Volume XXXIV Number 10 December 3, 2018

Weeklies

BI – Business India

BusW – Business World

BusT – Business Today

CMar – Capital Market

EPW – Economic and Political Weekly

SE – Southern Economist

Eco – Economist

For(Asia) – Fortune AsiaCI – Corporate India

Newspapers

BS – Business Standard

ET – Economic Times

FE – Financial Express

FT – Financial Times

H – Hindu

HBL – Hindu Business Line

HT – Hindustan Times

IE – Indian Express

TI – Times of India

Mint – Mint

Classifications

Economy Banking Agriculture & Rural Development Industry Small Scale Industry

International Economics Labour & Personnel Management Management Miscellaneous Books

CONTENTS

A. ECONOMY 1

B. BANKING 2

C. INDUSTRY 12

D. SMALL SCALE INDUSTRY 13

E. INTERNATIONAL ECONOMICS 13

F. MANAGEMENT 14

G. MISCELLANEOUS 14

– 1 –

BANKERS' BRIEF Vol. XXXIV No. 10December 3, 2018

ECONOMY"GDP growth may stay in top gear" – The Indian economy is likely to have grown at a robust pace of 7.2-

7.9% in the second quarter of FY19, independent economists said ahead of next week's release of officialestimates, putting the country well ahead of China as the world's fastest-growing major economy. However,they also expect a slower second half. The Chinese economy grew 6.5% in the September quarter. A report.– (ET Nov 23, 2018 p 1)

"Govt may have to cut capex by Rs,700 billion: SBI report: Growth in Q4 could be below 7%; this islargely due to shortfall in GST collections" – The shortfall in goods and services tax (GST) collectionwould severely affect the spending ability of the government this fiscal, a report by State Bank of India'sresearch wing has said. The cut in federal spending could be a massive Rs.700 billion, which is about a fourthof the capital expenditure for 2018-19. A report. – (BS Nov 23, 2018 p 4)

"Growth in India is picking up and will accelerate further in this quarter: Morgan Stanley" – Editedexcerpts from an interview with Ridham Desai, head-India equity and research, Morgan Stanley. He saysIndia is heading into the start of a new earnings cycle, but 2019 could see some volatility due to the generalelections. The key risk for the Indian market is if we get a minority govt, and the market gives off some of itsgain. It poses risk to stock prices but not economy. – (Mint Nov 29, 2018 p 11)

"Indian economy remains weak despite oil relief: Mint's macroeconomic tracker suggests weaknessesin India's external sector, though falling oil prices and a rising rupee may offer temporary respite"– Economic commentators and analysts expect the Indian economy to clock another round of robust grossdomestic product (GDP) growth in the quarter ended September, following an impressive 8.2% growth in theApril-June quarter. However, this headline figure could be masking significant economic vulnerabilities, accordingto the Mint Macroeconomic Tracker. A graphical report. – (Mint Nov 29, 2018 p 3)

"NBFCs need to receive enough liquidity for normal growth" – Edited excerpts from an interview withSubhash Chandra Garg, Secretary, Economic Affairs. The government feels more needs to be done onliquidity to ensure NBFCs can start lending. He says the government will meet its fiscal deficit target andRBI's governance structure needs to be reviewed. – (ET Nov 26, 2018 p 11)

"RBI reserves' transfer won't affect rating" – Edited excerpts from an interview with James McCormak,MD & Global Head of Sovereign & Supranational Group, Fitch Ratings. – (ET Nov 28, 2018 p 15)

"We have to always ensure there is sufficient liquidity in the economy, says Subhash Garg" – Editedexcerpts from an interview with Subhash Chandra Garg, Secretary, Department of Economic Affairs. Heshares his views in the non-banking finance company and housing financing space, and how the RBI, andgovernment departments can help the consumer and realty sector get over the crisis.– (Mint Nov 26, 2018 p 13)

FOREIGN EXCHANGE RESERVES"Forex reserves up $568.9 m to $393.58 b" – The country's foreign exchange reserves rose by $568.9

million to $393.580 billion in the week to November 16, mainly due to a spurt in foreign currency assets,according to RBI data. In the previous week, reserves had declined by $121.2 million to $393.01 billion.– (ET Nov 24, 2018 p 5)

– 2 –

BANKING"An old-style banker whose work and behaviour built a reputation" – Mangalore Devadas Mallya,

former chairman and managing director of Bank of Baroda (May 2008 to Nov 2012), passed away inBengaluru on Sunday morning. He was 66. He was chairman of Interglobe Aviation (which operates theIndiGo airline) and was recently considered for the chairman's post of ICICI Bank - he had asked not beconsidered, because of ill health. He was also on the board of State Bank of India (SBI) and Tata CapitalFinancial Services. M D Mallya was also a jury member for Business Standard's best banker award. Areport. – (BS Nov 26, 2018 p 16)

"How will banks come out of PCA unless they lend?" – Edited excerpts from an interview with RajivKumar, Secretary, Financial Services. The government and the Reserve Bank of India (RBI) have agreed tosort out their differences on some key issues affecting the economy. Ahead of the RBI's next board meetingon December 14, he talks about the government's views on some of the points of friction and the series ofreforms the government has taken to strengthen public sector banks (PSBs). – (BS Nov 26, 2018 pp 1, 6)

"Indian banks mull ways to cope with US sanctions against Russia; special branches among options"– Indian banks may designate one branch each to handle all Russia-related businesses in the wake of USsanctions against that country. This was proposed at joint meeting of Indian and Russian banks coordinatedby the Indian Banks' Association (IBA) earlier this month in Mumbai. According to sources, the selectedbank branches will be more conversant in the interpretation of the sanctions and help businesses work aroundthem. A report. – (HBL Nov 27, 2018 p 1)

ANDHRA BANK"Andhra Bank puts Rs.1,553 crore non-performing assets for sale" – To make recovery of about Rs.1,553

crore, state-owned Andhra Bank has invited bids from asset reconstruction companies (ARCs) to sell non-performing assets of more than 50 accounts. The bank has invited expressions of interest (EoIs) from ARCsfor the sale of its non-performing assets (NPAs) by November 30, according to the tender document.– (HT Nov 26, 2018 p 13)

AXIS BANK"Axis Bank plans to boost payments network with merchant acquisition: Launches UniPOS for digital

payments; expands PoS terminals to smaller towns" – Private sector Axis Bank is working to expandits payments network by acquiring more merchants and expanding its PoS terminals to newer cities. Axis hasthe second-largest number of PoS terminals across banks in terms of installation and service. A report.– (HBL Nov 28, 2018 p 5)

BANK OF BARODA"BoB to consider allotting shares to staff next week" – Bank of Baroda (BoB) said its board will meet

next week to consider allotment of fresh shares under the employee stock purchase scheme. The board ofdirectors of the bank is scheduled to meet on November 29, 2018 to consider and approve issuance of freshequity shares to its employees under Sebi (Share Based Employee Benefits) Regulations, 2014.– (FE Nov 23, 2018 p 10)

CENTRAL BANK OF INDIA"Central Bank to buy Rs.30 bn of retail loans" – With Rs.220 billion in surplus money, state-owned Central

Bank of India plans to buy loans to individuals (termed retail loans) up to Rs.30 billion in the remaining part ofthe current financial year. A report. – (BS Nov 24/25, 2018 p 4)

DENA BANK"Dena Bank puts NPAs worth Rs.3,324 cr on sale" – Dena Bank put on sale 84 non-performing assets

(NPAs) worth Rs.3,324 crore, inviting bids on full-cash basis or through a mix of cash and security receipts(SRs). A report. – (FE Nov 28, 2018 p 10)

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HDFC BANK"HDFC Bank is the biggest wealth creator for the first time ever" – After consistently hugging the

second and third rank for the past six studies. HDFC Bank has finally broken through to emerge as thebiggest wealth creator over 2013-18. A graphical report. – (ET Nov 27, 2018 p 14)

"HDFC Bank rolls out next-gen banking app" – HDFC Bank unveiled its next-gen mobile banking app thatoffers users effortless access to their bank accounts on the go. The next-gen app allows customers to bankthe way that they live. The launch of this new mobile banking app should be seen as a "first big step" in thebank's omni-channel strategy and its journey towards transforming itself into a lifestyle bank from a lifecycle-focused bank, according to Nitin Chugh, Country Head- Digital Banking, HDFC Bank. A report.– (HBL Nov 28, 2018 p 5)

"HDFC Bank's app, net-banking glitch hits customers" – Customers of HDFC Bank across the countrycomplained of outage of net- and mobile-banking (m-banking) services, which were affected from Tuesday.While many could access the services, there were several complaints from customers, indicating a widespreadproblem. In response to complaints, HDFC Bank has issued an apology stating that following the launch of itsnew m-banking app, it has been experiencing extremely heavy traffic on its online channel. "Due to this,some customers are unable to log in to the mobile-banking app. We are aware of this issue and our teams areworking round the clock to resolve it. – (TI Nov 29, 2018 p 16)

– CORPORATE FINANCING

"Despite improvement in corporate credit demand, large capex yet to come" – Private sector lenderHDFC Bank, which has a wholesale loan book of Rs.3.5 lakh crore as on September 30, 2018, believes thatthere has been an improvement in the credit demand of companies, but big-ticket private capex is yet to kickin according to Kaizad Bharucha, Executive Director, HDFC Bank. A report. – (HBL Nov 23, 2018 p 8)

ICICI BANK"ICICI Bank unveils strategy for future branches, ATMs: To set up branches/ATMs wherever there

is economic activity; will reduce branch format from 'large to small' if footfalls fall" – Leadingprivate lender ICICI Bank has announced two key decisions pertaining to its future branches and ATMexpansion. First, it will expand and set up branches and ATMs wherever there is economic activity. Second,if the footfalls at its branches reduce due to digitisation, it will consider reducing the branch format from largeto small. A report. – (HBL Nov 29, 2018 p 5)

– AXIS BANK

"ICICI Bank, Axis convert weakness to strength: With best-in-class CASA, retail loan portfoliosand better quality corporate loans, the banks have found their way back on investors' radar" –With foreign investors lapping the shares of Axis Bank and ICICI Bank, and Indian investors (including 'bigbull' Rakesh Jhunjunwala) are turning optimistic, the two lenders certainly got something right over the years.The year 2018 has rewarded them with stock gains of 9-14 per cent so far, top performers among the privatepeers. The thumbs-up from the Street is largely backed by fundamentals, which have turned favourable. Areport. – (BS Nov 29, 2018 p 11)

JAMMU & KASHMIR BANK"Malik puts J&K Bank in public sector, kicks off autonomy row" – A day after Governor Satya Pal

Malik dissolved the Jammu and Kashmir assembly, the State Administrative Council chaired by him decidedto turn the J&K Bank Ltd into a public-sector bank, taking its autonomy away and making it accountable tothe state legislature. Further, it will also be brought under the ambit of the J&K RTI Act and the CentralVigilance Commission. Until now, J&K Bank was classified as an 'old private sector bank' and supervised bythe Reserve Bank of India. Besides, it is also subject to oversight by the Comptroller and Auditor General(CAG). A report. – (IE Nov 24, 2018 pp 1, 2)

Iyer, P Vaidyanathan – "When a bank becomes a PSU" – Governor administration has cleared a proposalto treat J&K Bank as PSU. How that happened, what it means. An article. – (IE Nov 29, 2018 p 9)

– 4 –

KOTAK MAHINDRA BANK"Promoter stake quandary at Kotak Bank leaves investors on the edge" – The Reserve Bank of India's

(RBI's) insistence on promoter stake dilution continues to be an albatross around the neck of Kotak MahindraBank. This is reflected in the 9.7% fall in the stock price ever since the banking regulator refused to bless aninnovative way of bringing down the stake of promoter Uday Kotak in August. While Kotak Bank hasconversations with the regulator, investors are left wondering which way the outcome will swing. A report.– (Mint Nov 28, 2018 p 4)

ORIENTAL BANK OF COMMERCE"Oriental Bank in talks to sell stake in insurance JV: Bank eyes Rs.1,500 cr from sale of its 23%

stake in Canara HSBC OBC Life Insurance" – Oriental Bank of Commerce said it has begun theprocess of selling its 23% stake in Canara HSBC Oriental Bank Life Insurance Ltd by hiring ICICI Securitiesas the manager to a potential sale. Oriental Bank of Commerce plans to use the proceeds from the stake saleto boost the capital base of the bank. A report. – (Mint Nov 28, 2018 p 2)

PUNJAB NATIONAL BANK"Fitch affirms PNB's issuer default rating" – Fitch Ratings on November 27 affirmed Punjab National

Bank's (PNB) Issuer Default Rating and removed Viability Rating from 'Rating Watch Negative', as it feelsthat the lender's non-performing loans have peaked and downside risk to profitability has eased.– (FE Nov 28, 2018 p 10)

"NCR Corp inks 3-year contract with PNB for IT support services" – US-based banking solutionsprovider NCR Corporation said it has signed an agreement with Punjab National Bank for providing ITsupport services to the lender's ATM network. – (FE Nov 29, 2018 p 10)

– ATMs

"No plan to reduce ATMs PNB" – State-owned Punjab National Bank (PNB) said it has no major plans toreduce the number of its ATMs by March 2019. The statement comes a day after the Confederation of ATMIndustry (CATMi) said changes in the regulatory landscape are making it unviable to operate ATMs, and maylead to the closure of half of the 2.38 lakh machines in the country by March 2019. – (H Nov 23, 2018 p 13)

STATE BANK OF INDIA"SBI will buy priority sector loans worth Rs.15,000 cr within a month, says CFO" – Edited excerpts

from an interview with Prashant Kumar, CFO and Deputy Managing Director, State Bank of India. He saidIndia's largest lender expects priority sector loans worth Rs.15,000 crore to be closed within a month. That isin the pipeline. It should happen within a month. – (Mint Nov 28, 2018 p 13)

– RENEWABLE ENERGY SECTOR

"EIB, SBI to finance wind energy projects" – The European Investment Bank and State Bank of Indiahave formally agreed to finance the renewable energy sector by providing new support for wind energyprojects across India. This is being done by expanding an ongoing financing initiative to support onshore windprojects. – (HBL Nov 24, 2018 p 4)

YES BANK"Not involved in fund management: Yes Bank" – Yes Bank Ltd, India's fifth largest private-sector lender

by assets, said it was not involved with the fund management of its promoter firms YES Capital (India) PvtLtd and Morgan Credits Pvt Ltd. The statement was in response to an Economic Times report which saidthese promoter firms routed debt money as equity into private finance companies. – (FE Nov 29, 2018 p 10)

"Rana Kapoor eyes chairman's seat after tenure as Yes Bank CEO ends: Kapoor seeks to becomenon-executive chairman if RBI, shareholders okay his appointment as director" – Yes Bank Ltd'sco-founder and outgoing MD and CEO Rana Kapoor wants to be named as the bank's non-executive chairman

– 5 –

once his term ends on 31 January, according to documents reviewed by Mint. The document, a draft of theconsent terms being negotiated between the two promoters of the bank, says that if Kapoor's appointment asa director on the bank's board is approved by the Reserve Bank of India (RBI) and shareholders of YesBank, he will be either the non-executive chairman or managing director and chief executive or a non-executive director. A report. – (Mint Nov 29, 2018 p 6)

"RBI checking Yes Bank's loan exposure to NBFCs: Supervision team looking at details of loans toIL&FS, Indiabulls, Dewan" – The Reserve Bank of India (RBI) began inspecting Yes Bank's exposure toInfrastructure Leasing and Financial Services Ltd (IL&FS), Dewan Housing Finance Corp. Ltd (DHFL),Indiabulls Group, and Sudhir Valia-promoted entities Fortune Financial Services India Ltd and SurakshaARC, according to two senior officials aware of the matter. A report. – (Mint Nov 27, 2018 p 1)

"To boost data management, YES Bank shortlists 200 scientists for Datathon" – Private sector lenderYES Bank has significantly ramped up its focus on data management and analytics. The bank has shortlistedtop 200 data-science professionals to form a core part of YES Datathon, the bank's initiative to crowdsourcedata-driven solutions from some of the leading data scientists and analysts across the world. A report.– (HBL Nov 27, 2018 p 8)

"Yes Bank board to suggest names for new chairman to RBI on December 13" – Yes Bank said itsboard on December 13 will recommend names for new chairman to be approved by the RBI as well asconsider appointment of independent directors. The private sector lender, which is grappling with governanceas well as NPA issues, has seen resignations of three independent directors, including chairman AshokChawla. – (FE Nov 29, 2018 p 10)

"YES Bank promoters spar over equal rights:m Promoter groups are still in talks; Moody's changesoutlook to negative" – The two promoter groups of private lender YES Bank are in talks to end their long-drawn conflict, and draft consent terms are being discussed but a deal is still some time away. The stickingpoint still seems to be ensuring equal rights and representation, said sources in know of the development. Areport. – (BS Nov 28, 2018 pp 1, 6)

"Yes Bank shares plunge 12%, lowest in 32 months" – Private lender YES Bank's stock plunged nearly12 per cent on the BSE, closing at Rs.161.70 on BSE. This is the lowest for the bank in the past 32 months,with downgrade from ratings agency Moody's adding to the simmering investor discomfort.– (BS Nov 29, 2018 p 6)

EUROPE– EUROPEAN CENTRAL BANK

"Draghi sticks to plan on halting stimulus: ECB chief brushes off disappointing data and says inflationon rise" – Mario Draghi has insisted that the European Central Bank still plans to halt its €2.6tn stimulusprogramme at the end of this year, arguing that inflation is set to increase despite recent disappointing economicdata. A report. – (FT Nov 27, 2018 p 2)

UK"Will UK banks be in a race to avoid a Lehman moment after Brexit?" – A report.

– (HBL Nov 24, 2018 p 8)

USA– NEO-BANKS

Popper, Nathaniel – "The 'Neo-Banks' are finally having their moment" – After the financial crisis 10years ago, unhappy customers were expected to flee the mega banks for smaller competitors. It didn'thappen. And the big banks became even more entrenched. Now another wave of alternative banks are as itagain, and they say they've learned from the mistakes of the upstart banks that tried - and failed - beforethem. An article. – (ET Nov 23, 2018 p 14)

– 6 –

ATMs"All pins down at the ATM: A whole raft of inter-connected contracts and deals in the industry will

now have to be reworked" – It's happening too fast, too soon in the automated teller machine (ATM)industry - network operators who hitched their fortunes to the inter-change fee now face its unravelling; itthreatens to take the entire ecosystem down with it. A report. – (BS Nov 28, 2018 p 11)

"ATM costs are part of overall bank costs" – The reported warning of the Confederation of ATM Industrythat nearly half of the 2,38,000 ATMs may shut down by March 2019 due to unviability of their operationscannot be dismissed lightly. An editorial. – (ET Nov 27, 2018 p 12)

"CATMi urges RBI to constitute task force on pricing to prevent closure of ATMs" – To avoidclosure of ATMs due to rising compliance costs, the Confederation of ATM Industry (CATMi) has calledupon the Reserve Bank of India (RBI) to constitute a task force to transparently discover pricing related toimplementing cassette swap for replenishing cash and adhering to minimum standards for cash-managementactivities. A report. – (HBL Nov 24, 2018 p 8)

BANK FRAUDS"What crackdown? Bank frauds up 20% in 2 years: Banks need to integrate a larger compliance

agenda, finds Deloitte report" – Banking frauds have continued to rise over the past two years despite arecent crackdown, according to Deloitte Touche Tohmatsu India LLP. Instances of fraud have increased20% in the past two years, Deloitte said in its annual banking fraud survey to be released. A report.– (Mint Nov 24, 2018 p 22)

BANK LENDING"Banks squeeze money flow to car dealers" – Leading banks have turned extremely cautious of funding

inventories of car dealers, who are sitting on an abnormally high number of unsold vehicles after a sluggishfestive season. Manufacturers had built large inventories with dealerships in anticipation of high demand. Areport. – (BS Nov 26, 2018 pp 1, 4)

"Non-food credit grows at fastest pace since DeMo" – Total credit flow from banks to the commercialsector grew at 15.6 percent year-on-year at Rs.97.32 lakh crore in the fortnight ended November 9, 2018,the highest growth since demonetisation, according to an RBI data. A report. – (FE Nov 28, 2018 p 10)

"RBI data point to pick-up in bank credit offtake" – Credit offtake from banks has gathered further steamin the traditionally busy October-March season when economic activity picks up. As per the latest data fromthe Reserve Bank of India, banks disbursed loans aggregating Rs.79,207 crore in the fortnight ended November9 against Rs.41,501 crore in the preceding fortnight ended October 26. – (HBL Nov 23, 2018 p 8)

BANK RECAPITALISATION"FinMin may stick to capital infusion plan for PSU banks: Ministry expected to finalise infusion of

about Rs.54,000 cr. in the next few weeks" – The Finance Ministry would not curtail its capital infusionplan for this financial year even as state-owned banks would be needing lesser funds following the ReserveBank's decision to defer the deadline to meet Basel III norms by a year, according to sources. A report.– (H Nov 24, 2018 p 14)

"Govt may soon give banks Rs.42,000 crore: Big lenders such as SBI, PNB may be excluded fromthis exercise" – State-run banks are set to receive Rs.42,000 crore in capital infusion over the next fourmonths as part of the Rs.2.11 trillion mega capitalisation plan announced by the Union government last year.Big lenders such as State Bank of India (SBI) and Punjab National Bank (PNB) may however be excludedfrom this exercise, said the official, requesting anonymity. A report. – (Mint Nov 27, 2018 p 8)

BANKING REGULATOR-RBI"Central bank recap" – Urjit Patel provides reassuring signals on NPAs and the RBI-Centre détente. An

editorial. – (H Nov 29, 2018 p 8)

– 7 –

"Make RBI more consultative, don't kill its independence" – Also, many sectors like power/telecom hitby bad govt policy, real estate by DeMo and RERA; unfair to blame RBI for this. An editorial.– (FE Nov 27, 2018 p 8)

"Parliamentary panel quizzes Patel on Section 7, autonomy" – Faced with questions on controversialissues like the government invoking Section 7 of the RBI Act and the autonomy of the central bank. RBIGovernor Urjit Patel told the Parliamentary Standing Committee on Finance that he would submit writtenreplies. The panel gave Patel 10-15 days to respond. – (BS Nov 28, 2018 pp 1, 6)

"RBI vs GoI: RBI's governance structures have to be discussed: Garg" – With the issue of RBI'sreserves to be decided by an expert committee, the government now plans to push for a discussion onboosting overall liquidity - the current shortage is estimated at Rs.1 lakh crore - as well as to relook RBI'sgovernance structures at the next board meeting on December 14. Economic Affairs Secretary SubhashChandra Garg said while the government is committed to RBI's autonomy, there is a need to ensure RBI ismore responsive and transparent in the manner other regulators are. A report. – (FE Nov 24, 2018 pp 1, 2)

"Yes governor" – Urjit Patel reminds government that RBI reserves are not for meeting normal needs. Aneditorial. – (TI Nov 29, 2018 p 12)

Basu, Debashis – "RBI vs MoF: Pot, kettle & citizens" – An article. – (BS Nov 26, 2018 p 9)

Desai, Nitin – "RBI: Autonomy and accountability" – RBI autonomy, though a must, has to go hand inhand with a clear structure of accountability. An article. – (BS Nov 26, 2018 p 9)

Misra, Udit – "18 angry men and two staid questions" – An article. – (BS Nov 23, 2018 p 9)

Mulraj, J – "Turf war: It does no good to anyone" – An article. – (HBL Nov 23, 2018 p 10)

Narayan, Ananth – "The Reserve Bank versus government saga - In search of core solutions" – Anarticle. – (ET Nov 28, 2018 p 15)

Pattnaik, R K – "Securing autonomy - ball in RBI's court" – It's time to reset the fractured RBI-governmentrelationship and ensure a harmonious path ahead. An article. – (HBL Nov 26, 2018 p 14)

Prasad, Rohit – "The RBI and the flip flop finance ministry" – An article. – (Mint Nov 29, 2018 p 15)

Rangan, M C Govardhana – "RBI-government relations: Games people play" – An article.– (ET Nov 23, 2018 p 9)

Rangarajan, C – "In a spirit of accommodation" – The RBI, the RBI board and the government mustunderstand the limits to which they can push each other. An article. – (H Nov 29, 2018 p 8)

Singh, Nirvikar – "Government and RBI: Moving forward" – The basic autonomy of RBI does need tobe protected. The most serious, and unprecedented violation of this, not to speak of being a bad policy, wasdemonetisation. An article. – (FE Nov 27, 2018 p 9)

– AUTONOMY

"RBI autonomy with accountability" – The markets will punish breach of autonomy. An editorial.– (ET Nov 29, 2018 p 12)

– DECISION MAKING PROCESS

"Centre for more central board members in key RBI panels" – The central government will press theReserve Bank of India (RBI) to restructure its key committees in a way that more central board membersare a part the decision-making process of the bank that is set to meet on December 14. Sources said thegovernment had moved a proposal titled 'governance in RBI' at least six months back as it was upset overbeing kept in the dark on the new norms for resolution of stressed assets set by the central bank in February,popularly known as the February 12 circular. A report. – (BS Nov 23, 2018 p 4)

– 8 –

– ECONOMIC CAPITAL FRAMEWORK

"Economic capital framework: Govt for Jalan, RBI wants Mohan as committee head" – The governmenthas suggested former Reserve Bank of India (RBI) governor Bimal Jalan while the RBI has proposed thename of its former deputy governor Rakesh Mohan to chair a panel reviewing the economic capital framework(ECF) of the central bank. "Both (Jalan and Mohan) have already expressed their views on recent issues.The discussions are ongoing," according to a source aware of the development. A report.– (BS Nov 28, 2018 pp 1, 6)

– LIQUIDITY

Iyer, Aparna – "RBI: A seat belt for liquidity, not driver" – As of 9 Nov, credit had grown 14.9% from ayear ago, while banks could mop up just 9.1% more deposits than year before. An article.– (Mint Nov 27, 2018 p 4)

– RESERVES

"RBI has enough to give govt over Rs.1 trn: BofAML" – The Reserve Bank has "more than adequate"reserves and that it can transfer over Rs.1 trillion to the government after a specially constituted panelidentifies the "excess capital". "We expect the proposed committee on the RBI's economic capital framework(ECF) to identify Rs.1-3 trillion which is 0.5-1.6 per cent of GDP as excess capital," according to the analystsat Bank of America Merrill Lynch. A report. – (BS Nov 27, 2018 p 4)

BASEL III NORMS"RBI rejected govt proposal to apply Basel-III norms to 4 banks" – The Reserve Bank of India (RBI)

declined a request from the government to apply Basel-III guidelines, an international regulatory frameworkfor banks, to just four lenders in the country, in the central board meeting. The Board of Financial Supervision(BFS) of the RBI will now examine the government's proposal to review the Prompt Corrective Action(PCA) framework by re-looking at two additional parameters - non-performing assets (NPAs) and profitability,in the form of return on assets. A report. – (BS Nov 23, 2018 p 4)

– BANK CAPITAL

Roy, Anup – "Reprieve for capital-stressed banks" – A major decision taken at the recent Reserve Bankof India board meeting was to push back the deadline for banks to set aside an additional 0.625 per cent ascapital conservation buffer, required under the Basel III norms, by a year to enable them to lend more. Anarticle. – (BS Nov 23, 2018 p 8)

BHARAT INTERFACE FOR MONEY (BHIM APP)"Of BHIM and BACH" – As a child in school he was captivated by numbers; mathematics was magical as

was physics. That little boy from Trichy has come a long way. Today, Vimal Kumar is absorbed in apps. Theair in Koramangala and Kumar's experiments at JusPay led to the creation of BHIM, the app that works onthe UPI (Unified Payments Interface). BHIM incidentally is Bharat Interface for Money. One can sendmoney either using a person's contact saved on the phone or using the bank account number and IFSC codeor the UPI ID. A report. – (FE Nov 29, 2018 pp 1, 2)

BLOCKCHAIN TECHNOLOGY"Banks bet on blockchain to avert PNB - like frauds: The first blockchain project in the country went

live some months ago" – The banking sector is planning to create a blockchain platform with SWIFT Indiato prevent frauds, and ensure transparency and security of realtime transactions. SWIFT India, a leadingprovider of secure financial messaging services for the global financial sector, has partnered with fintechcompany MonetaGo for a pilot project. A report. – (BS Nov 23, 2018 p 18)

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DIGITAL LENDERS"NPCI's E-mandate order blow for digital lenders" – Fintech and digital lenders will no longer be able to

use a completely paperless model for automated collection of loan payments from customers as the NPCIinformed banks that the esign-based e-mandate product will be suspended starting Monday.– (ET Nov 24, 2018 p 1)

FINANCIAL INCLUSION– MOBILE WALLET INTEROPERABILITY

Mehta, Kalpesh J – "Revolutionising financial inclusion" – Industry participants will need to redoubletheir efforts to create merchant awareness and education in order to dislodge a well-entrenched cash behaviour.An article. – (FE Nov 23, 2018 p 8)

FINANCIAL INSPECTION– NPAs

"RBI scrutiny of stressed loans intensifies" – The Reserve Bank of India (RBI) has increased scrutiny onstressed loans in the books of banks, examining how they are treating these accounts and provisioning forthem. This is in addition to the annual financial inspection the RBI is doing for 2017-18 or FY18. A report.– (BS Nov 28, 2018 pp 1, 6)

INSOLVENCY AND BANKRUPTCY CODE– NPAs RESOLUTION

"IBC helps recovery of Rs.3 lakh crore in 2 years: Average recovery in 60-odd cases that sawresolution stands at 46% vs 26% under BIFR" – The Insolvency and Bankruptcy Code (IBC) hascatalysed the recovery of around Rs.3 lakh crore from various default cases, directly or indirectly, since itsinception in 2016, according to corporate affairs secretary Injeti Srinivas. How they stack up: * Rs.71,000crore: Recovery made so far in 60 cases that saw resolution. * Rs.50,000 crore: Likely recovery from EssarSteel. * Rs.1,20,000 crore: Recovery through just IBC threats to defaulters. * Rs 45,000-50,000 crore:Repayment by borrowers to convert NPAs into standard accounts and avoid IBC. A report.– (FE Nov 25, 2018 pp 1, 11)

INSOLVENCY RESOLUTION PROCESS"Bankrupt firms to get a quick rescue option" – The revival of such firms may be finalized in boardrooms

than in courts. A report. – (Mint Nov 26, 2018 pp 1, 6)

"Essar Steel: CoC approval of ArcelorMittal bid illegal and incomplete, says StanChart Bank: Receivedrevised plan just 3 minutes before vote, no discussion took place" – Throwing a spanner intoArcelorMittal's bid to acquire Essar Steel, Standard Chartered Bank (SCB) has said it received the revisedresolution plan submitted by ArcelorMittal just three minutes before it was put to vote by the Committee ofCreditors. A report. – (HBL Nov 26, 2018 p 1)

"Insolvency: Lenders ask NCLT to dismiss Essar bid" – The lenders of bankrupt Essar Steel told theAhmedabad bench of the National Company Law Tribunal (NCLT) that the last-minute offer by the company'spromoters to pay Rs.54,389 crore should be dismissed as it is "not maintainable". A report.– (FE Nov 29, 2018 pp 1, 2)

– PRE-PACKAGED INSOLVENCY

"Bankrupt plan: New bankruptcy resolution plan is full of holes, a bad idea" – The ministry of corporateaffairs (MCA)'s latest suggestions on rescuing bankrupt businesses seem to be bypassing the IBC process.MCA secretary Injeti Srinivas says lenders and promoters could come up with a "pre-packaged" bankruptcyscheme and present it before the National Company Law Tribunal (NCLT). The idea ostensibly is to reduceor prevent litigation and speed up the process. An editorial. – (FE Nov 27, 2018 p 8)

– 10 –

"Insolvency: Pre-IBC facility to speed up resolution" – The government is exploring the feasibility ofimplementing a so-called "pre-packaged" bankruptcy scheme, prevalent in countries like the US, in India toaid the existing insolvency framework and cut costs and time of the resolution process. The planned scheme,if implemented, will be a "pre-IBC (Insolvency and Bankruptcy Code) window for the resolution of stressedassets, which will complement the existing framework and not substitute it," according to the corporateaffairs secretary Injeti Srinivas. The secretary has asked the Insolvency and Bankruptcy Board of India toweigh the proposal and see if it can be adopted. The proposed scheme will only be an additional tool atdisposal in case both creditors and debtors wish to avoid the usual litigations and rigour of the resolutionprocess under the current IBC framework, which has been, in any case, immensely successful. A report.– (FE Nov 27, 2018 pp 1, 2)

LIQUIDITY MANAGEMENT"RBI to purchase Rs.40,000-cr OMOs" – In its effort to infuse durable liquidity into the banking system,

RBI is set to purchase the largest quantum of government bonds that it has ever bought in a single financialyear. A report. – (FE Nov 28, 2018 p 10)

LOAN WRITE-OFFS"Debt concerns: Write-offs by 18 PSBs rise 41.5% to Rs.9,116 cr in Q2: Indian Bank saw the steepest

climb in write-offs that jumped 672% y-o-y to Rs.1,258 cr." – Loans written off by a clutch of 18 largeand mid-sized public sector banks in the July-September quarter of FY19 rose 41.5% year-on-year (y-o-y) toover Rs.9,000 crore. The reduction in non-performing assets (NPAs) due to write-offs stood at Rs.9,116crore in Q2FY19, against Rs.6,440 crore in Q2FY18. A report. – (FE Nov 27, 2018 p 10)

MICROFINANCE SECTOR"MFI sector may be hit over liquidity issues: Bandhan Bank" – The growth in the microfinance sector

may get hampered in the short term due to the present problems in the non-banking finance space, accordingto C S Ghosh, Managing Director and CEO, Bandhan Bank. He also suggested that microfinance institutions(MFIs) should be cautious in expansion in the present market scenario. – (BS Nov 28, 2018 p 4)

MONETARY POLICY"A change in the policy stance at this juncture could seem uncertain: Ghosh" – Edited excerpts from a

discussion with B Prasanna, head, Global Markets Group, ICICI Bank; Sajjid Chinoy, Chief India Economist,JP Morgan, and Soumya Kanti Ghosh, group Chief Economic Adviser, State Bank of India; on the likelyaction by the RBI to increase liquidity in the system, and what could be its December policy decision.– (Mint Nov 26, 2018 p 13)

"Economists expect a 'pause' in Dec 5 policy review" – Almost nobody expects the six-member MonetaryPolicy Committee of the Reserve Bank of India (RBI) to tinker with the policy rate on December 5, given thelow oil prices and the rupee finding some support because of that. The same sentiment is reflected in theBusiness Standard poll of 12 economists and market experts, who said the central bank would exercise'pause' in the upcoming bi-monthly policy review as well as during the rest of the financial year. A report.– (BS Nov 29, 2018 pp 1, 6)

"RBI likely to maintain status quo on policy rates" – The Reserve Bank of India is expected to keep thekey policy rates unchanged at its ensuing policy review meet next month, amid easing global crude oil pricesand robust agriculture production, as per a report by Dun & Bradstreet Economy forecast. A report.– (IE Nov 25, 2018 p 15)

Kohli, Renu – "MPC must prepare for cutting rates: risks to core inflation have abated as foodinflation is nearly dead" – The central bank must conduct an in-depth research study to examine why foodprices are not restoring despite significant cost pressures and price support. An article.– (FE Nov 27, 2018 p 8)

– 11 –

PROMPT CORRECTIVE ACTION"Govt may raise PCA issue again if RBI panel doesn't relax rules: Report expected before next

board meeting on Dec 14; govt expects 4 banks off list soon" – The government is likely to raise theissue of relaxation of prompt corrective action (PCA) framework for stressed banks with the Reserve Bankof India again if the subcommittee tasked with looking into the issue does not relax or give guidance beforethe next RBI board meeting, said a board member aware of the developments. A report.– (ET Nov 26, 2018 p 7)

Bhoi, Barendra Kumar – "Relaxing PCA would mean a bigger bailout" – Unless early intervention isexercised by the regulator, the 'undercapitalised' banks may quickly turn into significantly or criticallyundercapitalised banks. As NPAs are currently a systemic problem and one that affects PSBs, pursuing abank merger may not be advisable. An article. – (FE Nov 28, 2018 p 8)

– RETAIL LOANS

"Under PCA framework, yet 11 PSBs report rise in share of retail loans, says Jefferies" – The 11state-run banks, which are under the RBI's prompt corrective action (PCA) framework, have seen a 400basis points increase in their share of retail loans at 19 per cent in the four years ending September 2018, saysa report. – (HBL Nov 24, 2018 p 8)

PUBLIC SECTOR BANKS– INTERCHANGE FOR ATMs

"Industry players say large PSBs blocking ATM interchange hike" – Apart from new regulations issuedby the ministry of home affairs (MHA) and the Reserve Bank of India (RBI), the refusal of large publicsector banks (PSBs) to shell out higher interchange for ATM transactions has made the business unviable,according to the people from the industry. A report. – (FE Nov 23, 2018 p 10)

– WILFUL DEFAULTERS

"PSBs get more power, can ask govt for LoCs: Move seen to empower state-owned banks to keepeye on defaulters" – The Union government has empowered chief executives of public sector banks(PSBs) to request a look-out circular (LoC) against wilful defaulters of loans in an effort to prevent themfrom fleeing the country, according to the senior finance ministry officials. This is a significant step, given itwill enable PSBs to alert authorities to stop wilful defaulters from escaping even before an FIR is registeredagainst them by enforcement agencies. A report. – (BS Nov 23, 2018 pp 1, 6)

SMALL FINANCE BANKS– AU SMALL FINANCE BANK

"AU Small Fin Bank to raise Rs.500 cr via bonds" – Au Small Finance Bank said it will raise Rs.500 croreby issuing bonds in one or more tranches. The Board of Directors at their meeting held on Thursday, November22, 2018 has considered and approved to augment the capital, the bank said in a regulatory filing.– (FE Nov 23, 2018 p 10)

– SURYODAY SMALL FINANCE BANK

"IFC may invest $20 m in Suryoday Small Fin Bank" – International Finance Corporation (IFC), themultilateral lending arm of the World Bank, is planning to invest up to $20 million (Rs.140 crore) in SuryodaySmall Finance Bank, in the form of a sub-debt investment. IFC's proposed investment will help the bankexpand the outreach of access to low-income borrowers who have little access to formal sources of financingand strengthening its balance sheet through availability of long-tenure debt. – (FE Nov 28, 2018 p 10)

WILFUL DEFAULTERSBandyopadhyay, Tamal – "Bank defaulters: No place to hide anymore?" – Wilful defaulters are those

who have the ability to pay but don't pay. The catch is who will decide on that. An article.– (BS Nov 26, 2018 p 8)

– 12 –

RBI CIRCULAR"Auction of Government of India Dated Securities" – (RBI Circulars RBI/2018-2019/80 Ref.No.IDMD/

1293/08.02.032/2018-19 dated 26.11.2018)

"Basel III Framework on Liquidity Standards - Net Stable Funding Ratio (NSFR) - Final Guidelines"– (RBI Circulars RBI/2018-2019/84 DBR.BP.BC.No.08/21.04.098/2018-19 dated 29.11.2018)

"External Commercial Borrowings (ECB) Policy - Review of Hedging Provision" – (RBI CircularsRBI/2018-2019/79 A.P. (DIR Series) Circular No.15 dated 26.11.2018)

"Interest Equalisation Scheme on Pre and Post Shipment Rupee Export Credit" – (RBI CircularsRBI/2018-2019/81 DBR.Dir.BC.No.09 /04.02.001/2018-19 dated 29.11.2018)

"Legal Entity Identifier Code for participation in non-derivative markets" – (RBI Circulars RBI/2018-2019/83 FMRD.FMID.No.10/11.01.007/2018-19 dated 29.11.2018)

"Relaxation on the guidelines to NBFCs on securitisation transactions" – (RBI Circulars RBI/2018-2019/82 DNBR (PD) CC.No.95/03.10.001/2018-19 dated 29.11.2018)

INDUSTRYMohan, Raghu – "Kicking the can down the road" – India Inc will continue facing credit concerns and the

outcome of the RBI board meeting will not resolve matters instantly. A report. – (BS Nov 28, 2018 p 11)

CREDIT RATING AGENCIESMukherjee, Deep Narayan – "Rethinking the CRA regulatory framework" – The regulatory approach

to CRA has been more inclined to a rule-based approach as opposed to principal-based approach. An article.– (Mint Nov 23, 2018 p 15)

EXTERNAL COMMERCIAL BORROWINGS– HEDGING NORMS

"Overseas debt: RBI relaxes ECB hedging guidelines: Move to make more bank capital availablefor small businesses, help address NBFC refinancing needs, prop up the rupee" – Amid persistingconcerns in the government over a liquidity squeeze in the non-bank lenders (NBFC) segment and its adverseeffect on the financing of small businesses, the Reserve Bank of India on Monday announced further easingof the hedging norms for external commercial borrowings (ECBs). According to a circular issued by thecentral bank, for ECBs of maturity period between three-five years, the mandatory hedging requirement willnow be 70%, instead of 100%. Also, for such ECBs already raised, the existing hedges would be required tobe rolled over only to the extent of 70% of the outstanding amount. A report. – (FE Nov 27, 2018 pp 1, 2)

MANUFACTURING SECTORKapoor, Radhicka – "India must not ignore the manufacturing sector" – It generates the strongest

forward and backward linkages across other sectors of the economy. An article. – (HT Nov 27, 2018 p 12)

NATIONAL HOUSING BANK"NHB seeks RBI approval for more liquidity: Relaxes eligibility norms to let more housing finance

firms get funds" – National Housing Bank (NHB) has requested the Reserve Bank of India (RBI) to allowit to increase its refinance limit to Rs.500 billion from Rs.300 billion at present, in a bid to provide liquidity toHousing Finance Companies (HFCs). A report. – (BS Nov 27, 2018 pp 1, 5)

NON-BANKING FINANCE COMPANIES"NBFC liquidity: More steps needed" – Edited excerpts from an interview with Subhash Chandra Garg,

Economic Affairs Secretary. He explains why the Reserve Bank of India's (RBI) governance structure andthe economic capital framework need review, while asserting that the government would meet this year'sfiscal deficit target of 3.3% of the gross domestic product, without a major capex reduction. With oil prices on

– 13 –

the decline (Brent crude plunged from a $85-plus/barrel in early October to around $63 now) and reducedconcerns on the current account, coupled with demand-side factors, could bring down bond yields further to7.5% in some time. He said, "Our sense is that liquidity-related solvency concern is no longer there (forNBFCs). But there could still be a shortage of the liquidity, in terms of the ability of these firms to carry onwith their businesses even with a reduced speed." – (FE Nov 24, 2018 p 7)

"NBFC problem is one of insolvency, not liquidity" – RBI needs to fix the Rs.1 lakh crore liquidityshortage, not worry about augmenting of credit for NBFCs - let banks lend to them. An editorial.– (FE Nov 26, 2018 p 6)

"NBFCs: In the spotlight" – Almost two-thirds of non-banking financial companies (NBFCs) and housingfinance companies (HFCs) by loan book have strong parentage and businesses with long vintage. Consumerand small and medium-enterprises (SME) loans account for 60 per cent of their loan mix. Key investorconcerns have been the aggressive build-up of wholesale real estate credit, loans against property (LAP),and exposure to SMEs by major NBFCs and HFCs as a proportion of overall credit has doubled over the pastfour years. A graphical report. – (BS Nov 28, 2018 p 11)

Sinha, Shilpy – "Future of NBFCs, Mortgage lenders: The paradigm shift" – The IL&FS implosion isa wake-up call for the industry in general. As risk gets priced in, non-bank lenders may have to change theirbusiness models and adopt the 'originate and distribute' model rather than keep growing through financialengineering. An article. – (ET Nov 28, 2018 p 15)

SMALL SCALE INDUSTRY

MUDRA YOJANA– MICROFINANCE

"Kotak report: MFI, small-business loans are reported under Mudra: Mudra loans do not pose anyincremental risks to lenders in terms of asset quality, says report" – Loans given by banks to smallenterprises and microfinance institutions (MFIs) in their regular course of business are being reported underthe Pradhan Mantri Mudra Yojana (PMMY), better known as the Mudra scheme, broking firm KotakInstitutional Equities (KIE) said in a report. As a result, they do not pose any incremental risks to lenders interms of asset quality, KIE noted. "Loans reported by banks show a greater preference for small-ticketfinancing, suggesting a higher proportion of MFI loans being reported as Mudra loans," KIE said in the report.– (FE Nov 28, 2018 p 10)

INTERNATIONAL ECONOMICS"Worst case scenario: IMF chief: Worse trade hit to global economy" – Data suggest greater slowdown

than thought last month; Lagarde urges countries to roll back recent import tariffs. Global growth may beslowing more than forecast only a month ago, underscoring the urgency for countries to pull back from adamaging trade war, the IMF warned. A report. – (FE Nov 29, 2018 p 14)

Giles, Chris – "Darkening outlook points to a bumpy ride in 2019" – This year's soft patch shows signsof being longer lasting. An article. – (FT Nov 29, 2018 Supl. p 4)

EUROZONE"Eurozone economy set to slow further" – Weak growth adds to doubts over ECB plans to shelve quantitative

easing. A report. – (FT Nov 24/25, 2018 p 2)

USABartsch, Elga – "A rate rise would take the froth out of the US economy" – An article.

– (FT Nov 27, 2018 p 9)

– 14 –

ACCOUNTING FIRMS– BIG FOUR

"Accountancy 'Big Four' face UK probe" – A series of high-profile corporate collapses in Britain,including retail giant BHS in 2016 and construction firm Carillion in early 2018, have put accountancysector's "Big Four" - Deloitte, EY, KPMG and PwC - in to the crosshairs of the authorities, The competitionand markets authority watchdog launched a sector review in October and is expected to report back beforeChristmas. – (IE Nov 24, 2018 p 11)

FUND MANAGEMENT"Global fund management" – A weekly report. – (FT Nov 26, 2018 Supl. pp 1-16)

INTERNATIONAL MONETARY FUND"IMF reputation on the line over nations' debts to China: Fund in dilemma as Beijing's opaque

lending terms cloud bailout pleas" – The IMF has warned for more than a year of rising debt levels inlow income countries. Now, bailout talks with Pakistan and requests for help from Angola, Zambia and othersare forcing the fund to confront a pressing question: how far is debt distress in the developing world due tolending by China? A report. – (FT Nov 23, 2018 p 4)

NEW DEVELOPMENT BANK"NDB aims for $40 bn loan book by 2027, says CFO Maasdorp" – Edited excerpts from an interview

with Leslie Maasdorp, Chief Financial Officer, New Development Bank. The New Development Bank,established by Brazil, Russia, India, China and South Africa (BRICS nations), has lent $2.5 bn so far to India,its largest borrower, for environment-friendly infrastructure projects. He also spoke about the bank's plans toraise local currency bonds in BRICS nations. – (Mint Nov 28, 2018 p 13)

MANAGEMENT

CORPORATE GOVERNANCE– INDEPENDENT DIRECTORS

"Governance questions: Independent directors are doing little to enhance their reputation" – Aneditorial. – (BS Nov 23, 2018 p 9)

MANAGEMENT EDUCATIONRaghuraman, S – "Will B-school teachers rise to the challenge?: issues that were non-existent a

few years back are heated topics of discussion in boardrooms today" – Students have to be taughthow to think holistically and how to connect the dots. An article. – (Mint Nov 23, 2018 p 14)

MISCELLANEOUS"Rich Indians' wealth grew fastest in Asia in 2017" – Japan's rich have the largest accumulation of wealth

in the Asia-Pacific region, at $7.7 trillion, but the legions of Chinese millionaires are rushing to catch up. Thepool of wealth held by China's high-net-worth individuals grew by more than 144% between 2010 and 2017,to reach $6.5 trillion, according to the latest Asia-Pacific Wealth Report from consultants Capgemini. Theequivalent rate of growth in Japan over the same period was about 87%. More recently, India's millionaireshave been picking up the pace. Wealth held by Indian high-net-worth individuals rose close to 22% in 2017compared with the previous year, the fastest growth in the region over that period, according to Capgemini.A report. – (BS Nov 29, 2018 p 18)

"SIP good way for new investor to start trading: NSE's Limaye" – Edited excerpts from an interview withVikram Limaye, MD & CEO, National Stock Exchange of India. He has some advice for young people: startinvesting early, learn about markets build an equity and only then buy a home. – (Mint Nov 28, 2018 p 13)

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