OPINION, P8 COMPANIES, P7 SUNIL JAIN Zeal to snuff out black money must not kill start-ups DEBT-RIDDEN TRADE TALKS Caste-quotas aren't going away soon, Modi's target is 55mn upper-caste families SIDDARTH PAI INTERNATIONAL, P14 Jet's Goyal to seek haircut from vendors, creditors today China has ‘good faith’ to work with US to resolve issues PUNE, TUESDAY, JANUARY 8, 2019 FOLLOW US ON TWITTER & FACEBOOK. APP AVAILABLE ON APP STORE & PLAYSTORE WWW.FINANCIALEXPRESS.COM READ TO LEAD VOL.IX NO. 256, 16 PAGES, `6.00 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: 35,850.16 ▲ 155.06 NIFTY: 10,771.80 ▲ 44.45 NIKKEI 225: 20,038.97 ▲ 477.01 HANG SENG: 25,835.70 ▲ 209.67 `/$: 69.68 ▲ 0.05 `/€: 79.69 ▲ 0.11 BRENT: $58.42 ▲ $1.36 GOLD: `31,764 ▼ `5 POLL-TRAIL ● ROMESH SOBTI: BANKER OF THE YEAR 2016-17 Elections in mind, BANKING’S RAHUL DRAVID quotas for upper castes ● FY19 GDP ESTIMATE Growth seen at three-year high of 7.2% GDP growth (%, y-o-y) 8 FY18 FY19* 6.7 7.2 7 6.5 6 4 2 0 GDP GVA Investment cycle picks up FY18 (% growth, y-o-y) FY19* 6.6 6.4 Private consumption Government consumption 10.9 9.2 Fixed investment 7.6 12.2 *Advance estimate Source: CSO ■ Detailed report on Page 2 Around 55 million upper-caste homes that earn less than `8 lakh per annum will benefit from new quotas RESERVATION REWORK ■ 50%: Current reservation system for SC, ST and OBC based on social criteria ■ The government plans to introduce a Constitutional amendment on Tuesday to introduce an economic reservation criterion to offer 10% of government jobs and admissions to educational institutions to the economically backward in the general category SHALINI NAIR & RAVISH TEWARI New Delhi, January 7 INASIGNIFICANT move ahead of the Lok Sabha elections to address demands of the poor amongtheuppercastes,theBJPled NDA government on Monday decided to amend the Constitution to provide 10% reservationfortheeconomically weaker sections (EWS) in government jobs and admission to highereducationalinstitutions. Sourcessaidthe10%reservationwillbeinadditiontothe existing 50% reservation for the Scheduled Castes, ScheduledTribesandtheOtherBackward Classes, taking the total reservation to 60%.A legislationinthisregard,sourcessaid, will be introduced on Tuesday, the last day of the winter session of Parliament. EXPRESS PHOTO: TASHI TOBGYAL ■ From the general category (50%), a sub-limit of 10% point will be reserved for economically backward (upper caste Hindus, Muslims, Christians, Sikhs, Jains and Budhists, etc) On Monday,the Union Cabinet approved a proposal for introduction of Constitution (One Hundred and Twenty Fourth Amendment) Bill for extendingthebenefitsofquota to “the economically weaker sections of the people who are not covered by any of the existingschemesofreservation”.Any Constitutionalamendmentwill require the approval of twothird of Parliament, without altering the basic structure of the Constitution. Sources said new clauses would be added to Articles 15 and 16 of the Constitutionwhich presentlyallow the State to make reservation foronlySCs,STs,andforsocially or educationally backward classes (OBCs). Articles 15 (6) and 16 (6) would be added to existing provisions so as to reserve up 10% cent quota in educational institutions and government jobs for the EWS that are currently not covered ● LAST TRANCHE HOMECOMING Essar Global says repaid all overseas debt RBI governor Shaktikanta Das said on Monday the central bank was ready to pitch in to ensure there was no liquidity crunch in the banking system. However, it will be strictly 'need-based' Report on Page 10 PE investment FE BUREAU E-commerce gets lion’s share Private equity (PE) players invested $8.4 billion in India's e-commerce space in 2018, a shade higher than the $7.5 billion that they invested in 2017. E-tailing, services and fintech have seen most fund flows in 2018 Fintech Others 2 @ 11 Travel 14 $ E-tailing (%) 38 $8.4 bn raised in 2018 ($ bn) 4.2 Services 35 Source: Jefferies, Media reports 0.9 5.9 7.5 8.4 2.7 Continued on Page 2 Related report on Page 5 Gruh to merge with Bandhan Bank FE BUREAU Mumbai, January 7 No loose money under reservation.“This would include all those earning an annualincomeofbelow`8lakh acrossallreligions,”sourcessaid. Familiesowningagricultural land above five acre, a house above 1,000 sq ft, or 100 yard plot or above in a notified municipal area or a plot of 200 yardsoraboveinanon-notified municipal area cannot avail of the benefit of this reservation. Aperson whose familyhas a gross annual income below `8 lakhwillbeidentifiedasEWSfor the benefit of reservation.Family includes “the person who seeksthebenefitofreservation, his/her parents and siblings belowtheageof18yearsasalso his/her spouse and children below the age of 18 years”.Also, income will include from all sources such as salary, agriculture,business,profession,etc. Toenableextensionofreservationtothepooramongupper castes,the government has also proposed, through a Constitutional amendment, removal of the clause that allows the State to make reservation only for those it thinks are ‘not adequatelyrepresented’. FE BUREAU Mumbai, January 7 ESSAR GLOBAL FUND, the holding company of Essar Group, on Monday said it has repaidallitsoverseasdebtafter it paid back the last tranche of `12,000crore($1.75billion)to various Indian and foreign lenders. This is in addition to `30,000-crore ($5-billion) repayment made in August 2017 to various lenders from the proceeds of EssarOil sale to RosneftofRussia,thecompany said in a statement. With this, Essar Global has nowrepaidabout`6,300crore to ICICI Bank, Axis Bank, and Standard Chartered Bank.This repays entire `31,500 crore of loans availed of from these banks during 2008-14. Over the past two years, Essar Group has repaid more than `1.37 lakh crore ($21 billion) of debt (including that of Essar Steel), majority of which are to Indian lenders.“This is more than 80% of the group’s debt,”the statement said. Russia’sVTBistheonlycontinuing lenderto EssarGlobal. Giving details of the repayment, the group said in 2017, Essar Global repaid about `86,000 crore of liability, including `72,600 crore to banks,from proceeds of sale of Essar Oil. BANDHAN BANK SAID on Monday Gruh Finance would merge with it in an all-share deal valued at approximately `81,800 crore based on the closing prices of shares of the two players. Shareholders of Gruh will get 568 shares of Bandhan for every1,000 shares held. The transaction helps lowerthepromoterstake inBandhanBankto61% from 82%. This means theoutstandingnumber ofsharesofBandhanBank will go up to close to 161 crore shares post the merger. The transaction valued Gruh at 8% lowerthan its closing of `306.2 per share on Monday,down nearly 4% over Friday’s close. Bandhan Bank closed Monday’s session at `501.1pershare,down5.21%. Moreover, the merger will seeHDFCLimitedowningclose to15%inBandhanBankviaits holding in Gruh Finance. Deepak Parekh, chairman, HDFC, explained that HDFC would need to applyto Reserve BankofIndia(RBI)andawaitits response.“Anon-bankcanhold up to 9.9%, but the merger gives us little less than 15%. Even for 9.9%, we need RBI approval because only a 5% stake is automatic,” Parekh explained. As of now, HDFC Detailed report on Page 7 Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank owns57.83%inGruhFinance. CSGhosh,founderandCEO of Bandhan Bank, said there was much to be gained from the mergersince Gruh Finance promotes affordable housing andBandhanBankcanprovide the loans. “The micro credit or unsecured portfolio will fall from the current levels of 86% to 58%,thanks to the presence of secured home loans in the combined portfolio. Also, the average tenure of the loans will also go up since Gruh loans tend tohave tenure of three years whereas we give loans of one-year,”Ghosh said. Continued on Page 2 2013 2014 2015 2016 2017 2018 GAS-BASED POWER QuickPick RBI may transfer over `30k-cr dividend to government THE RESERVE Bank of India (RBI) may transfer an interim dividend of over `30,000 crore to the Centre this year, a source told FE, reports fe Bureau in New Delhi. This will help a poll-bound government meet its FY19 fiscal deficit target of 3.3% of GDP at a time when GST and disinvestment revenues are expected to trail the budgeted goals. The RBI in August announced the transfer of `50,000 crore to the Centre from its 2017-18 (JulyJune) surplus. Given that the amount included `10,000 crore transferred in March as an interim measure to aid the Centre’s effort to contain the FY18 fiscal deficit, the Centre will have only `40,000 crore available for FY19, against the finance ministry’s estimate of `45,000 crore. PAGE 2 ‘Government to blame for crisis’ ANUPAM CHATTERJEE New Delhi, January 7 WITH GAS-BASED POWER unitsofover14,000megawatt (MW) — about 60% of the installed capacity — being stranded for want of fuel and customers, a parliamentary standing committee has rappedthepetroleumministry and the government as awhole for its ‘gross miscalculation’ of supplies from the KG-D6 fields off the country’s east coast,the chief reason why these units’ ILLUSTRATION: ROHNIT PHORE plans have gone haywire. Whilepeakflowofgasfrom these once-prolific assets, owned by Reliance Industries and BP, was expected to be 80 mmscmd, the production is currentlyhovering around 5.5 mmscmd. Since March 2013, supplies to the power sector from the KG-D6 fields have been virtually nil; apart from the steep fall in output, the sector’s loss of priority consumer status under a government policyalso led to the drying up of supplies. Continued on Page 2 ROMESH SOBTI CAN never forgetthedaywhenasaprobationer at a State Bank of India (SBI)branchinMotiharihewas told to run into the branch manager’schambers.Hiscrime was a small one: While distributing the ledgers in the morning he had shuffled the duties. But the unions were furious—andpowerful—and so he was asked by the ‘bada babu’ to hide in his office while tempers were calmed. Given half a chance, Sobti wouldn’t mind going back to those times in the early seventies,eventhoughtherewereno calculatorsandonecouldn’tgo home until the books had been balanced. It was a time when one knewwhat the back side of a letter of credit looked like. Branch managers like DP Mukherjee and DP Srivastava inspired him: He learnt from them how to clear piles of cheques in matter of minutes, reading them in an S:The date, the name,the figures inwords, then in numbers and lastly,the signature. “In your spare time you familiarised yourself with the signatures and if you made a single mistake there would be a black mark against your name,”recalls the MD& CEO of IndusInd Bank. It’stherigourofSBIthatprepared Sobti for bigger things in life; as Sobti says you came out of that probation feeling like a banker. He must also have inherited some sense of disci- CARICATURE: ROHNIT PHORE SHOBHANA SUBRAMANIAN Mumbai, January 7 pline from his father, an army officer.The IndusInd chief is in some ways a jack-of all-trades with the ability to take on any task and do it well. He is the quintessentialall-rounderhavingstartedoutinschoolcricket as a medium pacer,transformingintoanopeningbatsmanin college, reinventing himself as anoff-spinnerandthenretiring as awicket keeper. A shoulder injury has kept Sobtiawayfromthegolfcourse for many months as has the gruelling travel schedule. But he doesn’t mind; he’s happy meeting investors across the globe because he has a good storyto tell especiallynowthat Bharat Financial is in his fold. In manyways,life is coming full circle for Sobti.As a young banker in rural Bihar he went aroundinajeepwithafieldofficerworkingwith small farmers givingthemloansforcrops,cattletube-wellsandtractors.“You made an impact,” says Sobti. Today, IndusInd is doing what Sobti calls impact lending— moving credit into interior India—thanks to the reach that BharatFinancialhasbrought the bank. Essentially, the credit enables individuals to earn a livelihood. So, it’s the milkmen and plumbers who aregetting2-wheelerloansand the small guy—with one vehicle—who’s getting the truck loan. Sobti enchanted with the processes used to track loans and repayments across the hundredsofvillages.“Thebusiness correspondents are trackedonGoogleMaps.Ifthey stay longer than 45 minutes, thereisaprobleminthevillage. If theyspent just 15 minutes,it means they did not hold the meeting of the borrowers.It’s a good system,”he says. Continued on Page 2
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