OPINION, P8 COMPANIES, P7 EDITORIAL Teething troubles aside, GST does well in its first year INTERNATIONAL, P14 SURJIT S BHALLA HOUSING INVESTMENT US TARIFF RESPONSE India on track for the fastest pace of poverty reduction, between 2011/12 and 2017/18 Keki Mistry-led HDFC to launch $600-m equity fund Canada’s Trudeau targets whisky, toilet paper MUMBAI, SATURDAY, JUNE 30, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 154, 44 PAGES, `10.00 P U B L I S H E D F R O M : A H M E D A B A D , B E N G A L U R U , C H A N D I G A R H , C H E N N A I , H Y D E R A B A D , K O C H I , K O L K ATA , L U C K N O W, M U M B A I , N E W D E L H I , P U N E SENSEX: 35,423.48 ▲ 385.84 NIFTY: 10,714.30 ▲ 125.20 NIKKEI 225: 22,304.51 ▲ 34.12 HANG SENG: 28,955.11 ▲ 457.79 `/$: 68.47 ▲ 0.32 `/€: 79.78 ▼ 0.10 BRENT: $78.72 ▲ $0.87 GOLD: `30,341.00 ▼ `147.00 Mar 2014 Mar 2018 (in %) Change in share price (%) SBI 14.99 30.38 9.84 PNB 12.7 -35.86 12.24 IDBI Bank 5.91 10.39 10.82 Central Bank 5.44 47 10.04 Canara Bank 5.35 2.77 9.47 Bank of India 11.82 -54.83 8.77 Union Bank of India 10.28 -31.41 9.7 Bank of Baroda 10.79 -1.43 2.23 « « « THE INSURANCE REGULATORY and Development Authority of India (Irdai) on Friday approved a proposal by Life Insurance Corporation of India (LIC) to raise its stake in IDBI Bank up to 51% from the current 10.82%, giving the country’s largest insurer special relaxation from its 15% holding cap for insurers in a single firm. The deal will save the government from having to infuse more funds into IDBI Bank, which had received as muchas`10,610crorelastfiscal,themostbyanypublic-sector bank (PSB). However, analysts said itwill test the resolve of regulators who may have to extend a series of such special waivers for LIC for the deal to go through. Also, analysts feel the deal to acquire the stressed bank could also cast clouds on LIC's fiduciary duty to its millions of policyholders. It is not immediately clear whetherthedealinvolvesfresh equity infusion by IDBI Bank or a direct sale of the govern- « FE BUREAUS Mumbai/New Delhi, June 29 Syndicate Bank 9.52 10.2 Vijaya Bank 6.92 8.15 -42.44 « 30.57 Source: Capitaline ment’s stake in the bank that currently stands at 81%. AseniorIrdaiexecutivepresent at the meeting told FE: “We have also asked LIC to decide by when it plans to reduce its stake below the regulatory limit of 15% (once its acquisition of more stake is over). This decision will be taken byits board of directors.” Analysts said the LIC-IDBI Bankdealwillleadtoaseriesof exemptions to be given by three regulators — Irdai, the Securities and Exchange Board of India (Sebi) and the Reserve Bank of India (RBI).LIC needed an exemption from relevant provisions in the Insurance Laws (Amendment) Act,2015, and the Life Insurance Corporation Act, 1956, that bar insurers from holding more than 15% in any company. Even Section 35 of the Insurance Act restricts a life insurer from acquiring control in a non-insurance entity. The additional stake would cost LIC more than `9,000 crore. While it was reported that LIC could infuse `13,000 crore into IDBI Bank, the lender on Friday informed the stock exchanges that “no such discussion has taken place” in its board. Despitemassiveinfusionby thegovernmentlastfiscal,IDBI Bank’scoreequitycapitalstood at 7.42% as on March 31, just above the minimum regulatory requirement of 7.37%.Its gross non-performing assets (NPAs) zoomed to 27.95% and net NPAs to 16.69%, the most reported byanyPSB. ● ALLEGED LOBBYING CBI calls AirAsia director on July 3 TACKLING VOLATILITY Enough firepower to deal with rupee: DEA secy Says options open on raising funds via FCNR, sovereign bonds/other routes PRESS TRUST OF INDIA New Delhi, June 29 THE CENTRAL BUREAU of Investigation (CBI) has summoned Ramachandran Venkataramanan,a directorof AirAsia India, on July 3 for questioning in connection with alleged corruption in attempts to get international operations clearances from the government, sources said on Friday. They said the agency has recently questioned the airline’s chief financial officer Deepak Mahendra. It is alleged that promoters of the company and board of directors entered into criminal conspiracy with unidentified government officials through lobbyists to expedite the approval process for AirAsia India and change in aviation policies to suit the company. Continued on Page 2 FE BUREAU New Delhi, June 29 INDIA HAS ENOUGH “firepower”totackletherupee’sslide andthegovernmentcouldraise fundsthroughforeigncurrency non-repatriable (FCNR) deposits, sovereign bonds or otherroutestofurtherbolsterits foreign exchange reserves, if required,atopfinanceministry official said on Friday. However,no such situation hasarisenasofnowandthefall in the rupee is unlikely to last long, economic affairs secretary Subhash Chandra Garg said.“I do not see any need to increase rates,” Garg said. The monetary policy committee last hiked the benchmark interest rate in May, for the first time in over fouryears,by 25 basis points due to worsening inflationary pressure. If we assess at any stage that we need to refurbish our reserves, the options are open. But that situation has not arisen. SUBHASH CHANDRA GARG ECONOMIC AFFAIRS SECRETARY ● Q1 NUMBERS PIT advance tax up 44%, indirect taxes up sharply Continued on Page 2 FE BUREAU New Delhi, June 29 KEY APPOINTMENT Special Features The new BMW X3 is ontrack, but not offbeat The X3’s got space, is luxurious, drives better than all SUVs, but when a certain competitor can offer semiautonomous driving technologies, what’s stopping BMW India? ■ Motobahn, P13 Growth momentum is likely to be sustained Multiple impending levers are expected to ensure strong AUM growth; NIMs are likely to be resilient; a preferred name among CV financiers ■ Investor, P13 QuickPicks Govt to raise sugarcane FRP for next season in 15 days WHILE SUGARCANE farmers in Uttar Pradesh are up in arms against delayed cane payments from mills, PM Narendra Modi announced on Friday that the government would raise the fair and remunerative price of the crop for the next season in 15 days, while the minimum support prices of kharif crops would be announced next week, reports fe Bureau in New Delhi. PAGE 2 Forex reserves dip by $2.25 bn to $407.81 bn INDIA’S FOREIGN exchange reserves further fell by $2.25 billion to $407.815 billion as on June 22, RBI data show, reports fe Bureau in Mumbai. Foreign currency assets (FCA), which form a key component of reserves, fell by $2.83 billion from the previous week to $382.499 billion. FCAs are maintained in major currencies like the US dollar, euro, pound sterling and Japanese yen. PAGE 10 PNB sells entire stake in Icra for `109 crore PUNJAB NATIONAL Bank has sold its entire stake in ratings firm Icra for a consideration of `109 crore, reports PTI. As a planned strategy, the lender wants to hive off non-core businesses. Among others, the board of directors has authorised its management to start taking decisions to divest stake in PNB Housing Finance, Crisil and BSE at an appropriate time. PAGE 10 Chaturvedi is new ICICI Bank chair ■ Appointment effective from July 1, or whenever RBI gives approval TAKING OVER ■ Comes when ICICI Bank is battling a severe management crisis ■ Allegations of conflict of interest against CEO & MD Kochhar FE BUREAU Mumbai, June 29 THE ICICI BANK board on Friday approved the appointment ofGirishChandraChaturvedias non-executive part-time chairmanofthebank.Thetermofthe current chairman MK Sharma comes to an end on June 30. The appointment of Chaturvedi,who has extensive administrative experience, comes at a crucial juncture whenthebankisbattlingoneof its worst management crisis with the MD and CEO Chanda Kochhargoingonalongleaveto ■ Kochhar on leave to facilitate fair probe into loans to Videocon Group ■ Sandeep Bakhshi appointed COOdesignate for five years Doing the spadework US President Donald Trump at the groundbreaking ceremony for Foxconn’s new Wisconsin facility, with Wisconsin governor Scott Walker (left) and Foxconn chairman Terry Gou, on Thursday Dial F for Free RISHI RANJAN KALA WhatsApp is down allow retired justice B Srikrishnatocompleteaninvestigation into whether there was a conflict of interest in loans givenbythelendertotheVideocon Group. Earlier this month, after Kochhar announced her decisiontogoonleavetofacilitatea fairprobe,theboardofthebank appointed Sandeep Bakhshi, the former CEO and MD of ICICIPrudentialLifeInsurance, as a whole-time director and chief operating officer-designate fora period of fiveyears. Continued on Page 2 Finance minister Piyush Goyal also ruled out any“kneejerkreaction”andsaidappropriate measureswould be taken to stemvolatilityintherupeeafter taking into consideration the globalsituation.Themacroeconomic fundamentals are also much better now than in 2013 when the rupee had hit 68 against the dollar. Analystssayinsteadofusing up the forex reserves, India should raise money via NRI bonds as it did in 2013.Bank of America Merrill Lynch chief economist Indranil Sengupta recently argued that a $30-35 billion issuance would change investors’ perception of the rupee and help stabilise it. He pointed out that all the three NRI issuances (1998,2000 and 2013) had staved off contagion inthepastwhileaninterest-rate defencehadonlypartialsuccess in one case — when Bimal Jalan wasthegovernoroftheReserve Bank of India (RBI). Continued on Page 2 With free voice call offers by mobile operators, WhatsApp calling saw a sharp decline of 20% in January-March 2018 compared with the preceding quarter. Detailed report on Page 6 Internet telephony: outgoing usage Outgoing volume (million mins) 258 Jan-Mar 260 283 Apr-Jun Jul-Sept 2017 322 258 Oct-Dec Jan-Mar 2018 Source: Trai THE CENTRE’S FISCAL deficit in April-May stood at 55.3% of `6.24 lakh crore estimated for all of 2018-19, compared with 68.3% of the relevant annual estimateintheyear-agoperiod, inwhatreflectedarelativemoderation in front-loading of revenue spending. Indirect tax receipts, a proxy of consumption in the economy, grew at robust 59% in the two-month period;however,hugecorporate taxrefundsledtoayear-on-year decline in direct tax collections. Union ministerArun Jaitley wrote in a blog that “the first bignewsforthisyearisthatthe advancetaxdepositduringthe first quarter of this year has seen a gross increase of 44% in the personal income tax categoryand 17% in the corporate tax category”. But the minister added that afterrepayment of refunds due tosomeexcesstaxpaidinearlier years, usually paid back in the firstquarter,thenetadvancetax amount would be somewhat less.“But if the same trend continues in the next three quarters, one expects a significant increase in the direct tax collection thisyear,” hewrote. TheCentre’snettaxreceipts (afterdevolutiontostates)stood at `1.02 lakh crore or 6.9% of the FY19 budget estimate (BE) of `14.8 lakh crore; these were 5.5% of the target ayearago. Continued on Page 2 ECO-ILLOGICAL Amazon, H&M and other MNCs seek softening of plastic ban REUTERS Mumbai, June 29 MULTINATIONAL COMPANIES LIKE Amazon and H&M are lobbying to soften a ban against single-use plastic imposed by Maharashtra last week,accordingtofoursources familiarwith the matter. The ban could sharply raise costs for companies that rely heavilyonplasticforpackaging, suchasretailers,beveragemakers and sellers of bottledwater. Maharashtra’s move, the first such broad action against plasticbyanIndianstate,comes as Prime Minister Narendra Modi pushes a plan to completelyendtheuseofsingle-use plastic in India by2022. Plastic packaging accounts for nearly half of all plastic wasteglobally,andmuchofitis thrown away within just a few minutes of its first use,according to the United Nations. Representatives of firms including Amazon,H&M,Pepsi and Coca-Cola,aswell as plastic industry bodies and lobby ILLUSTRATION: ROHNIT PHORE UNION MINISTER for roads and highways Nitin Gadkari on Friday met a gathering of top bankers, the deputy governor of the Reserve Bank of India and the Life Insurance Corporation’s chairman in Mumbai, and urged them to finance road projects, reports fe Bureau in Mumbai. (`39,669 crore in March 2018) « Bankers urged to finance projects Bank holdings « CASH-STRAPPED FORTIS Healthcare, which is currently in the process to find a new investor, on Friday extended the date for submission of binding bids yet again by fixing July 3 as the new deadline, reports PTI. Earlier on June 12, the company had extended the deadline for submission of binding bids to June 28 after shortlisting four entities as possible suitors for the sale of its business. Deal will save govt from more infusion in the stressed bank, analysts see moral hazard « Fortis extends bids deadline LIC gets nod to buy 51% in IDBI Bank « THE MONSOON has covered the entire country, 17 days ahead of its normal onset date, the India Meteorological Department (IMD) said on Friday, reports PTI. The monsoon reached Rajasthan’s Sriganganagar, its last outpost in India. Its normal date to reach Sriganganagar was July 15. "The monsoon today covered the entire country," additional director-general Mritunjay Mohapatra said. IRDAI BOARD MEET « IN THE NEWS Monsoon covers country 17 days ahead of normal groups, met Maharashtra government officials days before thebancameintoeffectonJune 23, urging them to implement the rule in phases and relax some norms, said four sources who declined to be named. “Ourdemandtothegovernmentis:Givetheindustryseven years to come up with alternatives,” said Neemit Punamiya, general secretary of the Plastic Bags Manufacturers Association of India,who attended the meeting. “It cannot happen overnight — we’ve got invest- ments, we’ve got loans to pay and people to manage.” The Federation of Indian Chambers of Commerce and Industry, whose members include online retailers such as Amazon India and Flipkart, said in a June 7 letter to the state government that such a ban“willnotbewithoutitsown share of adverse environmental impacts which are largely drivenbyissuesassociatedwith the use of alternatives”. Continued on Page 2
The Financial Express (FE) is a business paper that’s closest to the people who are in the business of business. From business policies to market trends to new developments, The Financial Express comes packed with incisive news on every relevant issue.