OPINION, P8 ECONOMY, P3 SURJIT BHALLA Govt estimate of tax from LTCG is just plain incorrect INTERNATIONAL, P16 SUNIL JAIN TELECOM SERVICES NEW LEADERSHIP Maximise customer welfare via spectrum auction, not just government revenues Govt expects to finalise 5G roadmap by June: Sundararajan Japan reappoints Kuroda as Bank of Japan chief NEW DELHI, SATURDAY, FEBRUARY 17, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOLUME XLIII NO. 301, 20 PAGES, `8.00 (PATNA `9.00, RAIPUR `10.00) 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: 34,010.76 ▼ 286.71 NIFTY: 10,452.30 ▼ 93.20 NIKKEI 225: 21,720.25 ▲ 255.27 HANG SENG: 31,115.43 ▲ 599.83 `/$: 64.22 ▼ 0.30 `/€: 80.19 ▼ 0.41 BRENT: $64.50 ▲ $0.17 GOLD: `30,693.00 ▲ `151.00 PNB CASE Fresh CBI FIR against Gitanjali Group Fraud woes go beyond PNB Agency approaches Interpol; carries out searches at 20 places; ED summons Modi, Choksi; MEA suspends their passports AHMEDABAD-BASED GSEC Aviation and Monarch Networth Capital have bought over GR Gopinathpromoted Air Deccan, besides jointly buying a majority stake in Air Odisha, reports PTI. GSEC Aviation is owned by Rakesh Ramanlal Shah, who is married to Prity, the sister of the $11-billion Adani Group chairman Gautam Adani. Access norms for FPIs relaxed MARKETS REGULATOR Sebi has eased the norms for foreign portfolio investors, doing away with the priorapproval requirement in case of change in local custodian, reports PTI. Due diligence requirements at the time of change of custodian for FPIs have also been relaxed. NSE eyes Dhaka bourse stake The NATIONAL Stock Exchange is keen to buy a 25% stake in Dhaka Stock Exchange, reports Bloomberg. “We are well positioned to help grow the Bangladesh market and the exchange, given our experience and track record,” NSE’s CEO Vikram Limaye said on Thursday. PNB Intra-day on BSE (`), Feb 16 Intra-day on BSE (`), Feb 16 42.0 130 40.5 Prev. close: 46.90 128 40.30 36.0 Prev. close: 128.35 126 39.0 37.55 37.5 125.65 124 122 Open Close PRESS TRUST OF INDIA New Delhi, February 16 THE CBI ON Fridayregistered a fresh first information report (FIR) against Gitanjali Group, promoted by Mehul Choksi, uncle of billionaire jeweller Nirav Modi, following a complaint from Punjab National Bank (PNB),and also approached the Interpol to locate them. Officials said the fresh FIR was based on a February 13 complaintfromPNB.According toit,theallegedlosstoPNBwas over`4,886 crore,theysaid. The agency on Friday also carried out searches on the premises of the Gitanjali Group at 20 places in Mumbai, Pune,Surat,Jaipur,Hyderabad and Coimbatore. “Searches are at locations belonging to Gitanjali group of Mehul Choksi, other directors of the accused companies and other group factories and plants including offices,factories and residences,” a CBI spokesperson said here today. Itisallegedthattheaccused PNBofficialsinconspiracywith private persons sent unauthorised letters of undertaking 120 125.05 Open Close (LoUs) and foreign letters of credit to overseas branches of Indian banks for release of funds to accused companies’ suppliersortoclearliabilitiesof accused companies. The officials also said the central agencyapproached the Interpol with a request for issuing a “diffusion notice” whichwasaimedatlocatingan individual. “This (diffusion) is less formal than a notice but is also used to request the arrest or location of an individual or additionalinformationinrelation to a police investigation.A diffusion is circulated directly by an NCB (CBI in this case) to the member countries of their choice,or to the entire INTERPOLmembershipandissimultaneously recorded in Interpol's Information System,”the website of Interpol says. The Enforcement Directorate on Friday summoned ModiandChoksi,evenasagency sleuths expanded their search operationinpropertieslinkedto the accused,officials said. Continued on Page 2 Related reports, P10, 11, 19 EXPRESS PHOTO IN THE NEWS Adani kin-owned firm, partner buy out Air Deccan Gitanjali Gems REUTERS New Delhi/Mumbai, February 16 Empty shelves at a Nirav Modi showroom in Delhi on Friday INVESTORS MAY HAVE been shocked when one of India’s biggest banks disclosed a $1.77-billion fraud by a billionaire jeweller, but the central bank has recorded data that shows the problem runs far deeper and wider. Reserve Bank of India (RBI) data,which a Reuters reporter obtained through a right-toinformation request, show state-run banks have reported 8,670 “loan fraud” cases totalling `61,260 crore ($9.58 billion) over the last five financialyearsuptoMarch31,2017. In India, loan frauds typically refer to cases where the borrower intentionally tries to deceive the lending bank and does not repay the loan. The figures expose the magnitude of the problem in a banking sector already under pressure after years of poor lending practices. Bad loans surged to a record peak of nearly $149 billion last year. Bank loan frauds have SBI 284 Intra-day on BSE (`), Feb 16 280.05 Prev. close: 278.85 280 271.75 276 Open Close Intra-day on BSE (`), Feb 16 65 64.05 Prev. close: 63.50 63 61.75 Home-made drones threaten conventional armed forces Their small size and large numbers can overwhelm defences. Compared with military hardware, drone tech is both readily available and cheap. Even a lone drone can do plenty of damage. ■ Science & Tech, P15 QuickPicks Mahindra leads $40-million investment in Zoomcar SELF-DRIVE CAR rental start-up Zoomcar has raised $40 million in a Series C funding round led by auto major Mahindra & Mahindra (M&M), reports fe Bureau in Bengaluru. The funding round also saw participation from existing investors. M&M will be investing `176 crore for a near 16% stake in the company. Zoomcar, with this latest round of funding, has raised $85 million. PAGE 6 SC reduces Cauvery water allocation to Tamil Nadu DECLARING THE Cauvery river to be a “national asset”, the Supreme Court on Friday reduced its allocation of water to Tamil Nadu to 177.25 thousand million cubic feet (tmc), down from 192 tmc allocated by a tribunal in 2007, reports fe Bureau in New Delhi. Karnataka will now supply 177.25 tmc, a reduction of 14.75 tmc, from its Billigundlu site to the Mettur dam in Tamil Nadu. PAGE 2 Centre to launch schemes to ensure farmers get MSP rates THE CENTRE has decided to launch more than one scheme to ensure that farmers receive at least the MSP rate for their crops, reports fe Bureau in New Delhi. States will be given freedom to adopt a plan. The Union agriculture ministry has started preparing a roadmap with the NITI Aayog with this intent. The Centre targets to roll out all the plans before the next kharif harvesting season, an official said. PAGE 3 THE SINGH BROTHERS — Malvinder and Shivinder — sufferedyetanotherjoltonFriday when the Supreme Court dismissed theirappeal against the January 31 order of the Delhi High Court that allowed Japanese drug maker Daiichi Sankyo to recover $500 million (over `3,300 crore) from them as perthe award bya Singapore arbitration tribunal in April 2016. “We are not inclined to interfere. Our answer at the momentisno,”saidabenchled by justice Ranjan Gogoi. The brothers now don’t haveanyfurtherlegaloptionto BANIKINKAR PATTANAYAK New Delhi, February 16 STUNG BYTHE `11,400-crore fraud at Punjab National Bank (PNB),the finance ministry has directed all public-sector banks (PSBs) to tie up loose ends in their systems, tighten scrutiny ofallsortsoftransactions,especiallytheoverseasonesthrough theSWIFTmechanismthatwas abused by some PNB officials leading to the scandal,and take precautionary measures to ensuresuchscamsdon’trecurin future,a seniorofficial told FE. “Banks have been asked to furtherboost theirmonitoring and strengthen their systems. Such fraudulent activities can’tbeallowedtotakeplacein any PSB. The government is viewing these matters very, veryseriously,”saidtheofficial. PNB hasn’t yet been formally directed by the finance ministry to commission a spe- 152.40 150 Open Close Syndicate Bank Intra-day on BSE (`), Feb 16 63 62 61.20 59.65 60 61 Prev. close: 61.35 59 60 Open Close steadily increased as well, reaching `17,634 crore in the latest financial year from `6,357 crore in 2012-13, according to the data, which don't include the Punjab National Bank (PNB) case. PNB,India’s second-largest state lender, said on Wednesdaytwo juniorofficers at a single branch had illegallysteered $1.77 billion in fraudulent 58 Open Close loans to companies, most of them controlled by billionaire jeweller Nirav Modi. It was India’s biggest fraud ever. “Thismightbethetipofthe iceberg orthe middle,and that istheworry,”saidPratibhaJain, partner at law firm Nishith Desai Associates, who advises on bankruptcy cases. Continued on Page 2 cial audit of its books to detect theexactintensityofthefraud. However, it is willing to take any measure — including conducting a special audit — to ensure“clean banking”,said an official with the bank. Banks have been given the flexibility to adopt additional security measures that they think suit them the best,said a banker. Continued on Page 2 FE BUREAU Kochi, February 16 ONE OFTHE big tasks for bank chiefsoverthepastfewdayshas been to assess how significant their institution’s exposure might be to the illegitimate transactions that have come to theforeatPunjabNationalBank (PNB).Andwhat theyare saying almost in unison is that PNB must carrythe can. On Friday, State Bank of India (SBI), the nation’s top lenderbyassets,said that it had an indirect exposure of $212 million (about `1,361 crore at current exchange rates) to the NiravModi&Codealings.Chairman Rajnish Kumartold reportersthatSBIGrouphadnodirect exposure to anyof Modi’s firms and that this was indirectly through PNB’s letter of undertaking and fullyrecoverable. Continued on Page 2 ● SCREEN SHOT RIL to take majority stake in BKC drive-in firm block the enforcement of the award. Astatementissuedbythem said that theyaredisappointed by the SC’s order and are now evaluating the option of challengingtheawardinSingapore courts. “We respect the ruling by the Hon’ble Supreme Court of India. However we are disappointed by the decision. The Hon’ble Court decided not to gointothemeritsofthemajority arbitration award. We believe we have been wronged in the majoritySingapore arbitration award. The case has hurt and crippled our entire group,”the statement said Continued on Page 2 FE BUREAU Mumbai, February 16 Exam tips from the PM Prime Minister Narendra Modi interacts with students during an event, ‘Pariksha Pe Charcha’, at New Delhi’s Talkatora Stadium on Friday Move by Indian exchanges anti-competitive: MSCI MSCI, THE PROVIDER of index services, in a statement issued late on Thursday termed the decision by Indian stock exchanges not to provide Indian indices or the data including the price of Indian securities to foreign exchanges as disruptive and harmful to international institutional investors in Indian equities. “The breadth of the restrictions announced bythe Indian exchangesisunprecedentedin Prev. close: 158.95 Finance ministry tells public sector banks Other banks put the onus to tighten scrutiny, plug loopholes of repayment on PNB CURBING DATA SHARING FE BUREAU Mumbai, February 16 159 61 SC dismisses Singh brothers’ appeal FE BUREAU New Delhi, February 16 159 62 RANBAXY DEAL Special Feature 162 153 IDBI 64 Intra-day on BSE (`), Feb 16 156 272 268 Bank of Baroda anyequitymarket in the MSCI Emerging Markets Index series,”the index provider said in the statement. The index provider said underits market classification The breadth of the restrictions announced by the Indian exchanges is unprecedented in any equity market in the MSCI Emerging Markets Index series — MSCI framework, anti-competitive measuresrestrictinginvestors’ access to derived stock exchangeinformationreceives a negative score in the ‘Competitive Landscape’ category. This is because of their negative impact on international institutional investors, as the range of available financial instruments may be significantlyreduced,limiting ways for cross-border investors to access a local marketortohedgeanexposuretoa local market. Continued on Page 2 PREDATORY TARIFF Telcos to be fined up to `50 lakh a circle FE BUREAU New Delhi, February 16 THETELECOM REGULATORY Authorityof India (Trai) on Friday issued regulations on predatory pricing, which imposes a penaltyof up to `50 lakh per circle on mobile operators if they are found to indulge in such practices. While the regulator has defined predatory pricing for the first time, it won’t affect the existing players in any manner as far as their current tariffs have been designed. This is because Trai has said that a tariff will be considered predatory if in a relevant market an operatorwith over 30% market share offers services at a price that is below the averagevariable cost,with aviewto reduce competition or eliminatethecompetitorsintherelevant market. This clearly rules out any scope for a new player to be penalised if it disrupts the market by below-market tariffs because its market share will be below 30%. Continued on Page 2 RELIANCE INDUSTRIES’ (RIL) wholly owned subsidiary RelianceIndustrialInvestments and Holdings (RIIHL) proposes to acquire equity shares of The Indian Film Combine (IFC), for `1,105 crore, according to a statement on stock exchanges. As part of the transaction, RIIHLwill be acquiring 65% of current paid-up equity share capital of IFC from the existing shareholders.This will include 20% from the Mauritian arm of Xander Group Inc based in theUSfor`340croreand45% from entities belonging to the promoter group of RIL for `765 crore. The remaining 35% of IFC continues to be held by the Maker Group, the company said.The acquisition is expected to be completed by May 31,2018. Acompanyincorporated in 1942,IFC is setting up a drivein theatre and hospitality precinct comprising of a hotel, a retail mall and a club,built on approximately12 acres of land in Bandra Kurla Complex (BKC),Mumbai. RIL is engaged in constructionanddevelopmentofaconventioncentre,aretailmalland office space at BKC,Mumbai. The company said that together with the IFC project, RIL aims to create a retail and entertainment destination which will complement its upcoming convention centre. Continued on Page 2
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