OPINION, P8 MONEY & MARKETS, P10 INTERNATIONAL, P14 BOARD MEET STEPPING BACK Yes Bank to seek 3-month extension for Rana Kapoor Instagram founders quit after tensions with Zuckerberg EDITORIAL RBI, LIC, HDFC etc to blame, also probe fundsiphoning in IL&FS Criminal cases against 36% MPs and MLAs— bar them from polls NEW DELHI, WEDNESDAY, SEPTEMBER 26, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.XLIV NO. 178, 18 PAGES, `6.00 (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: 36,652.06 ▲ 347.04 NIFTY: 11,067.45 ▲ 100.05 NIKKEI 225: 23,940.26 ▲ 70.33 HANG SENG: 27,499.39 ▼ 454.19 `/$: 72.70 ▼ 0.06 `/€: 85.64 ▼ 0.20 BRENT: $81.84 ▲ $0.64 GOLD: `30,728.00 ▲ `64.00 ROILING THE WATERS RESCUE MISSION LIC offers to hike Sidbi takes IL&FS to NCLT its stake in IL&FS MSMEs driving job creation THE MSME sector seems to be driving job creation. Units employing 10-20 people created 4.5 lakh jobs on a net basis in July, while the entire universe of larger firms produced 9.5 lakh jobs, indicating the smaller units' higher labour-intensiveness, reports Surya Sarathi Ray in New Delhi. According to CSO data, EPFO's payroll saw a net addition of 9.5 lakh till July, while the number of newly registered workers under ESIC was 13.97 lakh. PAGE 2 SC asks govt to ‘cleanse’ politics REFUSING TO legislate and add a disqualification to bar a candidate from contesting elections on framing of charges in heinous crimes, the Supreme Court on Tuesday left it to Parliament to “cure the malignancy” and clean the “polluted stream of politics” by making a law to keep those facing criminal cases at bay, reports fe Bureau in New Delhi. SC urged Parliament to mull such a disqualification as it can’t legislate for the House. PAGE 16 55,870 IL&FS's total borrowing Total debt (` crore) BLOOMBERG New Delhi/Mumbai, September 25 1,360 ACREDITORISseekingtopush India’s troubled Infrastructure Leasing & Financial Services (IL&FS) into insolvency,risking regulators’effortstocalmfinancial markets and the group’s attempts to independently restructure its borrowings. Debentures Term loans 5,750 2,310 Subordinated Inter-corporate debt deposits Commercial Paper Debt securities Source: IL&FS 2018 annual report, Bloomberg Small Industries Development Bank of India (Sidbi) on Tuesday filed an insolvency ● AVOIDING LITIGATION application against IL&FS and its unit at the National Company Law Tribunal in Mum- bai, people familiar with the matter said. Defaults by the IL&FS group, a systemically important non-bank lender, have rattled India’s investors this month with anxiety levels in the equity market rising to a seven-month high and companies finding it harder to close bond sales. Sidbi is the first lender to seek resolution of the IL&FS group’s debt under the Insolvency and Bankruptcy Code, India’s first consolidated bankruptcy law that was passed in 2016. Continued on Page 2 ● DOWNGRADE ITNL seeks to recast debt ITNL CPs classified NPI with lenders’ consent by at least one bank ROUHAN SHARMA Mumbai, September 25 ■ ITNL seeks to ring-fence IN A PRE-EMPTIVE move to avoid litigation and insolvency proceedings, IL&FS Transportation Networks (ITNL) has sought to prevent creditors of 13ofitsinfrastructureprojects from hauling them to the National Company Law Tribunal (NCLT).The company on Monday filed an application with the Mumbai bench of the NCLT seeking relief relating to afilingforaschemeofarrangement under Section 230 of the 13 infra projects ■ Proposes discussion with creditors under Section 230 of Companies Act ■ Needs 90% approval of creditors to rearrange debt CompaniesAct.Thecompanyis hopingtobeabletorestructure debt for the projects with the consent of the lenders. Continued on Page 2 SHRITAMA BOSE Mumbai, September 25 OF THE 33 banks that have an exposure to the Infrastructure Leasing & Financial Services (IL&FS) group, at least one has alreadyclassifieditsexposureto a group company as a non-performing investment (NPI). Union Bank of India has classified its investment in commercialpapers(CPs)ofIL&FSTransport Networks (ITNL) as non-performing,sourcesaware of the matter said. An investment bya bank is recognised as an NPI if repayments on it have beendueformorethan90days. Icra downgraded the rating onITNL’sCPsfirstinJulytoA2+ from A1 and then to A4 in August.Two IL&FS entities on Monday said they were unable to service their obligations in respectofCPsdueontheday.In a filing, IL&FS also said it defaulted on the interest on its non-convertible debentures due on September 22 and 23, bothnon-bankingdays,andwas payable on September24. Continued on Page 2 ANNUAL PSB MEET ROOM TO GROW OYO fund-raise nets $1 billion Finmin backs PCA review ANUSHREE BHATTACHARYYA & BHAVIK NAIR Mumbai, September 25 OYO ROOMS SAID on Tuesday it has raised $800 million inafundingroundthatwasled bySoftBankInvestmentAdvisers. In addition, it said it had a commitment of an additional $200 million that would take the total funding to an enviable $1 billion. Interestingly, there was somediscussioninindustrycirclestotheeffecttheonlinehotel bookingplatformisnowvalued $25 m Lightspeed Ventures, Sequoia Capital, Greenoaks Capital and DSG Consumer Partners $250 m SoftBank, Sequoia India, Lightspeed Venture Partners, Greenoaks Capital and Hero Enterprise $100 m SoftBank, Greenoaks Capital, Lightspeed Venture Partners, Sequoia $10 m China Lodging Group in the region of $3-4 billion. Thatisaquantumincreaseover the$850-millionvaluationthat thecompanycommandedjusta August 2016 QuickPicks Continued on Page 2 Debt web 24,290 Sept 2018 ■ Personal Finance, P13 Speakingtothemedialater, Jaitley said the government was closelymonitoring the situation; he endorsed the LIC chief’s assurance but refused to elaborate on it. Apart from the funds infusion by LIC,a clutch of government-sector entities like the National Highways Authority of India might expedite payments of their dues to IL&FS July 2015 Three income tax deductions that can be reversed ASTHE DEFAULTS intheIL&FS group fuelled speculation of a broaderdebt crisis in the financial sector,the government and ReserveBankofIndia(RBI)went into a huddle here on Tuesday and resolved to come out with an action plan soon to salvage the infrastructure-financing conglomerate. Emerging from the meeting chaired by finance ministerArunJaitley,LifeInsuranceCorporationofIndiachairmanVKSharmasaidtheinsurer won’t allow IL&FS to collapse and hinted that it might increase its stake in the firm. “Wewillbetryingourbest,so that it (IL&FS) doesn’t collapse…doesn’t create a contagion effect,” Sharma said. All options, including increasing LIC’s stake in IL&FS,were open, he said, adding that the action planforthetroubledinfrastructure development and finance groupwould be clearbyFriday. — VK SHARMA LIC CHAIRMAN Sept 2017 SPECIAL FEATURE FE BUREAU New Delhi, September 25 group companies as part of the action plan,sources said.LIC is the largest shareholder in IL&FS with a 25.34% stake, followed by Orix Corporation of Japan,which owns 23.54%. Shares of IL&FS group companies surged up to 12% on TuesdayfollowingtheLICoffer. The scrip of IL&FS Engineering and Construction Company soared 12.02% and IL&FS Transportation Networks rose 5.74%ontheBSE.IL&FSInvestment Managers,however,ended marginallydown (0.13%). Apart from Jaitley and Sharma, Tuesday’s meeting was attended by RBI deputy governors Viral Acharya and NS Vishwanathan as well as State Bank of India chairman Rajnish Kumar. IL&FS Financial Services, a group company of IL&FS, defaulted on one of its commercial paper issuances due for repayment Monday. This was the third default by the company. What has landed the infrastructure development and finance group,which has long enjoyed the image of a robust institution, in trouble are a recent drying up of new infrastructureprojectsandthesharp increases in interest rates for short-term borrowings. March 2015 A RED initiative appears in today’s edition of Financial Express. This page is an initiative of the marketing solutions team of The Indian Express Group and contains content paid for by advertisers. This page should be read as an advertisement. We will be trying our best, so that, it (IL&FS) doesn't collapse…doesn't create a contagion effect... an action plan will be clear on Friday Sept 2017 FLAG BEARERS OF THE NATION Action plan to save troubled infrafocused group by Friday, state-run entities to expedite payments to IL&FS Is first lender to seek resolution of the group’s debt under the IBC FE BUREAU New Delhi, September 25 $90 m SoftBank $ $ $ $ $ $800 m+ ($200 m) SoftBank, Lightspeed Venture Partners, Sequoia and Greenoaks Capital Source: Crunchbase year ago, in September 2017, when it raised $250 million. Continued on Page 2 CHIEFS OF PUBLIC sector banks (PSBs) on Tuesday sought relaxations in the Reserve Bank of India’s (RBI) prompt corrective action (PCA) framework and asked the government to make “upfront capital infusions” in some of the PCA banks, finance minister Arun Jaitley said. “Some of the banks said the PCA guidelines should be revisited because that is indirectlyimpacting their lending ACTION PLAN PCA BANKS ■ Monetise non-core assets ■ To follow quarterly ■ Closure/consolidation of ■ To mitigate lending risk worth `18, 665 crore in FY19 57 foreign branches/offices by March 2019 ■ Step up recovery with focus on both IBC, non-IBC cases, curbing new slippages abilities,” Jaitley said, adding that the government would take up the matter with the RBI. Under PCA, banks face performance milestones profiles through a 6% reduction in credit RWA to advances ratio and 8% reduction in cost to income ratio restrictions on distributing dividends and remitting profits. 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