QBiz: Krishnamurthy is new CEA; HCL to Acquire $1.8B IBM Software

Here are the top business stories of the day.

File image of new CEA Krishnamurthy Subramanian. 

(Photo: Altered by The Quint)

1. Fresh Talent! Krishnamurthy Subramanian is The New Chief Economic Adviser in Finance Ministry

Krishnamurthy Subramanian, an associate professor of finance at the Hyderabad-based Indian School of Business (ISB), will be the next chief economic adviser (CEA) in the finance ministry.

Subramanian, who is also the executive director with the Centre For Analytical Finance at ISB, will fill the position lying vacant since Arvind Subramanian quit in late July. He is appointed for a period of three years or until further orders, whichever is earlier, according to an official statement on Friday.

A PhD in financial economics from the Booth School of Business, University of Chicago, and an alumnus of IIM Calcutta as well as IIT Kanpur, Subramanian is an expert in banking, corporate governance and economic policy.

(Source: Financial Express)

2. HCL to Acquire 7 Software Products from IBM for $1.8B

HCL Technologies has taken its boldest bet ever by acquiring seven software products from IBM for $1.8 billion, the biggest acquisition by an Indian IT services company that is intent on boosting revenue growth in emerging areas such as digital and cloud computing.

The Noida-based company’s aggression – it has acquired 15 companies in the past decade – failed to enthuse investors who punished the stock on Friday, 7 December. Some analysts too questioned the wisdom of paying such a steep price for intellectual property (IP) that could have been built in-house.

HCL Technologies CEO C Vijayakumar said the acquisition will help the company gain access to global customers to whom it can cross-sell services.

(Source: The Economic Times)

3. Buffett Speculation Lifts Kotak Stock

Kotak Mahindra Bank shares surged 8.5 percent, the most in five years, on speculation that billionaire Warren Buffett’s Berkshire Hathaway may buy a stake in the lender as promoter Uday Kotak runs against time to meet a regulatory diktat on reducing his holdings.

The bank, which has been among the best performers in the past three years, closed at ₹1,282.25 on the BSE, with a market capitalisation of ₹2.4 lakh crore. The shares climbed as much as 13.9 percent to ₹1,345.35 during the day.

Kotak Mahindra, responding to a clarification sought by the BSE on a news report, said that there was no development that warranted a regulatory disclosure.

(Source: The Economic Times)

4. Current Account Deficit Widens to 2.9% in September Quarter

India’s current account saw a deficit of $19.1 billion or 2.9 percent of the gross domestic product (GDP) in July-September quarter (Q2FY19) of this fiscal – the deficit stood at 2.4 percent in the previous quarter and a benign 1.1 percent in the year-ago quarter.

The widening of the current account deficit (CAD) was mainly owing to a big merchandise trade gap of $50 billion, up 50% from Q2FY18, which could not be offset by increases in net receipts from services trade and private remittances.

Though the capital account surpluses in Q2FY19 and Q2FY18 were roughly at the same level of $16.3 billion, the former period saw depletion of $1.9 billion from the country’s forex reserves while the reserves enlarged by $9.5 billion in the latter period.

(Source: Financial Express)

5. GST Burden: Banks to Tax ‘Free Services’ Unless Government Does a Rethink

While the finance ministry may reconsider the decision to tax free banking services following representations from the industry, bankers are readying to notify customers on the levy.

Unless the government ‘re-thinks’ the GST (goods and services tax) on ‘free services’, banks will alert customers, maintaining a minimum balance in their accounts, by the month-end, senior bankers told Financial Express.

Although the indirect tax department had issued 32 pages of FAQs in June clarifying that ‘free services’ offered by banks were not under ‘consideration’ and hence exempt from GST, the department has not called back notices issued to banks.

(Source: Financial Express)

6. Loot And Scoot Has Left Banks ₹168.72 Crore Poorer: RBI Data

Every day, almost three banks were looted in the last three years and three months (from 2015-16 to June 2018), according to RBI data. About ₹168.72 crore was looted from various banks during this period.

Of the 3,167 cases of robbery, dacoity, burglary, and theft reported by banks during this period, 10 per cent was reported from Bihar followed by 9 percent each from Maharashtra, Uttar Pradesh and West Bengal. With Punjab reporting 7 percent cases and Rajasthan 6 percent, these six States accounted for 50 percent of the total reported cases.

However, when it comes to the amount burgled, ₹87.21 crore (51 percent) was stolen from banks in Maharashtra, Andhra Pradesh, Karnataka, Uttar Pradesh, Tamil Nadu and Odisha.

(Source: The Hindu Business Line)

7. IL&FS Mess: CA Institute Holds Statutory Auditors ‘Prima Facie Guilty’

The Institute of Chartered Accountants of India (ICAI) has held certain statutory auditors of the beleaguered IL&FS Group, including its parent IL&FS Ltd and two of its subsidiaries IL&FS Transportation Networks Ltd (ITNL) and IL&FS Financial Services Ltd (IFIN), “prima facie guilty” of professional misconduct.

With this, the legal decks are now cleared for full-fledged investigations against those partners of the three top-notch Indian audit firms responsible for the statutory audit of these companies, sources said.

The ICAI is now understood to have sent a formal communication to the partners concerned of the three firms – Deloitte, Haskins & Sells, BSR & Associates LLP and SR Batliboi.

(Source: The Hindu Business Line)

8. Sebi Plans to Revamp Regulations for Proxy Advisory Firms

Market regulator Securities and Exchange Board of India (Sebi) is planning to revamp the regulations for proxy advisory firms. The expert panel appointed by Sebi to look into the matter met last week to identify the aspects where the regulations need to be tweaked.

Protecting proxy firms from frivolous litigation and increasing the accountability of the foreign-based proxy advisors will be the key focus for the expert panel, said two people privy to the development. The committee headed by Sandeep Parekh, founder, Finsec Law Advisors, will submit its final report by January-end.

The development assumes significance as proxy advisory firms do not have separate regulations despite their growing prominence. All the proxy firms currently come under Sebi’s research analyst regulations.

(Source: PTI)

9. HDFC Bank Hikes Short-Term MCLRs by 5 bps

HDFC Bank on Friday, 7 December, hiked its marginal cost of funds lending rate (MCLR) to 8.40 percent, 8.45 percent and 8.55 percent for the one, three and six month tenures, respectively. The hike for all buckets was five basis points.

HDFC Bank has hiked its short-term MCLR rates consecutively for the past four months.

However, the private sector lender left the benchmark one-year MCLR unchanged at 8.70 percent.

(Source: The Hindu Business Line)