Volume XXXIV Number 13 December 24, 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. AGRICULTURE & RURAL DEVELOPMENT 15

D. INDUSTRY 16

E. SMALL SCALE INDUSTRY 16

F. INTERNATIONAL ECONOMICS 16

G. MANAGEMENT 17

– 1 –

BANKERS' BRIEF Vol. XXXIV No. 13December 24, 2018

ECONOMY"India to become fifth-biggest economy in 2019: Study" – Britain risks slipping from being the world's

fifth-biggest economy to its seventh-largest next year, when it is due to leave the European Union, withFrance and India on course to overtake it, according to the accountancy firm PwC. PwC projected economicgrowth in 2019 of 1.6% for Britain - assuming the country manages to avoid the shock of a no-deal Brexit inMarch - versus 1.7% for France and 7.6% for India. A report. – (FE Dec 20, 2018 p 3)

"Inflation down, industrial activity up" – Leading economic indicators show improved performance over thepast few months. Retail inflation rate fell to a 17-month low in November while industrial activity grew at an11-month high in October, according to the latest data released by the Central Statistics Office (CSO). Agraphical report. – (BS Dec 17, 2018 p 4)

"Macro-economic stability: Govt to focus on cut in debt ratio: Garg" – Economic affairs secretary saysnot in talks with RBI on interim dividend; DIPP, commerce secretaries say regulators must be accountable.With inflation concerns abating, the government's focus would be to trim the elevated public debt-to-GDPratio in the next four to five years to keep macro-economic stability intact, according to economic affairssecretary Subhash Chandra Garg. A report. – (FE Dec 16, 2018 pp 1, 14)

"Regulatory rectitude: Capital norms for banks can't dilute" – Former CEA Subramanian sees PSUmergers like PFC-REC as signs of 'state is back'; votes for a separate fiscal council & only-advisory role forRBI board. A report. – (FE Dec 18, 2018 pp 1, 2)

"Sound advice from Indian economists: The point is to implement the policy inputs" – An editorial.– (ET Dec 18, 2018 p 12)

EMPLOYMENT/UNEMPLOYMENTSinha, Yashwant – "Employment crisis: The con job of creating jobs" – An article.

– (ET Dec 20, 2018 p 10)

EXPORTS"RBI waves ED threat to bring exporters in line" – In a bid to crack down on hedging against the rupee,

the Reserve Bank of India (RBI) has warned exporters that they could be reported to the EnforcementDirectorate (ED) if they fail to record their export proceeds with the banks. About 90,000 exporters, comprisinga sizeable segment of the community, are at risk from this new rule. A report. – (BS Dec 17, 2018 pp 1, 6)

FOREIGN EXCHANGE RESERVES"Forex reserves marginally up to $394 billion" – The country's foreign exchange reserves increased by

$16.6 million to $393.734 billion in the week to 7 December, mainly due to a rise in foreign currency assets,according to the Reserve Bank (RBI) data. In the previous week, the reserves had increased by $932.8million to $393.718 billion. – (FE Dec 15, 2018 p 10)

FOREIGN TRADE"From 17%, export growth drops to 0.8% in Nov" – A high base effect and falling outbound trade of major

exchange earners, such as gems and jewelry and engineering goods, nearly wiped out export growth inNovember, which came down to a marginal 0.8 per cent. On the other hand, a similar slower pace of growthon the import side effectively shrunk the trade deficit in November. The trade deficit was $16.67 billion in thelatest month, down from $17.13 billion in October. A report. – (BS Dec 15, 2018 p 4)

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INFLATION"WPI inflation dips to 4.6% in November: Easing of food, fuel prices leads to moderation" – The

Wholesale Price Index (WPI) based inflation fell to 4.64 per cent in November, from 5.28 per cent inOctober, official data showed. The latest WPI print was, however, higher than the 4.02 per cent level in thesame month last year. – (HBL Dec 15, 2018 p 4)

Kaul, Vivek – "If inflation is so low, why doesn't it feel like it?" – Inflation, as measured by consumer priceindex (CPI), was at a 17-month low of 2.33% in November. This means prices were 2.33% higher than thosea year ago. But, why doesn't it feel like inflation has fallen to such a low level? An article.– (Mint Dec 17, 2018 p 1)

Rajadhyaksha, Niranjan – "India's inflation record under a new MPC regime" – Over the past fewyears, the inflation gap with other emerging markets has narrowed, making India less of an inflation outlierthan before, data shows. An article. – (Mint Dec 17, 2018 p 3)

NITI AAYOG"Back series data based on global practice: We need to work hard to achieve double-digit growth,

says the Vice-Chairman of NITI Aayog" – Excerpts from an interview with Rajiv Kumar, Vice-Chaiman,NITI Aayog. The new RBI Governor will be much better as he is more of a team player and displays greatermaturity. He also, for the first time, explains why the Aayog got involved in the back series GDP calculations.– (H Dec 17, 2018 p 13)

"Niti Aayog meet: Economists call for rate cut, steps to boost liquidity" – With retail inflation continuouslyundershooting the target, the Reserve Bank of India should immediately cut interest rate to support economicgrowth while taking measures such as lowering cash reserve ratio (CRR) of banks to inject enough liquidityinto the system, many economists said at an internal meeting of Niti Aayog. – (IE Dec 14, 2018 p 14)

"NITI Aayog's strategy for new India @75 in 2022" – Objective: To bring information technology, enterpriseand efficient management together at the core of policy formulation and implementation Sectoral vision. Areport. – (BS Dec 20, 2018 p 4)

"Old wine in new bottle: Niti Aayog's 'New India' document lacks fresh ideas" – An editorial.– (BS Dec 20, 2018 p 7)

"Upgrades, pvt investments key to ending farm woes" – Edited excerpts from an interview with RajivKumar, Vice Chairman, NITI Aayog. He says farm loan waiver is not a sustainable solution for the issuesfaced by India's farmers. – (ET Dec 20, 2018 p 9)

BANKING"Centre, RBI differ on credit flow, liquidity support: Jaitley" – Finance minister Arun Jaitley admitted

there were two-three areas of differences with the Reserve Bank (RBI), but questioned how a mere discussionon its functioning could be considered "destruction" of an institution. A report. – (BS Dec 14, 2018 pp 1, 6)

"Plain speaking: Govt raising issues no threat to RBI autonomy, says Jaitley" – Finance minister ArunJaitley denied any government intrusion into the Reserve Bank of India's (RBI's) autonomous policy turf,arguing that making suggestions on crucial matters wasn't an aberration and that the economic system worksthrough communications and dialogues. A report. – (FE Dec 15, 2018 pp 1, 2)

"Rewarding good payment behaviour pays" – Edited excerpts from an interview with Rakesh Singh GroupHead, HDFC Bank. He has a bird's eye view of the industry as well as consumption. He speaks on host ofissues - from credit squeeze to infrastructure to start-up funding. – (ET Dec 19, 2018 p 14)

"With inflation staying low, chances of a rate cut have certainly opened up" – Excerpts from an interviewwith Ashish Parthasarathy, Treasurer, HDFC Bank. Even as bond yields have fallen sharply over the lastcouple of months following a decline in crude prices and strengthening of rupee, a reversal in crude pricemovement, rupee and rise in inflation may turn things volatile. He told that an uncertainty over the outcomeof 2019 elections only creates additional volatility. He said that while low inflation has opened up the chanceof a rate cut, it is unlikely before April 2019. He also spoke on the elevated risk in the agricultural loansegment and sudden resignation of RBI Governor. – (IE Dec 17, 2018 p 14)

– 3 –

Thomas, Renny – "2030 a banking Odyssey" – The state of banks may show us a gloomy picture today, butif tech disruptions continue, a decade would be enough for the new dawn. An article.– (Mint Dec 20, 2018 p 10)

AXIS BANK"Axis Bank's new CEO price tag gets shareholders' nod" – Axis Bank's shareholders approved Amitabh

Chaudhry's remuneration at a price higher than his predecessor, according to a filing to the exchanges. Hewill take over as the bank's MD& CEO from Shikha Sharma on January 1, 2019. A report.– (BS Dec 18, 2018 p 5)

BANDHAN BANK"Bandhan: RBI does not clear Khan's name: Bank pulls out application for chairman" – The Reserve

Bank of India (RBI) has not cleared the appointment of H R Khan as the non-executive chairman of BandhanBank despite the passage of six months since the bank's board had cleared the proposal. The bank hassubsequently withdrawn its application for the appointment of Mr Khan. A report. – (H Dec 20, 2018 p 13)

"Working to comply with RBI's guidelines on promoter shareholding: Bandhan's Ghosh" – Editedexcerpts from an interview with Chandra Shekhar Ghosh, MD & CEO, Bandhan Bank. He says his bank isworking towards ensuring compliance with the guidelines of the Reserve Bank of India.– (Mint Dec 14, 2018 p 11)

BANK OF BARODA– BANKING ABROAD

"BoB to shut 3 African branches by June" – Bank of Baroda will close down three overseas branches inAfrica by June. The bank in a regulatory filing said that as per the government guidelines for rationalisationof overseas presence, increase in efficiency and profitability of the overseas offices, it will close downbranches in Guyana, Trinidad and Tobago and Ghana by June 30, 2019. A report. – (FE Dec 18, 2018 p 11)

BANK OF INDIA"BoI to hire financial advisor for NPAs sale" – Bank of India (BoI) sought bids from financial advisors who

will be roped in to execute the sale of its non-performing asset (NPA) portfolio, including the processes ofdue diligence and valuation of NPAs. Bankers say lenders are selling their exposures to companies undergoinginsolvency over extended periods to avoid adding to their provisioning burden. – (FE Dec 14, 2018 p 10)

CANARA BANK"Canara Bank CEO post stays vacant, BBB repeats call: Executive directors in PSBs eligible to

apply for SBI MD post" – After getting a tepid response, the Banks Board Bureau (BBB) has yet againinvited applications for Canara Bank's MD & CEO post, which is lying vacant after Rakesh Sharma's termended on July 31, 2018. – (H Dec 19, 2018 p 13)

"Canara Bank to raise Rs.3,000 cr via Basel III-compliant bonds" – Canara Bank said it would raise upto Rs.3,000 crore by issuing Basel III-compliant bonds. The decision was taken at the bank's board meeting,it said in a regulatory filing. A report. – (HBL Dec 20, 2018 p 5)

ICICI BANK"ICICI Bank revamps its Trade Online platform" – ICICI Bank has revamped its online platform for

export and import transactions. The upgraded version of Trade Online offers a digital banking platform toenable companies carry out most of their export-import transactions online, eliminating the need for physicaldocumentation. – (HBL Dec 20, 2018 p 5)

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"Srikrishna panel report on Kochhar only next year" – Bank also likely to appoint a forensic auditor tolook into allegations by a whistleblower on irregularities in 31 loan accounts. A report.– (HBL Dec 15, 2018 p 10)

IDFC FIRST BANK"IDFC Bank, Capital First complete merger: Vaidyanathan made MD & CEO" – IDFC Bank has

completed the merger process with non-banking financial company Capital First following all the requisiteapprovals, the bank informed the exchanges. A report. – (H Dec 19, 2018 p 13)

"IDFC First Bank plans to add 500 branches over the next few years, says CEO Vaidyanathan" –Edited excerpts from an interview with V Vaidyanathan, Managing Director and Chief Executive Officer,IDFC First Bank. Following the merger of IDFC Bank Ltd and non-banking financial company Capital First,he says the merged entity has a healthy loan book and will start with a clean slate. – (Mint Dec 20, 2018 p 13)

"NCLT approves merger of Capital First with IDFC Bank" – The National Company Law Tribunal hasapproved the amalgamation of Capital First, Capital First Home Finance, and Capital First Securities withIDFC Bank. "NCLT, Chennai Bench, has sanctioned the arrangement embodied in the scheme and hasapproved the appointed date of the scheme to be October 1, 2018," according to IDFC Bank.– (HBL Dec 14, 2018 p 8)

INDIAN BANK"Need to focus on arresting slippage: We have to keep an eye on asset quality, says the MD and

CEO of Indian Bank" – Excerpts from an interview with Padmaja Chunduru, Managing Director andCEO, Indian Bank. She is only the second woman to helm this Chennai-based public sector bank (PSB). Thelender was her preferred choice when she was given the option to head a PSB. – (H Dec 17, 2018 p 14)

KARNATAKA BANK"Karnataka Bank, Paisabazaar in deal" – Karnataka Bank has entered into a partnership with

Paisabazaar.com, an online platform for financial products, to offer home loan products of the bank to customers.With this partnership, consumers will be able to choose and apply for home loans from Karnataka Bankdirectly through the Paisabazaar platform. Quoting Mahabaleshwara MS, Managing Director and ChiefExecutive Officer of Karnataka Bank, a press release said the lender is excited to partner with Paisabazaar.comto offer home loan products. – (HBL Dec 19, 2018 p 8)

KOTAK MAHINDRA BANK"Kotak must be in a tight bind as no regulated entity would want to take a regulator to court" – This

Christmas may not turn out to be a merry one for Uday Kotak, the promoter of Kotak Mahindra Bank.Janmejaya Sinha, chairman APAC, Boston Consulting Group, R Gandhi, former deputy governor, RBI andSandeep Parekh, managing partner, Finsec Law Advisors, talk of the road ahead for Uday Kotak afterBombay High Court refused to stay the RBI's deadline for Kotak Mahindra Bank to trim its promotershareholding to 20% of paid up capital. Edited excerpts. – (Mint Dec 18, 2018 p 16)

"Lowering promoter stake: No relief for Kotak Bank: Bombay High Court refuses to stay RBI'sDec 31 deadline" – The Bombay High Court declined Kotak Mahindra Bank's plea for a stay on theReserve Bank of India (RBI)'s December 31 deadline to reduce its promoter stake holding. This, in effect,would mean that the private sector lender has a little more than 10 days to lower its promoter stake fromclose to 30 per cent to 20 per cent without facing penalties from the RBI. – (HBL Dec 18, 2018 p 1)

PUNJAB NATIONAL BANK"PNB garners Rs.500 cr through ESPS scheme" – Punjab National Bank (PNB) has mobilised Rs.500

crore through its Employee Stock Purchase Scheme (ESPS). As part of the scheme, the bank issued up to 10crore new equity shares to its employees at a discounted price of Rs.53.95 per share. The scheme wasaccepted by the employees. The banks successfully completed the ESPS on November 10 with a subscriptionratio of 90.7 per cent. – (FE Dec 14, 2018 p 10)

– 5 –

STATE BANK OF INDIA"Rising delinquencies: SBI switches to farm lending backed by gold" – With borrowers delaying

repayments on agri loans and delinquencies on the rise, State Bank of India (SBI) has been moving to limitlosses in the agri segment by making loans backed by gold. Delinquencies follow announcements of farm-loan waivers by several states and resultant pressure on repayments. At the end of the September quarter, afourth of the bank's agri-loan book was backed by gold. Between September 2017 and September 2018,SBI's agri-loan portfolio shrunk 0.3% to Rs.1.9 lakh crore. A report. – (FE Dec 14, 2018 p 10)

"SBI asks EY to carry out forensic audit of Jet Air accounts from 2014-18" – Debt-laden Jet Airwaysseem to be lurching from one crisis to another. In the latest turbulence, State Bank of India has asked EY tocarry out a forensic audit of the airline's financials for the fiscal years 2014 to 2018. SBI is the lead banker tothe airline's loans of over Rs.8,000 crore. – (HBL Dec 15, 2018 p 1)

– CANARA BANK

"SBI may buy out Canara Bank's loans in RGPPL" – State Bank of India (SBI) is looking to buy outCanara Bank's loans of about Rs.400 crore in Ratnagiri Gas and Power Pvt. Ltd (RGPPL), the erstwhileDabhol Power Co., said two people in the know. This is expected to be the first resolution under the inter-creditor agreement (ICA), which is part of the government's Project Sashakt aimed at resolving bad loans. Areport. – (Mint Dec 18, 2018 p 6)

– NPAs

"Fresh accretion of NPAs has come down: SBI" – The State Bank of India (SBI) has been pursuingresolution of Non-Performing Assets (NPA) and they should decline in the future, with fresh accretioncoming down, according to a senior bank official. "As far as the NPAs are concerned, most of the largeaccounts which were not performing had already been regularised as NPA. So the bank has been acting ongetting the resolutions done. So, lot of those large cases are already under NCLT," according to the SBIManaging Director (Retail & Digital Banking), Parveen Kumar Gupta. A report. – (FE Dec 19, 2018 p 12)

SYNDICATE BANK"Syndicate Bank mulls Rs.500-crore rights issue" – Syndicate Bank is contemplating a rights issue or Tier

1 bonds by the end of the last quarter of the current fiscal, according to its CEO Mrutyunjaya Mahapatra.A report. – (HBL Dec 19, 2018 p 10)

UCO BANK"UCO Bank expects profitability boost" – UCO Bank is hoping that its profitability for the current fiscal

will increase as its current account savings account (CASA) deposits is expected to get a major boost afterIndia and Iran signed an agreement for oil import payments in rupees. A report. – (FE Dec 18, 2018 p 10)

UNION BANK OF INDIA"Union Bank of India targets Rs.50,000-cr business from mid-corporate vertical: Mid-corporates

provide positive impetus to India's economic growth, says CEO" – Union Bank of India is aiming toachieve a business of Rs.50,000 crore from its mid-corporate vertical (MCV) in the current fiscal, accordingto Rajkiran Rai G, Managing Director and Chief Executive Officer of the bank. A report.– (HBL Dec 18, 2018 p 8)

"Union Bank to boost loan generation in rural areas with hub-and-spoke model: Lender plans to setup 30 Union Samridhhi Kendras by the end of March" – In an effort to make the best use of informationtechnology in rural areas, Union Bank of India has now come out with a hub-and-spoke model to meet loanrequirements. Under this concept, 15-20 rural branches within a radius of 20 km are attached to a 'UnionSamridhhi Kendra' in their vicinity. Loan leads generated by branch manager/business correspondents aretaken over by the agriculture officers in the 'kendra' for further action. A report. – (HBL Dec 19, 2018 p 8)

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YES BANK"Brahm Dutt named interim chairman at Yes Bank" – Yes Bank Ltd has named one of its independent

directors Brahm Dutt as the bank's part-time non-executive independent chairman after former FinanceSecretary Ashok Chawla resigned from the position. A formal announcement on the appointment of Dutt islikely to be made next week after the RBI approves the decision of the bank's board, according to two peoplein the know. – (Mint Dec 15, 2018 p 20)

"Yes Bank recommends Brahm Dutt for chairman's post" – Yes Bank has recommended the name of itsboard member Brahm Dutt for the post of Chairman to the RBI, according to sources. The Chairman's postfell vacant after the resignation of Ashok Chawla in November following issues related to probity.– (FE Dec 19, 2018 p 12)

"YES Bank sells 2.13% stake in Fortis" – YES Bank said it has sold 2.13 per cent stake in Fortis Healthcarein various tranches. – (HBL Dec 19, 2018 p 8)

"YES Bank to give loans to MSMEs based on their GST returns, bank statements" – YES Bank,which is working closely with micro, small and medium enterprises for their banking requirements, haslaunched loan products that use their bank statements and GST returns for ascertaining their credit worthiness.A report. – (HBL Dec 18, 2018 p 8)

EUROPE– EUROPEAN CENTRAL BANK

"Draghi calls time on ECB's €2.6tn eurozone stimulus experiment" – Mario Draghi has joined most ofthe world's main central bankers in halting crisis-era economic stimulus, announcing that the European CentralBank would call time on its contentious €2.6tn bond-buying programme. A report. – (FT Dec 14, 2018 p 1)

"The ECB makes a return to normality - for now" – The central bank should be ready to use quantitativeeasing again. An editorial. – (FT Dec 14, 2018 p 8)

UK– BANK OF ENGLAND - CLIMATE CHANGE - STRESS TESTS

"Banks should recognise risks of climate change: Mark Carney is right to suggest adding globalwarming to stress tests" – Most central bankers make a virtue of the narrowness of their remit, remainingcircumspect on issues deemed to go beyond it. Not Mark Carney, governor of the Bank of England, who,despite facing criticism for exceeding his mandate, has suggested the risks arising from climate changeshould form part of its annual stress tests for banks from 2019. An editorial. – (FT Dec 19, 2018 p 8)

"BoE stress test goals turn to climate risks" – The Bank of England is planning to include the impact ofclimate change in its UK bank stress tests as early as next year, in what would be an unprecedented move fora central bank of a major financial centre. Governor hopes to include green opportunities and threats in nextyear's exercise. A report. – (FT Dec 18, 2018 p 12)

USA– FEDERAL RESERVE

"With a capital of $39 b, Fed remains insolvent" – According to its most recent financial report, the USFederal Reserve is insolvent. That is, its net worth is negative: As on last quarter, the Fed had losses of $66.5billion in its securities holdings, while its capital stands at $39 billion. A report. – (HBL Dec 14, 2018 p 8)

ASSET CLASSIFICATION"IL&FS exposure: Banks seek 6-month waiver from RBI on asset classification" – The Indian Banks'

Association (IBA), representing the country's top lenders, wants the Reserve Bank of India and the Centreto exempt banks from asset classification with regard to the loan exposure to the beleaguered IL&FS groupfor six months. A report. – (HBL Dec 14, 2018 p 13)

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ATMs– PUBLIC SECTOR BANKS

"PSBs don't have plans to close ATMs" – Public sector banks do not have any plans to shut down theirATMs, according to Shiv Pratap Shukla, Minister of State for Finance. – (FE Dec 15, 2018 p 11)

Pujara, Himanshu – "ATM closure: Keep the cash machine well-oiled" – Today, the country is staringat a very real possibility of 50% of automated teller machines (ATMs), numbering more than one lakh,shutting down by March 2019. Naturally, the big question is: can the disaster be averted? Here are a fewsolutions that may defuse the crisis. An article. – (ET Dec 15, 2018 p 8)

BANK CONSOLIDATION– BANK OF BARODA, VIJAYA BANK, DENA BANK

"BoB, Dena Bank, Vijaya Bank merger: New logo, but names of 3 PSBs to remain intact: RBI nod inplace, Jaitley-led group of ministers to give final approval soon" – The brand names of the threepublic sector banks (PSBs) - Bank of Baroda, Dena Bank and Vijaya Bank - that are set to be merged maybe kept intact as the government draws closer to frame an amalgamation scheme. One of the ideas that hasgathered pace is that the names of Dena Bank and Vijaya Bank will be retained when one visits their ATMsor branches, officials, who were part of the deliberations, told Business Standard. However, they will bebrought under the Bank of Baroda group and this will be written on top of the two banks' names, therebyretaining the identity of each bank under an umbrella group. A report. – (BS Dec 17, 2018 p 6)

– PUBLIC SECTOR BANKS

"Bank mergers are not beneficial: AIBEA: Even if all 21 PSBs are merged into one, we cannotmatch global banks in terms of capital strength" – The All India Bank Employees Association (AIBEA)has opposed the Centre's decision to merge Bank of Baroda, Vijaya Bank and Dena Bank, as it believes sucha merger would not be beneficial either to the employees or people at large. Besides, it would affect theinterests of employees, their jobs, job security and employment opportunities in banks, according to theAIBEA general secretary, C H Venkatachalam. A report. – (H Dec 16, 2018 Pt. II p 7)

"Centre seeks RBI inputs for merger of public sector banks" – Seeking to expedite the bank consolidationprocess, the government has sought inputs from the Reserve Bank of India (RBI) on certain regulatoryaspects of the proposed amalgamation of state-run Bank of Baroda (BoB), Vijaya Bank and Dena Bank.The merged entity will have a combined business of Rs.14.8 lakh crore, deposits of Rs.8.4 lakh crore, grossadvances of Rs.6.4 lakh crore and 85,675 employees, based on the position as of June 30. A report.– (FE Dec 18, 2018 p 2)

BANK FRAUDS– PUNJAB NATIONAL BANK

"CBI arrests eight officials of PNB in fraudulent LoU case" – The Central Bureau of Investigation (CBI)has arrested two Directors of a Mumbai-based private firm Chandri Paper & Allied Products and eightofficials associated with Punjab National Bank. These arrests have been made in the fraudulent Letter ofUndertaking (LoU) case. A report. – (HBL Dec 20, 2018 p 4)

BANK LENDING"Bank credit: Is it growing, and where's it going?" – Lenders have loosened purse strings, but some

sectors are monopolising bank loans. Hence the clamour for more credit. A report. – (H Dec 17, 2018 p 14)

BANK RECAPITALISATION– PUBLIC SECTOR BANKS

"Centre plans Rs.300 billion more for PSBs: Despite breather on Capital Conservation Buffer (CCB),state-run banks need more funds to meet Basel III norms" – The government is considering additionalcapital infusion of up to Rs.300 billion in public sector banks as they have been unable to raise required funds

– 8 –

from the markets. As part of the capital infusion plan announced by the Finance Ministry in October 2017, thegovernment envisaged that public sector banks (PSBs) would raise Rs.580 billion from the stock markets byMarch 2019 to meet Basel III norms. – (BS Dec 14, 2018 p 4)

"Govt to seek more funds for public sector banks: The proposal will be part of supplementary demandfor grants in parliament today" – The government will infuse additional capital into public sector banks(PSBs) in a move that is aimed at easing credit availability in the economy ahead of general elections due byMay. The measure is likely to be announced in Parliament. A report. – (Mint Dec 20, 2018 pp 1, 18)

Venkatesh, Latha – "Bank capitalization: Are Reserve Bank of India's reserves in imminent danger?"– If the idea is to capitalize banks, why isn't govt using easy ways like issuing recap bonds? An article.– (Mint Dec 17, 2018 p 12)

BANKING REGULATOR - RBI"A challenge for governor Das" – An editorial. – (ET Dec 14, 2018 p 12)

"Don't go by markets, RBI autonomy is critical" – Markets like easing NPA norms or more govt-spendwith RBI capital; govt must go by long-term consequences. An editorial. – (FE Dec 14, 2018 p 8)

"Govt tussle with RBI could undermine long-term financial stability, says S&P" – Terming the exit ofUrjit Patel as credit negative, S&P Global Ratings said the increasing involvement of the government in theaffairs of the RBI could undermine the hard-fought improvements in the banking system over the past fewyears. In particular, S&P Global Ratings views as credit negative the circumstances leading to the recentresignation of Urjit Patel, governor of the Reserve Bank of India (RBI). We await any changes to bankingsystem regulation at the next RBI board meeting in January 2019. A report. – (Mint Dec 18, 2018 p 9)

"HC gives RBI interim relief on CIC orders" – The Bombay high court granted interim stay on orderspassed by the Central Information Commission (CIC) directing the RBI to submit a list of wilful loan defaulters.A division bench of justices B P Dharmadhikari and S V Kotwal also stayed a show-cause notice issued onNovember 2 this year by the CIC to former RBI governor Urjit Patel for non-disclosure of the informationsought and for defiance of its orders. – (TI Dec 15, 2018 p 17)

"Hot seat" – The RBI's new governor has his task cut out. An editorial. – (HBL Dec 17, 2018 p 14)

"Need to scrutinize Reserve Bank's actions, but centre not the right body to direct it" – The firstboard meeting of the central bank chaired by the new RBI governor, Shaktikanta Das, took place on 14December. Sachin Chaturvedi, board member, Reserve Bank of India; Jaimini Bhagwati, RBI chair professor,Indian Council for Research on International Economic Relations (ICRIER); Arvind Virmani, chairman,Foundation for Economic Growth and Welfare (EGROW); and Ananth Narayan, Professor, S P Jain Instituteof Management and Research (SPJIMR); share their views on the proceedings of the RBI board meeting,and what is expected from the new governor, and whether, the concerns over the RBI-government rift, andthe subsequent resignation of Urjit Patel, will cast its shadow on the central bank's autonomy. ShaktikantaDas brings his characteristic conciliatory approach. He gave everyone a chance to speak which is absolutelydemocratic, according to Chaturvedi. The difference in a central bank directed arbitrarily by a political govt,versus a credible one, is to have valid professional arguments, according Viaramani. Edited excerpts.– (Mint Dec 17, 2018 p 12)

"Staffers expect Das to bring old RBI back" – With a former bureaucrat at the helm of affairs at theReserve Bank of India (RBI), employees are expecting the return of the old times where everything workedto well-established traditions and norms. Winds of change: * In many ways, it is the culture that the past twogovernors, Urjit Patel and Raghuram Rajan, upset the most. Not only were they outsiders, they also hiredlaterally, bypassing the existing talent, especially in the field of economics, when RBI staffers pride themselveson their domain knowledge. * Shaktikanta Das' initial days have been promising, say insiders. Last week, atthe L K Jha memorial lecture (Jha was RBI governor and belonged to the Indian Civil Service), the newgovernor greeted the audience with folded hands. * Senior RBI executives say all governments have beenunreasonable in their demands, but they also know the central bank won't be in a position to entertain thoserequests. A report. – (BS Dec 18, 2018 p 4)

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"The Reserve Bank of India: Exit on Mint street" – Urjit Patel's departure gives investors reason to thinktwice about India. An article. – (Eco 429(9122) Dec 15-21, 2018 pp 65-66)

Aiyar, Swaminathan S Anklesaria – "RBI's job is not to help the ruling party bring in achhe din andwin elections" – An article. – (TI Dec 16, 2018 p 19)

Bandyopadhyay, Tamal – "An open letter to the RBI governor" – Central banking is a science, not anart. By experience, expertise and intuition, most past RBI governors have done a phenomenal job. An article.– (BS Dec 17, 2018 p 12)

Gupta, Abhishek – "Change of guard: A breath of fresh air at RBI" – An easier monetary policy shouldallow the tailwinds of structural reforms to push growth without boosting inflation. An article.– (HBL Dec 18, 2018 p 6)

Jagannathan, R – "Reserve Bank vs the government: Peace in our time?" – The question of capitalreturn, though it appears to be the most intractable, is the easiest one. An article. – (Mint Dec 19, 2018 p 14)

Malik, Rajeev – "Finding the right balance at the central bank" – Das can choose be a dove, a hawk, anowl or any other monetary bird, but hopefully not a lame duck. An article. – (Mint Dec 19, 2018 p 15)

Mohan, T T Ram – "RBI-govt rift: What was the fuss about?" – An article. – (BS Dec 18, 2018 p 7)

Mukherjee, Andy – "RBI's Shaktikanta Das faces long to-do list in new job" – The govt will look to Dasto help provide much-needed liquidity to the banking system. An article. – (Mint Dec 14, 2018 p 8)

Mundy, Simon – "India's latest central bank head must resist calls to soften rules" – One test could bea flare-up of the crunch in India's short-term debt market. An article. – (FT Dec 19, 2018 p 12)

Panda, Baijayant 'Jay' – "Should RBI be independent?: A pushback is underway, globally, againstthe tenet of central bank independence" – Shaktikanta Das would do well to find a balance betweentaking tough, unpopular decisions - with or without government backing - while also keeping an open mindtowards urgent, short to medium term economic imperatives. An article. – (TI Dec 18, 2018 p 12)

Rangan, M C Govardhana – "Shaktikanta Das & autonomy: When Jayalalithaa couldn't bully…" – Anarticle. – (ET Dec 14, 2018 p 9)

Sabnavis, Madan – "RBI autonomy, like FRBM, disciplines the govt" – We don't criticise higher taxesas anti-people but justify them on grounds of fiscal discipline, so why are RBI's rules being attacked as beinganti-people? People don't want investment, they want dole, but the govt still takes a call. So why does RBItaking a firm stance on PCA or IBC become an election issue? An article. – (FE Dec 14, 2018 p 8)

Sharma, Mihir – "Denting RBI's autonomy will prove costly" – Urjit Patel's exit has raised some deeplydisturbing questions over India's institutional freedom. An article. – (HBL Dec 14, 2018 p 6)

Singh, Nirvikar – "An own goal or brilliant save?" – An RBI caught in the midst of a govt trying to boostits political fortunes through populism will emerge as a damaged institution. An article.– (FE Dec 14, 2018 p 9)

Sriram, M S – "Déjà vu, RBI" – The Story of the Reserve Bank of India by Rahul Bajoria. A book review.Section 7 of the RBI Act, which is now being interpreted as impinging on the autonomy of the RBI, wasintroduced precisely to protect the central bank's intellectual autonomy! – (BS Dec 14, 2018 p 9)

Vembu, Venky – "RBI 'groupthink' dynamics and the risk of policy errors" – An article.– (HBL Dec 20, 2018 p 7)

– BOARD OF DIRECTORS

"Complete overhaul needed for RBI board to emulate Fed, BoE: Acharya: Central bank preparingnew note on governance" – Reserve Bank of India deputy governor Viral Acharya has put across thepoint that a dramatic change in the role of the central bank board - on the lines of Bank of England (BoE) andUS Federal Reserve as was originally suggested by the government - would virtually call for a reconstitutionof the board. Acharya voiced his views in the course of the discussion on RBI governance in last week'sboard meeting. It's learnt that a note on the subject, prepared by RBI, would be shared with board memberslater. A report. – (ET Dec 17, 2018 p 1)

– 10 –

"India's central bank: The man who would be king" – Swaminathan Gurumurthy is liberal Indian economists'worst nightmare. An article. – (Eco 429(9119) Nov 24-30, 2018 p 68)

"RBI board meets, signals readiness to revisit governance framework" – The RBI's central board, in ameeting on Friday, deliberated on the contentious issue of the banking regulator's governance framework,and decided that the matter required further examination. Under newly appointed Governor Shaktikanta Das,it seems to have taken a conciliatory approach. A report. – (HBL Dec 15, 2018 p 1)

Goswami, Omkar – "Understanding the RBI's central board" – The board is a powerful supervisoryentity. Let Shaktikanta Das restore its position, quieten tensions and allow the RBI to get on with it. Anarticle. – (BS Dec 20, 2018 p 7)

– PROMOTION POLICY

"Hawkish promotion policy causes heartburn at RBI" – A new promotion policy in Reserve Bank of Indiaannounced last Friday, two days after Governor Shaktikanta Das took charge, created chaos at the centralbank's iconic Mint Street office Tuesday with a majority of officers striking work. The new policy makespromotion for junior and middle level managers more stringent. According to the new Bell Curve policy, RBIsaid 25 per cent of officers in "level B" to "level E" will be put in the lowest performance bracket as againsta 10 per cent rule earlier, three persons familiar with the development. This means they will become "non-promotable". A report. – (ET Dec 19, 2018 p 9)

– RESERVES

"Don't need RBI funds to bridge deficit: FM" – Finance minister Arun Jaitley expressed confidence thatthe government would meet its fiscal deficit target for the year to 31 March without dipping into the centralbank's reserves, which he said could be used for recapitalizing state-run banks or for public welfare. Areport. – (Mint Dec 19, 2018 pp 1, 7)

"Government will seek interim dividend from RBI, says Garg" – The Centre will seek interim dividendfrom the Reserve Bank of India, according to Economic Affairs Secretary Subhash Chandra Garg. With thecentral bank just half way through its fiscal year (July-June), it is, however, premature to comment on whatwould be the quantum of the ask. A report. – (HBL Dec 20, 2018 p 1)

"RBI reserves should be used to fix fin system" – The Reserve Bank is adequately capitalised, but themoney should be used for fixing the financial system, not for financial deficit or financing governmentexpenditure, according to the former Chief Economic Advisor Arvind Subramanian. The economic principles,moreover, say savings should not be used for current consumption, but for long-term investment. A report.– (FE Dec 15, 2018 p 10)

Aiyar, Swaminathan S Anklesaria – "How much is not too much?: Four economists argue for ArunJaitley against Urjit Patel on RBI reserves" – RBI reserves could be to buy back government bonds,reducing government debt. This would reduce its annual interest outgo by Rs.33,000-45,000 crore. An article.– (ET Dec 19, 2018 p 12)

– WILFUL DEFAULTERS

"Wilful defaulters: Bombay HC stays CIC fiat to RBI on list" – The Bombay High Court, granted interimstay on orders passed by the Central Information Commission (CIC) directing the Reserve Bank of India tosubmit a list of wilful loan defaulters. A report. – (HBL Dec 15, 2018 p 10)

CENTRAL BANKS– AUTONOMY

"Central banks must be independent and accountable to elected bodies" – Macroprudential authorities(central banks) should be independent and in return for their independence they should be accountable toelected bodies, according to Professor Hélène Rey from London Business School. A report.– (HBL Dec 15, 2018 p 10)

– 11 –

"Why a central bank's autonomy matters" – The lack of monetary autonomy can destabilize an economyand make it more vulnerable to debt-related crises, says a new National Bureau of Economic Researchworking paper by Javier Bianchi of the Federal Reserve Bank of Minneapolis and Jorge Mondragon of theUniversity of Minnesota. A report. – (Mint Dec 14, 2018 p 3)

CREDIT / DEBIT CARDS"RBI's insistence on PIN-based cards may needle customers from January 1: Banks are racing

against time to replace existing cards with chip-based ones" – Is your debit/credit card a chip-basedone? If not, you may not be able to swipe it from the New Year. According to an RBI circular, all existingbank cards should be Europay Mastercard Visa (EMV) chip- and pin-based from January 1. The magneticstripe cards will not be valid after December 31. A report. – (HBL Dec 18, 2018 p 1)

CREDIT CULTURE– DEBT WAIVER SCHEMES

"Farm loan waivers: A reality check: Worried bank chiefs sound dissent note" – Having barely emergedfrom the corporate bad debt hangover, banks are worried about the next threat - farm loan waivers. "It is adeadly poison. It's a wrong way of addressing the real issue," according to United Bank of India's managingdirector Ashok Kumar Pradhan. Banks don't lose money in such waivers as they are fully compensated bythe state exchequer, which bears the burden. But banks believe such promises will destroy credit culture. Areport. – (ET Dec 20, 2018 pp 1, 3)

CROSS-CHECKING BORROWERS INFORMATION"To prevent bad loans, banks to cross-check info on borrowers: To approach I-T and GST departments

to check veracity of information submitted" – Banks are likely to soon seek authorisation from borrowersand guarantors so that they can approach authorities such as Income Tax (I-T) and Goods and Services Tax(GST) departments to cross-check the veracity of information submitted for getting loans. A report.– (HBL Dec 19, 2018 p 8)

CURRENCY NOTES"Bank notes' printing cost rose to Rs.80 bn in FY17: Govt" – The cost of printing currency notes

escalated to Rs.79.65 billion in 2016-17, the year when the government had banned the high-value 500 and1,000 rupee bills, the government informed the Parliament. – (BS Dec 19, 2018 p 5)

DEMONETISATION"DeMo dragged India's growth down: Rajan" – Demonetisation slowed down India's economic growth at

a time when the world economy was growing and it impacted the GDP significantly, according to the formerRBI Governor Raghuram Rajan. Rajan said he has seen studies which reaffirm that banning of high valuecurrency notes in late 2016 impacted India's growth significantly. I think the net impression is that it(demonetisation) had a significant effect on our growth. A report. – (FE Dec 18, 2018 p 10)

"November & December 2016: Note-ban led to a 3 percentage point decline in GDP: NBER" – Twoyears after the government announced demonetisation in November 2016, a paper released by NationalBureau of Economic Research states that demonetisation resulted into a 3 percentage point decline in nationaleconomic activity in November and December 2016 and a 2 percentage point decline in credit in the fourthquarter of calendar 2016. The report, however, said that while it had a short-term impact on economicactivity and credit growth, there may be "long-term advantages from demonetisation." A report.– (IE Dec 19, 2018 p 11)

DIGITAL BANKING"Digital banking" – A marketing feature. – (HBL Dec 19, 2018 p 13)

– 12 –

"Over 80% of banking transactions now happen digitally" – Armed with tech like AI, blockchain, chatbots,there has been a massive shift in the way banks serve their customers. A report. – (HBL Dec 19, 2018 p 13)

EXECUTIVE APPOINTMENTS– STATE BANK OF INDIA

"SBI top job now open to more PSU bankers" – The government has decided to open the field for selectionof managing directors of SBI to executive directors of nationalised banks, ending the monopoly that executivesfrom the country's largest bank had over top jobs. "EDs of nationalised banks made eligible for selection asMD, SBI. Earlier, DMDs of SBI were made eligible to be MD in nationalised banks. Government's thrust towiden top-management talent pool and sharing of experience across PSBs continues," the financial servicessecretary, Rajeev Kumar, tweeted. A report. – (TI Dec 19, 2018 p 17)

FOREIGN BANKS IN INDIA"Foreign banks must hold 51% in fully owned Indian arms" – Earlier this month, the government came

out with a notification to exempt tax implications on conversion of branches of foreign banks into locallyincorporated, wholly owned subsidiaries (WoS). However, the government has placed a condition that theforeign bank cannot dilute stake in the Indian subsidiary below 51% for at least five years.– (TI Dec 18, 2018 p 15)

FOREIGN BANKS– STANDARD CHARTERED BANK

"Standard Chartered to take $160-m charge on sale of private-equity arm" – Standard Chartered hasagreed terms for the sale of its private equity division, ending a more than two-year effort to shed a businessthe bank no longer deems central to its strategy. StanChart will sell a majority of the private equity arm'sinvestment portfolio to funds managed by Intermediate Capital Group (ICG). – (HBL Dec 18, 2018 p 8)

INSOLVENCY AND BANKRUPTCY CODE"In insolvency, operational creditors deserve a say: SC: Observations came during hearing on validity

of IBC" – Operational creditors of companies undergoing the corporate insolvency resolution process shouldhave a say in the committee of creditors (CoC) and get voting rights proportional to the debt owed to them,the Supreme Court observed. – (BS Dec 14, 2018 p 4)

"Straitjacketing the creditors' panel?: NCLT Chennai asks for creating standard operating procedurefor CoCs in consultation with finance ministry" – Since its inception, the Insolvency and BankruptcyCode (IBC) has been hailed as a monumental reform that would help tackle the problem of bad loansplaguing the Indian financial system. Part of the code's appeal was that it minimised the role of the state andthe judiciary in the insolvency process. Instead, it provided space for financial creditors to take commercialdecisions by introducing a time-bound transparent price-discovery process for bad loans between buyers andcreditors. Going by a recent order of the NCLT Chennai bench, in the case of Ashok Magnetics Limited, thiscritical aspect of the code is likely to be reviewed. A report. – (BS Dec 17, 2018 p 4)

Agrawal, Shrija – "The code that recoded biz relationship in 2018" – The Insolvency and BankruptcyCode put Indian companies on tenterhooks. An article. – (Mint Dec 17, 2018 p 2)

MERGERSChakraborty, Nilanjana – "What to expect if your bank goes for a merger" – While you would need to

give fresh bank mandates for your SIP and EMI payments, the rates on fixed deposits and most loans willremain the same. An article. – (Mint Dec 17, 2018 p 14)

– 13 –

MICROFINANCE SECTOR"Fund-raising is back on radar of microfin cos" – The microfinance sector is slowly getting into the fund

raising mode with prospects of a revival of business expansion after a two-month caution amid credit squeeze.Growth in the sector was believed to have slowed down in October and November following the IL&FS-ledcredit crisis. A report. – (ET Dec 15, 2018 p 6)

MONETARY POLICYIyer, Aparna – "Minutes show too-good-to-be-true food deflation had MPC befuddled" – Indians and

even Indian policymakers have hardly ever witnessed food deflation. The recent collapse in food pricescaught them off-guard and the surprise was visible in the minutes of the latest monetary policy committeemeeting. All six members of the committee stated that the food deflation was a surprising development,which made headline retail inflation undershoot previous forecasts of the Reserve Bank of India (RBI). Anarticle. – (Mint Dec 20, 2018 p 4)

– INFLATION TARGETING

Nayak, Gayatri – "Monetary policy committee: A question of tools" – The MPC could be given creditfor containing inflation in the past two years since it began setting rates. With instruments such as cashreserve ratio also impacting rates, should this policy framing panel be given additional devices to targetinflation. An article. – (ET Dec 19, 2018 p 14)

NON-PERFORMING ASSETS– POWER SECTOR

"Lenders scramble to resolve stressed power assets before SC hearing: Out of 30 that figure inParliamentary panel report, only a third are resolvable" – Lack of interest from investors in stressedpower assets is forcing lenders to become more proactive in resolving at least one-third of the projectsidentified as stressed by the government earlier this year, according to industry sources. A report.– (HBL Dec 19, 2018 p 12)

"Stressed power assets in limbo over court delay" – The future looks bleak for about Rs.2 trillion worth ofthermal power projects facing insolvency. The delay in the Supreme Court hearing the challenge to the RBIcircular by power companies could worsen the debt situation of more than 24 assets that have been unable tofind any resolution or buyer. The power sector had in August contested the February 12 circular of the RBIin the Supreme Court, questioning its legality. A report. – (BS Dec 17, 2018 p 4)

– PUBLIC SECTOR BANKS"PSU banks filed 2,500-plus FIRs against wilful defaulters: Corporate house & farmer NPAs excluding

individuals, PSUs stood at Rs.6.29 L cr till September 30, says finance ministry in replies to LokSabha" – The finance ministry said that state-run lenders have filed more than 2,500 FIRs against wilfuldefaulters till September-end, and that the recovery process has been initiated. Of 568 corporate house andfarmer NPAs, 95 borrowers had aggregate gross NPAs of over Rs.1,000 crore, involving funded outstandingof Rs.5.57 lakh crore as on September 30. A report. – (ET Dec 15, 2018 p 11)

NPAs RESOLUTION"Marrying IBC with settlement schemes an option: Jaitley" – Finance and Corporate Affairs Minister

Arun Jaitley said the option of 'marrying' insolvency framework with possible settlement schemes could belooked at in the future for the resolution of stressed assets. However, such an option could be explored onlyafter the initial batches of bankruptcy cases are cleared at the National Company Law Tribunal. A report.– (IE Dec 19, 2018 p 11)

"Meet with RBI: Banks want to keep NPAs out of court" – Anxious that provisioning requirements forstressed assets will go up, bankers are understood to have asked the Reserve Bank of India (RBI) to relaxthe rules for out-of-court resolutions as envisaged in the central bank's February 12 circular. Heads of publicsector banks (PSBs) who recently met with RBI governor Shaktikanta Das suggested the threshold level of100% of votes needed to approve a restructuring plan to prevent an account being referred for the insolvencyprocess be lowered to around 60-66%. A report. – (FE Dec 20, 2018 pp 1, 2)

– 14 –

PAYMENTS BANKS– PAYTM PAYMENTS BANK

"Paytm Payments Bank posts Rs.21-crore loss in 2017-18" – Paytm Payments Bank registered net lossof Rs.20.7 crore for the fiscal ended March 31, 2018, according to regulatory documents. Its total loss stoodat Rs.30.7 crore during August 22, 2016 to March 31, 2017, the documents filed with the corporate affairsministry showed. The total income grew to Rs.721.9 crore in financial year ended March 31, 2018 comparedto Rs.2.47 crore in August 22, 2016 - March 31, 2017 period, the documents sourced by business intelligenceplatform. A report. – (FE Dec 14, 2018 p 5)

"Why RBI blocked Paytm bank's new biz" – Why did the RBI ban Paytm's payments bank from openingnew accounts and e-wallets in August? In a response to an RTI filed by ToI, the RBI for the first time hasdisclosed the reasons - four of them. The apex bank said the Noida-based company was in violation of know-your-customer (KYC) rules while on-boarding users. These precise violations are not clear. The RBI wasalso not happy with the close relations between Paytm founder Vijay Shekhar Sharma's One97 Communicationsand the entity that runs Paytm Payments Bank. The bank is owned 51% by Sharma, while the rest is ownedby One97 Communications and its subsidiaries. Payments banks are expected to maintain an arm's lengthrelationship with promoter group entities. A report. – (TI Dec 20, 2018 p 15)

PRIVATE SECTOR BANKS– OWNERSHIP

"Ownership of private banks should remain with Indians: Swadeshi Jagaran Manch urges new RBIGovernor to rethink regulatory framework for private banks' ownership" – Swadeshi Jagaran Manch,the economic wing of Rashtriya Swayamsevak Sangh (RSS), wants the newly-appointed RBI GovernorShaktikanta Das to do a rethink on the regulatory framework for private bank ownership. Asserting that theownership of banks in India should stay with Indians, SJM said on Thursday that it does not want Indianhome-grown banks to go to foreign players. – (HBL Dec 14, 2018 p 8)

PROVISIONING NORMS"IL&FS provisioning: Banks to seek relief from Reserve Bank" – Bankers to Infrastructure Leasing

and Financial Services (IL&FS) and its subsidiaries have decided to seek relief from the Reserve Bank ofIndia (RBI) on provisioning norms after December 17, if the National Company Law Appellate Tribunal(NCLAT) extends its stay on proceedings against IL&FS and its 346 subsidiaries. A report.– (FE Dec 15, 2018 pp 1, 2)

PUBLIC CREDIT REGISTRY"Public credit registry better for SMEs: RBI's Acharya" – RBI deputy governor Viral Acharya said the

authority is putting together a public credit registry that will give banks the entire profile of a borrower. TheReserve Bank prefers fundamental changes to smoothen loan flow to micro-businesses through a publiccredit registry, rather than doling out forbearances, according to Viral Acharya, Deputy Governor, RBI. Areport. – (FE Dec 16, 2018 p 14)

PUBLIC SECTOR BANKS– NPAs, CAPITAL, ATMs

"PSBs petition new RBI chief to relax NPA resolution norms: At first meeting with Das, discusscapital adequacy ratio, new ATM guidelines" – The Reserve Bank of India top brass, led by newlyappointed Governor Shaktikanta Das, gave a two-hour hearing to Mumbai-based public sector bank (PSB)chiefs on Thursday on a host of issues. These included relaxing the revised framework for resolution ofstressed assets, tempering capital requirements, and reviewing guidelines on using lockable cassettes inATMs. A report. – (HBL Dec 14, 2018 p 1)

– 15 –

– PRIVATISATION

"Privatization of state-run banks not panacea: Rajan" – Pointing out that privatisation of public sectorbanks is not panacea for all ills, former RBI Governor Raghuram Rajan made a case for reduction ofuncompensated mandates like lending targets and pushing government schemes through branches of state-owned lenders. He also said there is a need to reduce the Statutory Liquidity Ratio and substituting this withthe liquidity coverage ratios and net stable funding ratios set by Basel. A report. – (HT Dec 15, 2018 p 13)

– RECOVERY OF NPAs

"PSBs recover Rs.2.33L-cr bad loans in four years" – Public sector banks recovered Rs.2.33 lakh croreworth of bad loans during the four years from financial year 2014-15 to fiscal 2017-18, Parliament wasinformed on Friday. As per RBI data on global operations for PSBs, during the financial years 2014-15 to2017-18, PSBs recovered Rs.2,33,339 crore, of which Rs.32,693 crore was from written off accounts, Ministerof State for Finance Shiv Pratap Shukla said in a written reply in Lok Sabha. During 2014-15 to 2017-18, thePSBs witnessed reduction of Rs.3,16,515 crore in their NPAs due to write-offs (including compromise). Areport. – (FE Dec 15, 2018 p 10)

SMALL FINANCE BANKSMerwin, Radhika – "Can Small Finance Banks make it big?" – After reeling under the demonetisation

shock, loan growth and asset quality are slowly returning to normalcy. However, garnering low-cost depositsand improving profitability remain a challenge. An article. – (HBL Dec 17, 2018 p 2)

– FINCARE SMALL FINANCE BANK

Parvatha Vardhini C – "A safe avenue with attractive rates" – Fincare Small Finance Bank offers 9% for24- to 36-month deposits. The bank has bounced back quite well from the impact of demonetisation, improvingits loan growth and profits since then. An article. – (HBL Dec 17, 2018 p 9)

RBI CIRCULAR"Auction of Government of India Dated Securities" – (RBI Circulars RBI/2018-2019/93 Ref.No.IDMD/

1548/08.02.032/2018-19 dated 17.12.2018)

AGRICULTURE & RURAL DEVELOPMENT

DEBT WAIVER SCHEMES"Loan waiver may not bear fruit for farmers: Rajan" – The clamour for a farm loan waiver may be a

constant in India's political discourse, but former RBI governor Raghuram Rajan does not mince words whenhe says it won't be the best solution to address the distress of the farmers. A report.– (HBL Dec 15, 2018 p 1)

FARM DISTRESS"Loan waiver won't root out farm distress, says NITI Aayog chief" – Loan waiver is not the right policy

to help farmers and it does not work on the principle of equality, according to NITI Aayog. Strategy for a newIndia: * Increase investment rate as measured by gross fixed capital formation. * Shift emphasis to convertfarmers into 'agripreneurs' by further expanding e-NAMs. * Work for unified national market, freer exportregime, abolition of the Essential Commodities Act to boost agricultural growth. * Move to 'Zero BudgetNatural Farming' techniques that reduce costs, improve land quality and increase farmers' incomes. A report.– (HBL Dec 20, 2018 p 1)

RURAL EMPLOYMENT– MGNREGA

Jadhav, Radheshyam – "Making a mockery of MGNREGA" – In Maharashtra, it appears the rural jobsscheme is being implemented on paper alone. Contractors, government officials and gram sabha heavyweightscream away the funds. An article. – (HBL Dec 18, 2018 p 2)

– 16 –

INDUSTRY"IIP growth: More than a silver lining" – Policy action needed to sustain momentum. An editorial.

– (ET Dec 15, 2018 p 8)

FICCI"We need a governing framework for NBFCs" – Edited excerpts from an interview with Rajesh Shah,

President, FICCI. He says relaxing prompt corrective action norms is not a bad idea, but it needs to be donein a phased manner. – (Mint Dec 14, 2018 p 11)

LIC– IDBI BANK

"LIC makes open offer to acquire 26% stake in IDBI Bank" – IDBI Bank said it has received final letterfrom Life Insurance Corporation (LIC) for an open offer to acquire additional 26% in the lender. A report.– (FE Dec 19, 2018 p 12)

NON-BANKING FINANCE COMPANIESMukherjee, Andy – "Why India's shadow-bank risks put China in the shade" – Will New Delhi be

prepared to pull the rug from under the nonbank lenders if they push things too far? On that count, hold nohope. China's shadow banking may be a lot bigger than India's, but India's is already too big to fail. An article.– (HBL Dec 20, 2018 p 5)

Shah, Ajay – "NBFCs don't need much regulation" – NBFCs and banks need not be treated in the samemanner. An article. – (BS Dec 17, 2018 p 13)

POWER SECTOR"World Bank is working with power distribution firms on a cash transfer model" – Excerpts from an

interview with Fan Zhang, Senior Economist, Chief Economist's Office, South Asia Region - World Bank andlead author of the report. titled 'In the Dark - How much do power sector distortions cost South Asia'. Shetold that institutional distortion, such as expensive coal supply, is having a larger effect on India's powersector than the distortion by subsidies. – (IE Dec 18, 2018 p 13)

SMALL SCALE INDUSTRY

SMEsSonwaney, Vandana – "Operations management for SMEs" – Educational institutes and business schools can

help SMEs grow with the support of operations management. An article. – (FE Dec 17, 2018 p 12)

INTERNATIONAL ECONOMICS

ASIA"Asia faces more growth downgrades and currency pain, says S&P" – Asian nations face downgrades to

economic growth and more pain from rising U.S. interest rates next year, according to S&P Global Ratings.Having already trimmed 2019 growth forecasts for Asian economies across the board, there could be furthercuts. Trade-reliant nations like Thailand, Taiwan, Korea and Malaysia remain the most vulnerable, saidShaun Roache, S&P's chief economist for Asia and the Pacific. A report. – (ET Dec 20, 2018 p 7)

– 17 –

CHINA"China's woes spook global markets" – A sharp slowdown in Chinese spending growth and manufacturing

has added to the gathering gloom around the international economy, sending financial markets lower aroundthe world at the prospect of global loss of momentum. Retail sales grew at their slowest in 15 years inNovember in China, while factory output was the weakest in nearly three years, suggesting stimulus measuresby Beijing since the summer had failed to revive flagging growth. A report. – (FT Dec 15/16, 2018 p 1)

EUROZONEMunchau, Wolfgang – "The eurozone faces sleepwalking into a downturn" – And the really bad news?

The economy might tank early. The ECB has a record of optimistic forecasts. An article.– (FT Dec 17, 2018 p 9)

FUND MANAGEMENT"Global fund management" – A weekly report. – (FT Dec 17, 2018 Supl. pp 1-20)

IMF"US snubs IMF push to lift permanent reserves" – The US has come out against an increase to the IMF's

permanent reserves, dealing a blow to efforts by Christine Lagarde, its managing director, to put the institutionon a more stable financial footing. A report. – (FT Dec 14, 2018 p 3)

MANAGEMENT

BOARD OF DIRECTORS"Boards that lead: How competent are corporate India's boards?" – Korn Ferry study conducted jointly

with NSE is the first-of-its-kind survey on Indian board practices. Study aims to evaluate board practices.Some of the leading practices have been highlighted in the report. A report. – (Mint Dec 17, 2018 p 6)

CORPORATE GOVERNANCEArora, Pankaj – "Corporate governance needs moral compass" – Only individuals with a strong value

system can help create an ethical boardroom culture. An article. – (Mint Dec 20, 2018 p 16)

– INDEPENDENT DIRECTORS

"Why independent directors are rushing for the exit door" – Of 743 who quit this year, 561 exited withoutadequate reasons before the end of their terms. Data shows that while 297 independent directors quit withoutassigning a reason, 264 cited 'personal reasons and preoccupation'. A report. – (Mint Dec 19, 2018 p 7)

MANAGEMENT EDUCATIONBang, Vasant V – "B-schools must go beyond research" – The focus should be developing innovative

solutions to managerial problems. An article. – (FE Dec 18, 2018 p 9)

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