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Govt may nudge LIC, SBI to buy out IL&FS

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New Delhi: It emerges that outright sale of IL&FS is the best option before its new board. But it is a big challenge to find buyers. Keeping this in mind, the government is likely to approach cash-cow LIC and SBI for sale of the infrastructure giant and group entities if it doesn’t find prospective buyers. It is also expected that the new board may go for equity routes if the deals come to fructification.

Meanwhile, speculation is rife that Abu Dhabi Investment Authority (ADIA), one of the major shareholders in IL&FS, is likely to either exit or significantly reduce its stake if it is not satisfied with the board’s resolution roadmap.

A top source in the ministry of corporate affairs (MCA) told FC, “Though the new board has not announced the plan for sale of IL&FS subsidiaries so far, an initial attempt was made to test the waters in this regard. However, it has been observed that there are no takers, both nationally and internationally. In that scenario, I think the government will save the company by any means. Roping in LIC & SBI as the prospective investors can’t be ruled out at this juncture. If the sakes deals get finalised, the new board may prefer equity route for this plan.”

 

“The MCA has given a timeframe to the new board for the resolution plan. If the options like consolidation or other revival plans fail to reach a decisive conclusion in this regard, the outright sale option of IL&FS will be final way out for the resolution. For this, we need to have right investors to sell the company with good valuation. Also, it is expected that some key stakeholders like ADIA has intended to exit the company if the new board fails to come with a decisive conclusion,” the source added.

LIC and ORIX Corporation of Japan are the largest shareholders in IL&FS having 25.34 per cent and 23.54 per cent stake respectively, while ADIA has 12.56 per cent stake in the company. Besides, all other stakeholders such as HDFC, Central Bank of India and State Bank of India hold 9.02 per cent, 7.67 per cent and 6.42 per cent respectively.

According to a report submitted by IL&FS new board to NCLT, over 130 creditors have issued notices to IL&FS group entities as on October 26, 2018.

“Individual creditor action is unlikely to realise value for creditors, making an orderly resolution impossible. It has requested the NCLT to extend the moratorium so that legal action can’t be taken by creditors against IL&FS or its 347 group entities,” the report had said. On the other hand, an insider of the new board said that the board could look at merging four different subsidiaries functioning under the financial services vertical.

“The web of complexities is very large in which the revival option is very difficult at this point in time. For instance, in the infrastructure space, particularly in the transportation segment, where at present 203 different entities function and they have maximum exposure to various lenders. Besides, other segment such as mutual fund, private equity and security brokerage operations tell the same story,” he said.


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India’s trade deficit narrows by 7.98% to $15.28 billion in June, exports falls by 9.71%

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New Delhi: India’s trade deficit for June 2019 narrowed by 7.98 percent to USD 15.28 billion as against the deficit of USD 16.60 billion in June 2018, government data showed.

The country’s exports registered a negative growth of 9.71 percent during June 2019 to USD 25.01 billion as compared to USD 27.70 billion in June 2018. Non-POL exports for June 2019 declined by 5.73 percent; non-POL and non-gems and jewelry exports declined by 4.86 percent.

India’s imports in June 2019 too fell 9.06 percent to USD 40.29 billion in June 2019 as compared to USD 44.30 billion in June 2018, data further showed.

 

The major commodities which contributed towards decline exports in June 2019 have been Petroleum products (-32.85 percent), Rice (-28.05 percent), Cotton yarn/Fabrics/made-ups (-19.73 percent), Gems and Jewellery (-10.67 percent), Readymade garments (-9.18 percent), Organic & inorganic chemicals (-8.17 percent), and Engineering goods (-2.65 percent), data showed.

Import of petroleum crude & products in June 2019 (USD 11.03billion) has recorded a negative growth of 13.33 percent as compared to June 2018 (USD 12.73billion). In this connection it is mentioned that the global Brent price ($/bbl) has decreased by 15.81 percent in June 2019 vis-à-vis June 2018 as per data available from World Bank, official data said.

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It will take 2-3 days for scheduling to use Pakistani airspace: AI

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New Delhi: Hours after the Pakistan Civil Aviation Authority ordered its airspace to be opened to all civilian traffic for flights between India and Pakistan, Air India official said that it will take 2 to 3 days for scheduling to use Pakistani airspace.

Indian airlines resumed flight operations over the Pakistan airspace, after the latter removed access restrictions, following Balakot airstrikes by the Indian Air Force in February. Air India was saddled with heavy financial losses following this.

The Ministry of Civil Aviation wrote on Twitter, “After cancellation of NOTAMS by Pakistan and India in the early hours of Tuesday, there are no restrictions on airspaces of both countries, flights have started using the closed air routes, bringing a significant relief for airlines”.

 

In March, Pakistan partially opened its airspace but did not allow Indian flight to fly over its airspace.

Since then, foreign carriers had been using Indian airspace have been forced to take costly detours because they cannot fly over Pakistan. The closure mainly affects flights from Europe to Southeast Asia.

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RBI slaps Rs 7 cr penalty on SBI for violating various norms

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Mumbai: The Reserve Bank of India said it has slapped a penalty of Rs 7 crore on the country’s largest bank SBI for non-compliance with norms related to NPA identification and fraud risk management, among others.

The penalty has been imposed on the bank for non-compliance of income recognition and asset classification (IRAC) norms, code of conduct for opening and operating current accounts and reporting of data on Central Repository of Information on Large Credits (CRILC), and fraud risk management and classification and reporting of frauds.

Giving details of the case, it said the statutory inspection of SBI with reference to its financial position as on March 31, 2017, revealed, non-compliance with IRAC norms, sharing of information about customers with other banks, reporting of data on CRILC, fraud risk management, and classification and reporting of frauds.

 

Based on the inspection report and other relevant documents, a notice was issued to the bank advising it to show cause as to why penalty should not be imposed on it for non-compliance with directions issued by the RBI.

“After considering the bank’s reply and oral submissions made in the personal hearing, RBI came to the conclusion that the aforesaid charges of non-compliance with RBI directions were substantiated and warranted imposition of monetary penalty,” the RBI said.

The penalty, RBI said, is based on deficiencies in regulatory compliance and is not intended to pronounce upon the validity of any transaction or agreement entered into by the bank with its customers.

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