OPINION, P8 EDITORIAL BACK PAGE, P26 Bank reforms start, but no privatisation in an election year INTERNATIONAL, P16 EDITORIAL CBI COURT DECISION Q4 PERFORMANCE DeMo & GST disruption seems to be over but the recovery is still muted and piecemeal Lalu, Mishra awarded five-year jail term in fodder scam case Flannery-led GE posts $10-bn loss as quarterly revenue drops 5% MUMBAI, THURSDAY, JANUARY 25, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XXXXXV NO. 266, 26 PAGES, `6.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 36,161.64 ▲ 21.66 NIFTY: 11,086.00 ▲ 2.30 NIKKEI 225: 23,940.78 ▼ 183.37 HANG SENG: 32,958.69 ▲ 27.99 `/$: 63.69 ▲ 0.09 `/€: 78.54 ▼ 0.41 BRENT: $69.85 ▼ $0.11 GOLD: `30,239.00 ▲ `181.00 INTERGLOBE AVIATION, the owner of budget carrier IndiGo, on Wednesday reported a robust 56.4% growth in net profit at `762.06 crore in the three months ended December 2017, aided by better revenue management and credit received from manufacturers, reports PTI. It had a net profit of `487.25 crore in the year-ago period. In the third quarter of the current fiscal, revenues from operations rose 24% to `6,177.82 crore. It stood at `4,986.49 crore in the yearago period, according to a regulatory filing. The airline, which has embarked on ambitious expansion plans, said it remains interested in acquiring the international operations ofAir India. THE FRONTLOADING OF recapitlisation of public sector banks (PSBs) — bonds worth `80,000croreofthetotal`1.35 lakhcroreplannedwillbeissued thisfiscal—hascomewithaset ofinviolabledosanddont’s,constituting significant reforms in the banking sector. As per the plan unveiled by thegovernmentonWednesday, growth capital will be provided to only relatively strong PSBs while stressed PSBs would get just about enough capital to meet regulatory requirements. The government also capped theminimumexposureofaPSB in consortium lending at 10%, which will allow only a few of them,mainlythestrongones,to participate in financing large projects.This means small and weak PSBs can’t just ride on the stronger ones for lending to Who gets how much Non-PCA Banks (` crore, 2017-18) SBI BOI UBI Syndicate Bank BOB SBI PNB `8,139 cr Allocation to banks from Indradhanush Plan in FY18 `80,000 cr Issuance of recapitalisation bonds in FY18 PCA Banks (` crore, 2017-18) 8,800 IDBI Bank 10,610 PNB 5,473 Bank of India Bank of Baroda 4,865 UCO Bank Canara Bank 4,865 Central Bank of India 5,158 Union Bank of India 4,524 Indian Overseas Bank 4,694 Total* 35,828 Total# *For all nine non-PCA banks PCA: Prompt Corrective Action (initiated by RBI) largeprojects;instead,theyhave to generate their own businesses and scout for alternate sourcesoflendingthatsuittheir size and portfolio. Without growth capital from the government,weaker banks will be required to focus more on recovery, closure of non-core business and operational efficiency to gather enough capital to lend adequately,financialservicessecre- 9,232 6,507 52,311 #For all 11 PCA banks taryRajivKumartoldFE.Also,he said,bankswill have to separate the sections appraising a loan from those monitoring it and the recovery teams, so that greater efficiency and objectivity could be achieved and the recovery process is prompt under designated cells encouragedwith incentives. Thegovernmentwillfollow a “liquidity-neutral” model of recapitalisationbondswhereby Continued on Page 2 2,55,035 2,82,574 3,04,000 Idea Cellular Vodafone Reliance Jio NA 2,40,300 3,11,130 4,37,142 4,94,546 Bharti Airtel 4,38,688 5,71,301 Idea Cellular -271 7,83,809 11,05,839 37,80,000 43,10,000 504 343 306 6,510 Voice volume Q3FY18 (million minutes) 3,83,000 NA Jan 24, 2018 Q2FY18 Vodafone 1.86 2,980.35 Oct 23 2017 Bharti Airtel 2,800 Reliance Jio 2.24 (million MB) Idea -1,176 Cellular -1,352 3,100 2.65 Data volume Reliance Jio 3.00 2.94 Net profit (` crore) Bharti Airtel 3,400 3.71 7,465 3,700 Idea Cellular 3,965.6 4,000 4.76 Q3FY18 6,147 6,879 4,300 Q2FY18 Reliance Jio (%) 5.57 PSBs would sell their shares to the government,which would, in turn, issue dated securities, with duration of 10-15 years, to the banks, economic affairs secretary Subhash Chandra Garg said. Bank stocks gained in anticipation of the news while the bond market was mostly unaffected as the government clarified the recap bonds will not have statutory liquidity ratio (SLR) status,soothing fears of a supply overhang. Yield on the new benchmark bonds — the 7.17%yieldingnotesmaturing in 2028 —closed three basis points higher on Wednesday at 7.28%. Similarly, the yield on the old benchmark bonds —the 6.79%yieldingnotesmaturing in 2027 — closed four basis points higherat 7.45%. All capital infusion will be tiedtostrictperformancegoals, incorporating 30 action points on operational efficiency,portfolio diversification, smoother lending to small and medium enterprisesandstrictriskmonitoring to avoid such a massive pile-up of bad debts in future. Finance minister Arun Jaitley saidstringentnormsfordisbursal of high-value loans have beenframed,withstrictsurveillanceonbigloandefaultersand mandatoryreportingofloansof over`250 crore. 21,777 Nifty PSU Bank OBC FE BUREAU New Delhi, January 24 Nifty PSU Bank top gainers IDBI Bank IN THE NEWS IndiGo Q3 net jumps 56% to `762 crore Consortium norms changed, smaller banks must diversify, lending limits on PCA banks, separate cells for appraisal-recovery but no privatisation or branch closure Revenue (` crore) 20,319 Recap funds with riders DIALLING CHANGE Bharti Airtel BANKING REFORMS CHURN IN TELECOM Idea’s loss widens in Q3; gets toppled by Jio in revenues During the quarter, incumbent operators were majorly hit by 57% cut in termination rates FE BUREAUS Mumbai/New Delhi, January 24 IDEA CELLULAR ON WednesdayjoinedBhartiAirteltogethit onallkeyfinancialmetricsduring the October-December quarter, impacted by the 57% reduction in mobile terminationratesaswellascompetitive pressuresbroughtinbyReliance Jio.Thecompany,whichisinthe process of being merged with VodafoneIndiatobeabletoface competitive pressures better, reported a wider net loss at `1,352 crore compared with `1,176 crore in the preceding quarter and a 13% sequential fallinrevenuesat`6,510crore. The October-December quarterrangintwokeychanges in the country’s telecom sector. First,Jiopostedhigherprofitsat `504 crore than Bharti Airtel’s `306 crore.Second,during this period Jio raced ahead of Idea with revenues of `6,879 crore. Similar to Bharti, Idea said that its revenues and Ebitda were adverselyimpacted bythe reduction in the mobile termination rates which came into effect from October 1, 2017. Idea said that its revenues took ahitof`820croreandEbitdaof `230crore.Consequently,Idea’s Ebitda declined 18.5% q-o-q to `1,223 crore,while the Ebitda margins came in lower by 130 basis points at nearly19%. Bharti’s revenues due to reduction in termination rates were hit by `1,062 crore and Ebitda by `338 crore. Further, the cut in internationalmobileterminationeffectiveFebruary1,from53paiseto 30 paise per minute,will once againhitalloperators,butsince Jio’s revenues from internationalcallsislowerthanBharti’s, Idea’s and Vodafone’s, it will be less affected than incumbents. 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