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Banking News 22.07.2017

Government considering changing the

financial year to ‘January to December’: Jaitley

 

The IANS (News Agency)

Published on July 21, 2017

 

 

New Delhi, July 21 (IANS): Finance Minister Arun Jaitley on Friday said the government is considering changing the financial year to January-December to coincide with the calendar year.

 

"The matter of changing financial year is under consideration of the government," Jaitley said here in a written reply in the Lok Sabha.

 

The matter has been examined recently by a committee constituted by the government under the chairmanship of former Chief Economic Adviser Shankar Acharya.

 

The report of the committee has been received, the Finance Minister said. Jaitley refused to comment on whether the government was proposing to present the Union Budget in November-December this year to enable the change in financial year.

 

 

From E-Group, Banking-News

 

 

Government mulls insurance cover

for digital transaction frauds

 

The IANS (News Agency)

Published on July 21, 2017

 

 

New Delhi, July 21 (IANS): The government is "very seriously" considering the recommendations of the Chandrababu Naidu committee on digital payment security, including insurance cover for the victims of fraudulent digital transactions, a union minister said on Friday.

 

In response to a question by Samajwadi Party MP Naresh Agrawal, Union Electronics and Information Technology Minister Ravi Shankar Prasad told the Rajya Sabha that the number of digital transactions in the country was rising and hence the concern for their security.

 

"The government is very seriously considering the recommendations made by the Chandrababu Naidu committee. And I am in principle for it (idea of insurance)," Prasad said.

 

The Committee of Chief Ministers on Digital Payment, chaired by Chief Minister of Andhra Pradesh N. Chandrababu Naidu, has in its interim report suggested several measures for digital payment security, including an insurance scheme to cover losses incurred in digital transactions on account of fraud, etc.

 

The report suggests that in order to address the apprehension of the general public in adopting digital payments, the scheme should target low-ticket transactions to cover the vulnerable sections like small merchants, farmers etc.

 

Prasad said the number of fraudulent digital transactions in comparison to the total number of digital transactions was negligible and the government was taking steps to curb those frauds.

 

"Around 1,200 crore digital transactions take place annually in the country. Of these, between 0.005 per cent and 0.007 per cent are fraudulent transactions," he said.

 

As per data presented by the minister before the House, the number of cases of frauds involving credit cards, ATM/debit cards and Internet banking during 2015-16 was 16,468 and in 2016-17 it was 13,653.

 

He said that for prepaid payment instruments, including e-wallets, the Reserve Bank of India (RBI) has started maintaining provisional data of fraudulent transactions.

 

According to the data for March, April and May 2017, the number of fraudulent transactions is between 0.005 per cent and 0.007 per cent of the total number of transactions.

 

"As per incidents reported to the Indian Computer Emergency Response Team (CERT-In), 40 phishing incidents affecting 19 financial organisations and 10 incidents affecting ATMs, Point of Sale (POS) systems and Unified Payment Interface (UPI) have been reported during November 2016 to June 2017," Prasad said.

 

"As part of promotion of digital payments, the government is taking several steps to ensure that frauds are minimised and even when an incident of this nature takes place, corrective action is immediately taken," he added.

 

 

From E-Group, Banking-News

 

 

SBI creates a wholly owned subsidiary

SBI Infra Management Solutions Pvt. Ltd.

 

The Business Standard

Published on July 22, 2017

 

 

New Delhi, July 21: SBI creates a wholly owned subsidiary SBI Infra Management Solutions Pvt. Ltd." for providing real estate services to them.  State Bank of India (SBI) has informed that they have created a wholly owned subsidiary “SBI Infra Management Solutions Pvt. Ltd.” for providing real estate services to them.

 

The role of the subsidiary is envisaged as under:

 

v         Transaction Management / Advisory Services

 

v         Project Management

 

v         Facility Management

 

v         Implementation of Policies / Initiatives

 

The subsidiary has been formed to segregate the non-core activity of the SBI and improve operational efficiency.

 

The SBI will continue to hold the existing (commercial and residential) as well as the new acquired property of the SBI and not in any way transfer them to the subsidiary.

 

This was stated by Shri Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Lok Sabha today.

 

 

From E-Group, Banking-News

 

 

40% of Fortune-500 companies

are from Asia, India has 7 in list

 

The Times of India

Published on July 22, 2017

 

 

Fortune-500: Seven Indian Companies

v         Only one of the seven Indian companies is in the top 200; Indian Oil, ranked 168th

v         The other six Indian companies in the Fortune 500 list are Reliance Industries (203), State Bank of India (217), Tata Motors (247), Rajesh Exports (295), Bharat Petroleum (360) and Hindustan Petroleum (384)

 

New Delhi, July 21: The latest edition of the Fortune Global 500 list, which ranks companies by their revenues in 2016, has a distinctly Asian flavour to it.

 

With 197 companies on the list based on its soil, Asia is now home to more of these global giants than any other continent, leaving North America (145) and Europe (143) slugging it out for second spot. The rest of the world has a mere 15 companies on the list.

 

The US continues to have the largest presence on the elite list with 132 firms, but China is not too far behind at 109 and is leading the Asian drive to the top. Japan, with 51, is in third spot; South Korea has 15 while India has seven. Only one of the seven Indian companies is in the top 200 —Indian Oil, ranked 168th.

 

The other six Indian companies in the Fortune 500 list are Reliance Industries (203), State Bank of India (217), Tata Motors (247), Rajesh Exports (295), Bharat Petroleum (360) and Hindustan Petroleum (384).

 

Walmart remains Numero Uno with revenues of $485,873, but the next three slots are occupied by Chinese firms, State Grid, Sinopec and China Petroleum, all in the energy sector.

 

Toyota, Volkswagen, Royal Dutch Shell, Berkshire Hathway, Apple and Exxon Mobil complete the top 10.

 

Between themselves, the 500 companies on the list generated $27.7 trillion in revenues and $1.5 trillion in profits in 2016 and employed 67 million people. There are companies based in 34 different countries represented on the list.

 

 

From E-Group, Banking-News

 

 

 

National Company Law Tribunal (NCLT) admits

SBI's insolvency petition against Electrosteel

 

Ishita Ayan Dutt

The Business Standard

Published on July 22, 2017

 

 

Electrosteel's debt to bankers stood at Rs 11,309 crore

A PwC partner has been appointed as the IRP

 

Kolkata, July 21: The Kolkata bench of the National Company Law Tribunal (NCLT) has admitted the State Bank of India's (SBI's) insolvency petition against Electrosteel Steels.

 

A PwC partner has been appointed as the interim resolution professional (IRP). "The court order is expected to be served by Monday. Once it is served, the board will be suspended," said Electrosteel Steels Chief Financial Officer Ashutosh Agarwal. However, Agarwal said that the IRP will be working with the existing management in running the company.

 

After the IRP is appointed, within 30 days, he or she will have to make financial calls and the committee of creditors will have to be constituted. In the next 150 days, a resolution plan will have to be worked out. In the meantime, the resolution professional will have to advertise and invite bids for Electrosteel Steels. The best proposal will then selected and a resolution plan will be arrived at.

 

The resolution plan will have to be approved by at least 75 per cent of the creditors by value before it goes to the NCLT. If there is no agreement in 180 days, then under special conditions, an additional 90 days will be granted.

 

A resolution plan for Electrosteel Steels was already being discussed with lenders before SBI took the company to the NCLT under the Insolvency and Bankruptcy Code (IBC) under the Reserve Bank of India (RBI) directive. Electrosteel Steels happened to be among the 12 cases identified by the RBI, initially, to be referred under the IBC, 2016.

 

According to the resolution plan under discussion, Abhishek Dalmia of the Renaissance Group was to bring in fresh equity into the company, besides an infusion of another Rs 1,500 crore as loan from Edelweiss. However, that proposal would now become null and void as the company would have to go through a bidding process.

 

Electrosteel's debt in FY16 stood at Rs 10,274 crore and lenders had first opted for the strategic debt restructuring (SDR) path to resolve the issue. The SDR was introduced by the RBI to tackle the issue of burgeoning debt by allowing banks to acquire control of a defaulting company by converting loans into equity. Following this, the banks were supposed to bring in new promoters and upgrade their sticky assets to standard ones. Electrosteel was the first case where lenders invoked the SDR mechanism.

 

In the bidding that followed, First International Group had emerged as the shortlisted bidder but the deal fell through, leading to a series of negotiations with other companies. Eventually, the proposal forwarded by Dalmia and Edelweiss was being discussed when an internal committee, set up by the central bank, sought IBC reference of all its accounts that had fund and non-fund based outstanding amounts greater than Rs 5,000 crore with 60 per cent or more classified as non-performing by banks as of March 31, 2016.

 

 

From E-Group, Banking-News

 

 

What’s next for Jyoti Structures,

Monnet Ispat, Alok Industries?

 

Jayshree P. Upadhyay & Gopika Gopakumar

The Mint

Published on July 22, 2017

 

 

The next leg in the resolution process for Jyoti Structures, Monnet Ispat and Alok Industries, with National Company Law Tribunal (NCLT) approving bankruptcy proceedings against them

 

Mumbai, July 21:  The National Company Law Tribunal (NCLT) has so far approved bankruptcy proceedings against three companies—Jyoti Structures, Monnet Ispat and Alok Industries. In each of these cases, the tribunal has approved the appointment of an interim resolution professional (IRP) to monitor the operations of the company until a resolution professional is finally appointed.

 

Mint looks at the next leg of the resolution process, following the admission of these cases.

 

1) What happens in the next 30 days after an IRP is appointed?

 

Once appointed, the IRP will be given a 180-day moratorium period to prepare a resolution plan. During the first 30 days, the professional will draw up a list of financial creditors by verifying their claims. A public advertisement will be put out inviting claims from other operational creditors. Simultaneously, the IRP will start the process of appointing valuers who will prepare valuation reports on the assets of the company. During this period, the IRP will also appoint accountants, legal or other professionals to assist him in managing the affairs of the company. The IRP will also be required to get cash flows in control and call for a meeting of the committee of creditors (CoC) on the 30th day. The professional will collect all information relating to the assets, finances and operations of the defaulter. He will then draft an information memorandum to invite bidders for the company, following the approval of the creditors’ committee.

 

2) Is an interim resolution professional same as an insolvency resolution professional?

 

Currently, these terms are being used interchangeably. However, they are not the same. As per the Insolvency & Bankruptcy Code (IBC), an interim resolution professional is proposed by the lender who had filed the application with the NCLT. The CoC, in the first meeting after its constitution, will give its final nod by way of a 75% majority vote to appoint the interim professional as a resolution professional or replace him by another professional.

 

3) Once an IRP is appointed, who is in control of the debtor and who does an IRP report to?

 

Once the insolvency proceedings are initiated, the powers of the board of directors stand suspended and the reigns of the defaulting company is passed on to the insolvency professional. While he will act as an administrator at the instance of the creditors, the promoters of the company along with the management are expected to extend all assistance and cooperation to the IRP. Though not laid down in the IBC, some IRPs have also formed “steering committees” which comprise of the management and promoters to assist him in the operations.

 

4) Is an IRP an individual or a firm?

 

An IRP is an individual who is registered with the Insolvency & Bankruptcy Board of India. Typically, in big cases, these professionals are supported by big consulting firms. These professionals can be partners in these firms or independent professionals. In the 12 large cases identified by the Reserve Bank of India (RBI), the big consulting firms have constituted a team of around 10 people to assist the IRP.

 

5) Who drafts the resolution plan?

 

An IRP under the IBC is not required to draft a resolution plan for the company under insolvency, but facilitate the CoC in arriving at the best resolution. The professional can draft a resolution plan, invite one from promoters, lenders and interested bidders and buyers.

 

6) What happens if the management turns hostile? What is the recourse available for an IRP in such a situation?

 

There can be a situation where the employees and management can lose interest, fearing that the company is on the verge of closing down. The management turning hostile will lead to inconsistent flow of information, which is the basis for drafting an “Information Memorandum” and a resolution plan. Without information readily available, the timelines provided under the Code become unattainable.

 

Without the support of the employees and management of the company, the insolvency professional would be left with no option but to draw his best estimate of the value of assets, thereby pushing away any good “resolution plans” that could be otherwise possible. The worst-case scenario is liquidation. An IRP can highlight to the NCLT that the management is not cooperating.

 

 

From E-Group, Banking-News

 

 

Bankers pessimistic on recovery

of loans after insolvency process

 

Beena Parmar

The Moneycontrol News

Published on July 22, 2017

 

 

Mumbai, July 22: Debt in the balance sheets of most public sector banks may not get drastically reduced as bankers expect less than 50 percent recovery of the loans under insolvency.

 

A month after the insolvency and bankruptcy process kick-started, three companies-- Jyoti Structures, Monnet Ispat and Energy and Alok Industries have been admitted into proceedings by the National Company Law Tribunal (NCLT), the company court.

 

A senior State Bank of India executive said, “Insolvency is a process which has empowered us to take decisions. The real test is yet to be seen but I do not expect much recovery in the loans as most of them have been NPAs for more than 2-3 years now. In some cases there may be recovery of up to 50 percent but in some EPC (engineering, procurement, Construction) companies, the economic situation in itself is not conducive.”

 

On June 13, the Reserve Bank of India identified these companies and nine others including Essar Steel, Bhushan Steel and Electrosteel Steels and Amtek Auto to be immediately filed under the Insolvency and Bankruptcy Code (IBC).

 

Dipak Gupta, Joint Managing Director at Kotak Mahindra Bank, on the sidelines of the bank’s results announcement, said, “Insolvency is a long shot…It’s like a bullet that is released from the gun once the case is admitted by the NCLT. The purpose ultimately is recovery. It remains to be seen how much of it will happen as there is limited time after the court starts the insolvency proceedings. So, unless we get a good buyer or restructure it, recovery could be long drawn.”

 

However, Gupta is hopeful that this process would bring in more definite decision-making and the promoter also has something to lose.

 

There is a considerable fact that Indian banks also need to accept significant hair-cuts that will be required to be taken in order to arrive at a resolution as several of the NPA cases are in sectors where market conditions are still stressed, such as steel, power and textiles.

 

Lenders may have to forget 60 percent of its outstanding dues or about Rs 2.4 lakh crore from top 50 stressed companies that could not repay their loans leading to insolvency battles, said a Crisil rating agency’s analysis. Total value of bad loans from that universe is about Rs 4 lakh crore.

 

A majority of the debt requiring deep haircuts belong to companies with unsustainable businesses so asset sales are necessary to recover monies. Companies needing moderate or aggressive haircuts had gone for debt-funded programmes.

 

"Some of these assets offer M&A opportunities for companies with strong credit profiles," said Ramesh Karunakaran, Director, Crisil Ratings. “Also, potential synergies could allow for a significant reduction in haircut – an aspect that has not been considered in our analysis.”

 

Finding a new buyer to run the company with the same expertise in this environment at a price acceptable to both creditors and the buyers is a tough nut to crack.

 

At the end of it, it would be how to reduce the losses on NPAs and create a reform such that it would deter future potential defaulters, the SBI executive added.

 

 

From E-Group, Banking-News

 

 

Reliance JioPhone launched

Offer 'most intelligent' 4G JioPhone for 'Rs 0'

 

The News Agencies Online

Published on July 21, 2017

 

 

Mumbai, July 21: Mukesh Ambani, Chairman and Managing Director of the Reliance Industries Limited today made a speech at the company’s 40th annual general meeting. Besides the figures related to its Reliance Jio 4G services, Ambani also took wraps off the much-anticipated Reliance Jio feature phone. The JioPhone feature handset will go on sale next month.

 

Here is the Edited extracts of Mukesh Ambani's speech:

 

It has been only 10 months since the launch of Jio. And what an incredible journey it has been! Jio has broken one world record after another.

 

First, nobody believed that we could acquire customers fast enough to justify our Rs. 2,00,000 crore investment in the world’s largest greenfield 4G LTE all-IP network. Team Jio stunned the world. They over-delivered on the 100 million target that I had set for them at our last AGM. In less than 170 days, more than 100 million customers signed up for Jio’s services. On an average, Jio added 7 customers per second every single day. This was the fastest adoption of any technology service, anywhere in the world. Faster than even Facebook, WhatsApp and Skype. This is a testament to the unwavering trust that Indians have placed in us and their love for the Jio brand. Today, Jio has over 125 million customers.

 

Second, before the launch of Jio, sceptics said that Voice over LTE is a globally unproven technology. But, we proved them wrong! We enabled Jio users to make unlimited voice calls from anywhere to everywhere in India – absolutely free. Jio users consistently make more than 250 crore minutes of voice and video calls every single day.

 

Third, many analysts believed that India can never be the largest mobile data market in the world. Again, Jio proved them wrong. In just 6 months of Jio’s launch, data consumption in India went from 20 crore GB to 120 crore GB per month and has been multiplying ever since.  Now, Jio customers alone are consuming over 125 crore GB of data every month, including 165 crore hours of highspeed video every month, making Jio the largest mobile video network. Indeed, India has overtaken USA and China in mobile data usage. Before Jio’s launch, India was 155th in the world in mobile broadband penetration. Now India is number 1 in mobile data consumption and well on its way to becoming number 1 in mobile broadband penetration, in the coming months.

 

Fourth, sceptics said India being India, free users will never convert to paid users. Once again, Jio’s customers proved them wrong. Starting March of this year, Jio successfully undertook the largest migration from free to paid services in history. And we have converted majority of our free customers to paid customers. Today, Jio has more than 100 million paying Jio Prime customers. Most of them have recharged on Jio’s Rs. 309 or higher plans. Jio Prime members will continue to get tariff benefits with Jio Dhan Dhana Dhan and Every Day More Value plans. Additionally, they will get many attractive surprises. Jio Prime members have a special place in our hearts. We thank them for their trust in Jio and I want to commit that Jio is a customer-obsessed organization and will always walk the extra mile in serving them every single day.

 

There are 78 crore mobile phones in India. However, let us not forget that in this 78 crore, there are more than 50 crore feature phone users who have been left out of the digital revolution. They cannot avail any benefits of a smart phone, much less the benefits of a 4G LTE smartphone. They can neither afford the cheapest 4G LTE smartphone, nor the exorbitant cost of data charged by existing 2G operators. I had said that data is the oxygen of digital life, and no Indian should suffer because of data scarcity and unaffordability. Sadly, a vast majority of mobile users in India are starved of data. This digital disempowerment and unfairness must end.  Jio is committing to end it today. We shall achieve this in three ways – Connectivity, Data Affordability and Device Affordability.

 

First, connectivity:

 

Jio is a data strong network built for the internet from the ground up with the highest speeds and the best coverage. This is a significant advantage we have over all other Indian operators. For the past 5 months, the TRAI SpeedTest portal, which officially monitors the quality of telecom networks in India, has consistently ranked Jio as the clear 4G network leader in coverage, usage and data speeds. Our network continues to rapidly expand across the country.  And in the next 12 months, Jio services will cover 99% of our country’s population. Because of Jio, India’s 4G coverage will be more than its 2G coverage. It took 25 years for our competitors to build their 2G network. Jio will have created a larger 4G network in just three years. To support the enhanced coverage, we are also expanding our physical distribution network across India. We will soon have over 10,000 Jio offices, across every city and tehsil town of India. These offices will service our sales channel partners and over ten lakh physical retail outlets that sell Jio services. In addition we will integrate with all major e-commerce platforms.

 

Second, Data Affordability:

 

It is both unjust and ironic that 50 crore Indians who have feature phones pay more for voice calls and sms than those with smartphones.  They end up spending their entire month’s telecom budget of Rs. 150 – 200 only to get 150 minutes of voice – while their smartphone counterparts on Jio network get voice for free. Even today, they have to pay between Rs. 4,000 to 8,000 for every GB of data – while their smartphone counterparts on Jio get data for Rs. 10 to 20 per GB. If these feature phone users were to consume a similar quantity of data as smartphone users, they would spend over Rs. 4000 per month at the prevailing 2G data rates. This makes it impossible for them to even think of using data, let alone avail advanced data services like video calling, mobile video and mobile applications.

 

Third, device affordability:

 

Even an entry-level smart phone costs between Rs. 3,000 to Rs. 4,500 making it unaffordable for feature phone users to upgrade to a smartphone. We simply cannot idly stand by when such a large proportion of our fellow citizens are unable to participate in the digital revolution sweeping the nation. This is the most critical problem in bridging the digital divide. And I had challenged our young engineers at Jio to find a disruptive Indian solution to this problem. What they came up with, stunned me. And it will stun you. Today, Jio is going to reinvent the conventional feature phone.  With a revolutionary device, an unmatched Indian innovation, Made in India, by young Indians and for all Indians. Let me introduce India ka Intelligent SmartPhone – Presenting Jio Phone. JioPhone is a truly revolutionary phone that will transform the lives of 50 Crore feature phone users.

 

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