OPINION, P8 COMPANIES, P6 A GUPTA, K SHAH & A MANTRY New RBI rules mean more NPAs under IBC, larger haircuts INTERNATIONAL, P16 EDITORIAL HIGHER EXPENSES OUTSIDER CEO Bar convicted leaders from party posts to curb culture of proxies, subversion of democracy Naresh Goyal-led Jet quarterly net slumps 46% on fuel costs Toshiba bringing in Kurumatani to lead electronics maker NEW DELHI, THURSDAY, FEBRUARY 15, 2018 WWW.FINANCIALEXPRESS.COM FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE READ TO LEAD VOLUME XLIII NO. 299, 50 PAGES, `5.00 (PATNA `6.00, RAIPUR `7.00) 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: 34,155.95 ▼ 144.52 NIFTY: 10,500.90 ▼ 38.85 NIKKEI 225: 21,154.17 ▼ 90.51 HANG SENG: 30,515.60 ▲ 676.07 `/$: 64.09 ▲ 0.23 `/€: 79.11 ▼ 0.22 BRENT: $62.51 ▼ $0.21 GOLD: `30,200.00 ▲ `137.00 NPA NORM REVISION MORNING SHOCKER PNB loses sparkle on $1.8-bn fraud 164 160 Write off Gross NPA 2,574 4,015 56 57,519 6,556 CASA deposit 3.4 55,628 2,62,775 Global deposit 6.5 2,67,685 6,12,180 Gross advances 1.9 6,128 5.9 6,47,998 17 Total provision Source: PNB PNB Intra-day on BSE (`) Feb 14 Previous close: 161.65 158 145.8 152 146 140 Open Close undertaken with the apparent connivance of bank officials. Based on these transactions, otherbanksadvancedmoneyto these customers abroad. “The quantumofsuchtransactionsis $1,771.69 million approximately. The matter is already referred to law enforcement agencies to examine and book the culprits as perthe lawof the land,” PNB said. AbankofficialsaidModihas verbally communicated to the bankthathewouldberepaying the money. However, the bank hassofarnotreceivedanywrittencommunicationfromModi on the same,the official said. Three sources in the bank confirmed that the fraudulent transactions mentioned in Wednesday’s notification pertain to those of Nirav Modi,the founder and chairman of privatelyheld FirestarDiamond. Continued on Page 2 LATEST AUCTION Special Feature Feb ‘17 Aug ‘17 (SECI) (Tamil Nadu) Country's installed wind power capacity (Dec 31, 2017) 32,850 MW Dec ‘17 (Gujarat) Oct ‘17 MW Feb ‘17 (SECI) (SECI) Tamil Nadu Gujarat QuickPicks 3.46 Nod for listing Bharti Africa biz BHARTI AIRTEL is mulling listing the holding arm for its Africa operations, Bharti Airtel International (Netherlands) or BAIN, reports fe Bureau in New Delhi. “This is to inform you that Board of Directors of BAIN BV on February 12, 2018 has authorised its management to initiate non-binding exploratory discussions with various banks/ intermediaries to evaluate the possibility/ feasibility of listing of its shares on an internationally recognised stock exchange,” it said in an exchange listing. PAGE 7 Fortis Healthcare downgraded CARE RATINGS on Wednesday said it has downgraded the credit ratings of Fortis Healthcare following disclosure of significant advances extended to related parties by the healthcare chain, reports PTI. "The revision in ratings assigned to the bank facilities and short-term instruments of Fortis Healthcare Ltd takes into account the impact on FHL’s liquidity profile given the disclosure made by the company on significant advances extended to related parties," CARE Ratings said in its note. PAGE 7 3.42 2.64 Wind tariffs under earlier feed-in method (FY17) Average national-level power purchase cost 2.43 2.44 `3.82-6.04 per unit `3.48 per unit FE BUREAU New Delhi, February 14 WHILEAGGRESSIVEBIDDING by developers has been blamed forwindpowertariffsplunging to levels lower than many believeareviable,analystswere divided if the results of latest roundofauctionunderthecentral government scheme suggestedthepricesarebottoming out.Though the rate of `2.44 a unit discovered in the reverse auctionconductedbystate-run Solar Energy Corporation of India (SECI) on Tuesday was about 30% lower than the tariff discovered in the first wind Maharashtra 7,979 5,537 4,778 Rajasthan 4,282 Andhra 3,835 Pradesh power auction in February 2017 — till then the “feed-in tariff” (FiT) regime, no longer applicable to new projects,prevailed — it was nominally higherthanthetariffof`2.43a unit found by the Gujarat government in the auction executed in Decemberlastyear. Accordingtosources,ReNew Power,GreenInfra(aunitofSingapore-based Sembcorp), Inox Wind and Torrent Power, all quoting `2.44 a unit, were awarded projects of 400 MW, 300 MW, 200 MW and 499.8 MW,respectively,bySECI. Continued on Page 2 NET NEUTRALITY COAI plans to play national objective card RISHI RANJAN KALA New Delhi, February 14 EXPERIENCE SEEMS TO have made telecom operators wiser. More than two years after the net neutrality battle saw them fighting with their backs to the wall to counter the challenges mountedbythecontentservice providers and over-the-top (OTT) players, they have accepted that theylost the perceptionbattleinthefirstround. It was civil society groups and content service providers who had the last laugh. Havinglearnedtheirlessons, theirindustrybody,theCellular Operators Association of India (COAI),has now chalked out an extensive advocacy plan by which they want to steer the debate in the direction that revolves around their concerns,which theyfeel is right. The industry body wants toclearlycommunicatewith all stakeholders — consumers as well asthegovernment and regulators — that there is no universalprincipleofnet neutralityandwhatever passes off is defined by national objectives. And the the national objectiveforourcountryshould be access, bridging the digital divide and enhancing internet proliferation. The priority for India should be the growth of and expansion of networks to connect the whole country digitally,COAIhasconcluded. By aligning their campaign on these lines, they plan to fight back and recover ground lost to civil societygroupswhointheearlier battle had successfully run the “Save the Internet” campaign. COAI now through its ILLUSTRATION: ROHNIT PHORE campaign wants to delink the Save the Internet kind of campaign from net neutrality. On the issues that the industrywants to take upwith the government, the first would be on developing a regulatory framework for OTT players to ensure same service, same rules. Second, the department of telecommunications would be pressed not to prescribe any ex-ante regulations on net neutrality. Internet of things should also be excluded from its scope. It would also urge the Telecom RegulatoryAuthority of India to review its regulations on differential pricing. Intra-day, Feb 14 25,900 25,810.25 25,750 3,450 3,307.05 3,400 25,450 3,350 3,300 3,250 2,5341.25 25,600 25,300 Previous close 3,473.05 Open Close to revamp non-performing asset (NPA) recognition norms and dismantle the earlier regime of multiple restructuring options,byputting in place a clear, but tougher, roadmap for recognition and resolution of NPAs. The RBI also directed banks to share information on all defaulting borrowers with an exposure of over `5 crore 25,150 Previous close 25,701.60 Open Close with the central bank on every Friday.Indian banks are sitting onastressedassetspoolofover `10 lakh crore. In a note to investors,Morgan Stanley said the new restructuring scheme is relativelystricter and will ensure a relatively lower delay in rightsizingofprovisioningbybanks on stressed accounts.“Conse- PLANS COME A CROPPER quently, this could imply higher slippages and provisioning for F18/F19e — the new scheme is applicable for existing stressed accounts under resolution as well and will warrant higher provisioningifnotresolvedastheymove to the IBC,”the note added. “It will lead to an acceleration in provisioning, and it will hurt near-term earnings.But it is also a good thing from a longer-term perspective because it accelerates the cleanup.Therearesomebankswhich have been slow in recognising distressed assets,therewill be a more negative surprise for them,” said Gautam Chhaochharia,head of India research, UBS.Regarding the outlook for banking stocks, he said, “The fourth-quarternumbersofPSU banks will be impacted by provisioning. We are positive on corporate lenders,we are neutral on PSU banks, and we like select private banks.” Continued on Page 2 ● OZ OUTING Share of PPPs in rail capital expenditure on the decline Ola kicks off services in Perth SAURABH KUMAR New Delhi, February 14 PRESS TRUST OF INDIA New Delhi, February 14 INDIAN RAILWAYS (IR)maybe making all the right noises about public-private partnerships (PPPs) in railway projects (expertcommitteeshadpitched for broad-basing PPPs, having private train operators paying rentals to IR for track access, proposals which haven’t materialised),buttheshareofPPPsin extra-budgetary resources (EBR)hasdeclinedfrom51%in 2016-17 to 33% in 2018-19 (budget estimate).This is even asEBRshavebecomethemainstay of railway capex over the last few years, as support from the central Budget stagnated. EBRs increased from 47% of capex in 2016-17 to 56% in 2018-19 (BE). “The capex is happening through EBRs which are basically loans even as internal accruals are reducing over the years,” said a former railway official, on condition of anonymity. Railways' off-Budget capex PPP as % of EBR 51 FY17 34 (` crore) Total extra budgetary resources (EBR) FY18 (RE) 33 FY19 (BE) 81,940 Wind tariffs discovered via competitive bidding (`/unit) Intra-day, Feb 14 3,500 3,460.85 69,100 This new smartphone endorsed by Siddharth Malhotra with its powerful camera is perfect for people who love to be stylish while capturing their memories ■ Gadgets, P15 THE RESERVE BANKofIndia’s (RBI) move to revise non-performing asset norms on Mondaynight triggered a sell-off in banking stocks on Wednesday. TheNiftyBankindex,abarometer for bank stocks, declined 1.40% to 25,341.25 points, three times more than the market benchmark index.The Sensex slipped 0.42% to 34,155.95 points. The Nifty PSU Bank index, which tracks public sector bank stocks, saw an even sharper decline of 4.78% to 3,307.05. The sell-off in banking stocks follows the RBI’s move Nifty Bank 52,579 Oppo F5 Limited Edition: A sleek and fast snapper At `2.44/unit, wind tariffs at Dec level FE BUREAU Mumbai, February 14 Nifty PSU Bank FY17 26,834 YES BANK on Wednesday said it has listed $600 million bonds, issued under its maiden $1-billion mediumterm note (MTN) scheme, on the Global Securities Market (GSM) of India INX, reports PTI. The bonds issuance saw a final order book, at a spread of 130 basis points, being oversubscribed by over 1.83 times from over 90 accounts, the bank said. Q3FY18 Q3FY17 Sell-off after RBI move to revamp NPA rules; analysts see a hit in the fourth quarter FY19 27,000 (BE) FY18 24,000 (RE) IN THE NEWS Yes Bank makes India INX debut with $600-m bond DIAMANTAIRE FROM ANTWERP Nirav Modi, who was the first Indian to be featured on the covers of Christie’s andSotheby’scatalogues,wasin the spotlight again on Wednesday, but this time for walking away fraudulently with a sum equal to about a third of Punjab National Bank’s (PNB) market capitalisation of `35,365.06 crore. Modi is accusedofswindlingIndia’ssecondlargestpublicsectorbankof a sum of nearly $1.d billion (about`11,355croreatpresent exchangerates).Thenotification ofthisfraudbythebanktostock exchanges saw PNB’s stock plummetnear10%onWednesday, wiping out about `3,850 crore of shareholdervalue. In an early-morning notification to exchanges,the lender saidithaddetectedsomefraudulent and unauthorised transactions at a branch in Mumbai. Thetransactionsbenefitedafew selectaccountholdersandwere (` crore) Change (%, y-o-y) 4,06,042 FE BUREAU Mumbai, February 14 PNB scorecard 4,74,952 SERBIA Bank informs bourses of unauthorised deals at a Mumbai branch; referred to authorities Banking stocks take a knocking Public-privatepartnership (PPP) Of EBR, loans mobilised through the Indian Railway Finance Corporation (IRFC) and taken from financial institutions including Life Insur- Of IR's total capex, 58% comes from EBR, 33% as (central) Budget support and 9% from accruals (RE, FY18) ance Corporation of India and multilateral bodies like the World Bank are on the rise. Continued on Page 2 CAB HAILING COMPANY OLA on Wednesday said it has started offering its services in Perth, Australia,“on a limited basis”. The SoftBankbacked company last month had announced its plans to make a foray into the Australian market. “Ola, one of the world’s largest ride-sharing platforms, is now available on a limited basis to customers in Perth,”it said in a statement.As part of the soft launch offer, Perth-based customerswill be given their first two rides free up to the value of A$10 per ride,it added. In January, Ola announced that it had started onboarding private hire vehicle owners onto its platform in Sydney, Melbourne and Perth. Uber is Ola’s main rival in Australia.The two are locked in anintensebattleforleadership in the Indian market.
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