will stop shipments from that Gulf nation which has the one of the largest crude reserves in the world. China, Japan and India are the biggest three customers for Iran. A 10 per cent spike in crude prices can result in a 0.40 per cent widening of the CAD, which can consequently play out into a 3-4 per cent depreciation in the rupee and also push up inflation by 0.24 per cent, the ratings agency said. Crude prices jumped to the highest level at $74 a barrel since November following the US announcement and equities also tumbled the worst in 2019 Monday. With the US-directed sanctions kicking off from May 2, it would be interesting to see how the various macroeconomic indicators of the domestic economy change course owing to increase in crude prices, it said. Meanwhile, its peer Icra said a $10 a barrel increase in oil prices will lead to a 0.10 per cent increase in the headline inflation.

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COMPETITION COMMISSION DISMISSES COMPLAINT AGAINST SANA REALTORS

Competition Commission Tuesday dismissed allegations of unfair business practices made against realty firm Sana Realtors. The complaint was filed by a group of individuals, who had booked units in the company's project 'Precision Soho Towers' located at Gurugram, Haryana. It was alleged that the firm abused its dominant position by imposing unfair and discriminatory conditions in the flat buyers agreement. They were also aggrieved by the delay in handing over the units. For the case, the Competition Commission of India (CCI) considered 'the market for commercial units for office space in Gurugram' as the relevant one. In its order, the watchdog noted that presence of other players in the relevant market indicates that competing products are available to consumers. Hence the firm does not appear to be dominant in the relevant market, it added. In the absence of dominance, the company's conduct cannot be examined under the provisions of Section 4 of the Competition Commission Act. No case of contravention of the provisions of the Competition Act is made out against the Sana Realtors and the matter is ordered to be closed, the CCI said.

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FORMER DENA BANK MD KARNAM SEKAR APPOINTED AS IOB'S NEW MD & CEO

Karnam Sekar is set to take over as the new Managing Director and CEO of Indian Overseas Bank from July 1, 2019. He will take over from R Subramaniakumar, who was instrumental in taking measures to turn around the bank, which has been reporting loses due to high NPA.

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AS 5G ROLLOUT NEARS, THE UNENDING DEBATE OVER HEALTH EFFECTS IS BACK

Affordable access to the fourth generation of wireless communication, or 4G, has had us hooked to our phones for a large part of the day. It’s our gateway to the news, entertainment and to commerce. But what’s coming next may change the way we interact with the internet forever. At transmission speeds of over 1 gigabit per second, 5G – the fifth generation of wireless communication – will be more than 20-times faster than 4G. At these speeds, the concept called internet of things – where one internet-linked device can send and receive data from another such device – would become more workable. But to enable data traffic at this rate, telecom companies will have to change the way they send data. 5G networks will use a frequency band separate from the already congested 4G networks. And instead of relying on low-frequency radio waves like 4G and all its predecessors did, the 5G network is set to make use of high-frequency radio waves These would carry more data and enable faster transmission rates. The millimetre-long radio waves that will do much of 5G’s bidding cannot travel over large distances. They will have to be intercepted and re-beamed after about every 500 metres. To do this, telecom companies plan to place several small antennas 500 metres apart, cramming them in close spatial quarters. This could expose us to radiation from more sources than before. Unlike X-rays and ultraviolet radiation, radio-wave exposure is non-ionising It doesn’t damage the DNA per se. However, some studies have shown that continuous exposure may cause small amounts of localised heating. Whether this could lead to more serious health effects is a question many researchers have asked – and the answers remain out of reach. Few reports have shown a positive relationship between telephone use and cancer. However, there are as many studies that show no association between the two. So far, the body of evidence is not large enough to say that the association is conclusive, Manya Prasad, a senior resident at the All India Institute of Medical Sciences, New Delhi, told. So does the absence of evidence mean evidence of absence? Usually not – but in healthcare, the attendant risks, including the risk of panic through misinformation and/or miscommunication, must be taken into account. As K.S. Parthasarathy, wrote, Unfortunately, less accurate and provocative media coverage of [nuanced studies] may excite raw emotions even as the perceived harm in this instance is more than the actual harm. Possible cancer induction by cellphone radiation concerns people. Anecdotal evidence and highly publicised litigations filed by persons claiming that cellphone radiation injured them fan the fire. There is a recurring problem with establishing causality with rare tumours: because the rate at which they occur is so low, the data is of low quality by default. For example, it took several decades to demonstrate the link between tobacco and lung cancer, another rare disease that takes many years to develop. This classification followed INTERPHONE, a large study organised by the WHO to look into the potential health risks of mobile phone use. It covered data from 13 countries and concluded in 2010 that making calls for more than half an hour a day for more than 10 years could increase users’ risk of developing brain cancer by as much as 40%. However, scientists who participated in the study told at the time that there is not enough evidence to show a causal connection and the group of participants using their phones this much was relatively small. The article further clarified that, In regular mobile phone users, the study found that phone radiation exposure actually decreased the likelihood of tumours, although this ‘protective’ effect may have resulted from limitations in the study, the authors wrote. The single most comprehensive long-term study that investigated the radiation-cancer link was undertaken by the US National Toxicology Program (NTP). In the NTP study, which released data in 2016, scientists exposed mice and rats to nine hours of radiation each day since before they were born until they were two years old. A small percentage of male rats exposed to radiation developed brain cancers (2-3%) and schwannomas in the heart (5-7%). However, these effects were found only at extremely high radiation doses – far in excess of the amount of radiation humans are exposed to through cell-phone use. In a press release accompanying the study’s publication, Otis Brawley, chief medical officer of the American Cancer Society, cautioned:

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FINANCIAL SERVICE COMPANIES ARE NOW BETTING BIG ON DATA

Many banking, financial services and insurance (BFSI) players have turned data worshippers Data can precisely map demographics, individual preferences and financial tendencies that help risk projection and customer relationship management. And the field is vast and diverse from private weather bureaus to food app payment gateways, telecom bill payments and even social media records. Take meteorologist Jatin Singh and his team. They pore over hundreds of drone captured pictures and satellite images to map agriculture across central India. The founder of Skymet Weather Services demarcates farmlands on the basis of government records and uploads them onto a platform secured by a pay-wall. Banks and insurers are Skymet’s clients. Over the next few months, we’ll cover other regions too. This data is turning out to be very useful for banks, says Singh, whose reports have helped lenders disburse over 10,000 crop loans. Drone-captured images, acreage data, yield prediction, market price analysis and weather forecasts arms Skymet’s clients to price their risk suitably, besides cross sell opportunities — to wheedle a prosperous farmer to apply for a tractor loan or mark up his personal insurance cover. Data has changed the way BFSI operate. Data analytics has become the key determinant in matters pertaining to core BFSI operations, risk projection and customer relationship management. Data is now used across the customer value chain. It helps us to ‘hyper-personalise’ our products and services, admits Abonty Banerjee, chief digital officer of Tata Capital. Tata Capital uses data across functions — and almost indispensably in ‘collection analytics’, which helps the NBFC to put its money back on time. Tata Capital created a model on basis of debtor responses to collection calls. Factors such as — did the debtor promise to pay on a specified date, did he act upon his promise, number of failed contact attempts, number of successful contact attempts, borrower reaction while on call with collection agent et al were used to create the model. L&T Finance, a large lender with a rural focus, uses secondary data (rainfall, reservoir levels and irrigation coverage) to formulate business strategies. It helped the L&T slash default rates by 64% since 2017. This is precision bombing, and not carpet bombing. Data and analytics help us to do just that, said Dinanath Dubhashi. New-age insurer Acko General Insurance is primarily driven by data, analytics. It has 200 employees. A year ago it launched ‘Ola trip insurance’ a year ago — a one-rupee cover for Ola cab users against missed flights, accidents and baggage losses — designed solely by reading data. Acko built a lot of ‘possibilities’ using data modelling tools. Most of the time, Ola customers missed flights due to unexpected traffic blocks or client delays (Ola customer delays); baggage losses and accidents were rare, Acko found out. These summations were the outcome of processing several micro-data bits such as Ola accidents-per-day, driver delays, customer delays, missed flight records and baggage loss complaints.

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NEVER LET YOUR GUARD DOWN, SWIFT INDIA’S ARUNDHATI BHATTACHARYA TELLS BANKS

Bankers should never let their guard down and should always watch out for fraudulent activities as it is the only way to prevent them, said Arundhati Bhattacharya. Bhattacharya, said that if bankers remain on their toes, the possibility of bank frauds comes down significantly. It is only when our trust levels go up, we become gullible, stop being attentive or suspicious about things, that frauds happen. Bankers have to maintain their focus on what is going on in order to prevent it, said Bhattacharya. She said perpetrators of bank frauds are always thinking up new techniques to defraud banks and the only way to prevent it is being watchful. While you are thinking of 1,000 scenarios to prevent it, they (fraudsters) will come up with another one. Bankers have to be very conscious of the fact that some people are trying to penetrate the safeguards they have, said Bhattacharya. According to Bhattacharya, the Indian banking industry has been using SWIFT for quite some time as a mode of secured messaging. While these banks, she said, are not averse to using technology, the smaller banks do not always have the wherewithal to adopt expensive technologies.

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BITCOIN PRICES SURGE TO A SIX-MONTH HIGH, AFTER 35% GAIN THIS MONTH

Bitcoin prices jumped to its highest in six months, pulling smaller cryptocurrencies up with it in a move that traders and analysts ascribed to technical forces with no apparent news catalysts at play. Bitcoin, the biggest virtual coin, climbed as much as 4.5% in early trading to top $5,600 briefly, touching its highest since November 18. Other major cryptocurrencies that tend be correlated to bitcoin such as ethereum and Ripple's XRP also gained.

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AMAZON TO CLOSE ITS ONLINE BIZ IN CHINA: REPORT

Retail giant Amazon will withdraw its domestic e-commerce marketplace business in China effective from July 18, but will keep operating its other business sections, including Amazon Web Services, Kindle e-books and cross-border operations. Facing stiff competition from local online marketplace operators, including Alibaba, JD.com as well as the fast-growing Pinduoduo, Amazon's exit from e-commerce business would be the end of the company's 15 years of journey into the China market. We are notifying sellers that we will no longer operate a marketplace on Amazon.cn (the Chinese-language site) and we will no longer be providing seller services on Amazon.cn effective July 18, the company was quoted as saying by the Financial Times late on Monday. Agency data suggested that Alibaba owns 58.2% of China's e-commerce market in terms of sales, followed by JD.com's 16.3% and Pinduoduo's 5.2%, said a Sina report in July 2018, according to the ZDNet.

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SOFTBANK EYES INVESTMENT OF $2-3 BN IN JIO AS MUKESH AMBANI DELEVERAGES BIZ

Japan's Softbank is reportedly looking to make a $2-3 billion investment in India's fastest-growing telecom firm Reliance Jio as billionaire Mukesh Ambani looks to deleverage business by selling stakes. This comes on the back of reports of Saudi giant Aramco in discussions to buy a 25 per cent stake in Reliance Industries' refining and petrochemical business for $10-15 billion. Softbank has long been seen as a potential investor in Jio, JPMorgan said in a research report. It, however, remains to be seen how much money does Softbank actually put in, what the implied equity valuation is and if the e-commerce venture is included in the Jio entity. In our view, for a meaningful de-leveraging, investors would likely want to see an equity inflow of more than $ 5 billion from a single investor or a combination of investors, JPMorgan said valuing Jio at $ 50 billion. It, however, put implied equity value at $25 billion. Reliance Retail was valued at an implied equity value of $ 35 billion. In a separate report, HSBC Global Research said RIL's consolidated adjusted net debt has declined to $ 33.2 billion in the fourth quarter of 2018-19 that ended on March 31, from $ 42.7 billion in third quarter. This was a result of the restructuring of the telecom operations (Jio) by transferring control of its key assets - fibre and towers - to two separate infrastructure trusts (InvITs) along with Rs 70,000 crore ($ 10 billion) of external liabilities and part of RIL's investments of Rs 36,600 crore ($ 5 billion). RIL will monetise these investments once external investors bring capital into the InvITs in the coming months. Jio as an anchor tenant will pay rentals for using these assets. In addition, RIL expects a business case beyond Jio's usage as other telecom operators and customers can also lease these assets and can participate in any such upside after the trusts service liabilities of Rs 1,07,000 crore, HSBC said. RIL expects certain external investors to bring in capital into these trusts which will be further dropped down into two subsidiaries to refinance liabilities as well as pay for part of its investments into these assets, HSBC said.

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TCS, INFOSYS INCREASE HIRING BY 350 PER CENT IN FY19

Amid a slowdown in job growth across sectors, IT services major Tata Consultancy Services (TCS) and Infosys hired about 42,000 more techies in the recently concluded fiscal 2018-19 than it did in the previous fiscal, registering a growth of over 350 per cent in new hiring a media report said. While Mumbai-headquartered TCS hired 29,287 employees in the financial year ending on March 31, Bengaluru-based Infosys added 24,016 software professionals, Fortune reported this week. So together these two companies added 53,303 employees in the 2018-19 financial year, while they hired just about 11,500 employees in the 2017-2018 financial year. TCS hired 7,775 employees, while Infosys added 3,743 employees in FY18, the Fortune report said, suggesting that the momentum of hiring in the $167-billion Indian software services industry has started picking up. The Indian IT industry is expected to add around 2.5 lakh new jobs this year, according to a TeamLease Services report. Investments in IT re-skilling will increase by around 20% in 2019, said the report on IT hiring projections for 2019.

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FLIPKART UNDER WALMART LENS FOR ‘KICKBACKS’ PAID TO GOVT OFFICIALS

Walmart is learnt to have begun an internal probe into the alleged regulatory and compliance lapses committed during the setting up of Flipkart’s fulfilment centres (FCs) across the country. Sources told that this investigation might have led to the delay in going ahead with the 100-acre logistics park near Bengaluru which was announced in March 2018. The first phase of the logistics park was expected to be completed by June this year. The e-commerce major had announced that it would set up a 45 lakh sq ft fully integrated logistics park which would vastly reduce its logistics costs, improve supply-chain efficiencies and speed up e-commerce delivery. Two months later, US retail giant Walmart picked up a majority stake of 77 per cent in Flipkart for $16 billion. American companies work under very stringent checklists and it has come to Walmart’s notice that Flipkart warehouses do not have the necessary licences and permits, and in some cases, government officials have been paid off to get them. This will make them liable under the FCPA (Foreign Corrupt Practices Act). Until these issues are sorted out, the logistics park project will be put on the back-burner and no new warehouses will be announced, sources close to Walmart told.

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COMPLAINTS BY BUYERS ON RISE, RERA OPENS 3RD BENCH IN NOIDA

The Uttar Pradesh Real Estate Regulatory Authority (UP-Rera) has opened a third bench in Greater Noida to tackle the rush of complaints that has been pouring in from homebuyers. According to UP-Rera members, at least 25 complaints are being registered daily and around 100-150 cases are picked up for hearing every day. The volume of complaints is so huge that we badly needed a third bench. Now, we hope to speed up hearing of pending cases. We have already heard a significant number of cases since September, said Balwinder Kumar. Until now, the regulatory body has received 7,999 complaints and disposed 4,232 of them. Over 4,800 complaints from across NCR are yet to be heard. The UP-Rera had on April 22 rejected applications by 36 commercial and residential projects for failing to meet perquisite norms. There are a set of documents that a builder needs to supplement their application with. When we scruitinised these applications, we found several documents missing. We have on the outset cancelled all these applications. However, as many of these projects are already launched and are in the middle of construction, we will give these builders an opportunity to refurbish the information as required for Rera certification, Kumar said.

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IOB'S LOSS MAKING BRANCHES DOWN TO 157 FROM PEAK OF 742

Indian Overseas Bank (IOB) has said it has brought down the number of loss incurring branches to 157 as on March 2019, from a peak of 742 in March 2015. This is the one of the key focus areas of the Bank as part of its turnaround plan. A K Srivastava said the bank's focus is to achieve profitability at grassroot level and that reduction in loss making branches stands testimony to this effort. The bank has been able to consistently pare the number of such branches from 742 in March 2015, to 718 in March 2016, to 536 in March 2017 and then to 371 branches in March 2018 and finally to 157 as on March 2019. The reduction can be attributed to the efforts taken by the bank in controlling operating expenditure and improving overall efficiency, Srivastava added. As of March 2019, most of IOB's branches stand self-sustaining. The percentage of loss making branches has drastically come down from 22 per cent of total branches in 2015 to less than five per cent in March 2019. Specific directions were given to loss incurring branches on focussed activities and functions such as improvement in CASA share, NPA reduction and directed lending in order to become profitable again. The steps taken include rationalisation of branches -- which involves merger or closure of a branch without affecting customer service -- containing administrative expenses by way of reduced rent, electricity, space audit, redeployment of staff, among other measures. As on March 2015, number of branches were 3381, including administration office 171. This was brought down to 3,280, including 64 administration office by March 2019. Around 145 branches are either merged or closed.

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NSE TIGHTENS TRADING MARGINS FOR DERIVATIVES SEGMENT UNDER NEW FRAMEWORK

The National Stock Exchange (NSE) on Wednesday increased trading margins for the derivatives segment. In a joint meeting of exchanges and the Securities and Exchange Board of India, it has been decided that the markets should be altered at different levels of MWPL, the NSE said in a circular. MWPL refers to ‘market wide position limit’. Under the new framework, derivatives market participants will have to provide margins 300 per cent higher than the normal applicable amount, if the MWPL for a security is high. Forensic auditors indicate IGIDR used data shared by MCX to develop an ‘algo-trading strategy’. Was an agreement between the Multi Commodity Exchange (MCX) and the Indira Gandhi Institute of Developmental Research (IGIDR) to share market data misused for ‘algo trading strategy’ in deviation of the stated objectives of the 2016 pact between the two? A forensic audit of the MCX conducted by TR Chadha & Co says: Prima facie indications are that the objective behind seeking trading-related data ‘seems more related to develop algo strategy’ than underlying deliverables as per agreement/undertaking. The report states that the MCX, on instructions from Susan Thomas, researcher, IGIDR, also shared key data with one Anand Chirag, a Delhi-based designer of algo- trading software. The audit report meticulously details what constituted sharing of ‘live data’ by exchange with researchers. It says the MCX gave out details of pending orders that were still valid up to a certain date at exchange level, actual order quantity, and display quantity along with quantity filled ‘today’, all of which reflect actual transactions done against orders on that date. Further, the report states that the researcher, by gaining access to ‘disclosed quantity’ and ‘actual quantity’ on a daily basis, is made aware of the actual quantity placed by the trader, which the trader did not want others to know as it would result in knowledge of sensitive data. Data demanded by the Delhi-based software designer included 22 fields regarding trade data, 24 fields of order data, 37 fields of bhav copy and 64 fields of master file data. The auditors have said that the MCX research team was directly in touch with the technology team to extract the required data without involving people from the operations and compliance departments. It seems ‘researchers’ want to gain access to data not available to other traders and not required to be available as per the order of the said trader, the draft forensic audit says. Mrugank Paranjape, as to why such data would be useful for research, he is quoted in the audit report as saying that the operational aspect was completely monitored by the research department and they should be in a position to answer. Raadheshyam Yadav, from MCX’s IT Department, said: Live data was never shared.

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CUSTOMER COMPLAINTS AGAINST BANKS SURGE 25% IN FY18: RBI REPORT

More people are complaining about banking services than before even as the Reserve Bank of India (RBI) claims to have increased its efficiency in resolving plaints. The 21 offices of the banking ombudsman received 163,590 complaints in 2017-18 (FY18), marking an increase of 24.9 per cent over the previous year. Most of the complaints were against nationalised banks, followed by State Bank of India and its associates (now merged). This is not surprising, considering these bans also account for 70 per cent of the banking industry. Disposal rate was 96.5 per cent, compared to 92 per cent in the previous year, according to the annual report of the banking ombudsman scheme of the central bank. This is also the first ombudsman report that takes into account complaints against mobile banking and electronic banking services, with the services being brought into ambit under the scheme in July 2017. The central bank now plans to float a separate ombudsman for digital banking. It has already started an ombudsman scheme for deposit taking non-banking finance companies (NBFCs) in February 2018 that would be extended to other NBFCs as well, said RBI’s Deputy Governor and appellate authority M K Jain in the foreword of the report. RBI’s financial year runs from July 1 to June 30. In FY18, the RBI doubled the award that an ombudsman office can offer to Rs 20 lakh, and allowed a compensation of Rs 1 lakh towards harassment and mental anguish. The report said that 148 awards were issued in the year, compared to 31 awards issued in the previous year. The major grounds of complaints received during the year were non-observance of fair practices code (22.1 per cent), automated teller machine and debit card issues (15.1 per cent), credit card issues (7.7 per cent), failure to meet commitments (6.8 per cent), mobile and electronic banking (5.2 per cent), according to a statement attached with the report. Complaints received on grounds such as problems relating to ‘Pension’, ‘Levy of Charges without Notice’, ‘Loans and Advances’, ‘Remittance’, ‘DSA and Recovery Agents’ and ‘Mis-selling’ each accounted for 5 per cent or less of the total complaints received. The most complaints came from New Delhi and Mumbai. Zone-wise, North recorded 44 per cent of the complaints, while East accounted for only 15 per cent of the complaints. Half of the complaints came from urban areas, the report showed. With increased expansion of grounds on which appeal can be filed against the decision of the ombudsman, the appellate authority received 125 appeals, a sharp rise from previous year’s 15 appeals. Awareness was also built up due to campaigns and outreach activities in rural and semi-urban areas, the RBI said.

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SFIO QUIZZES DELOITTE EX-CEO OVER ALLEGED AUDIT LAPSES IN BOOKS OF IL&FS

The Serious Fraud Investigation Office (SFIO) on Wednesday questioned Deloitte’s former chief executive officer Udayan Sen and two others over alleged audit lapses in the books of Infrastructure Leasing & Financial Services (IL&FS). The probe agency had recently received a communique from a Deloitte Haskins & Sells whistle-blower, raising several audit shortcomings in the company’s books. The letter alleged that the audit firm had recommended a complex structure to the infrastructure company and that it received a hefty fee from IL&FS. According to sources in the know, the serious fraud office has recorded statements of Sen and two other related persons in the matter. We have sought certain information with respect to the books of IL&FS and its key subsidiaries and misrepresentation of the financials. We are probing the role of the auditors in the matter. The recorded statements would be part of the final report, which is underway. The probe agency is also learnt to have sought an explanation from Sen and others over the allegations made against Deloitte’s former senior leadership. Sen had left Deloitte in 2015. The investigations on the company (IFIN) are in progress and we are cooperating fully. The audit partners concerned are called to provide information and clarifications in the normal course of the investigation process, due to our role as the past auditors. We reaffirm that we have conducted our audits in accordance with the standards on auditing and the applicable laws and regulations. The IL&FS group started defaulting on loans worth Rs 94,000 crore late last year, putting a question mark over its debt repayment capacity. The government sacked the old board and put a new board in charge of the company. The whistle-blower has sent the letter to the Reserve Bank of India, Securities and Exchange Board of India (Sebi), and the Ministry of Corporate Affairs. It has also been shared with Grant Thornton, which is conducting a special audit of the IL&FS group.

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NEW MANAGEMENT WORKS ON REVIVING RELIGARE ENTERPRISES

Religare Enterprises (REL) is in discussions with banks and private equity investors for debt restructuring and capital infusion, as the new management of the financial services firm — promoted earlier by Malvinder and Shivinder Singh — looks to revive it. Milind Patel, are leading revival of REL that is embroiled in several cases with its former promoters. We are putting all the efforts to revive the company with support of the existing investors, said Milind Patel. REL said that as part of its revival plan, it has reduced overall borrowings of the group to Rs 5,852 crore from Rs 9,801 crore, as of March 2019. All efforts are being made to rebuild business, mobilise fresh capital, retain good employees and terminate the services of unproductive and tainted employees, the management said. REL also denied allegations by former MD Sunil Godhwani, who accused Siddharth Singh of Bay Capital and Shyam Maheshwari of SSG capital of attempting to acquire substantial stake in the company by not going for open offer in violation of rules. Patel and Palve said these allegations are to divert attention from the investigations that are looking at fund diversion to the tune of Rs 3500 crore, allegedly by Mr Godhwani, on behalf of Singh brothers. Not only was Sunil Godhwani paid hefty compensation from the company, he also abused his power to authorise these fraudulent loans to Singh brothers, REL said. It also explained that all the investigations by external lawyers, internal studies and an independent investigation carried out by Sebi into the corporate loan book implicated the erstwhile promoters and management in defrauding the company. A Sebi report released in March this year directed Religare finance to recall and recover all the monies from the promoter entities.

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RBI IS THE FIRST CENTRAL BANK IN ASIA-PACIFIC TO START INTEREST RATE EASING CYCLE

The Reserve Bank of India (RBI) is the first central bank in the Asia-Pacific region to have begun explicit interest rate easing cycle by cutting the policy rate back-to-back in the last two monetary policy reviews in 2019, said Fitch Ratings. Benign food inflation and easier global financial conditions following the US Fed’s shift to a more dovish policy stance has enabled the Reserve Bank of India (RBI) to become the first central bank in Asia-Pacific (APAC) to begin an explicit easing cycle, Fitch said. With Consumer Price Index (CPI) at 2.9 percent in March 2019, the inflation is still under the target zone of 4 per cent (+/- 2 percent). This has given the central bank room for reducing the policy rate to support growth in the economy. Fitch’s baseline is for the RBI to remain on hold for the remainder of 2019, although we acknowledge the central bank may look for opportunities for further easing, the report added. In the past, the government has slightly deviated from its path of fiscal consolidation. Even in the recent budget 2019-20, the government has announced various fiscal sops which will add to its expenditure. Against this background, maintaining the target of reducing debt to GDP ratio to 60 percent by FY25 from the estimated 68.8 percent IN FY19, as per FRBM Act 2018, would be difficult, said Fitch. Fitch has also revised the expected growth rate of the Indian economy downwards at 6.8 percent in FY20 from an estimated 6.9 percent in FY19, before picking up to 7.1 percent in FY21, supported by accommodative monetary policy, an easing of bank regulations, and government spending.

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GOLD PRICES TO REMAIN HIGHER IN 2019, SAYS WORLD BANK; HERE ARE 2 KEY FACTORS

Gold prices are expected to remain higher by 3.2 per cent this year on account of strong demand and an extended pause in interest rate hikes by the US Federal Reserve, World Bank Commodity Outlook for April 2019 said. The yellow metal rates surged in the first quarter by 6.1 per cent after hitting a downward path in September last year. The rise may be attributed to the support offered by robust demand and decline in the real interest rates, the report said. Gold prices, after reaching a recent trough in September 2018, increased 6.1% in the first quarter. Prices have been supported by strong demand and a fall in long-term real interest rates, the World Bank Commodity Outlook added. The share of gold holdings have been increased by the central banks of the emerging markets such as China, India, Russia and Turkey so as to diversify their asset base, the World Bank report said. The investors have increased their net long positions in the gold-backed exchange traded funds, it added.

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GOLDMAN SACHS GROUP AGREES TO $22 MILLION SETTLEMENT WITH CHINA REGULATOR

Goldman Sachs Group Inc will pay $22 million to settle allegations by Chinas securities regulator over how the firm interacted with its local joint venture, the first such agreement under pilot rules the nation adopted in 2015. The China Securities Regulatory Commission agreed with Goldman Sachs under guidelines that allow it to negotiate a settlement rather than to simply issue a fine. The deal relates to how Goldman Sachs’ Asia unit worked with the company’s onshore joint venture on its trading business. Employees at both entities have agreed to step up internal controls, the CSRC said in a statement late Tuesday. The settlement underscores Chinese regulators willingness to use new approaches to supervision as they increase scrutiny of financial markets. Fines and confiscations levied by the CSRC reached a record $1.59 billion last year, according to official data. This case represents a major breakthrough in the history of Chinas securities regulatory and administrative law enforcement, said Melody Yang, a Beijing-based partner at Simmons & Simmons. We expect this approach will be more widely accepted by the market. We are pleased to have resolved the matter, a spokeswoman for Goldman Sachs said. The two parties engaged in other related stock and stock index futures contract transactions during four trading days from May to July 2015, the notice said. During those three months, the Shanghai Composite Index slumped 18 per cent as turmoil gripped Chinese markets.

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28% INDIAN ULTRA HNIS EXPECT WEALTH CREATION WILL BE EASY IN 2019: SURVEY

Around 28 per cent of ultra high net worth individuals in India are optimistic that wealth creation would be easy in 2019 despite being election year, more than two times of the global average of 12 per cent, according to a survey. The Attitudes Survey of ultra high net worth individuals (UHNWI) by Knight Frank found that 28 per cent of respondents in India believe that economic and political factors would be favourable for wealth creation this year, up by 3 per cent from last year. Around 36 per cent of Indian respondents think that wealth creation would be difficult in the country as opposed to the global average of 68 per cent, indicating a largely positive outlook in 2019 for India, the survey said. In the context of global markets, around 56 per cent of respondents from India said it would be more difficult to create and protect wealth due to global factors in 2019 as opposed to 62 per cent of global respondents, the property consultancy major said. The survey added that 56 per cent of Indian respondents feel that global envuironment is likely to make it difficult to create and protect wealth in 2019, 33 per cent felt that there will be no change while only 11 per cent cited that it will be easier. Despite being election year, Indian UHNWIs are more optimistic of the country's growth journey and expect wealth to increase in the year 2019. This is a solid testimony of strong economic fundamentals built in the country owing to the various economic reforms and structuring. India remains one of the key growth engines of the world economy which, coupled with improving indices like ease of doing business etc have further ensured investors to have a positive outlook towards the country. This in juxtaposition to the uncertainty around US-China trade tensions, a China economic slowdown and Brexit have impacted overall global growth sentiment but has further strengthened Indian UHNWIs outlook for domestic markets, Shishir Baijal, said. The survey also asked respondents to indicate whether it was easy or difficult to create and maintain wealth in 2018. About 56 per cent of respondents from India revealed that it was difficult for them to create and protect their wealth in 2018 as compared to 2017 due to political and economic environment within their country of residence and globally. Globally, 70 per cent respondents felt that it was more difficult to create wealth in 2018 compared to 2017, the survey added.

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DEVELOPERS CAN’T USE BUYERS’ FUNDS TO REPAY LOANS, SAY UP-RERA & HARYANA RERA

Developers should not repay loans taken from banks and financial institutions by using 70% of the total amount collected from buyers and allottees of a project in escrow accounts, both HRera and UPRera have ordered. This amount is meant to complete construction of the project and meet the land cost, the regulatory authorities said. In a case in Gurgaon, the local bench of HRera has directed the police commissioner to register a criminal case against Indiabulls Housing Finance Limited, Industrial Finance Corporation of India Limited and PNB Housing Finance Limited for using money from the 70% of the amount collected from buyers and allottees, which it said should be used to complete construction of the project as per the Rera Act. HRera’s Gurgaon chief KK Khandelwal said it is probably the first-of-its-kind decision since the regulatory authority is constituted, in which it has asked the police to initiate action against the financers of the realty project. The authority has taken a serious note of the fact that lending institutions fraudulently and arbitrarily withdrew 100% of the receivable deposited in the Rera account in violation of Section 4(2)(l)(D) of Rera, 2016. According to the Rera provision, 70% of the amounts realised for the realty project from the allottees, from time to time, shall be deposited in a separate account to be maintained in a bank to cover the cost of construction and the land cost, and shall be used only for that purpose. The builder can use only 30% of the amount collected from allottees for other purposes, including creating charge in favour of lending institutions to repay loans. In the normal course, lending banks and institutions get repayment of their loans from the escrow accounts opened by developers where all the receivables get deposited. If the collection from allottees in a particular month is less than the installment supposed to be paid to lending banks and institutions, the entire amount in the escrow account goes to lenders. But this leaves the project high and dry owing to cash crunch, and the construction could be stalled. Khandelwal said before making a provision for any purpose, 70% of the money collected from allottees must go to another escrow account, which should be called Rera account, to be maintained for the purpose of construction of the project and meet the land cost under the supervision of Rera. Khandelwal said the developer cannot create lien on the project to raise money for a purpose other than completing construction of a project. He also said the provision in law is to address the mischief, earlier being committed by unscrupulous builders to divert amount realised from the allottees to other projects or for different purposes other than the project, for which amount has been deposited by the allottees. UP Rera in a letter to various banks said, It is obligatory both for the promoter and the bank to ensure strict compliance of the above stated provisions of the Rera Act. UP Rera also pointed out that some of the banks, especially those which have sanctioned loan to promoters, arbitrarily adjust the entire amount deposited in the account against the outstanding loan of the promoter, instead of transferring 70% of the money collected to the escrow account for the purpose of construction and payment of land cost.

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UPI SCORES 87% TRANSACTION SUCCESS RATE IN MARCH 2019

Transaction success rates on the Unified Payments Interface, an instant payment mode between bank accounts, touched around 87% in March compared with around 78% in April last year. The National Payments Corporation of India, which manages the UPI railroad, does not make this data public. The percentage of transactions that have been declined on the platform has gone down to around 2% compared with more than 3.5% in the same time period, the data show. This is a pointer to the fact that transaction declines due to technology challenges have decreased due to improvement in connectivity and enhancement of bank server capacity. At the same time, errors induced by people have reduced to around 10% from more than 18% last year. It has been a focus for NPCI and all participants to give the customer a high success rate experience on UPI, and it has seen considerable enhancement and is in the mid-80s with technical declines at sub 3%, said Praveena Rai. This can be attributed to the steps taken by the entire ecosystem such as infrastructure level enhancements and system fine-tuning, among others. UPI, which was set up in 2016, has seen exponential growth over the last year. In March, the number of UPI transactions stood at around 800 million, from 178 million in the year-ago period. A success rate of more than 85% for UPI is ‘commendable’ given that cards are also at the range of 90%, top executives in the payments industry said, adding the success rates are only set to improve further. We have seen transactions failing because of human induced errors like wrong pin number, insufficient balance or when sometimes consumers intend to transfer more than the prescribed limit, said a top executive of a payments company.

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RBI SWAP AUCTION GETS BIDS MORE THAN THRICE THE NOTIFIED AMOUNT

The second dollar-rupee buy/sell auction also saw healthy demand with the Reserve Bank of India getting 255 bids worth $18.65 billion compared with the notified amount of $5 billion. Dealers said high cut-off premium indicated banks mostly stayed away but companies and NBFCs saw it as a good opportunity to lower hedging costs compared with the secondary market. The cut-off premium was 838 paisa compared with 776 paisa the last time. In a statement after the auction, RBI said liquidity injected in the first leg was ₹34,874 crore. The move would help shore up the country’s foreign exchange reserves which are now close to $415 billion. Companies that raise funds via the external commercial borrowing route find this route cost effective due to lower hedging cost as compared to the secondary market, said a dealer. Based on a review of evolving liquidity conditions and assessment of the durable liquidity needs going forward, RBI has decided to conduct purchase of Government securities under open market operations for an aggregate amount of ₹250 billion in May 2019 through two auctions of ₹125 billion each, the RBI said in a statement. The first auction of ₹12,500 crore would be conducted on May 2. According to dealers, liquidity deficit in the market is more than ₹1 lakh crore. While the market was not expecting an OMO announcement soon after the swap auction, the move is likely to lift spirits in the bond market.

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SAVE INDIAN CAPITALISM FROM INDIAN CAPITALISTS

The grounding of Jet Airways India Ltd, the country’s oldest private-sector carrier, is not just bad news for customers and its 23,000 employees It raises yet again a question that has puzzled two successive governments and will continue to bedevil whichever party takes power after elections conclude next month: What’s killing capitalism in India? Jet was born in the early 1990s, when India’s closed Soviet-style planned economy had just started embracing globalisation and private enterprise. Back then, few Indians could afford to fly; now the country has the world’s fastest-growing aviation market. An airline that was at one point the industry’s dominant player should theoretically have been able to thrive. While Jet Airway’s costs were too high compared with those of its no-frills rivals, that issue could have been fixed. The real problem is that Jet’s founder Naresh Goyal gambled away a perfectly fine albeit, unprofitable airline by not injecting equity himself into the cash-strapped business, or stepping aside in time and allowing someone else to do so. It is only natural for entrepreneurs to be possessive and irrational, especially when like Goyal. they have been so wildly successful for so long. The bigger conundrum is why providers of outside capital (banks and capital markets) did not act as a disciplining force on Goyal and save the business. Despite Abu Dhabi’s Etihad Airways PJSC taking a 24 per cent stake in the airline in 2013, Jet has been slipping deeper into negative equity for seven years. Had India’s state-run banks insisted on a timely and substantial capital infusion, and had they credibly threatened to dilute Goyal’s 51 per cent controlling stake by issuing themselves new shares when the inevitable debt default occurred, Jet would now be flying under a new owner. When Jet Airline’s rival Kingfisher Airlines Ltd collapsed in 2012, India did not have a modern bankruptcy law. Now it does. Even so, in Jet’s case or in the high-profile $7 billion insolvency of tycoon Anil Ambani’s Reliance Communications Ltd, creditors did not utilise that option. Instead they foolishly relied on entrenched insiders to make things right, thereby hurting their prospect of extracting value. Banks are now awaiting a white knight Yet for a new owner to revive the airline after it has stopped flying will necessarily mean very deep haircuts on its $1 billion of net debt. State-run lenders will lose heavily, as will employees. Its an unnecessary waste of capital and jobs in a country that does not have enough of either. Private investment in India has been weak for years now, first under a Congress Party-led coalition and then under Prime Minister Narendra Modi’s Bharatiya Janata Party. There has been no dearth of new rules in this period. But, rules-based capitalism cannot flourish in a business landscape so heavily dominated by insiders, who are regularly tapped by all parties for anonymous political donations. Almost every large business failure in India today involves providers of outside capital and their agents giving insiders a free pass to maintain control using other people’s money, destroying value in the process. These agents are not just company boards. In the case of the now-bankrupt infrastructure financier-operator IL&FS Group, it was the auditors and credit rating agencies that led even small pension plans like that of the American Embassy School staff in New Delhi into trouble. Or consider the problems brewing in India’s mutual funds industry, which lent money to media mogul Subhash Chandra against his shareholding in Zee Entertainment Enterprises Ltd, a highly profitable television content business that dates back once again to the early days of India’s economic liberalisation. When Chandra’s leveraged bets on infrastructure ran into liquidity problems, the mutual funds agreed not to sell the Zee shares they held as collateral. Relationship lending is to be expected in a state-dominated banking system prone to rigging by crony capitalists. But relationship-based fund management? That shows the extent to which even the private sector is compromised. Business promoters, as they are known in Indian law, have used a mix of personality cult and proximity to political power to terrorise the ultimate providers of outside capital. Its lamentable that after 14 years as a publicly traded firm, operating in a capital-intensive, price-sensitive, competitive, regulated industry, Jet Airways was still allowed to carry on basically as Goyal’s fief. Let the airlines avoidable collapse serve as a warning for the next government: Do not go out of the way to rescue Jet Airways, but do save Indian capitalism from insiders.

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WIRELESS BROADBAND SUBSCRIBER BASE TOUCHES 532 MN IN FEB: ICRA

Wireless broadband subscriber base surged to 532 million in February 2019, onboarding 10.2 million users during the month, with Reliance Jio cornering nearly 56 per cent of the overall wireless broadband market, ICRA said. The wireless broadband subscriber base continues to maintain its strong growth trajectory, increasing to 532 million in February 2019, or 45 per cent of the total subscriber base, witnessing addition of 10.2 million during the month. R Jio leads the wireless broadband market, with market share of 56 per cent, followed by Bharti and Vodafone-Idea at 21 per cent each, ICRA said in its latest report. ICRA noted that 100 per cent of Reliance Jio's subscribers are broadband subscribers, while the same ratio for Vodafone-Idea stood at 27 per cent and for Bharti at 32 per cent. The wireless subscriber base in India increased to 1,183.7 million in February 2019, adding 1.7 million subscribers over the previous month, the report said. The growth in subscriber base in February was primarily driven by RJio, which added 7.8 million subscribers. State-owned BSNL or MTNL (Bharat Sanchar Nigam Ltd/Mahanagar Telephone nigam Ltd) was the only other telco gaining subscribers in the month, adding 0.9 million users, Harsh Jagnani, sector head and vice president - Corporate Ratings, ICRA said. The overall active subscriber base remained at 1,023 million in February, as increase in RJio's and BSNL or MTNL's active subscriber base has been at the expense of other industry participants, who lost 10.4 million active subscribers on a combined basis, he added.

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RELIANCE PREPARES THE GROUND FOR E-COMMERCE LAUNCH

Reliance Industries Ltd’s retail arm—Reliance Retail Ltd—is testing its food and grocery app among its employees before the commercial launch of its e-commerce venture, mirroring the strategy India’s most valuable company adopted ahead of launching its 4G telecom service in Reliance Jio Infocomm Ltd. The grocery app would be made available to the public by this year-end and orders made on the app fulfilled by local merchants, two people aware of the matter said, requesting anonymity. Reliance Industries’ entry into the Indian e-commerce market, if its aggressive foray into the telecom industry is anything to go by, may similarly upend the online retail industry that is dominated by US giants Amazon.com Inc. and Walmart Inc.-owned Flipkart, at present. While food and grocery is the largest consumption category in India, accounting for two-thirds of India’s retail market, online sales in this category are still restricted to the top cities. We think Reliance Retail is most suited for an e-commerce play. They have the capital strength, a big offline presence, good brands in their kitty and significant grocery operation. If not this Diwali, we expect a launch of the e-commerce venture next year for sure, said Satish Meena. Though it may challenge the position of existing e-commerce majors, it will also attract new online buyers, which will be good for the segment. Reliance Retail operates neighbourhood stores, supermarkets, hypermarkets, and wholesale, speciality and online stores. We believe given the vast store network (10,415 stores) it gets an edge to implement the omnichannel platform, brokerage Jefferies India said in a note to clients on 22 April. We estimate the share of online retail in India will increase to about 8% by 2030, with the total size at $170 billion. This implies a 21% compound annual growth rate (CAGR) for online retail over FY18-30E, versus 15% CAGR over FY18-30E for physical organized retailers. Over the same period, we expect the overall retail in India to grow by 9% as unorganized players lose market share, said Jefferies India in the note.

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RICH AND POWERFUL ARE PLAYING WITH FIRE: SC ON CONSPIRACY AGAINST CJI CLAIM

The Supreme Court on Thursday expressed anguish over the systematic attack on the judiciary and said time has come to tell the rich and powerful of this country that they are playing with fire and this must stop. The apex court was hearing claims made by an advocate that there was a larger conspiracy to frame Chief Justice of India, Ranjan Gogoi on allegations of sexual harassment. The court said it will pass an order at 2 pm. A special bench headed by Justice Arun Mishra said that it was anguished with the way the judiciary has been treated in the past 3-4 years. Justices Rohinton Nariman and Deepak Gupta are the other two judges on the bench. The way this institution is treated in last few years we must say that we will not survive if this will happen, the bench said. There is a systematic attack, systematic game to malign this institution, the bench said.

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RBI SELLS ENTIRE STAKE IN NHB, NABARD TO GOVT FOR RS 1,470 CR

The Reserve Bank has exited the National Housing Bank (NHB) and the National Bank for Agriculture & Rural Development (Nabard), by selling its entire stakes to government for Rs 1,450 crore and Rs 20 crore, respectively, making them fully government-owned now. The central bank has sold its stake in NHB on March 19, while it sold the stake in Nabard on February 26, the bank said in a statement Wednesday. With this divestment, the government now holds 100 percent stake in both these financial institutions, RBI said in a statement. The move is part of ending the cross-holding in regulatory institutions and follows the recommendation of second Narasimham committee report of October 2001 and the RBI's own discussion paper on the same entitled 'Harmonizing the role and operations of development financial institutions and banks.' The Narasimham panel had said RBI could not own those entities which are regulated by it. The RBI said divestment of its shareholding in Nabard was done in two phases. The central bank held 72.5 percent equity in Nabard worth Rs 1,450 crore, of which 71.5 percent amounting to Rs 1,430 crore were divested way back in October 2010 and the residual shareholding was divested on February 26, 2019. The RBI held 100 percent shareholding in NHB, which was divested on March 19, 2019. Accordingly, on June 29, the government had bought out the entire 59.7 percent stake in SBI from the Reserve Bank. The current change in the capital structure of both these financial institutions was brought in by the government through amendments to the Nabard Act of 1981 and the NHB Act of 1987 which were notified on January 19, 2018 and March 29, 2018, respectively. The Nabard came into existence on July 12, 1982 by transferring the agricultural credit functions of RBI and refinance functions of the then Agricultural Refinance and Development Corporation. Set up with an initial capital of Rs 100 crore, the development finance institution's paid up capital stood at Rs 10,580 crore as of March 2018. The decision to establish NHB was announced in the 1987-88 Budget. Following that, the National Housing Bank Bill, providing a legislative framework for the NHB, was passed by Parliament in the Winter session of 1987 and it became an Act on December 23, 1987. The National Housing Policy of 1988 envisaged setting up of NHB as the apex level institution for promoting the housing sector.

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ONLY ONE HURDLE REMAINS IN JIO'S PATH TO INDIA DOMINATION

As per recently released data, Jio has now left Airtel behind in subscriber base to become as India's second-biggest telecom company. The number of Jio customers now stands at 30.6 crore — behind only Vodafone-Idea which has 38.7 crore. It means with 28.4 crore customers, Airtel now slips to third place. The 30-crore milestone was breached by Jio on March 2 this year. Airtel had achieved the same landmark in 19th year of its operations. Jio had bagged 100 million customers within 170 days of opening shop — becoming the fastest company in the world to achieve the remarkable feat. Growth at breakneck speed has been the hallmark of Jio's story since its big-bang launch in September 2016. In the two and a half years since its launch, customers have flocked to Jio because of its dirt-cheap prices. In 2018, new subscriber addition by Jio stood at a humongous 12 crore. During just the first three months of this year, Jio added 2.7 crore new subscriber, JP Morgan said in a report. In stark contrast to Jio's aggressive wooing tactics, its rivals have been weeding out low-paying subscribers. Jio's hyper aggressive price war has run rivals ragged, with Airtel and market leader Vodafone Idea bleeding continuously and heavily. But even as its completitors bled, Jio's profit in the year rose four times to $427 million (Rs 2,980 crore), data released by the company showed. Trai data for December quarter showed Jio consolidated its lead over rival carriers on adjusted gross revenue (AGR) in the quarter to December. Jio’s AGR — or revenue from licensed services — rose 14.63% on-quarter to Rs 9,482.31 crore at the end of December. In contrast, Vodafone Idea suffered a 4.05% sequential fall to Rs 7,223.72 crore, while Airtel’s slipped 4.18% on-quarter to Rs 6,439.65 crore. One quarter earlier, Jio had become the top telco by AGR, when it had trumped Vodafone Idea on that count. Analysts have more bad news for the already stretched challengers of Jio. The ToI story quotes JM Financial as saying, We see no prospects of a tariff hike in FY2019-20, unless Jio’s net addition (of subscribers) comes down. Meanwhile, Jio's aggression shows no signs of abating. It continues to go all-out to court customers with cut-throat price plans. Riding on its 4G power, it continues to lead all rivals by a mile in the data business. The JioPhone — the handset that comes bundled with services — has played a prime role in making Jio the strongest and fastest in bagging data customers. Mukesh Ambani has always maintained that Jio would not be a pure-play telco but a business that would set up a digital ecosystem featuring fintech, high-speed data and entertainment. The power of Jio could eventually be harnessed to dominate Indian retail, analysts have said. Going by a slew on recent deals, Ambani seems to be already on the way to that end. The acquisitions will help Reliance create a unique and a very powerful digital economy ecosystem for Reliance, which is way beyond simple merchandise e-commerce, Arvind K. Singhal, told. As Ambani — slowly but surefootedly — puts in place the components to take Amazon and Walmart head on, the contours of the bigger war is already taking shape in the country. The battle lines have been already drawn.

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TO REDUCE CASH BURN, AMAZON TWEAKS COMMISSION FOR SELLERS

Amazon India has revamped seller commissions across half of its product categories, in a move aimed at cutting subsidies improving business margins and rationalising costs, while continuing to give incentives for highgrowth categories. The ecommerce giant has also increased logistics fee structures on average, raised charges for promoting lightning deals and introduced an item listing charge beyond 1 lakh items per seller. Although the new incentive structure is likely to face backlash from some sellers, industry observers say it is in line with steps taken by the ecommerce company to control cash burn and reduce incentives it once gave sellers to scale up the business. Business is not constant, business structure changes, margins change and keeping inflation into account while taking seller feedback, we are making. Amazon said, effective May 23, it would increase commissions on certain categories including watches, luggage, shoes, beauty products and mobile phones, and cut commissions on home furnishing, sports items, fashion jewellery, handbags and musical instruments, among others. Broadly, the changes range between 0.5% and 2% across categories. Amazon charges a commission of anywhere between 3% and 25%, and this is similar for Walmart-owned Flipkart, its rival at home. Both the companies have been revisiting seller commissions and cost structures every six months. They have been revising rates based on the categories they want to build, and fill gaps in product selection. Amazon India has over 4.5 lakh sellers offering over 170 million products on its platform. Sellers pay a fixed fee per order, referral fee, and separately incur shipping costs, monthly warehousing fee and pick and pack fee depending on the mode of fulfilment they choose on the marketplace. Amazon has marginally increased its weight-handling fee for its Fulfillment by Amazon and Easy Ship business, and has raised the cost of listing on its Lightning deals page, which is its most visited page giving sellers high exposure. Amazon said its high volume listing fee of Rs 0.50 per item per month will ensure better visibility on the marketplace. The company has, however, made some cost deductions in its Easy Ship business and pick and pack fee for standard-size items on its Fulfillment by Amazon offering, and also offered zero fulfilment fee for items over Rs 20,000. This is a service where a seller stores products in Amazon's fulfillment centres and lets Amazon take care of packing, shipping and customer service. We hope to build on this as our sellers progress on the journey of growing their business by selling to millions of customers across India, Pillai said.

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CYBER THREAT: INDIA WITNESSED 1.4 LAKH ACCOUNT HACKING ATTEMPTS EVERY HOUR IN 2018

According to the 2018 ‘Credential Stuffing: Attacks and Economies’ report by global firm Akamai, India was the second most preferred target destination after the US, recording more than 120.8 crore ATOs in just the one year. Each attack represented an attempt by a person or computer to log in to an account with a stolen or generated username and password. The vast majority of these attacks were performed by botnets or all-in-one (AIO) applications. Akamai recorded nearly 30 billion credential stuffing—breaching of databases—attacks in 2018. Botnets are groups of computers tasked with various commands and they can be instructed to find accounts that are vulnerable to being accessed by someone other than the account owner; these are called account takeover (ATO) attacks. AIO applications allow an individual to automate the login or ATO process, and they are key tools for account takeovers and data harvesting. Compared to India, the US saw more than 1,200 crore ATOs, while Canada, which was the third most preferred target country saw 102.5 crore ATOs. The US is the number one spot for attack destinations because many of the most popular targets are based there, the report said. So far as the sources from where attacks are launched go, the US occupied the first place again given that most of the credential stuffing tools are developed there, with Russia being a close second and Canada in third place. India stands at the fifth place with 62 crore such logins traced back to the country, while the top four—US, Russia, Canada and Vietnam—together account for 861 crore of such logins.

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TWITTER FEATURE TO ALLOW PEOPLE TO FLAG 'MISLEADING' CONTENT ABOUT VOTING

Twitter has added a feature that will allows users to report misleading content on voting and elections, stepping up efforts to tackle misinformation. The government has warned social media companies that any abuse of their platforms to influence electorate will not be tolerated. A study in early April had claimed that one in two respondents have received fake news through digital platforms in the last 30 days. Twitter, in a statement Wednesday said, the new dedicated reporting feature is in addition to its existing proactive approach to tackling malicious automation and other forms of platform manipulation on the service. The platform will start with 2019 Lok Sabha (polls) in India (April 25) and the European Parliament (April 29) elections and then roll out to other elections globally throughout the rest of the year, it added. Twitter said the violation that can be flagged include misleading information about how to vote or register to vote. Citing an example, Twitter said this could be instances like content that claims one can vote by tweet, text message, email, or phone call. Users can also report misleading information about requirements for voting, including identification requirements, or wrong information pertaining to the date or time of election. Users can choose 'report tweet' from the drop down menu in the app and select it's misleading about voting, followed by opting for the choice that best describes how the tweet is misleading about voting and then submitting the report. The reporting feature would be available for desktop users as well.

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TIM COOK SAYS TECH NEEDS TO BE REGULATED BY GOVERNMENTS

Apple CEO Tim Cook believes that governments need to regulate technology in order to ensure data privacy for common people. Technology needs to be regulated. There are now too many examples where the no rails have resulted in a great damage to society. We all have to be intellectually honest, and we have to admit that what we're doing isn't working, he added. In a bid to explain to US-based lawmakers what he meant, Cook cited the example of General Data Protection Regulation (GDPR) data privacy rules in Europe. Europe is more likely to come up with something. GDPR is a step in the right direction, Cook said, adding We are advocating strongly for regulation - I do not see another path at this point. However, for improving data privacy, he said he does not promote going overboard with depending on the government or leveraging the government with favours and cited Apple as an example. We cannot look for the government to solve all of our problems. Apple doesn't have a Political Action Committee (PAC) and I refuse to have one because it shouldn't exist. The company donates zero to political candidates, Cook noted.

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Thanks & Regards,
CS Meetesh Shiroya