Tag: government

IDBI Bank will be a subsidiary and not merged into LIC

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

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The government is in favour of selling its majority stake in IDBI Bank to state-owned insurance company LIC, as it fears private players may acquire the stake at low cost, sources said.

The bank’s current valuation was not reflective of its inherent value, according to the centre, the sources added.

“Selling the bank to a private investor at this juncture may not get the best value for the government,” a person with knowledge of the matter said.

“Private insurance companies are also wary of strong institutions like LIC with bancassurance through IDBI Bank’s network,” the source added.

While many any private buyers are eyeing the opportunity, the government is not keen on the same. Two private banks reportedly have shown interest in picking up strategic stake in the bank.

IDBI Bank’s real estate assets are worth about Rs 7000 crore, while its non core assets, which include investments in NSE, NSDL, IDBI Federal Life, IDBI Mutual Fund and IDBI Capital Markets, are also valued around Rs 7000 crore.

The market cap of the bank is around Rs 24,000 crore. The government also expects the additional provisioning requirement for the bank to reduce on NCLT resolutions in high value accounts.

“IDBI Bank is in the process of a turnaround and is expected to show profits soon. Therefore, the present approach is expected to give a big upside to LIC when IDBI Bank’s valuations rise. It will also give a good upside to the government as well, as and when it decides to divest its shareholding. LIC will also bring down its stake over the years, as prescribed by regulators, realizing significant gains,” the sources said.

“IDBI Bank will work as a subsidiary of LIC, just as LIC Housing and other subsidiaries, managed at arms length as a board run entity with a professional management,” the sources added.

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

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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 considers selling controlling stake of over 40% in IDBI Bank to LIC, says report

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

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The government is considering to sell a controlling stake of between 40 and 43 percent of IDBI Bank’s stake to Life Insurance Corporation (LIC), finance ministry officials told NewsRise.

As of March 31, the government held an 80.96 percent stake in IDBI Bank, while the rest was held by the public.

The LIC Board has approved the idea of taking charge of the controlling stake in a bank and will discuss the IDBI Bank stake sale after the government approves the idea, the official told the news agency.

CNBC-TV18 has not received any information on the amount of stake from sources. Sources have, however, confirmed that LIC is open to buy a significant minority stake in the bank.

“The entire equity cannot be transferred to LIC as unless both the regulators,  i.e.,  insurance and banking regulator, agree in which case we are talking of a merger but not talking of LIC holding that substantial equity into it. However, from a business point of view,  it’s a bet the government had said it will work its best effort to revive IDBI bank in some form or other and this is one of those attempts basically.” Ashvin Parekh, managing partner at Ashvin Parekh Advisory Services told CNBC-TV18.

The bank’s board, till the decision materialises, is likely to prepare the capital requirements, financial projections and fundraising plans for the next five years, the official told the agency.

“IDBI Bank was initially looking for large private investors and whether they should be strategic or financial investors was debated,” Parekh said.

The bank has reported large non-performing assets earlier.  On this, Parekh said:

” One thing is clear that the bank is in trouble and there are huge NPAs, the bet the government seems to be taking that if money is provided to the bank at this point in time and if more funds are provided and if the NPAs are funded and proper provisioning is carried out then in four to six quarters, some value restoration may happen. This will happen mainly on account of the recovery basically of all the bad debt that they are sitting on but it’s a bet and one doesn’t really know what will happen.”

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

Indian Bureaucracy 2.0: What the decision to hire outsiders as joint secretaries means

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

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As someone who has been collaborating closely with the government for the past decade, the government’s decision to hire outside its ranks as joint secretaries is an exhibition of embracing change and acknowledging an existent lacuna.

Not just in India but worldwide politicians are often blamed for not taking the long view of life given their tendency to play to their term and nothing beyond. This move is yet another example of a bold and adventurous state that is not plagued by insecurities. The time spent with different government departments over the last few years has led me to being humbler about what represents the government – a clear departure from the earlier days of having an antibiotic reaction to everything in the government.

So, what is the primary role of Indian bureaucrats? Their primary role is to ensure ministries act within the boundaries of the constitution and advise them on whether any course of action is practical or feasible. Over the years bureaucracy has been playing lesser role in suggested course of action towards getting things done. The ability of the bureaucracy to think out of the box given they do have the long-term view contrary to politicians and execute has taken a backseat. The influence of changing political ideologies have taken its toll in their independent thinking and they have been playing more the role of what can’t be done than what can be done (of course barring a few exceptions). Somewhere the approach has become inward.

Just like in the corporate world, on and off infusion of fresh talent is a necessity to ensure there is diversity of thought and action, to challenge status quo and stereotypes, to infuse new ideas and best practices believe it’s imperative for our bureaucracy to follow suit. While we have had conversations earlier of the possibility of bringing in outsiders from the private sector – seeing this being actualised is beneficial for five reasons.

One, this signals an appetite for change – It clearly communicates that what might have worked for the past 71 years, may not be sufficient for the future. It indicates an openness to learn and improve the effectiveness of the government functioning with an outside in view. Two, it’s an opportunity to bring in a culture of meritocracy and accountability which is likely to shift focus from activities to outcome. Three, the infusion of private sector talent is also expected to contribute by way of relevant subject matter knowledge, specialised experience and domain networks which are key ingredients in getting things done. Four, there are many professionals in the private sector who have secured themselves and built their credibility to a level from where they are eager to contribute and active participate in serving the country rather than simply being a bystander. This is a unique opportunity for them not only to influence, but also to make change happen. Five, it challenges the great divide (including lack of trust) of the private and public and brings in an atmosphere of empathy and understanding around the strengths of bureaucrats and that of private sector professionals which can potentially be a force multiplier towards achieving said goals.

When the inherent strengths of the private sector professionals are marinated with that of the traditional bureaucrats (which is undeniable),  it creates the ideal recipe of transformation of Indian Bureaucracy to one which has a noticeable action bias towards nation building. However, this move shall be effective provided we are mindful of the following:

There needs to be absolute transparency in the selection criteria – in essence for each role there has to be well laid out qualification and experience criteria of relevant industry or roles. This shall ensure that the right person gets hired for the right role. From the outset there has to be absolute clarity around the goals that are being assigned to the individuals within the period of three years to judge the effectiveness.

Even if one is attracted to these roles – to retain and sustain their motivation clarity around goals is a must. The likes of Nandan Nilekani, Raghuram Rajan, Arvind Pangariya were able to make significant contribution simply on account of the fact that they were give the autonomy and empowerment they needed to deliver to set goals and objectives. Constant political intervention would be detrimental to the initiative and success of the hired professionals. And lastly, one should plan against any misuse of this opportunity for lobbying by those with vested interests from the private sector.

Like every attempt of change, I am not surprised by the kind of backlash even this move has received so far. However, it is important to bear in mind, “The tallest oak in the forest was once a little nut that held its ground.”

Rituparna Chakraborty is Co-Founder and EVP of TeamLease Services Limited

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

Air India will not be sold if bid price is inadequate, says government

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

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The government will decide the highest bidder for the national-carrier, Air India, by the end of August, said RN Choubey, union civil aviation secretary.

The qualified bidders for Air India’s 76% stake will be announced on June 15, 2018.

If the government found out that the bid price is inadequate, it will not sell the airline, said Choubey.

According to the memorandum, the government plans to offload 76% equity share capital of Air India as well as transfer the management control.

Government is also free to change the floor price at any point of time, sources said. The highest bidder would be declared as the buyer after requisite security clearances.

The divestment includes the profit-making Air India Express and AISATS, an equal joint venture between the national carrier and the Singapore-based SATS Ltd.

In a related development, sources told Jet Airways has not sent any informal interest to the ministry, after chairman Naresh Goyal had expressed interest in sale of Air India.

Meanwhile, union civil aviation secretary will be meeting the union revenue secretary on Tuesday for bringing aviation turbine fuel (ATF) under the Goods and Services Tax (GST) regime.

Currently, ATF is not under the GST ambit and the levy on it varies from state to state.

A proposal to bring ATF under the GST will allow airlines to claim input tax credit from the government is among the issues likely to be discussed.

Earlier, government cut the GST on the bunker fuel from 18% to 5%, providing huge relief to the traders.

The government is also mulling changes to norms for inviting private players to run Jaipur and Ahmedabad airports.

The ownership will remain with Airports Authority of India (AAI), but private players will operate the airport, said the sources, adding that the government is looking at privatising three more airports after June this year.

Denying the reports that the employee unions are opposing the move, sources said, they are not unhappy and the government will protect employees’ service conditions.

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

Reasonable for government to ask OMCs to keep consumers’ interests in mind, says HPCL

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

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No respite for oil marketing companies in trade after reports that the government is nudging them to absorb a one rupee hike in every litre of petrol or diesel.

As far as news report is concerned, we don’t have any inputs to suggest that there is a reason for us to absorb cost, said MK Surana, CMD of HPCL said.

Talking about margins, he said, “It’s not a question of peak margin or a margin. The prices are determined based on the day-to-day international product prices in a rolling basis of 15 days. So on a particular day when the crude prices are going up, it doesn’t mean that it reflect in the product prices on that day because it is a rolling average of 15 days past. So how past 15 days has performed will determine the price on that day – that’s one thing. Second, the crude prices and fuel prices doesn’t move in tandem always.”

According to him, it’s reasonable for government to ask oil marketing companies (OMCs) to keep consumers’ interests in mind.

– Structurally it does not justify that crude prices should be going substantially higher.
– If there are no geopolitical adverse situation, I feel it should rebound.
– perception that OMCs are making huge profit on fuel sale is incorrect

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

Aadhaar not panacea for all ills, Supreme Court tells Centre

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

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The Supreme Court on Thursday told the Centre that Aadhaar is not a panacea for all ills in the system such as corruption, tax evasion, money laundering, leakage of subsidies and terrorism, and wondered how far it can cast the net of Aadhaar.

Saying that “Aadhaar is not a catch for all frauds”, the five-judge constitution bench comprising Chief Justice Dipak Misra and Justices A K Sikri, A M Khanwilkar, D Y Chandrachud and Ashok Bhushan, asked: “How far the State can cast the net of Aadhaar that goes beyond Section 7 of Aadhaar Act and the money laundering?”

“Frauds are not happening because of multiple identities” a person possesses, the court said as Attorney General (AG) K K Venugopal tried to impress upon the constitution bench the virtues of having one identity — Aadhaar.

Summing up the broad submissions of the AG, Justice Chandrachud said: “The core of Centre’s case is that there are legitimate State interests which are to be protected. Lakhs of crores of rupees are spent which should reach the poor. You want to prevent money laundering. You want to protect collection of taxes.

“The question is how far you pass the test of proportionality. Many of the problems are unrelated to Aadhaar, which may not satisfy the rigours of Section 7 of the Aadhaar Act, 2016. How far you pass the net?”

Section 7 of the Aadhaar (Targeted Delivery of Financial and Other Subsidies, Benefits and Services) Act, 2016, says that the proof of Aadhaar number is necessary for availing certain subsidies, benefits and services.

“There are wide economic disparities, 67% of the country’s wealth is concentrated in the hands of less than 1% people. The disparity has further widened after the country became independent,” Justice Sikri said as the AG tried to defend and justify Aadhaar by pointing to the large section of vulnerable population.

Finding the AG’s submission that “Aadhaar will prevent bank frauds” unpalatable, Justice Sikri said: “When loans are given you know the person. You give loans after due diligence. NPAs (non-performing assets) don’t happen unless banks are hand in glove with those who secure loans.”

Blaming the banks for the lack of due diligence in granting loans, AG Venugopal said: “That (due diligence) ought to have been taken at the level of banks. If it had been done, Nirav Modi would not have happened.”

“Aadhaar will not prevent a person from starting different commercial entities. Starting different companies or entities by one person is not per say illegal. The problem is that for every layer of transaction, separate credit is given by the banks. There is multi-layer transactions and you get credit for every transaction… Aadhaar is not a catch for all frauds,” observed Justice Chandrachud.

Defending the decision of linking all bank accounts with Aadhaar, the AG said: “Our point is that every banking transaction will be discovered through Aadhaar. To that extent, Aadhaar is useful.

“For the larger interest, the question is whether we have one identity for all.”

As Venugopal tried to focus on the over-arching benefits of linking Aadhaar with various services and activities, Justice Sikri said: “You want Aadhaar authentication for each and every activity of mine. This is the concern expressed by them (petitioners).

“You have issued 144 notifications. You want cell phones to be linked with Aadhaar. You consider every individual of population as a terrorist or a violator… Here comes the question of proportionality.”

The court also took exception to the Aadhaar Act giving “excessive powers” to the Unique Identification Authority of India (UIDAI) on expanding the list of biometric data it can collect, saying that tomorrow it could start asking for samples of blood and saliva. “It has already added fascial impression in the list of biometric data.”

Asking, “does a terrorist apply for cell phone”, Justice Chandrachud said “but they can as well use wireless phone”.

The AG said a lot of terrorists and their supports have been nabbed by linking Aadhaar with SIM card.

The constitution bench is hearing a batch of petitions by former Karnataka High Court Judge K S Puttuswamy, Magsaysay awardee Shanta Sinha, feminist researcher Kalyani Sen Menon, social activist Aruna Roy, Nikhil De, Nachiket Udupa and others challenging the constitutional validity of the Aadhaar scheme on the touchstone of the fundamental right to privacy.

Attorney General Venugopal will continue his arguments on April 10.

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