MCA
Form
AGILE is likely to be revised w.e.f. 03rd May, 2019
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HUGE GAP IN 12 NPA
CASES' DUES WITH LIQUIDATION VALUE: IBBI
The
12 large non-performing assets (NPAs or bad loans) accounts directed by the RBI
for resolution through insolvency process had total outstandings of Rs 3.45
lakh crore against their liquidation value of Rs 73,220.23 crore, while
haircuts taken by creditors in case of the resolved accounts so far have been
as high as 90 per cent, according to the insolvency regulator IBBI data. This
shows the huge gap between the value of the assets and the outstandings the firms
had accumulated. The resolution of 12 large accounts were initiated by banks as
directed by the Reserve Bank of India (RBI). Of these, resolution plans in
respect of six corporate debtors have been approved. The insolvency regulator
data also showed that out of these six, Bhushan Steel has the highest
realisation claims so far, and Alok Industries has the lowest at 11 per cent.
Due to the failure to implement the approved resolution plan in Amtek Auto Ltd,
the process has restarted. Other accounts are at different stages of the
process, the data showed. The Insolvency and Bankruptcy Board of India (IBBI)
data states out of those six resolved cases, the outstanding dues admitted in
the case of Electrosteel stood at Rs 13,175 crore and the amount realised was a
mere Rs 5,320 crore, or 40.38 per cent realisation of the claims. In the case
of Bhushan Steel, the amount admitted was Rs 56,022 crore and that realised was
Rs 35,571 crore, or 63.50 per cent realisation. In the case of Monnet Ispat and
Energy, the admitted amount was Rs 11,015 crore, while Rs 2,892 crore or 26.26
per cent of admitted dues was realised. In the Essar Steel case, the due
admiited was Rs 49,473 crore and the apportionment between financial creditors
and operational creditors is under consideration at the National Company Law
Appellate Tribunal (NCLAT) since the case has been resolved. The National
Company Law Tribunal (NCLT) has cleared ArcelorMittal's Rs 42,000 crore
resolution plan for the insolvent Essar Steel but the case is now in NCLAT
after one of the operational creditors, Standard Chartered, filed an appeal
against the due amount allotted to it by the financial creditors. In the case
of Alok Industries, the admitted amount was Rs 29,523 crore and Rs 5,052 crore
was realised, which is a 17.11 per cent realisation. In the case Jyoti
Structure, the due was Rs 7,365 crore and Rs 3,684 crore was realised, which
represents a 50 per cent realisation.
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IBBI STREAMLINES INSOLVENCY PROFESSIONAL’S ‘TEMPORARY
SURRENDER’ PROCESS
An insolvency professional
(IP) may not find it easy to wriggle out of an existing transaction because of
the difficult situations faced during the corporate insolvency resolution or
liquidation process. This is because the insolvency regulator, IBBI, has
advised the Insolvency Professional Agencies (IPAs) — who register the IPs with
them — not to ordinarily accept ‘temporary surrender’ of professional
membership of an IP while doing the CIRP or individual insolvency resolution
and individual bankruptcy. The idea is when somebody has taken up an assignment
and wants to surrender, he should not be allowed to surrender ordinarily. We
just don’t want an IP to run away during a transaction. If there is a genuine
reason, then he can go. IPA should do some due diligence, sources in Insolvency
and Bankruptcy Board of India (IBBI) said. There have been couple of instances
where the IP had sought to use the temporary surrender route to get away from
difficult situations and later return when things are quite sorted out, sources
said. Sumit Batra, said the IBBI circular is in a direction to bring more
accountability to IPs considering the fact that recently the National Company
Law Tribunal (NCLT) has come down heavily on resolution professionals for
various reasons. To escape such rigours, IPs have been seeking temporary
suspension, Batra told. Alka Kapoor, said IBBI’s latest circular on this front
will ease the process of temporary surrender and revival. It is a proactive
measure of IBBI to discourage the surrenders while an IP is handling an
insolvency resolution case or involved in such case in different capacity, she
said. It is a welcome move since, it streamlines the process and prescribes the
formats. It also avoids inconveniences that are being faced during CIRP, she
added.
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WILFUL DEFAULTERS MUST NOT BE ALLOWED TO BUY BACK THEIR ASSETS
The discussion paper on
corporate liquidation process put out by the Insolvency and Bankruptcy Board of
India last week has inexplicably left a backdoor open for ineligible promoters
to reclaim control of their company. Section 29A, that was inserted into the
Code in 2017 to keep out errant and wilful defaulters from buying back stressed
assets under a resolution process, may not apply to compromise deals or
arrangements under Section 230 of the Companies Act, if the proposal in the
discussion paper goes through. Section 230 essentially deals with ‘Power to
Compromise or Make Arrangements with Creditors and Members’, which may include
reconstruction or amalgamation/merger/demerger of companies or reduction of
share capital or even corporate debt restructuring. As proposed, while sale of
assets under liquidation cannot be made to persons ineligible under Section 29
A, such persons may not be barred from participating in the scheme of
arrangement under Section 230 of the Companies Act. The entire argument is
built on the oft repeated intent of the Code — resolution and revival of the
corporate debtor rather than liquidation. In the famous Supreme Court ruling in
Swiss Ribbons vs. Union of India, it was reiterated that the steadfast intent
of the IBC was to revive a corporate debtor; liquidation is only a last resort
if resolution fails. In the ArcelorMittal India vs. Satish Kumar Gupta case, it
was cited that even in liquidation, every effort must be made to sell the
business as a going concern. In the NCLAT ruling in the SC Sekaran vs Amit
Gupta case, the appellate authority had directed the ‘liquidator’ to consider
provisions of Section 230 of Companies Act, 2013 before taking steps to sell
the assets. Given that liquidation brings the life of a firm to an end,
destroys organisational capital and is hugely damaging to employees, workmen
and the industry at large, it is true that every effort must be made to sell
the corporate debtor as a going concern. But the proposal of letting ineligible
promoters under Section 29A of the Code to participate in the compromise or
arrangement under section 230 of the Companies Act needs an immediate rethink.
After all, the very purpose of the IBC would be defeated if fraudulent
promoters were to re-acquire the business, at throwaway prices. Chronic
defaulters and fraudulent promoters cannot be allowed to game the system, owing
to mere difficulties in implementing the ineligibility criteria under Section
230. The discussion paper also argues that it is not only the liquidator
(resolution professional under IBC) but also creditors and members
(shareholders) who can propose a compromise or arrangement under Section 230.
It may be a good idea to review this provision to avoid misuse by various
stakeholders. Above all, adhering to a strict timeline for concluding the
process of compromise or the completion of the liquidation process is of
greatest importance. A long drawn liquidation process can erode the underlying
value of assets steeply leaving little for creditors.
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AS RESOLUTIONS GET DELAYED, BANKS PUT UP RS 1.3L CRORE OF BAD
LOANS ON SALE TO ARCS
Banks have put up nearly Rs
1. 3 lakh crore of bad loans for sale to asset reconstruction firms (ARC) in
the last fiscal, amid delays and legal challenges in cases admitted for
resolution in the National Company Law Tribunal (NCLT) under the bankruptcy
code. State Bank of India, Central Bank of India and numerous other banks have
decided to sell these assets that would require lesser provisioning and reduce
the hassle of long litigation in the NCLT, said people familiar with the
thinking. There was an acceleration in assets put up for sale by banks to the
ARCs in March FY19 quarter, said Hari Hara Mishra. Among others, in view of
protracted litigation in some large cases under IBC and consequent time
overrun, the banks wanted to get a clean exit and reduce the NPAs in their
books. Despite the Insolvency and Bankruptcy Code being in place for more than
two years, resolution plans are getting delayed. The record filings in those
courts have also burdened the system, leading to long waits for the resolution
plans to get approved. It also consumes bank’s time which would have otherwise
been spent on growing its business. Estimates show that Bank of India and State
Bank of India had around Rs 25,000 crore to Rs 30,000 crore on the block, while
Andhra and Dena were around Rs 10,000 crore. Around 70 per cent of the cases
that are admitted to NCLT have missed the deadline set by the Insolvency and
Bankruptcy Code of 270 days. The numbers also went up because in the fourth quarter,
State Bank of India had put its entire loan to Essar Steel on sale. SBI had put
up Rs 9,588 crore Essar Steel on the block after almost reaching resolution as
the process was taking too long. It went on for over 500 days while the maximum
stipulated was 270 days. Based on the data for all 94 cases resolved under the
insolvency resolution process till the fourth quarter, financial creditors
faced a haircut of 52 per cent, said Kotak Institutional Equities. The premium
received on resolution (2X of liquidation value) compared to opportunity cost
on liquidation is high but decreasing sequentially. The haircut on resolved
cases in the fourth quarter was high at 90 per cent(barring Essar Steel) but
this was owing to an 83 per centhaircut observed in a large account -- Alok
industries, the Kotak report said. The average premium to liquidation value was
high at 1.5X for accounts resolved in the fourth quarter.
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OVER RS 9,500 CRORE CAN BE RECOVERED FROM AMRAPALI, AUDITORS
INFORM SC
Forensic auditors told the
Supreme Court Thursday that Rs 9,590 crore can be recovered from the embattled
Amrapali Group which has diverted Rs 3,523 crore of home buyers money Of the
money diverted as much as Rs 455 crore can be recovered from persons including
directors of the realty firm, their family members and individuals holding hey
managerial position. A bench of Justices Arun Mishra and U U Lalit was told by
court-appointed forensic auditors, Pawan Agarwal and Ravi Bhatia, that firm
sold 5,856 flats at throw-away prices and Rs 321.31 crore can be recovered at
the current market value. They also said that Rs 3,487 crore is recoverable
from home buyers who have booked flats and taken the possession in 14 Amrapali
Projects. The auditors in their 8-volume report submitted to the court said
that till now they have detected Rs 152.24 crore which the company's directors
and their family members have taken for paying income taxes, advances for
purchase of share and under other heads. The summary report also pointed that
from 35 group companies, persons holding key managerial positions including
directors siphoned off Rs 69.36 crore, which was cash in hand with the firms. Amounts
given as advances without any business transactions which have not been
adjusted along with the amount received/paid for the non-genuine transactions
amount to Rs 234.31 crores and should be recovered from the management of the
Amrapali Group of companies, the report said which included only the companies
audited by Bhatia. They said that non-genuine and bogus purchases amounted to
Rs 1,446.68 crore and Amrapali Group has a liability of Rs 6,004.6 crore
towards the Noida and Greater Noida authority.
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UNION BANK’S INSOLVENCY PLEA AGAINST ROLTA INDIA REJECTED BY
NCLT
The Mumbai bench of the
National Company Law Tribunal (NCLT) on Wednesday dismissed the insolvency
petition of Union Bank of India against Rolta India, citing the Supreme Court’s
judgment striking down the Reserve Bank of India’s (RBI) February 12 circular
as ultra vires. We are writing to appraise you that on Wednesday, May 01, 2019,
the hon’ble National Company Law Tribunal — Mumbai has passed an order
dismissing the insolvency petition filed by Union Bank of India as not
maintainable in view of the judgment delivered by the hon’ble Supreme Court of
India in the case of Dharani Sugars vs. Reserve Bank of India, Rolta India said
in a notification to the stock exchanges on Thursday. The text of the NCLT
order is yet to be uploaded on the Insolvency and Bankruptcy Board of India’s
(IBBI) website.
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WITH ABG SHIPYARD, NCLT MARKS CONCLUSION TO INSOLVENCY OF 7
STRESSED ASSETS
The National Company Law
Tribunal’s latest order approving liquidation of ABG Shipyard marks a conclusion
to insolvency proceedings of seven of a dozen stressed assets flagged by the
Reserve Bank of India for initiation of proceedings under the Insolvency and
Bankruptcy Code, 2016. Last week, the NCLT Ahmedabad bench ordered that the
company would go into liquidation under Section 33 (2) of the code, and
directed resolution professional Sundaresh Bhat to act as liquidator. Pursuant
to the 21st meeting of the committee of creditors (CoC) of ABG Shipyard held on
February 20, 2019, approval of the members of the CoC was accorded to liquidate
the corporate debtor and the resolution professional i.e. Sundaresh Bhat was
authorised to file an application before the Hon’ble National Company law
Tribunal (Ahmedabad Bench) seeking liquidation of the corporate debtor, the
corporate debtor said in an exchange filing. The Hon’ble National Company law
Tribunal (Ahmedabad Bench) vide its order dated April 25, 2019, copy uploaded
on the NCLT website on April 29, 2019, ordered liquidation of the corporate
debtor, it said. Essar Steel India, where the resolution process has crossed
over 600 days has been succefully bid for by Arcelor Mittal India but pending
closure owing to legal troubles over distribution of funds among stakeholders.
Jaypee Infratech resolution also looks close with financial creditors and
home-buyers currently voting on a bid by Suraksha Realty. The process will
conclude on May 3.
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ANIL AMBANI NEEDS $2 BILLION IN ASSET SALES TO SAVE LAST
BASTION
The last stronghold in
embattled tycoon Anil Ambani’s phone carrier-to-power empire is also developing
fault lines. Reliance Capital Ltd., his financial services business that almost
doubled its profit in five years, had largely remained insulated from the
distress plaguing the wider conglomerate. Now, the company that controls
India’s fifth-biggest mutual fund, is racing to close a planned $2 billion of
asset sales to bolster its finances after cash dwindled to 110 million rupees
($1.6 million) as of March, according to CARE Ratings. With $252 million of
debt falling due over May and June, a unit of Moody’s Investors Service and two
other local firms have slashed ratings of Reliance Capital or its short-term
instruments, citing holdups in asset sales, deteriorating liquidity and risks
on loans to unprofitable affiliates. The downgrades came against the backdrop
of soaring finance costs for an industry shaken by last year’s meltdown at one
of the nation’s biggest shadow lenders that’s unrelated to Reliance Capital.
Asset disposals are key to averting a crisis at Reliance Capital, said Mathew
Antony, a managing partner at Mumbai-based Aditya Consulting, a credit advisory
firm. Unless some strategic infusion of long-term equity comes into the
company, the day when Reliance Capital falls into a liquidity crisis isn’t too
far, he said. The company told exchanges on April 27 that it only has
short-term debt of 9.5 billion rupees, which will get fully repaid by
end-September using proceeds from the sale of its stake in the asset management
business. The 43 percent stake was valued at 53 billion rupees, it said.
Despite 140 billion rupees of planned divestment, almost all the transactions
are behind schedule, CARE Ratings said in an April 18 statement while slashing
Reliance Capital’s long-term rating to A from A+ and putting it on a credit
watch. Brickwork Ratings pared it to A+ from AA last month while ICRA, Moody’s
local unit, had downgraded the short-term ratings in March, saying the timeliness
of receipt of funds from divestment remains critical. More cuts have followed
for other group companies as well. The conglomerate has struggled to sell
assets in other firms. While Ambani managed to dispose of the Mumbai power
distribution and road assets, many others, especially in telecommunications
were scuttled due to regulatory hurdles or legal delays. ICRA has also
red-flagged Reliance Capital’s substantial exposure toward group companies
which can curb its ability to raise and repay its near-term debt obligations.
Reliance Mutual Fund wrote down about $233 million of investments in Reliance
Home Finance Ltd. and Reliance Commercial Finance Ltd. last month, although it
said investors’ interests will be protected. Reliance Communications is headed
for bankruptcy proceedings after it failed to close the sale of its telecom
assets and repay lenders. Reliance Naval and Engineering Ltd. has proven hard
to turn around while Reliance Power Ltd. has been fighting for higher tariffs
to make up for increased costs.
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JAYPEE INFRATECH LENDERS UNLIKELY TO CONSIDER NBCC'S REVISED
BID
The revised bid of
state-run NBCC, despite securing the government’s approval to acquire
debt-stressed Jaypee Infratech, is not expected to be considered by the lenders
in the ongoing round, said two persons directly involved in the insolvency
resolution process. Currently, financial creditors and home buyers are voting
on Suraksha Realty’s bid and its outcome will be known on Friday. The Committee
of Creditors (CoC) rejected NBCC’s offer last week citing lack of approvals and
that resulted in Suraksha Realty emerging as the only contender. NBCC’s bid can
only be considered if the deadline for the resolution process is extended and
Suraksha’s bid gets rejected by lenders and home buyers, said one of the
persons mentioned above. According to him, only when these two conditions are
met, the CoC is likely to invite fresh proposals providing an opportunity to
the state-run construction company. IDBI Bank, Jaypee Infratech’s lead lender,
has already approached the Allahabad bench of the National Company Law Tribunal
(NCLT) to seek an extension to insolvency proceedings beyond the current
deadline. NCLT is scheduled to hear the matter next May 6, which also happens
to be the deadline to complete the insolvency process for debt-hit realtor.
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SFIO TO FILE REPORT ON ROLE OF THREE AUDIT FIRMS IN IL&FS
SAGA BY END OF MAY
The Serious Fraud
Investigation Office (SFIO), which is probing the financial fraud in IL&FS
and its subsidiaries, is likely to submit its report on the role of auditors by
the end of this month. SFIO is separately looking at the role of the auditors.
The officials have been questioning all three auditors, and after that it will
submit a report to the Ministry of Corporate Affairs by the end of this month,
said a senior official. On Wednesday evening, SFIO questioned an audit partner
of BSR Co LLP in Delhi, widening the ambit of its probe into the role of
auditors in the IL&FS case. BSR is the Indian audit arm of KPMG, one of the
big four consultants, and one of the three auditors of IL&FS, including EY
affiliate SRBC and Deloitte Haskins. Last week, the agency had probed top
officials of Deloitte Haskins.
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BAR COUNCIL OF DELHI DIRECTS KPMG, PWC, E&Y, DELOITTE TO
NOT PRACTICE LAW
The Bar Council of Delhi
on Thursday in a notice directed four accounting firms — KPMG, Price Water
House and Coopers, Earnst & Young and Deloitte India to not practice law
until further orders The direction was made after Lalit Bhasin, said all these
firms are actually accounting firms, however, are engaged in doing law
practice. The notices were served in hand to Managing Partner, KPMG, PwC
Chairman Deepak Kapoor, E&Y Regional Managing Partner Rajiv Memani and
Deloitte India Managing Director. Though KPMG and Deloitte India filed their
reply on Thursday, E&Y and PwC have six weeks and four weeks respectively
to file their responses. The Council is of the view that in the meantime, all
the firms be directed to give the list of all the advocates, who have been
engaged by them, in any capacity, in any of their offices at any place, the
notice read. The matter has been adjourned for July 12, 2019.
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NCLAT ALLOWS BANKS TO
DECLARE DEFAULTING IL&FS ACCOUNTS AS NPAS
The
National Company Law Appellate Tribunal (NCLAT) on Thursday allowed the banks
to declare as non-performing assets the accounts of IL&FS and its group
companies that have defaulted on payments. A bench headed by Chairman Justice S
J Mukhopadhaya lifted the embargo on the banks to declare the accounts of the
debt-ridden IL&FS and its 300 group entities. However, the appellate
tribunal has also clarified that although the banks would declare the IL&FS
accounts as NPAs but can not initiate recovery process and debit money. The
bench has observed that lenders must not withdraw support until a resolution is
found of the IL&FS and its group companies.
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JAYPEE INFRA
INSOLVENCY: HOMEBUYERS WANT NBCC BID TO BE RECONSIDERED; SAY NO FAITH IN
PRIVATE COS
Distressed
homebuyers of debt-ridden Jaypee Infratech Thursday demanded that state-owned
NBCC's bid to acquire the realty firm should be reconsidered as they do not
have any faith in private companies Representatives of nine homebuyers'
associations of Jaypee Infratech's housing projects in Noida, Uttar Pradesh,
said that Jaypee group promoters are interfering in the insolvency proceedings
to regain control over the troubled realty firm. They also cast aspersion on
court-appointed Interim Resolution Professional (IRP), alleging that it was
taking the side of the Jaypee group. Aggrieved buyers, who have booked flats in
Jaypee Infratech projects, also complained that voting process is not being
carried out in a fair manner Financial creditors and homebuyers of the Jaypee
group realty firm are currently voting on the bid of Suraksha Realty, the lone
player left in the race to acquire the company and complete over 20,000 flats.
The government Wednesday cleared NBCC's revised offer to acquire Jaypee
Infratech under the insolvency process. Lenders had rejected the bid of NBCC
terming it conditional and without the necessary approval from the government.
The voting process started on Tuesday (April 30) and would conclude on May 3.
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DELOITTE FACES CLASS
ACTION SUITS, FINE IN IL&FS PROBE
Deloitte
Haskins and Sells Llp, the auditor of struggling IL&FS Financial Services
Ltd (IFIN), may have to disgorge the audit fees it had received from the lender
with penalty if a probe finds that the auditing firm had overlooked
irregularities or colluded with the non-bank’s management, a person familiar
with the investigation said. Deloitte may also face class action suits from
bondholders and shareholders of IFIN, the person said on condition of
anonymity. The Serious Fraud Investigation Office (SFIO), which comes under the
corporate affairs ministry, has also extended its probe to BSR and Associates
Llp, which came in as the joint auditor of IFIN for the year ended 31 March
2018. If the ongoing probe finds any shortcoming in the audit of the company,
which reported a spike in its bad loans to 90% in the December quarter from 5%
in the March 2018 quarter, the government may take action against the
individual audit teams assigned to IFIN or Deloitte itself. An industry
executive familiar with the IFIN audit process said on condition of anonymity
that the scope of a statutory audit is narrower than that of a forensic audit,
which can track transactions in much greater detail. That is not a tenable
argument. If the auditors are to accept every claim of the management, what is
the need for an auditor? said the first person cited earlier. There should be
punishment commensurate with the audit lapses to ensure accountability and to
prevent such future occurrence. It will have a demonstrative effect. BSR and
Co. said in a statement that it remains committed to the highest standards of
ethics and audit quality and that it came into the audit of IFIN as joint
auditors only in FY18. We are not the auditors for IL&FS or any other
material subsidiary of IL&FS. We stand by our audit, which was performed in
line with the applicable auditing standards and regulations, and are fully
committed to cooperating with the regulatory authorities on their inquiries,
BSR said.
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RUCHI SOYA: LENDERS TO
TAKE 52% HAIRCUT AS PATANJALI'S PLAN GETS GREEN SIGNAL
With
Patanjali Ayurved acquiring debt-ridden oil firm Ruchi Soya in a Rs 4,350 crore
deal, the lenders have agreed to a 52 percent haircut on admitted claims. The
CoC will present Patanjali's resolution plan to the National Company Law
Tribunal (NCLT) on May 7. The plan got a 96 percent approval from the committee
after a vote on April 30. The Baba Ramdev-led company will infuse Rs 115 crore
in the company. Sources in one of the lenders told that the resolution plan
offers Rs 4,235 crore to stakeholders, of which Rs 4,053 crore will go to
secured lenders, whose admitted claims are nearly Rs 8,377 crore. This means
their recovery is about 48 percent. Unsecured financial creditors will get Rs
40 crore according to the proposed plan, against a whopping Rs 1,007 crore of
admitted claims, indicating a haircut of 96 percent. The bank with the most
exposure to Ruchi Soya is State Bank of India, with a debt of Rs 1,822 crore
through working capital loans among other things.
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LOKPAL OFFICE TO MOVE
OUT OF DELHI'S FIVE STAR HOTEL
The
office of country's first Lokpal, the anti-corruption ombudsman, will move out
of a five-star luxury hotel in Delhi to its own permanent address. The
government is in the process of searching a permanent office for Lokpal, the
personnel ministry replied to an RTI application filed by this PTI journalist.
It said no payment has so far been made towards rental charges for the Lokpal
office at 'The Ashok' hotel.
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SAT SETS ASIDE NSE'S
2017 ORDER AGAINST OPG SECURITIES IN CO-LOCATION CASE
Securities
Appellate Tribunal has set aside the NSE's 2017 order banning OPG Securities
for six months and has asked the exchange to pass a fresh order in the matter. The
National Stock Exchange (NSE) had suspended stock broker OPG Securities for six
months in September 2017 as a trading member on all segments after it found
that OPG had used the secondary server instead of primary server without any
valid reason in co-location facility. The NSE had introduced co-location server
at its premises in 2009 and OPG had subscribed the facility, according to
Securities Appellate Tribunal (SAT) order. The use of secondary server was
permitted only in case of failure of primary server and the NSE had already
issued such directions, the SAT order said. It conducted the forensic
investigation by Deliotte Touche Tohmatsu LLP and the forensic report brought
adverse findings against OPG, following which the exchange had passed the order
in September 2017. However, another forensic report by EY LLP in the same issue
was submitted and OPG argued that the report depicts a different picture, the
order said. In view of the fact that another forensic investigation report has
come up it would be in the interest of justice that the impugned order be
quashed and set aside and the matter be remanded to the respondent Stock
Exchange to have a fresh look in the matter, SAT said in an order on Wednesday.
Besides, it directed the NSE to pass the order in six week after giving an
opportunity to OPG Securities for hearing.
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SEBI TO SOON ACT
DECISIVELY ON THE CRISIS IN DEBT FUND MART
Market
regulator Sebi may could soon step into the crisis in debt mutual funds after
Kotak AMC and HDFC AMC rolled over some of their fixed maturity plans (FMP),
putting investors' money at risk. Sources told that Sebi could soon unveil
fresh directives to reign in mutual funds acting like banks. Mutual funds are
not banks. They do not have capital adequacy ratio like banks, neither do they
have the adequate expertise to evaluate risks. So why should investors' money
be put at stake, said a Sebi official who is in the know of the development. The
new directive will ensure higher disclosures in case of a default by companies
and will also aim to cap exposure to debt securities of a single company. To
ensure higher transparency and accountability by mutual funds, Sebi may ask MFs
to devise a mechanism to reflect risks on the NAV (net asset value). Sebi's new
directive may also ensure that collaterals taken by mutual funds for lending to
corporates are done in a clean manner, and not via complex structures. Clean
collaterals can be monetised and will ensure investors' money is not at risk,
the official said. Irrational exuberance of mutual funds while lending has
resulted in the current crisis. Debt funds have been facing issues as they do
not disclose information regularly. Neither do they have the expertise to
evaluate credit. The government is seized of the crisis in debt mutual funds
and in the NBFC space and is watching the developments, KV Subramanian told.
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CO-LOCATION ISSUE:
FOREIGN INVESTORS URGE NSE NOT CHALLENGE SEBI'S FINE
Some
foreign investors in India's National Stock Exchange (NSE), which the market
regulator has slapped with a steep fine and a six-month ban from public
fundraising, are urging the bourse not to challenge the penalty and instead
focus on doing a long-awaited initial public offering NSE said it was reviewing
the order and awaiting legal advice before deciding whether to appeal against
SEBI's order to the Securities Appellate Tribunal. But foreign investors in
NSE, who have been pushing the exchange to go public, said they fear that an
appeal would further delay its plans for an IPO that bankers had estimated
could raise up to $1 billion.
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AFTER SEBI ORDER, NSE'S
COMMODITIES DERIVATIVES PLANS DELAYED BY 6 MONTHS
National
Stock Exchange (NSE) wason Thursday barred from issuing any new derivatives
contract for six months after Sebi issued orders in the co-location case
involving NSE. The bourse has also been banned from launching any new
derivative products as well as, from accessing the securities market directly
or indirectly for six months. The order comes at a time when the NSE was
planning to go aggressive in the commodity segment where it had entered just
six months ago in October, 2018. The exchange has also been directed to
disgorge profits worth over Rs 1,000 crore. Industry officials believe that the
Bombay Stock Exchange (BSE) will be benefit from Sebi's orders as BSE is
planning to launch new derivatives contracts in commodities like castor seed,
turmeric, chana, etc. For the metal segment, it plans deliverable Kilo Bars
contracts and Silver deliverable contracts in base metals. NSE is exploring all
legal options on the Sebi’s order, but its plans for launching new derivatives
contracts will be delayed if the order remains valid. In last 7 months, with
the entry of BSE and NSE in the segment, competition has intensified, but
without any big impact. So far, non-agri commodities derivatives was largely
controlled by MCX, while NCDEX was the dominant player in the agri segment.
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IS SEBI'S RS 1,100 CR
PENALTY ON NSE TOO HARSH? BY GLOBAL STANDARDS, YES
The
way the cost of financial misconduct has been rising globally a $158 million
fine may seem like loose change. However, the Securities & Exchange Board
of India has delivered much more than a slap of the wrist with its disgorgement
order against the National Stock Exchange of India Ltd. over an algorithmic
trading scandal. Including five years of interest at 12 percent, the Rs 625
crore penalty works out to Rs 1100 crore, or about $158 million. That’s a
fraction of the $110 billion bill Bank of America Corp. and JPMorgan Chase
& Co. have run up between them in fines and settlements since 2008. Yet
that figure is only 5 percent of the revenue that the banks have garnered in
the past 11 years. By contrast, what Sebi is asking the NSE to pay is more than
a quarter of its combined overall operating revenue for four years, after the
regulator ruled that a high-frequency trading firm benefited from unfair market
access. It’s also more than whatever money the exchange made from HFT until
changing its system in 2014. This is overkill, especially since the regulator
couldn’t establish the graver charges of fraud or unfair trade practice. It all
boiled down to whether the technology used by the NSE to roll out its
high-frequency business provided an equal and fair trading environment to
everyone who had opted to place their computers close to the exchange's, hoping
to pare microseconds when executing trades. When I wrote about the scandal two
years ago, the contents of a forensic study by Deloitte Touche Tohmatsu had
just leaked. It pointed out that until 2014, when the NSE shifted to
broadcasting price information simultaneously to all traders, it was giving
those first to log in an advantage without randomizing the benefit.
Additionally, there was a lightly used backup server, which OPG Securities Pvt.
was consistently connecting to before anyone else between December 2012 and
April 2014. Further analysis failed to unearth a scam of any size however. In a
separate order, Sebi slapped a fine of roughly $2 million plus interest on OPG,
assessing that to be the unlawful profit from unreasonable use of the backup
server. As for NSE’s failure to ensure an equal and fair trading environment,
Sebi has also asked two of the exchange’s previous CEOs – Ravi Narain and
Chitra Ramkrishna – to give up a part of the pay they earned in the top job
between 2010 and 2014. They won’t be able to work for a market intermediary, a
stock exchange or a listed company for five years. Vikram Limaye should be
reasonably happy, though. The fact that the the NSE wasn’t found guilty of
intentionally running a rigged high-frequency market lifts the cloud hanging
over its credibility. The order paves the way for the exchange’s long-delayed
IPO after a six-month moratorium during which it won’t be allowed to access the
securities markets. Besides, the penalty – harsh as it is – won’t have any
cash-flow implications. Even as it was taking its time investigating, the
regulator had asked the NSE to set aside its co-location revenue. By March
2018, the escrow account had already swelled to about Rs 1200 crore. After
paying the fine, Limaye will have more cash at his disposal. But since the
exchange hasn’t made any provisions for the fine, it will have to take a
charge, perhaps as early as the June quarter. Internal processes have already
become more robust but the bigger impact of Sebi’s order may be on NSE’s
culture. The company achieved dominance in a short time, leaving its much older
rival, the Bombay Stock Exchange, in the dust. The hubris that engendered needs
to be tempered with some humility. Investors like Goldman Sachs Group Inc. and
Singapore's Temasek Holdings Pte would have been able to exit a lot sooner had
the previous management of NSE not been so contemptuous of the idea of listing
its shares on the BSE. Or if they had addressed a whistle-blower’s complaint
against its algorithmic trading system rather than slapping a defamation suit
against Moneylife India, the website that reported the allegations of unfair
access, in 2015. That one mistake may have cost the exchange four years, and
$158 million.
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AJAY SHAH COLLUDED TO
MISUSE NSE DATA FOR COMMERCIAL PURPOSES: SEBI
Among
the multiple angles investigated by the stock market regulator in the National
Stock Exchange of India Ltd (NSE) co-location case, one pertains to the alleged
misuse of exchange data for commercial gains. In one of the five orders it put
out after a four-year-long investigation, the Securities and Exchange Board of
India (Sebi) said Ajay Shah, a senior academic with the government think-tank
National Institute of Public Finance and Policy (NIPFP), along with his wife
and sister-in-law, misused market data obtained from the NSE for commercial
gains. Sebi has held that Shah, along with his sister-in-law and an NSE
official, have collusively worked to fulfil their commercial goals by
fraudulently using the data that was obtained by them from NSE to develop an
algo trading software and products. This trading software was used for sale to
market participants for dealing in the securities market. Some of these
products were allegedly used by firms for unfair access to NSE’s systems. Shah
said that he was very disappointed with the order. The order is not supported
by facts. Sebi charged Shah with violating Sebi’s Prevention of Fraud and
Unfair Trade (PFUTP) norms and barred him from having association with any
market infrastructure institute, listed company or registered intermediary for
a period of two years.
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INVESTMENT IN REALTY
SECTOR RISES 7% IN JAN-MAR TO ₹17,682
CRORE: REPORT
Indian
real estate sector attracted investment of ₹17,682
crore in the January-March period, highest quarterly funding since 2008, on
strong inflows from foreign investors in commercial assets, according to
property consultant Cushman & Wakefield. The investment was up by 7% from ₹16,528 crore in the corresponding
period last year. Foreign funds investment in Indian real estate rose 81% to ₹11,338 crore in the first quarter of
2019 calendar year from ₹6,260 crore in the
year-ago period, the data showed. Higher participation of foreign investors
this quarter is a signal towards sustained interest in the country's real
estate story backed by increasing transparency and friendly investment
policies, Anshul Jain said in a statement. The first successful REIT (real
estate investment trust) listing has opened another avenue for investors to
participate in the momentum visible in office markets while also reinforcing
the attractiveness of Indian realty, Jain said. Asset-wise, C&W said the
housing segment got 57% less investment during the January-March quarter of
2019 at ₹3,697 crore from ₹8,518 crore in the year-ago period. Investment
in office properties rose to ₹7,925 crore from ₹6,100 crore during the period under
review. Hospitality segment got ₹3,950
crore in the first quarter of 2019, an over three-fold jump from the year-ago
period at ₹1,200 crore. Investment
flow in retail real estate jumped to ₹1,000
crore from ₹250 crore, and that of
in mixed-use projects to ₹350 crore from ₹110 crore. Industrial segment
(warehousing and logistics) received ₹760
crore as against ₹350 crore during the
review period.
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CAS PLAY MAJOR ROLE IN
DEVELOPMENT & PROMOTION OF MSME SECTOR: EXPERT
Chartered
Accountants (CAs) play a major role in the development and promotion of Micro,
Small and Medium Enterprises (MSME) sector, said Director of MSME-DI, Nagpur. P
M Parlewar elaborated various schemes of MSMEs and hoped that it would give
ample opportunities to chartered accountants to render their services in MSME
sector. He observed that MIHAN was one of the largest SEZs in India and was
taking time to establish the small and medium industries in that area. The
benefits under SEZ scheme are substantially high and Cluster Scheme of Ministry
will enable MSMEs to get multiple benefits. Till now 8 sector specific clusters
have been formed in and around Nagpur, added Parlewar.
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TURNOVER OF MSES
FACILITATED BY NSIC INCREASES BY 54% IN NORTH EAST
Business
turnover of Micro & Small enterprises (MSEs) facilitated by National Small
Industries Corporation (NSIC) in the North-East has increased by 54%, according
to the statistics released by NSIC. P Udayakumar, stated that the turnover
MSE’s in the region has touched Rs 171 crore in 2018-19 financial year from Rs
111 crore in the previous fiscal. The Director also informed that NSIC in North
East has been pursuing various technical, promotional & commercial
activities for promotion, development & fostering the growth of
entrepreneurship & MSMEs through its array of services and activities since
the last couple of decades.
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WE ARE SPOT ON INFLATION, SAYS RBI; BLAMES DEMONETISATION FOR
OCCASIONAL GLITCHES
Even as RBI’s inflation
forecasts mostly remained on target, it missed them on two occasions due to unexpected
shocks arising from food prices such as vegetables. The projection errors were
first noticed following demonetisation and second between 2015 to 2017, when
the prices of pulses dropped sharply after rising by 50 per cent, said a
report. The report stated that during April to June 2016, vegetable prices rose
only to stabilise by October 2016 ona cocunt of robust seasonal surge in the
tomato prices. However, soon after demonetisation, a significant dip in the
prices of vegetables was seen. Similarly, the prices of pulses that rose by
nearly 50 per cent between January 2015 to July 2016, began to ease in the
third quarter of FY17. The prices declined further by nearly 20 per cent in the
fourth quarter from the July-level, the report said. This steep decline was in
a stark contrast to the trends seen historically, the report also mentioned.
Adequate rainfall, better supply side decisions taken by the government,
increase in stock limit of pulses, higher MSPs, among others, were a few
factors behind the sharp decline in the prices. The divergence from actuals may
occur on account of change in the initial conditions and rise in volatility in
the baseline assumptions, the report added. In addition to a sharp dip in food
inflation, deviations may also happen due to other variables including crude oil
prices, it noted. There is a significant correlation of forecast errors with
the composition of the food items in the CPI basket, the RBI report said. India
took to an inflation-targeting mechanism to RBI monetary policy in 2016. A
target of 4 per cent with a range of +/- 2 per cent for the period from August
2016 to March 2021 has been established as a medium-term inflation target by
the government.
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HOLES IN RBI’S SANDBOX FOR FINTECHS
Over the weekend, the RBI
rolled out its much-awaited ‘draft enabling framework for regulatory sandbox’
(RS). This came at the behest of the recommendations of the inter-regulatory
working group, stressing the need for the framework to increase efficiency,
manage risks and create new opportunities for consumers. While the policy is
welcome, there are some crucial points of ambiguity, particularly with respect
to customer privacy and data protection that raise serious concern. To begin
with, the framework simply demands of an applicant entity to demonstrate
arrangements to ensure compliance with the existing regulations/laws on
consumer data protection and privacy. However, the status quo on consumer data
protection and privacy, much less a curated financial data protection framework
is woefully inadequate. The right to privacy is still only a Constitutional
right espoused by the Supreme Court, and the widely contested Data Protection
Bill remains unenforceable. The existing applicable legal framework for the
fintech industry is encapsulated primarily in the Information Technology Act,
2000, which while providing for some norms for data collection and its usage,
doesn’t elaborate adequate guidelines for data storage techniques, data
processing or user consent when it comes to particular kinds of financial data.
To this extent, although a motley of other financial legislation also provide
some perspective on privacy, they are largely inconsistent across the financial
sector, disparate in providing harmonised protections, and designed to focus
more on fraud, than on privacy. Most importantly, both for entities and
consumers, the legal landscape on financial data protection is exceptionally
complex. Further, the regulations make the entity responsible for maintaining
customer privacy, without clarifying the liability and compensation frameworks,
and the adequate metrics and ring-fenced mechanisms for limiting customer
liability. Most alarmingly though, the RBI continues to rely on the problematic
policy stance of making entities seek explicit consent from their customers.
Not only does this shift the burden of consumer protection from the state to
private entities, the policy fails to realise that consent based privacy
policies, particularly in the frontier fintech space, may fail given the usual
fintech jargon (this can be mitigated, for example, by the regulator
prescribing a standard language in certain cases) and un-nuanced financial
customers. In effect, by placing the onus of compliance with data protection
laws on applicant entities, what the policy also does is shift the burden on
the consumer to review the proposed innovation and ask for a meaningful
enforcement of their rights; a cost too high for any one individual. Even
within the consent–privacy conception of consumer rights, the least the
regulator should ask for is meaningful consent, and application of key data
protection principles like purpose limitation and access control, transparency
in data-collection and usage at every stage, and a clear exit strategy for
consumers to opt-out when they choose; all of which are missing in the draft
framework. The draft framework’s silence on the application of the principle of
proportionality to entities, that is, the applicability of the framework in a
manner that takes into account an institution’s size, internal organisation and
nature, the complexity of its activities is particularly telling.
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SBI TO CONSIDER JET STAFF’S BILLION-DOLLAR BID AFTER MAY 10
State Bank of India will
consider the ₹7,000-crore investment proposal made by employees of Jet
Airways only if it does not receive an acceptable offer from any of the four
entities that have been short-listed to place binding bids. In a meeting with
employee representatives on Thursday, the bank took the view that the proposal
to allow the airline’s management to take over the company can be considered
after May 10, the last date for the short-listed players to place a binding
bid. It was a preliminary discussion. The employees have been told to discuss
with the management and come up with a comprehensive plan because currently the
bid process is going on and we cannot be unfair to the bidders who have
qualified, said a source aware of the development. Meanwhile, banks are
understood to be moving to strengthen their collateral so that their chances of
recovery are better in case recovery proceedings are initiated against the
airline. Domestic lenders are considering paying off the US EXIM Bank ₹400
crore to get first charge of Jet Airways’ five aircraft.
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ULTRATECH’S TASK NOW IS TO SELL BINANI’S ASSETS
UltraTech Cement, an
Aditya Birla Group company, will have to be mindful of country specific
regulations and seek consent of joint venture partners as it looks to sell the
associated global assets it inherited with the recent acquisition of Binani
Cement in an insolvency-driven process. The global assets that UltraTech plans
to sell include the Binani 3B - the Fibreglass Company, with plants in Europe
and Goa; a three-million tonne per annum (mtpa) joint venture cement plant in
China; and a 2.5 mtpa grinding unit in the UAE. Binani Cement owned a 90 per
cent stake the China JV and 49 per cent in the UAE venture. As the fibreglass
company was not part of the insolvency process in India, UltraTech has to file
a fresh insolvency case under European laws. For the other two assets it has to
find a buyer approved by joint venture partners. Before filing for insolvency,
the Binani Group had tried to sell its stake in the cement venture to its
Chinese partner, who refused to acquire it, sources said. Finding a buyer for the
grinding unit in the UAE is also difficult, as the cement supply there greatly
exceeds demand.
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BANDHAN BANK TO CUT
PROMOTER HOLDING TO 40% THROUGH OFFER-FOR-SALE ROUTE
Bandhan
Bank will reduce its promoter holding to the mandated level of 40% through the offer-for-sale
(OFS) route and is not looking at any more acquisitions at the moment, said Chandra
Shekhar Ghosh. Ghosh said, We cannot go for any further acquisition and the
option is to have an offer for sale. He added that the bank has been receiving
requisite approvals from the authorities and hopes to get the National Company
Law Tribunal (NCLT) approval as well. Now we need the approval of NCLT and
whenever the approval comes, we will merge the entities. However, we cannot
give a timeline for the NCLT approval, said Ghosh. The OFS mechanism,
introduced by the Securities and Exchange Board of India (Sebi) in 2012, allows
promoters to dilute their holdings in listed companies. The Kolkata-based bank
had, in January, announced the acquisition of Gruh Finance, the
affordable-housing finance arm of Housing Development Finance Corporation
(HDFC), in a share swap deal. This acquisition is set to reduce promoter
holding of Bandhan Financial Holdings Ltd in the bank to 61% from 82% at
present. The deal was necessary after the central bank, in September, barred
Bandhan Bank from opening new branches without its approval and ordered the
bank to freeze the salary of its chief executive Ghosh. This was owing to the
bank’s failure to meet shareholding rules. RBI has communicated to us that
since the bank was not able to bring down the shareholding of Non Operative
Financial Holding Company to 40% as required under the licensing condition,
general permission to open new branches stands withdrawn and the bank can open
branches with prior approval of RBI and the remuneration of the MD and CEO of
the bank stands frozen at the existing level, till further notice, the bank had
said in a notification to BSE.
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Q4 THROWS A MIXED BAG
OF FORTUNES FOR INDIA INC
The
financial results season is on, and it has been a mixed bag so far for the
India Inc. While some companies have announced their fourth-quarter numbers,
the overall sales and profit growth for S&P BSE 200 companies are expected
to be in the mid-teens range. Around 150 companies have announced their March
quarter results so far. On Tuesday, Kotak Mahindra Bank results were in line
with street expectations as the company reported a 25% increase in net profit
to Rs 1,408 crore in the March quarter, riding a strong credit growth. Barring
YES Bank, which posted a loss of Rs 1,506 crore, Axis Bank and HDFC Bank have
reported a strong set of numbers. According to analysts, steel, cement and
metal sectors have seen a rally based on their quarterly earnings. While the
cement sector's performance will be led by higher realisation and cost, the
steel sector has shown a sign of confidence. Tata Steel's performance was led
by improvement in their European business, while its debt reduction is aided by
strong cash flows and favourable currency movements. Rahul Shah, VP – said
while corporate banks are showing good performance with Axis, HDFC and ICICI
Bank are holding ground, pain for public sector banks, except for State Bank of
India, is likely to continue for some more time. This is a nervous quarter for
India Inc, and we expect either a static or subdued growth. For S&P BSE 200
companies, the growth should be in mid-teens range, Shah said. A K Prabhakar,
echoed Shah's views, saying that the best results have already been declared,
and going ahead, there is a likelihood of negative surprises. According to him,
while private banks have shown positive results, it is to see how PSU banks
assessing their exposure to bad assets.
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INDIA STRUGGLES TO DEVELOP
TINY MUNICIPAL BOND MARKET; CHINA HAS THE OPPOSITE PROBLEM
India’s
recent step to expand its tiny municipal bond market isn’t winning much
enthusiasm from bankers, a bad sign for cities desperate for money to build new
bridges, subways and sewers. The central bank said last week that it would allow
foreign portfolio investors to buy muni bonds But municipalities need to
improve their fiscal health and report financials in a more timely manner to
attract foreign funds, which also want to see more local participation,
according Shameek Ray. Narendra Modi’s ruling Bharatiya Janata Party has pledged
to spend $1.44 trillion on infrastructure as it seeks to retain power in
elections that started this month. Those ambitions compare with a muni bond
market with just 13.9 billion rupees ($199.8 million) of securities
outstanding, with only about seven civic authorities having sold such debt
since the capital markets regulator detailed rules in March 2015. Lack of
adequate disclosure among Indian municipalities has stymied demand for such
securities even among local investors. India is not alone in Asia in struggling
to develop a healthier muni market. But the issue for China, which has greatly
outpaced its neighbor in infrastructure development, is more one of huge supply
with about $2.94 trillion worth of muni bonds outstanding.
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GLOBAL GOLD DEMAND UP
7% IN Q1; GOLD JEWELLERY DEMAND IN INDIA AT 4-YR HIGH
The
overall demand for gold at the global level surged 7 per cent to 1,053.3 tonnes,
led by buying by central banks and exchange traded funds (ETFs), says the
latest report. Central banks bought 145.5 tonnes of gold, the largest Q1
increase in global reserves since 2013. Diversification and a desire for safe,
liquid assets were the main drivers of buying. On a rolling four-quarter basis,
gold buying reached a record high for our data series of 715.7 tonnes, the WGC
report said. India’s demand for gold jewellery hit a four-year high in Q1CY19
at 125.4 tonnes. This, WGC said, helped the overall gold demand for jewellery
at the global level inch nearly one per cent higher to 530.3 tonnes, worth
$22.2 billion during the recent concluded quarter despite a 2 per cent decline
in China’s demand for gold jewellery, estimated at 184.1 tonnes. A lower rupee
gold price in late February/early March coincided with the traditional
gold-buying wedding season, lifting jewellery demand in India to 125.4t up 5
per cent year-on-year – the highest Q1 since 2015, the WGC report says. The
first half of the quarter, according to WGC, was subdued. The month-long
inauspicious period of Kharmas / Malmas ended in mid-January and was followed
by a sharp rise in the local gold price, hitting Rs 33,730 per 10 gram by the
third week of February 1. Prices then slipped to Rs 32,000 per 10 gram by the
first week of March. This price correction, WGC believes, got consumers rush to
make wedding-related buying. At the global level, though the demand in the US
continued to expand, the pace of growth slowed as the prolonged government
shutdown hit demand in January. The demand in Middle East, which was hit by the
introduction of value added tax (VAT) in the UAE and Saudi Arabia in Q1CY18,
saw an improvement in the recently concluded quarter. Iran was a notable
exception where the demand slipped 10 per cent. Gold bar and coin demand surged
3 per cent at the global level, rising to 298.1 tonnes in the recently
concluded quarter as compared to 288.4 tonnes in Q1CY18. This again was led by
demand in India, which surged 4 per cent to 33.6 tonnes in Q1CY19, as compared
to 32.3 tonnes in the previous corresponding period. Demand from China,
however, dipped 8 per cent to 71.2 tonnes. Investors globally added 40.3 tonnes
to gold-backed ETF holdings in Q1, as compared to 27.1 tonnes in Q1CY18 - an
increase of 49 per cent y-o-y.
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INDIA BIGGEST RECIPIENT
OF FUNDS FROM ASIAN DEVELOPMENT BANK LAST YEAR
India
was the biggest recipient of funds from Asian Development Bank last year and
would continue to get sovereign loans in excess of USD 3 billion in 2019 as
well, the bank’s President Takehiko Nakao said. The multilateral funding
institution committed USD 3 billion in sovereign loans to India in 2018, the
highest level of assistance since sovereign operations began in the country in
1986. We will continue to lend this kind of level (during 2019), he said. Also,
growing debt-GDP ratio is coming down and provides more space for lending, he
added. He said ABD will continue to make investment in rural connectivity,
urban development and skill development, among others. India received nearly 25
per cent of the total loans sanctioned last year. New commitments included USD
21.6 billion in loans, grants and investments from ADB’s own resources,
exceeding the target of USD 19.71 billion and up 10 per cent from 2017. The
Manila-headquartered bank committed several projects in India. Nakao said BRI
is a very natural idea to expand the connection between East Asia, Central
Asia, Europe and Africa but the investment should generate good returns. There
are merits over investment but at the same time we have to be careful we must
find good project with good return, even if the lending is to the government.
Each identified project should have sound economic grant with good returns and
also we should pay attention to social and environmental impact, he said.
Otherwise, there could be issues with regard to investment, he said, adding,
Chinese authorities should pay more attention to these issues.
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HOW PAYTM KILLED ITS
E-COMMERCE DREAM IN INDIA
Exactly
two years back, Paytm Founder and CEO Vijay Shekhar Sharma, keeping Alibaba
model in mind, took a plunge into the burgeoning e-commerce space where Amazon
and Flipkart (now owned by Walmart) were two dominant forces. Nurturing a
little grudge that he never had a chance to study at the Harvard University, Sharma
de-merged the e-commerce business into a separate entity by the name of Paytm
Mall to address India's large online retail opportunity with cashbacks.
Confident that the growing number of smartphone users would help it sail
through, the new entity started off with the same shareholding as the parent
company of Paytm - One97 Communications Limited- and raised $200 million from
SAIF Partners and Jack Ma-run Alibaba Group Holding Ltd. Paytm Mall managed to
raise over $650 million from Alibaba, SoftBank and SAIF Partners. Alibaba- a
pioneer in the online-to-offline (O2O) marketplace- soon realised that giving
cashback to attract customers was a short-term strategy which won't help Sharma
make Paytm Mall a third big player in the fast-growing Indian e-commerce market
poised to touch $84 billion in 2021 from $24 billion in 2017. Paytm Mall's
losses mounted and in the financial year 2018, the company posted a loss of
nearly Rs 1,800 crore on revenue of Rs 774 crore. According to Forrester
Research, the market share of Paytm Mall almost halved in 2018- to 3 per cent
from 5.6 per cent in 2017. Sharma, however, is still optimistic and wants to
run Paytm Mall in the face of massive competition which, the analysts feel, is
the end-game as his focus should be on the digital payments market which
Alibaba always wanted his to excel in. Several attempts to reach out to Paytm,
including emails, calls and even a personal visit to One97 Communications
Limited's Noida Sector 5 office for their version did not elicit any response
till the press time. According to Thomas George, Paytm is currently facing
several challenges. Paytm is far behind the top two e-commerce players in terms
of market share. They have a single-digit share against the top leaders which
are commanding over 30 per cent. Plus, the service standard set by these market
leaders is quite remarkable, George told. On the other hand, Paytm is not
making investments in stocking and delivering products. Paytm Mall's primary
catchment segment was its payment wallet customers base. This base is not
growing as anticipated, George added. Paytm's Payment Bank vision is also under
scrutiny. The Paytm payment bank could have helped the company to create a
buzzing marketplace and attract more consumers onboard. While billionaire
investor Warren Buffet's Berkshire Hathaway Inc has invested in Paytm, we had
seen Alibaba diluting its stake too, George noted.
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HOW TO MAKE YOUR
PASSWORDS DIFFICULT TO CRACK
We
often adopt a ‘It-won’t-happen-to-me’ attitude when it comes to online safety
and security. For instance, the passwords that we use on a variety of sites are
the weakest links Despite warnings by cyber security experts, we tend to use
easy passwords that even toddlers can break into. On World Password Day,
McAfee’s Chief Consumer Security Evangelist, Gary Davis, has come out with a
set of do’s and don’ts to make logins safer and more secure. Our most sensitive
details live behind online password protection – from our financials, to our
official documentation, personal photos and more. This means that consumer
behaviour around passwords must evolve in order to prevent cybercriminals from
accessing vital information, he points out.
Basic
house-keeping tips
·
Check
if your passwords are exposed. Do not use common passwords and simple personal
details within your passwords.
·
Remember
that your basic personal details such as birthdays, family members’ names or
pets’ names are easily guessable.
·
The
same applies to common passwords such as ‘password’ or ‘qwerty’. The less
obvious and more obscure, the better.
·
Layer
your passwords. Passwords should always contain a variety of capital and lower
case letters, numbers and symbols.
·
Choose
unique passwords across all your accounts. Many consumers use the same
password, or variations of it, across all their accounts. This means that if a
hacker discovers just one password of one account, passwords of all other
accounts are at risk. Have different passwords for different accounts.
·
Use
a password manager. Using a password manager will dramatically simplify
managing passwords across all your accounts and make it easy to quickly change
a password if your service provider announces that they have been breached.
Since it can be difficult to remember multiple complex passwords, use the
password manager to keep track.
·
Enable
two- or multi-factor authentication, a service that many sites offer. This
provides an extra layer of authentication and protection that will keep hackers
at bay.
#For Source of Information copy and paste the heading in google.
Thanks & Regards,
CS Meetesh Shiroya
Thanks & Regards,
CS Meetesh Shiroya
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