Month: January 2019

RBI lifts lending curbs on Bank of India, Bank of Maharashtra and Oriental Bank of Commerce

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The Reserve Bank of India (RBI) said it has dropped Bank of India (BoI), Bank of Maharashtra (BoM)and Oriental Bank of Commerce from the prompt corrective action plan (PCA) for state-owned banks with high levels of bad loans and insufficient capital, subject to “certain conditions and continuous monitoring”.

The action follows improvements in their asset quality and capital ratios after a review of the performance of government-owned banks currently under the PCA framework. Both BoI and BoM meet the regulatory norms including capital conservation buffer (CCB) and have net non-performing assets (NPAs) of less than 6 percent as per third quarter results, RBI said in a statement on Thursday.

In the case of Oriental Bank of Commerce (OBC), RBI said though the net NPA was 7.15 percent, as per the published results of third quarter, the government has since infused sufficient capital and bank has brought the net NPA to less than 6 percent. Ergo, the restrictions on OBC under the PCS framework were removed, according to RBI.

RBI’s board for financial supervision chaired by new governor Shaktikanta Das took the decision at its meeting on Thursday after reviewing the latest quarterly performance of all the 11 banks on the PCA list. The 11 government-owned banks on the RBI’s list are barred from issuing fresh big-ticket loans or expanding operations and their financial performance is given close scrutiny.

There are 21 listed government-owned banks in India that provide about two-third of the total loans. With nearly half of them under a PCA plan and the rest cautious due to a record $150 billion in bad debt, the government has been keen the curbs be relaxed to boost their ability to lend.

Referring to Bank of India and Bank of Maharashtra, RBI said these banks are not in breach of the PCA parameters as per their published results for the quarter ended December 2018, except return on assets (RoA). “However, though the RoA continues to be negative, the same is reflected in the capital adequacy indicator,” RBI said, adding that these banks have provided a written commitment that they would comply with the norms of minimum regulatory capital, net NPA and leverage ratio on an ongoing basis.

Justifying why the two banks were taken out of the PCA framework, RBI said these banks have also apprised it of the structural and systemic improvements that they have put in place which would help them in continuing to meet these commitments. Further, the government has also assured that the capital requirements of these banks will be duly factored in while making bank-wise allocations during the current financial year.

Bank of India’s net non-performing assets fell to 5.87 percent in the October-December quarter from 7.64 percent in July-September. Its capital adequacy ratio improved to 12.47 percent from 10.93 percent. Bank of Maharashtra’s net non-performing assets fell to 5.91 percent from 10.61 percent while its capital adequacy improved to 11.05 percent from 9.87 percent.

RBI will continuously monitor the performance of these banks under various parameters, said the release.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Oil India gets Sebi exemption from buyback norms

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Markets regulator Sebi on Thursday exempted state-run Oil India from complying with buyback regulations with regard to its proposed 5.04 crore share purchase programme.

The order comes after the PSU filed an application in December with the Securities and Exchange Board of India (Sebi) seeking exemption from the strict enforcement of the buyback norms.

The application has been necessitated on account of transfer of 3,33,20,401 equity shares of Oil India, which were held by the promoter (government), to the asset management company of the Central Public Sector Enterprise Exchange Traded Fund (CPSE ETF) on December 4, 2018.

According to Sebi, transfer of these equity shares by the promoters had occurred during the period between the date of passing the resolution of the board of directors approving the offer of buyback of securities of the company (November 19, 2018) and the closure of such offer (yet to occur).

Sebi’s buyback rules impose an obligation on the company to ensure that its promoter(s) do not deal in the shares of the company in the stock exchange or off-market, including transfer of shares among themselves during the period from the date of passing the resolution of the board of directors till closing of the buyback offer.

On November 19, Oil India’s board had approved the buyback of 5.05 crore equity shares (representing about 5 per cent of the total number of equity shares in the paid-up share capital of the company) at a price of Rs 215 per equity share for an aggregate consideration of Rs 1,085.72 crore.

Oil India, in its submission, said that the the proposed buyback will help in optimising its capital structure and improve its key financial ratios and would also lead to reduction in outstanding shares, improvement in earnings per share and enhanced return on invested capital.

Besides, the company said the strict enforcement of the buyback regulations at this point in time may result in undue hardship to investors, including shareholders of the company who may seek to participate in the proposed buyback.

“I note that the transfer of 3,33,20,401 equity shares of Oil India by its promoter on December 4, 2018 pursuant to the CPSE ETF Scheme FFO 3 was necessitated as part of the ongoing disinvestment programme formulated by the Government of India,” Sebi Whole Time Member G Mahalingam said in an order.

He further said the exemption or relaxation should be granted to Oil India.

Accordingly, Sebi has granted “exemption/relaxation to the company viz Oil India from ensuring compliance with the requirement of… the buyback Regulations in relation to the proposed buyback of 504,98,717 equity shares”.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Import duty cut on EV components to spur electric mobility: SIAM

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Automobile industry body SIAM on Thursday welcomed government’s move to reduce import tariff on imported parts of electric vehicles (EVs) for assembly in India saying it would trigger investments in critical components both from domestic and foreign players.

The Society of Indian Autombile Manufacturers (SIAM), however, urged the government to reconsider raising of duty on battery cell to 5 percent from zero saying as there is no local manufacturing at the moment, imported cells would become costlier and make introduction of EVs more difficult.

The government’s move to provide preferential import duty on CKD and SKD of electric vehicles vis-a-vis conventional vehicles will encourage electric mobility in the country, SIAM said in a statement.

“At the same time, government’s intention to not allow import of completely built electric vehicles at a concessional rate is also in the right spirit of Make in India,” it added.

On Tuesday, the government had lowered customs duty on import of parts and components of such EVs to 10 to 15 percent.

“This would help in creating supply and demand for electric vehicles. Government should allow these concessions for a few years to allow industry to achieve minimum viable scale. With improved scale of operations, localisation of these components would also happen,” SIAM added.

On battery packs, the auto industry body said as there is no cell manufacturing in the country presently, the local battery pack with imported cells would become costlier and make introduction of electric vehicles more difficult.

“However, it is recognised that domestic cell manufacturing would be an important strategic goal for the country, we would recommend that import duty on cell can be reconsidered and kept at nil duty with an expiry date announced upfront to enable battery and automobile companies plan,” it added.

In another statement, SIAM said a meeting of various stakeholders is required for proper implementation of colour stickers notifying type of fuel used, as a part of HSRP (high security registration plates) from April 1, 2019 for new vehicles.

SIAM said after a notification by the transport ministry on December 6, 2018, the responsibility of providing the coloured sticker and HSRP has shifted from the HSRP vendor of the state transport departments to the vehicle manufacturers.

“Since, the said notification raises several questions on implementation of HSRP by various stakeholders, a meeting is required with MoRTH, with all stakeholders, to iron out open issues,” it said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Former CEO Chanda Kochhar may have to return Rs 350 crore to ICICI Bank: Report

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Former ICICI Bank chief executive officer (CEO) Chanda Kochhar might be liable for repayment of Rs 353.12 crore to the lender, reported Economic Times.

The bank’s annual reports between 2008-09 and 2017-18 showed that Kochhar was paid total cash bonuses of Rs 10.12 crore.

According to the report, Kochhar may have received up to Rs 343 crore in employee stock options (ESOPs) issued since FY09 and about Rs 10 crore as cash bonus. The bank’s annual reports data showed that 94 lakh shares were given to Kochhar between FY09 and FY18, the period for which the bank has sought a claw-back of all dues and stock options,

Kochhar received shares in all the years between FY09 and FY18, except in 2009, the bank’s annual reports showed.

ICICI Bank after the indictment by the Justice BN Srikrishna committee report said that due to the ‘termination for cause’ under the bank’s internal policies and code of conduct, the bank would revoke all her existing and future entitlements which would include any unpaid amounts, unpaid bonuses or increments, unvested, vested and unexercised stock options and medical benefits, report said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Facebook lifts Nasdaq, S&P at open; downbeat earnings weigh on Dow

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

The S&P 500 and the Nasdaq got a boost from Facebook Inc’s stellar earnings on Thursday, while the Dow was weighed down by a bunch of disappointing quarterly results as investors awaited the outcome of the US-China trade talks.

Wall Street surged on Thursday after the US central bank said it would be patient in raising rates further this year, reassuring investors concerned about tighter financial conditions crimping economic growth.

The Fed’s dovish tone, along with heartening results from tech companies including Apple Inc and Facebook set the main US indexes on track for their best month in about three years.

Facebook jumped 13 percent after its quarterly profit topped analysts’ estimates, showing that digital advertisers were still flocking to spend money on the service even after a series of high profile embarrassments.

The communications services sector gained 3.45 percent, while other FAANG members — Amazon.com Inc, Apple, Netflix Inc and Alphabet Inc — gained between 0.6 percent and 1.8 percent.

General Electric Co soared 17 percent after the industrial conglomerate beat estimates for sales and cash flow in the fourth quarter.

“Right now we have positive earnings, positive economy and a positive Fed, but the only missing piece of the puzzle is trade,” said Andre Bakhos, managing director at New Vines Capital LLC in Bernardsville, New Jersey.

“It seems as if most of the fears have been taken away except for trade, which is holding back markets. It’s still a wait-and-see approach.”

US President Donald Trump expressed optimism about high-level trade talks with Chinese officials in Washington but said no final deal would be made until he meets with Chinese President Xi Jinping in the near future.

The two countries opened a pivotal round of talks on Wednesday aimed at bridging deep differences over China’s intellectual property and technology transfer practices and easing a months-long tariff war.

Fourth-quarter earnings reports have largely exceeded market expectations so far, helping US stocks recover from a December selloff that was fueled by concerns about trade disputes, rising interest rates and fears of diminishing corporate profits.

At 10:17 a.m. ET the Dow Jones Industrial Average was down 109.08 points, or 0.44 percent, at 24,905.78, the S&P 500 was up 9.92 points, or 0.37 percent, at 2,690.97 and the Nasdaq Composite was up 67.90 points, or 0.95 percent, at 7,250.98.

DowDuPont Inc fell 7.7 percent, leading decliners on the blue-chip Dow, after the chemical maker’s revenue fell short of expectations. The S&P materials sector dropped 2.12 percent.

Microsoft Corp declined 2.6 percent as its Azure cloud computing sales grew at a slower pace than a year earlier, although its quarterly results and forecast topped Wall Street estimates.

Intel Corp slipped 2 percent after the chipmaker named interim Chief Executive Officer Robert Swan to the role on a permanent basis.

Advancing issues outnumbered decliners for a 2.08-to-1 ratio on the NYSE and a 1.75-to-1 ratio on the Nasdaq.

The S&P index recorded nine new 52-week highs and no new lows, while the Nasdaq recorded 26 new highs and 12 new lows.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government likely to announce farm package in interim budget: Here’s what experts have to say

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Interim finance minister Piyush Goyal is scheduled to present the BJP government’s sixth and final budget of the current tenure, during which it is widely speculated that he may announce sops to regain political ground that the BJP seemed to have lost in the recent assembly elections.

The build-up has been all about farmers and ways to rejuvenate the rural economy. According to sources, the government seems to have finalised farm package which will appease the farmers.

The centre is planning to announce a farm package on the lines of schemes announced by Odisha and Madhya Pradesh governments, said sources familiar with the matter.

Over the past few weeks, after studying farm packages announced by different state governments, the centre has zeroed in on the farm policies by Madhya Pradesh’s Bhavantar Bhugtan Yojana (BBY) and Odisha’s Krushak Assistance for Livelihood and Income Augmentation (KALIA).

CNBC-TV18 is in conversation with Siraj Hussain, former agriculture secretary; M J Khan, chairman of ICFA; Devendra Sharma, agri economist and Ajay Vir Jakhar, chairman of Bharat Krishak Samaj, to discuss the likely farm packages that the government may announce in the interim budget.

Ajay Vir Jakhar said, “I have been hearing the same voices for the last four budgets that it is going to be a farmer-friendly budget. There have been all sorts of slogans and promises over four years to the point that I lost hope that there could be any miracles in the coming budget also.”

“I don’t have much hope on the outcomes. I have a lot of hopes that the announcements are going to be very good, but I do not have any hope that these announcements will turn into favourable positive outcomes for farmers,” Jakhar added.

Siraj Hussain said, “Bhavantar is very difficult to implement. For that we need a very robust mandi infrastructure and a very detailed, thorough, correct and incorruptible system in markets which unfortunately does not exist in most of the states.”

“As far as KALIA kind of model is concerned it is doable. However, there would be enormous difficulties in identifying people who would be given the benefit. Even if this scheme is limited to rural areas and people dependant on agriculture their identification is not easy as we have seen in case of National Food Security Act,” Hussain said.

Devendra Sharma said, “I am also keeping my fingers crossed, we will have to see, wait and watch as to what exactly they come up with. Even if I look at the Telengana model of Rs 10,000 per acre, it boils down to Rs 800 per month. Now if Rs 800 per month is big support then we need to be worried about the kind of deprivation that prevails in the countryside and if you even look at Odissa, it is model of around Rs 10,000 crore that they want to spend on the scheme for three years.”

“This kind of schemes whether it is KALIA or Telangana model, it is not going to be working in a manner that bring a longtime change,” Sharma said.

M J Khan said the government is concerned about how quickly it can transfer the benefits to the farmers.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Walmart, Amazon scrambling to comply with India’s new ecommerce rules

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Walmart Inc-owned Flipkart and Amazon.com Inc’s Indian unit are rushing to rejig ownership structures and rework some key vendor relationships, as they seek to comply with new Indian ecommerce curbs without disrupting their businesses.

In late December, India modified rules around foreign direct investment (FDI) in ecommerce, creating additional hurdles for the retail giants. The rules, which kick in on Friday, do not allow e-commerce sites to “exercise ownership or control over the inventory” of sellers.

India does not allow foreign investors to control and market their own inventory on their e-commerce platforms. They are only allowed to operate marketplace platforms where others sell goods to retail consumers.

Traders and rivals say companies such as Amazon and Flipkart have been violating the spirit of these rules by creating proxy sellers or vendors in which they have direct or indirect stakes, allowing firms to give deep discounts that upset off-line trade.

The All India Online Vendors Association, a group of about 3,500 online sellers, has accused both Flipkart and Amazon of using their dominant position to favour selected sellers. Amazon and Flipkart deny the accusations.

Both Amazon and Flipkart sought more time to comply with the new rules. But India said on Thursday, it had, after “due consideration” decided not to extend beyond February 1 the deadline for the implementation of the modified FDI norms.

In a letter to India’s industries department earlier this month, Flipkart Chief Executive Kalyan Krishnamurthy said the rules required it to assess “all elements” of its business operations, a source told Reuters previously.

Flipkart and Amazon did not respond to requests for comment on their plans for complying with the new regulations.

Equity Stakes

The new rules, meant to close loopholes in the regulations, state that if any seller purchases more than 25 percent of its inventory from the wholesale units or other group companies of an e-commerce firm that runs an online marketplace, then that vendor’s inventory will be deemed to be controlled by the e-commerce company.

That could disrupt the models of Amazon and Flipkart, whose wholesale units buy products in bulk and sell to thousands of vendors on their platform, who in turn sell to consumers.

Flipkart was likely to create a so-called “middle layer” firm – in which it would have less than a 25 percent shareholding – between its wholesale arm and vendors on its marketplace, two sources familiar with the matter told Reuters.

This company, which would be classified as a non-group company under Indian law, would be able to freely sell to vendors without the 25 percent sourcing restriction, the sources added.

Another rule blocks entities in which an e-commerce firm, or any of its group companies, owns a stake from selling its products on that firm’s marketplace.

This creates a barrier for India’s Shopper’s Stop to sell on Amazon India, as Amazon’s investment arm has a minority stake in the department store chain.

Cloudtail and Appario, among the top sellers on Amazon India, could also face similar restrictions, because Amazon owns minority stakes in their parent firms.

“By the letter of the regulation it will not be considered to be an entity in which Amazon has an equity stake, but if the government is wanting to implement the spirit of this rule they might say this doesn’t cut it,” one of the sources said.

E-commerce players may also be forced to give up the word “exclusive” when they launch products such as smartphones on their platforms, as the rules mandate that an online retailer cannot push vendors to “sell any product exclusively on its platform only”.

Contracts between a brand and e-commerce firms would be reworded to say a brand would not sell to a direct rival, giving it freedom to sell elsewhere, one of the sources said.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

India’s new foreign direct investment rules for ecommerce, explained

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

India late last year modified foreign direct investment (FDI) rules for its burgeoning ecommerce sector that has attracted Walmart Inc and Amazon.com Inc, creating new hurdles for both global retail giants.

As a result, both Walmart-owned Flipkart and Amazon are scrambling to reconfigure ownership structures and re-jig some key vendor relationships and agreements before the rules come into effect on Friday.

What is the issue?

At the heart of the problem is India’s view on the two e-commerce models that exist today: marketplace and inventory.

* India allows 100 percent foreign direct investment (FDI) in the marketplace model of e-commerce, which it defines as a tech platform that connects buyers and sellers.

* India has not allowed FDI in inventory-driven models of e-commerce. The inventory model, which Walmart and Amazon use in the United States, is where the goods and services are owned by an e-commerce firm that sells directly to retail customers.

* The restriction is aimed largely at protecting India’s vast unorganized retail sector that does not have the clout to purchase at scale and offer big discounts.

* It means that Amazon and Flipkart can only operate the marketplace model in India. Both companies have wholesale units that bulk purchase goods and sell them to vendors listed on their platform. These vendors in turn sell to retail customers.

What are the restrictions on controlling inventory?

* Existing regulations state that e-commerce firms cannot exercise ownership over the goods sold on their online marketplace.

* Both Amazon and Flipkart developed complicated seller structures that helped them comply with the inventory control rule while exercising some level of control over inventory.

* Traders and small online sellers have accused Amazon and Flipkart of violating the spirit of the law and of using the structures to offer deep discounts, accusations they deny.

* The new rules state that the inventory of a seller or vendor will be seen as being controlled by a marketplace if the vendor purchases more than 25 percent of its inventory from the marketplace, or any of its group firms.

* The rule would not allow sellers on Flipkart and Amazon to make bulk purchases from the wholesale units of the companies.

* The new regulation replaces a rule that said an e-commerce firm could not permit one vendor’s retail sales to overshoot 25 percent of the overall sales of the marketplace by value in a fiscal year.

What are the equity interest restrictions?

* The rules now bar any entity in which an e-commerce firm or its group companies have a stake from selling on their online platform.

* This is a problem for Amazon, which had been picking up stakes in offline Indian retailers to boost its market share.

* The US company’s investment arm owns a 5 percent stake in Indian department store chain Shopper’s Stop. Through an investment vehicle it also picked up a stake in the More retail chain. Amazon also owns a minority stake in the parent companies of Cloudtail and Appario, even though it does not have a direct stake on either of the two sellers.

What are the other rules?

* The government has also prohibited e-commerce firms from pushing merchants to sell any product exclusively on its platform. The sellers can, however, choose to have a preferred online partner.

* Amazon and Flipkart launch products such as smartphones exclusively on their online portals and apps. While such arrangements may continue, e-commerce firms are unlikely to use the word “exclusive” anymore and will likely re-negotiate contracts to give brands more freedom to sell elsewhere.

* The new rules also stipulate that an e-commerce marketplace, as well as any companies the marketplace has equity stakes in, should provide services such as fulfilment, logistics and payments to all sellers on the platform in a fair manner.

* Providing such services to one seller and not to others in similar circumstances would be deemed as unfair and discriminatory, according to the rules.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Intel makes interim CEO Swan permanent

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

Listen to the Article (6 Minutes)

Intel Corp named interim Chief Executive Officer Robert Swan to the role on a permanent basis on Thursday while also naming a new interim chief financial officer.

Swan, 58, had been in temporary charge of the chipmaker since last June when Brian Krzanich left the top job after an investigation found he had a consensual relationship with an employee in breach of company policy.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow