OPINION, P8 COMPANIES, P7 INTERNATIONAL, P14 SATYAM CASE LIKELY CEASEFIRE Sebi bars Raju, three others for 14 years, directs them to return `813 cr Trump asks Cabinet to draft possible trade deal with Xi EDITORIAL Helping MSMEs more than just hiking bank credit Google’s staffers do a great job of letting their bosses know that it’s not OK Google MUMBAI, SATURDAY, NOVEMBER 3, 2018 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL. 58 NO. 260, 26 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: 35,011.65 ▲ 579.68 NIFTY: 10,553.00 ▲ 172.55 NIKKEI 225: 22,243.66 ▲ 556.01 HANG SENG: 26,486.35 ▲ 1,070.35 `/$: 72.44 ▲ 0.01 `/€: 82.97 ▲ 0.66 BRENT: $72.93 ▲ $0.04 GOLD: `31,565 ▼ 132 IRAN OIL SANCTIONS RBI VS GOVT, AGAIN After finmin barb, RBI India, 7 others get US waiver ` logs biggest gets in another shot single-day RBI creates room for banks to lend more to NBFCs Govt peace moves on Thursday go for a toss after DEA secretary’s tweet and RBI DG’s speech FE BUREAU New Delhi, November 2 THE FRAGILE PEACE between the finance ministry and the central bank was ruptured on Friday when economic affairs secretary Subhash Chandra Garg took a pot shot at Reserve Bank of India (RBI) deputy governor Viral Acharya’s stern warning last week that governments that make incursion into central banks’ autonomous regulatory space would incur“wrath of the markets”. By the evening,RBI deputy governor NS Vishwanathan had come back with his own ripsote, to explain why the regulator’s capital adequacy norms must not be diluted. In a tweet, Garg said: “Rupee trading at less than 73 to a dollar, Brent crude below $73 a barrel, markets up by over 4% during the week and bond yields below 7.8%. Wrath of the markets?” In response to the government saying CRAR (Capital to Risk Weighted Assets FE BUREAU New Delhi, November 2 ministry had said the government has “nurtured and respected” the central bank’s autonomy as an essential and accepted governance requirement, in remarks widely seen as the finance ministry’s willingness to make peace with the RBI. Even that statement was, however, not completely devoid of rancour. IN A MOVE aimed at easing a liquiditycrunch faced bynonbank lenders, the Reserve Bank of India (RBI) on Friday allowed banks to offer partial credit enhancement (PCE) to bonds issued by non-banking financial companies (NBFCs) and housing finance companies (HFCs), subject to certain conditions. The PCE enables an NBFC/HFCtoimproveitscreditworthiness by securing a backing from a higher-rated entity (a bank, in this case). Though the RBI move is aimed at helping these firms to raise more resources from the market at lower rates, some banks remained skeptical of the scheme as it could increase their capital needs further. Introduced in 2015, the PCE facility was restricted to bonds issued only for project financing. Continued on Page 2 Continued on Page 2 Rupee trading at less than 73/dollar, Brent crude below $73 a barrel, markets up by over 4% during the week and bond yields below 7.8%. Wrath of the markets? Dilution of standards in the name of aligning them with international benchmarks ... cherrypicking ... will result in our banks being strong in a make-believe sense and not in reality. SUBHASH CHANDRA GARG ECONOMIC AFFAIRS SECY — NS VISHWANATHAN DEPUTY GOVERNOR, RBI Ratio) norms were too high — higher than Basel norms — Vishwanathan said, “We must guard against any push for dilution of standards in the name of aligning them with international benchmarks because that will be cherry-picking and will result in our banks being strong in a make-believe sense and not in reality.” OnWednesday,the finance PROVISIONS SOAR 300% Special Feature Driving Dutchman: A road trip with a goal A charged-up Dutchman travels from Amsterdam to central Australia in an electric car. His aim is to inspire, educate and accelerate the transition towards a zero-carbon future ■ Motobahn, P13 QuickPicks US adds tougher provisions to H-1B, goes easy on green card THE DONALD Trump-led administration has introduced a new set of stringent provisions to the H-1B labour application process under which the US employers must disclose the total number of foreigners already employed by them, making it tougher to sponsor fresh foreign workers, reports PTI. Meanwhile, he appeared to be considerate to the hundreds of thousands of skilled professionals, including Indians, patiently waiting for years to receive green cards, saying they have done everything perfectly and they are going to enter America. PAGE 14 Govt to launch next tranche of gold bonds scheme on Nov 5 THE GOVERNMENT will launch the next tranche of sovereign gold bonds scheme on November 5, reports PTI. “The issue price of the bond during this subscription period November 5-9, 2018, shall be `3,183 per gram with settlement on November 13, 2018,” an official statement from the finance ministry said. It has also been decided to allow a discount of `50 per gram from the issue price to those investors who apply online and the payment is made through a digital mode. For such investors, the issue price of gold bonds will be `3,133 per gram of gold. The sovereign gold bond scheme was launched in November 2015. PAGE 2 Pilot proposal: Two more senior executives quit GoAir RESIGNATIONS OF senior executives at the Wadia Group-promoted airline GoAir continue with two more executives — a director and deputy director of flight training — resigning on Thursday, reports Manisha Singhal in Mumbai. The resignations happened reportedly due to differences over the number of pilots proposed by Nandkumar Ramaswami, director, flight operations training at GoAir, and the management. While Ramaswami proposed seven pilots per aircraft are needed to run operations smoothly, the management proposed 4.5 pilots per aircraft, which is below the industry average. PAGE 6 PNB posts net loss of `4,532 cr in Q2 FE BUREAU Mumbai, November 2 PUNJAB NATIONAL BANK (PNB), the country's secondlargest public sector lender on Friday reported a net loss of `4,532 crore in the September quarter of FY19, against a net profit of `561 crore a year ago as provisions soared 300% on a year-on-year (y-o-y) basis to `9,758 crore. At the operating level, PNB reported a profit of `2,839.5 crore, against an operating profitof`6,232crorereported a year ago. Its net interest income (NII) – difference between interest earned and interest expended – stood at `3,974 crore, down 1% y-o-y, and its domestic net interest margin — a key measure of profitability—stoodat2.46%, down 44 bps from 2.9% in Q1. PNB said for the fraud on account of letters of understanding (LOUs) and foreign letters of credit (FLCs) involving the Nirav Modi and Mehul Choksi-relatedaccountsworth `14,357 crore, the Reserve Bank of India (RBI) had given the bank a dispensation to make provisions to the tune of 25% without debiting other reserves in Q4FY18. Continued on Page 2 Report card (` crore) Q2FY18 Q2FY19 % Change Total income 14,205.3 Net interest income 4,015.0 Other income 1,906.0 Provisions 2,440.8 Net profit 560.6 Domestic net interest margin (%) 2.6 Gross NPA (%) 13.31 Net NPA (%) 8.44 14,035.88 3,974 1,709.6 9,757.9 -4,532.35 2.46 17.16 8.9 -1.2 -1.0 -10.3 299.8 NA ▼ 14 bps ▲ 385 bps ▲ 46 bps Source: BSE Crude has fallen about 15% from over $85 a barrel in October on rising speculation that at least some nations will get exemption CRUDE CHECK ■ Oil headed for biggest weekly loss since Feb as US softens crackdown on Iranian exports 90 Brent ($/bbl) ■ Waivers being granted in exchange for continued Iran oil import cuts by nations so as not to drive up crude prices ■ Japan, India, and South Korea, among eight nations can keep buying Iranian oil after reimposition of sanctions on Nov 5 The othertwo are at ornear zero but receiving a waiver gives them flexibilityand time to end their dependence on Iranian oil imports. THE RUPEE ON Fridayclocked its biggest single-day gain in over five years,surging by 100 paise to close at 72.45 against the dollar on easing crude oil prices and possibility that the US might grant waivers to India from sanctions on Iranian oil imports,reports PTI. The domestic unit on Fridayopened on a highernote at 73.14, then gained further ground and touched an intraday high of 72.43, a jump of 102 paise. It,however,closed at 72.45 against the greenback, showing a rise of 100 paise – the best day for the Indian unit since September 2013. Continued on Page 2 Detailed report on Page 10 80 BLOOMBERG Washington, November 2 US SECRETARY OF state MichaelPompeosaideightgovernments are going to receive temporary waivers from US sanctionsontheimportofIranian crude that snap back on Monday following President Donald Trump’s decision to quittheIrannuclearagreement reached in 2015. Waivers are being granted to countries that have shown they’ve made “important 70 69.65 73 60 50 Feb 1, 2018 moves” toward reducing Iranian oil imports to zero,Pompeo told reporters on a conference call on Friday. Of the eight countries receiving the waivers, six will import at “greatlyreducedlevels”,hesaid. gain in 5 years Nov 2, 2018 ● SALES DRAG Cook says weak ` part of Apple's challenge in India PRESS TRUST OF INDIA New York, November 2 APPLE CEO TIM Cook said despite the challenges,including currencyweakness,he was veryoptimistic about his company’s future growth in the Indian market. Withtherupeetouching74 to a dollar, Cook said the currency weakness has been part ofApple’schallengeinIndia,“as youcantellfromjustlookingat the currency trends, but I sort of view these as speed bumps along a very long journey though, and the long term is, I think is very,very strong there (India).“There’sahugenumber of people that will move into the middle class. The government has really focused on reform in a major way and made some very bold moves and I applaud them for doing that, and sort of can’t wait for the future there,”he said. Cook said the emerging markets that Apple is seeing pressure in are Turkey, India, Brazil,Russia.“These are markets where currencies have weakened over the recent period. In some cases, that resulted in us raising prices and those markets are not growing thewaywewould like to see,”he said. Respondingtoaquestionon whetherApple is at a disadvantage in India,Cook voiced optimism that the Indian governmentwillatsomepointagreeto allow the technology giant to bring in its stores as he lauded thecountry’sboldreforms,saying he is a “big believer” and “verybullish”on India. Continued on Page 2 In action mode Prime Minister Narendra Modi talks with finance minister Arun Jaitley at a function to launch the MSME Support and Outreach Programme, in New Delhi on Friday PTI OUTREACH PROGRAMME GST-hit MSMEs get 12-piece Diwali gift set from PM FE BUREAU New Delhi, November 2 BOGGED DOWN BY the twin blows of demonetisation and the goods and services tax (GST), the country’s micro, small and medium enterprises (MSMEs) on Friday received a shot in the arm,with the Prime Minister Narendra Modi unveiling 12 steps to support these employment-intensive units. Modi announced 59minute loan sanctions, relaxationinlabourlaws,easiercompliance with environmental rules and changes in company laws forthe benefit of MSMEs. GST-registeredMSMEswill now be sanctioned loan up to `1 crore in just 59 minutes BOOSTER DOSE ■ Loan of up to `1 crore in just 59 minutes via a new portal to GSTregistered MSMEs ■ Interest rates on loans to be 2% lower than market rates ■ Must for PSUs to have 25% procurement from MSMEs through a new portal (more than 72,000 such MSME loan requests have already been approved); interest rates on loans taken by such MSMEs will be 2% lower than market ratesforfreshandincremental loans up to `1 crore. Also, MSME exporters availing loansduringthepre-shipment and post-shipment periodwill get interest rebate of 5% instead of 3% earlier. Besides, itwill nowbe mandatoryforall government entities and PSUs to have 25% procurement from MSMEs, against 20% now and 3% sourcing by PSUs would have to be done from MSMEs run bywomen. Toridthesectorofinspector raj, Modi announced that inspections of MSME factories willbesanctionedonlythrough a computerised random allotment to avoid discretion. Continued on Page 2 GOOGLE WALKOUT CEO Pichai says he’s still the boss amid employee revolts BLOOMBERG New York, November 2 MASS EMPLOYEE WALKOUTS. Leaks about an effort to get back into China. Successful demands to stop building artificialintelligenceforthePentagon.Thesedays,Googleworkers are exerting an unusual level of control overtheircompany. But chief executive officer Sundar Pichai signaled on Thursday that he’s still in chargeandwon’tbeconstantly swayed by staff uprisings. “We don’t run the company by referendum,” Pichai said at a conference in New York on Thursday. “There are many good things about giving employees a lot of voice,out of that we have done well.” The internal dynamics may appear chaotic to outsiders, but they’re not as intense as some have characterised them to be,he added. Google employs more than 50,000 full-time staff, but has maintained a more transparent culture than other corpo- We don’t run the company by referendum. There are many good things about giving employees a lot of voice, out of that we have done well. — SUNDAR PICHAI GOOGLE CEO ratebehemoths.Employees openly debate on internal forums, and are free to speaktheirmindsatweekly all-hands meetings where executives take questions. On Thursday, thousands of Google employees walked out of their offices worldwide to protest the company’s handling of alleged misconduct by some executives.Starting in Asia and spreading across Europe,photos posted with the hashtag Googlewalkout began flooding Twitter as employees gatheredoutsideGoogleoffices in Zurich, Dublin, Singapore, London and Hyderabad, India. In the US, walkouts began in NewYork,including at Google’s Manhattan offices and in Atlanta. The employee group, Google Walkout For Real Change, said 47 offices worldwide were participating in the walkout onThursday. Last week, the New York TimesreportedAndroidcreator AndyRubinreceiveda$90-million pay out after leaving becauseofasexualharassment accusation by an employee. Googlesaysitdoesn’tofferpayouts to people it fires forsexual harassment anymore. The company has also gottenheatfromUSpoliticiansfor ending an AI contract with the US military. Pichai said on Thursdaythatthecompanystill works with the military on manyotherprojects.
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