QBiz: Govt Sets New Rules for NPA; Forex Reserves Hit Record High

Here’s a compilation of the important business stories from the previous day.

Image used for representation purpose. (Photo: iStock)

1. Onus on RBI as Govt Notifies New Rules to Tackle NPAs of Banks

The government on Friday notified an ordinance to the Banking Regulation Act, giving the Reserve Bank of India (RBI) broad powers to deal with specific bad loans cases as it tries to speed up resolution of ₹ 9.64 trillion of non-performing assets clogging the Indian banking system.

Experts cautioned that this was just the first step in the process of putting the onus on the central bank to reduce the mountain of bad loans. The move could pose potential conflict-of-interest issues for the regulator, they said.

The ordinance, which was approved by President Pranab Mukherjee late on Thursday, also gives the government powers to authorize RBI to invoke the Insolvency and Bankruptcy Code against defaulters.

Separately, it also empowered the central bank to direct banks on its own to settle bad loans with defaulters, and to form oversight committees to deal with the issue.

(Source: Livemint)

2. Forex Reserves Touch Record High at $372.73

Foreign exchange reserves rose $1.594 billion to touch a life-time high of $372.73 billion in the week to 28 April, supported by increase in foreign currency assets (FCAs), the Reserve Bank of India (RBI) said.

The reserves had gone up $1.250 billion to $371.14 billion in the previous week.

They had touched a high of $371.99 billion in the week to 30 September 2016.

FCAs, a major component of the overall reserves, surged $1.569 billion to $349.055 billion in the reporting week, the RBI said.

(Source: Business Standard)

3. RBI Makes It Easier for Banks to Implement Joint Lenders Forum

The Reserve Bank of India sprang into action as soon as the government notified the ordinance on bad loans, with the regulator offering more teeth to groups of lenders to deal with recovery proceedings and telling banks to stick to majority-agreed plans or face a penalty.

Any resolution plan agreed to by 60% of members in a joint lenders’ forum is binding on everyone in the group and no bank board will have the power to overrule the decision, the central bank said. Banks will have to implement the plan agreed upon without any additional conditions and there would be a monetary penalty on those who veer away from the decision.

(Source: The Economic Times)

4. ACC, Ambuja Mull Merger to Create India’s Second Largest Cement Maker

Ambuja Cements Ltd. and ACC Ltd. are considering a long-anticipated merger which would create India’s second largest cement company by market capitalisation after the Aditya Birla Group owned UltraTech Cement Ltd.

The boards of the two companies have initiated a study to explore the possibility of a merger, two separate stock exchange filings by Ambuja and ACC said. A special committee of directors, majority of them being independent directors, has been set up to consider the matter. No decision has been taken to merge yet, the filings added.

(Source: BloombergQuint)

5. Fine Print Fails to Enthuse Dalal Street, Bank Shares Reverse Gains

Benchmark indices fell the most in over a month on Friday, shedding nearly 1% as bank shares reversed the previous day’s gains after details in the ordinance for stressedloan resolution fell below investor expectations.

The tumble in global commodity prices led by crude, which triggered a sell-off in Asia, also contributed to the weakness in the market as traders cut bullish bets ahead of the French presidential election results on Sunday night.

The Nifty ended below the 9,300 mark and the Sensex lost 267.41 points, or 0.9%, to 29,858.80. For the week, indices ended 0.2% lower.low the 30,000 mark. The Nifty ended down 74.60 points, or 0.8%, at 9,285.30 after closing at a record 9,359.90 on Thursday.

(Source: The Economic Times)

6. IRB’s InvIT IPO Subscribed 8.5 Times

The initial public offer of IRB Infrastructure Developers Ltd.’s infrastructure investment fund (InvIT) was subscribed 8.57 times at close on Friday, the last day of the issue.

The maiden offer, the first by an InvIT in India, received bids for 215 crore shares against the total issue size of 25.09 crore shares, a company statement said.

IRB InvIT Fund had on Tuesday raised around ₹ 2,100 crore from anchor investors. The IPO had a price band of ₹ 100-102.

InvITs are mutual fund-like investment trusts that pool in infrastructure projects to raise money from investors. Listing enables promoters to monetise completed assets and raise funds for other long-term projects.

(Source: BloombergQuint)

7. Flight Tickets May Get Costlier as Govt Plans Hike in Passenger Service Fee

The passenger service fee (PSF) charged on fight tickets is likely to go up marginally as the government is planning an increase in security and facilitation charges.

The government, after a high-level meeting of Union ministers Kiren Rijiju (MoS, home) and Jayant Sinha (MoS, civil aviation) and national security adviser Ajit Doval, asked the Civil Aviation Ministry to find out ways to recover the cost of security arrangements at airports.

The Home Ministry has also been told to find out what the total annual cost of providing security at 143 functional airports in the country will be, a government functionary said.

(Source: Livemint)

8. Sekar Reddy Case: ED Attaches Assets Worth ₹34 Cr

The Enforcement Directorate, Chennai, has attached properties worth ₹34 crore under the Prevention of Money Laundering Act (PMLA) in a case related to alleged exchange of old notes for new currency notes by businessman J Sekar Reddy and his associates.

The Central Bureau of Investigation (CBI) had arrested Reddy, a former board member of the Tirumala Tirupathi Devasthanam, and his associate K Srinivasulu, last December in connection with the seizure of the notes.

The ED, in a release, said it is conducting an investigation against Reddy and others based on CBI cases registered, after the Income Tax Department seized ₹34 crore in new currency from them.

(Source: The Hindu BusinessLine)

9. Citi Lists Netflix, Tesla as Potential Takeover Targets for Apple

Citigroup listed seven companies as potential takeover targets for Apple Inc, including Netflix, Walt Disney and Tesla Inc, as a way to put its cash hoard of more than $250 billion to work. With over 90 percent of its cash sitting overseas, a one-time 10 percent repatriation tax would give Apple $220 billion for acquisitions or buybacks, Citigroup analyst Jim Suva said in a note to clients.

US President Donald Trump’s tax blueprint, which was unveiled last month, proposes allowing multinationals to bring in overseas profits at a tax rate of 10 percent versus 35 percent now. “Since one of the new administration’s top priorities is to allow US companies to repatriate overseas cash at a lower tax rate, Apple may have a more acute need to put this cash to use,” Suva said.

(Source: Financial Express)