Volume XXXIV Number 2 October 8, 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 11

D. INDUSTRY 11

E. SMALL SCALE INDUSTRY 12

F. INTERNATIONAL ECONOMICS 13

G. MANAGEMENT 13

– 1 –

BANKERS' BRIEF Vol. XXXIV No. 2October 8, 2018

ECONOMY"Govt has no excuses on fiscal deficit this year" – Excerpts from an interview with Rathin Roy, member of

Prime Minister Narendra Modi's Economic Advisory Council, and director of National Institute of PublicFinance and Policy. The government has done well in hiking import tariffs on certain discretionary items.– (BS Oct 1, 2018 p 6)

"New CEA to be appointed only after poll, says official: Government is satisfied with the advisoryrole being fulfilled by others" – The government is unlikely to fill the post of the Chief Economic Adviser(CEA) until after the general election in 2019, according to a senior official in the Finance Ministry. The posthas been vacant since Arvind Subramanian left office at the end of July. The government has received onlya few applications for the post in the three months since it advertised the vacancy, the official added. Areport. – (H Oct 1, 2018 pp 1, 12)

"Rupee depreciation need not be fought at all times" – Excerpts from an interview with Montek SinghAhluwalia, former Deputy Chairman, Planning Commission. Generally positive, but some headwinds. To sumup his impression of the Indian economy, at an event in Chennai last week. – (HBL Oct 3, 2018 p 12)

"We think RBI is on a rate-hike cycle: Brian Coulton of Fitch" – Edited excerpts from an interview withBrian Coulton, Chief Economist, Fitch Ratings. India's economy may not get directly impacted due to the US-China trade war as it is less integrated with the global value chains, though slower global growth is likely tohalt economic revival next fiscal year. Coulton said India should focus on reforms that help bring moreforeign direct investment (FDI) to fund its widening current account deficit (CAD). – (Mint Oct 1, 2018 p 20)

Singh, Nirvikar – "What ails the Indian economy?" – At India's stage of economic and institutionaldevelopment, kleptocracy in the private and public sector, which is most lucrative for large-scale, long-terminvestments, is the country's biggest economic problem. No country is able to eradicate this problem completely,but those that can contain the problem are the ones that grow the most sustainably. An article.– (FE Oct 3, 2018 p 7)

CURRENCY MARKET– EXCHANGE RATE

Barua, Abheek and Arora, Tushar – "How much more can the RBI intervene?" – The fact that we aremuch better protected today might just explain the RBI's reluctance to bring in a biggish chunk of dollars fromNRIs either through bonds or dollar deposits as it did in 2013. An article. – (BS Sep 28, 2018 p 8)

EMPLOYMENTRaghavan, T C A Srinivasa – "Jobs: Universal basic problem" – The Jobs Crisis in India by Raghavan

Jagannathan. A book review. – (BS Oct 2, 2018 p 9)

FOREIGN EXCHANGE RESERVES"Forex reserves rise to $401.7 bn" – India's foreign exchange reserves increased by $1.30 billion to $401.790

billion as on September 21, data from the RBI show. Foreign currency assets, which form a key componentof reserves, shot up by $1.25 billion from the previous week to $377.412 billion. FCAs are maintained inmajor currencies like US dollar, euro, pound sterling and Japanese yen. – (FE Sep 29, 2018 p 10)

SERVICES SECTORDayal, Raghu – "Services sector is the saving grace" – India has a lamented and lacklustre export record;

how to attempt a change. An article. – (FE Oct 3, 2018 p 7)

– 2 –

BANKING"13 banks lost out on pounds 40 mn in Force India sale: Bidder" – One of the two main bidders, keen to

acquire embattled Indian businessman Vijay Mallya's Force India Formula One racing team after it went intoadministration, has claimed that a consortium of 13 Indian banks lost out on estimated 40 million pounds as aresult of an "unfair" sales process concluded last month. A report. – (BS Oct 1, 2018 p 4)

"Banks not playing fair with acquirers" – The Payments Council of India accused banks of not sharing themerchant discount rate reimbursement for small-value digital transactions with merchant aggregators andacquirers. A report. – (FE Sep 28, 2018 pp 1, 2)

BANDHAN BANK"Bandhan eyes acquisition route to cut promoter stake" – Bandhan Bank told investors that it would

explore inorganic route to pare promoters stake. In a hurriedly organised telephonic interaction with investors,the Bandhan management tried to calm investors who had become anxious after the Reserve Bank of Indiapunished the bank for failing to reduce promoters' stake to below 40 per cent. The promoters may also selltheir holdings directly in the secondary market if the inorganic route option does not work out fast, the bankmanagement told investors, according to two people who were part of the interaction. A report.– (ET Sep 30-Oct 6, 2018 p 2)

"RBI bars Bandhan Bank from opening branches: Lender rapped for not trimming promoter holdingto 40%" – The RBI pulled up Bandhan Bank for its failure to bring down the promoter holding to 40 percent, as mandated in the licensing norms for universal banks. The promoter holding in the bank at present is82.28 per cent. The central bank also barred the bank from opening new branches and put a freeze on theremuneration of Bandhan Bank MD and CEO Chandra Shekhar Ghosh. A report. – (HBL Sep 29, 2018 p 1)

"To bring down promoter stake to 40%, Bandhan Bank eyes 'inorganic' ways" – Bandhan Bank isopen to exploring "inorganic opportunities" to pare promoters' stake to 40 per cent as mandated by theReserve Bank of India. In an analysts' call on Saturday, Sunil Samdani, CFO, Bandhan Bank, said the lendermay look at inorganic opportunities in MSME finance and affordable housing finance in line with the bank'soverall strategy for growth. It may also consider getting into mutual fund or insurance business at the holdingcompany level. A report. – (HBL Oct 1, 2018 p 17)

BANK OF MAHARASHTRA"BoM closes over 50 branches to cut costs" – The Bank of Maharashtra has closed 51 branches across

the country as part of cost-cutting measures in the banking industry. All the closed branches were in urbancentres and were declared unviable and incurring huge losses, according to the official of the Pune-headquartered public sector bank. The senior official said on the condition of anonymity that these 51 brancheshad been merged with neighbouring branches. This is the first such measure initiated by any PSB in Maharashtra.The BoM has around 1,900 branches all over India. – (HT Oct 4, 2018 P 2)

CANARA BANK"Canara Bank moves NCLT on RGPPL" – Canara Bank, a minority shareholder in Ratnagiri Gas and

Power Pvt. Ltd (RGPPL), has moved the New Delhi bankruptcy court months after a debt recast plan anddemerger was approved, in a move that has taken lenders such as the State Bank of India (SBI), IDBI Bankand ICICI Bank by surprise, said two senior bankers. – (Mint Sep 28, 2018 pp 1, 7)

"Canara Bank to raise Rs.6,000 crore through QIP" – Canara Bank said it proposes to raise Rs.6,000crore by issuing shares on private placement basis. – (HBL Sep 28, 2018 p 11)

CATHOLIC SYRIAN BANK"Six months later, Fairfax - CSB deal still stuck in govt files" – It has been more than six months since

Prem Watsa-promoted Fairfax Holdings said it would infuse Rs.12 billion into Catholic Syrian Bank (CSB)for a 51 per cent stake. However, the finance ministry is yet to clear the deal, though the Centre had said itwould clear such foreign direct investment (FDI) proposals in 8-10 weeks. The Reserve Bank of India hadapproved the first stake sale of an Indian bank to a foreign non-banking entity in July. A report.– (BS Oct 1, 2018 p 4)

– 3 –

FEDERAL BANK"Federal Bank fined Rs.5 cr for non-compliance" – Federal Bank has been penalised Rs.5 crore for non-

compliance on reporting of large borrower exposures and non-payment of customer compensations, amongother deficiencies, according to the Reserve Bank. The lender was found to have not complied with RBIdirections on reporting of data on Central Repository of Information on Large Credits (CRILC).– (FE Oct 4, 2018 p 10)

IDBI BANK"IDBI Bank board to weigh allotting controlling stake to LIC on 4 Oct" – IDBI Bank said its board will

meet on 4 October to consider preferential allotment of up to 51% shares to Life Insurance Corporation ofIndia. LIC already holds a 7.98% stake in the bank. A report. – (Mint Sep 29, 2018 p 21)

"IDBI Bank CEO & MD retires" – B Sriram, MD & CEO of IDBI Bank has superannuated on September30, the bank said in a notification to the exchanges. The government, however, is yet to decide on the newCEO of the bank which is in the process of being taken over by the LIC. "This is to inform that in terms ofGovernment of India's notification dated June 29, 2018 and consequent upon attaining the age of superannuation,B Sriram has ceased to be the MD & CEO of IDBI Bank with effect from September 30, 2018," accordingto the notification. – (H Oct 2, 2018 p 14)

IDFC BANK"IDFC Bank to see several senior-level exits post its merger with capital first" – Several senior

executives of IDFC Bank, which recently got regulatory approval to merge with non-banking finance company(NBFC) Capital First, are said to be leaving the company, according to three senior executives aware of thedevelopment. Resignations stem from duplication of roles such as risk, operations, HR. A report.– (ET Sep 28, 2018 p 8)

INDIAN OVERSEAS BANK"IOB launches new product for senior citizens" – World over October 1 each year is celebrated as

international Day of Older Persons. This year Indian Overseas Bank is celebrating October 1, 2018, asSenior Citizens' Day. Branches having more number of senior citizen customers are celebrating this day byorganising meeting of senior citizens duly attended by executives. Presently, IOB is extending various servicesto senior citizens such as pleasant on-branch experience, additional interest rate of 0.50 per cent for fixeddeposit, free cheque book facility, automatic conversion of status of savings bank account etc.– (Mint Oct 4, 2018 p 13)

"IOB to raise Rs.2,157 crore from Centre" – Indian Overseas Bank is seeking the shareholders' nod forissuing equity shares of face value of Rs.10 each to government of India on preferential basis aggregating toRs.2,157 crore, including the share premium. The EGM of the bank for this purpose will be held onNovember 2. – (FE Oct 4, 2018 p 10)

KARNATAKA BANK"Karnataka Bank unveils 'KBL-Force'" – Karnataka Bank has launched 'KBL-Force', a digital web tool

aimed at business lead capture and conversion. KBL-Force is an integrated lead management system,customised for end-to-end management of prospective leads from all loan, deposit and para- banking products.– (HBL Oct 3, 2018 p 6)

LAKSHMI VILAS BANK"Lakshmi Vilas Bank to raise Rs.2,000 cr via pref share sale" – The Tamil Nadu-based mid-sized private

sector lender Lakshmi Vilas Bank (LVB) is planning to raise around Rs.2,000 crore in fresh equity capitalbefore the end of the current financial year and has appointed JP Morgan Chase for advice.– (HBL Oct 1, 2018 p 17)

– 4 –

PUNJAB NATIONAL BANK"MD says PNB to turn profitable in FY19, Nirav Modi scam a bygone" – The Punjab National Bank

(PNB) is expected to turn profitable this fiscal and is poised for growth, its Managing Director Sunil Mehtasaid asserting that the Rs.14,000 crore Nirav Modi scam is a bygone. Mehta said he hopes PNB will be backin the black during 2018-19 due to various efforts taken by the bank after the fraud came to light in Januarythis year. The bank is slowly getting on to the growth path, he said adding that credit growth is picking up andhas surpassed industry average. A report. – (FE Oct 3, 2018 p 5)

"PNB raises lending rate by up to 0.2%" – Punjab National Bank (PNB) increased its benchmark lendingrates or MCLR for the short-term loans by up to 0.2 percent. With the revision overnight Marginal Cost ofFunds Based Lending Rate (MCLR) stands at 8.2 percent. The new rates are effective from October 1.– (IE Sep 30, 2018 p 15)

– WILFUL DEFAULTERS

"Bank's wilful defaulters' dues fall marginally to Rs.15,075 cr in August" – Outstanding dues of bigwilful defaulters of Punjab National Bank reduced marginally to 15,075.07 crore at end-August from Rs.15,175crore at the July end, according to the bank's data. In 2017-18, the lender had registered a net loss ofRs.12,283 crore - the highest ever by any bank in India so far, due to rising bad loans and parking huge sumto cover for losses due to the scam. A report. – (FE Oct 3, 2018 p 5)

STATE BANK OF INDIA"SBI halves daily ATM cash withdrawal limit to Rs.20,000" – The country's largest lender, State Bank of

India has lowered ATM cash withdrawal limit to Rs.20,000 a day, from Rs.40,000. The lower limit will beeffective from October 31. Hopes to lower instances of fraud and promote digital transactions with move. Areport. – (ET Oct 1, 2018 p 1)

"SBI moves to transfer merchant acquiring unit to finance arm" – State Bank of India said that it hasexecuted a business transfer agreement in respect of transfer of its existing merchant acquiring business(MAB) to its wholly owned non-banking finance subsidiary, SBI Payment Services Pvt Ltd.– (HBL Oct 2, 2018 p 6)

"SBI reviewing exposures to non-banking finance companies" – India's largest lender State Bank ofIndia is currently reviewing its exposures to non-banking finance companies (NBFCs) and this review isexpected to be completed within the next fortnight, according to a senior bank official. This review processassumes significance as IL&FS, a major infrastructure financing and construction company, has sent shockwaves through the country's NBFC sector when it defaulted on some of its debt obligations in recent weeks.A report. – (FE Sep 29, 2018 p 10)

VIJAYA BANK"Vijaya Bank board approves merger with BoB, Dena Bank" – The boards of state-run Vijaya Bank gave

in-principle approvals for its merger with Bank of Baroda along with another PSU lender Dena Bank. Earlierthis month, the government announced the merger of Bank of Baroda, Vijaya Bank and Dena Bank to createthe country's second-largest PSU lender by assets and branches. The board of decided to give its in-principleapproval for the amalgamation. – (FE Sep 30, 2018 p 12)

"Vijaya Bank has won the Rajbhasha Kirti Puraskar" – Vijaya Bank has won the Rajbhasha Kirti Puraskar(Region-C) for effective implementation of Hindi for the year 2017-18. The bank has won the award for thesecond year in a row. – (HBL Sep 28, 2018 p 2)

YES BANK"No window-dressing of loan accounts to conceal NPAs, says YES Bank" – Private sector lender YES

Bank, said it has not indulged in any window-dressing of its corporate accounts to conceal non-performingassets, and also denied that it had indulged in manipulation of the stock price ahead of fund-raising activities.A report. – (HBL Sep 28, 2018 p 6)

– 5 –

"Panel for MD & CEO selection to be in place by Oct 7: YES Bank: Clarifies that its asset qualitycontinues to be stable" – Private lender YES Bank said it is fully geared up to work out a succession planfor the post of Managing Director and CEO and said the two external experts of the search and selectioncommittee would be finalised by October 7. – (HBL Oct 2, 2018 p 1)

"Rana Kapoor: Will never sell stake in YES Bank: Says the stake will go to his daughters" – YESBank Managing Director and CEO Rana Kapoor on Friday underlined his commitment to the interest of thebank and its stakeholders, and vowed to never sell his stake in it. In this leadership transition at YES Bank, Icontinue to remain fully committed to the interests of the bank and all its stakeholders. I will be fully guidedby the Board of Directors of YES Bank and the Reserve Bank of India. A report. – (HBL Sep 29, 2018 p 5)

"Yes Bank chairman looks to restore investor confidence" – Yes Bank chairman Ashok Chawla haswritten to employees asking them to go beyond their assigned roles to clarify retail investors' doubts and builda deeper relationship with every borrower. Chawla's letter comes after the Reserve Bank of India (RBI) cutshort managing director Rana Kapoor's term to 31 January. Stocks fell steeply over the past few weeks. Ourmost immediate focus is in ensuring continued and uninterrupted services to our customers, according toAshok Chawla, Chairman, Yes Bank. A report. – (Mint Oct 4, 2018 p 5)

"Yes Bank promoter not for Kapoor's extension" – Yes Bank Ltd's decision to request the regulator toextend managing director Rana Kapoor's tenure is not in the best interests of the lender, Madhu Kapur,widow of co-founder Ashok Kapur and the bank's second largest shareholder, wrote to the board. In the 28September letter to the Yes Bank board, Kapur suggested that the board expedite the process of finding asuccessor to Kapoor so that the bank does not suffer any long-term setback. A report.– (Mint Oct 1, 2018 pp 1, 6)

"Yes Bank's investors poorer by Rs.44,000 cr" – Investors in Yes Bank Ltd have lost Rs.44,000 crore infive weeks as the bank's shares fell following uncertainty around its performance and the appointment of itsnext chief executive officer (CEO), after the banking regulator rejected a board proposal to extend CEORana Kapoor's tenure for three years. A report. – (Mint Sep 28, 2018 pp 1, 7)

USA– FEDERAL RESERVE

"Fed faces questions on whether gentle tightening is at odds with booming economy" – US presidentDonald Trump was predictably displeased about the Federal Reserve's rate increase, saying he was unhappyabout the decision and that he was worried the central bank enjoys lifting rates. A report.– (FT Sep 28, 2018 p 4)

"Fed shows due caution about future tightening" – Powell wisely stresses uncertainty over the neutral rateof interest. An editorial. – (FT Sep 28, 2018 p 8)

"US Fed raises interest rates and remains bullish despite trade war" – The US Federal Reserve raisedshort-term interest rates for a third time this year and signalled it would forge ahead with plans to tightenpolicy even as central bankers face White House pressure to keep down borrowing costs. A report.– (FT Sep 27, 2018 p 1)

BANK CONSOLIDATION– PUBLIC SECTOR BANKS

"Chiefs of Dena Bank, Bank of Baroda, Vijaya Bank to meet by 12 Oct over merger" – The heads ofthe three state-run banks awaiting merger-Dena Bank, Bank of Baroda (BoB) and Vijaya Bank-will meet by12 October to plan out its implementation, according to Dena Bank's newly-appointed managing director(MD) and CEO Karnam Sekar. Some basic discussions have happened between all three of us (CEOs) lastweek; we will meet by 12 October, but the date has not yet been finalized. We have been speaking to eachother but have not yet met on the merger. We need to work on the broad contours of the exercise along withtimelines. A report. – (Mint Oct 3, 2018 p 2)

– 6 –

Raju, B Yerram – "Why merger of PSBs is not a good idea" – Human resource and cultural issues apart,most mergers in the past haven't led to improvement in profits. An article. – (HBL Oct 4, 2018 p 9)

Ray, Atmadip – "Public sector bank mergers: It is just a baby step" – The announcement of a three-waymerger between Bank of Baroda, Vijaya Bank and Dena Bank received a lukewarm response from industryand investors. That reflects the challenges that lie ahead. The success or failure of this move would determinethe future of banking industry. An article. – (ET Oct 3, 2018 p 12)

BANKERS' INVESTIGATIONS"K C Chakrabarty's PNB stint under CBI lens" – Reserve Bank of India (RBI) former deputy governor

K C Chakrabarty is under scrutiny by the Central Bureau of Investigation (CBI) over his alleged "indiscretions"as chairman of Punjab National Bank (PNB), said one of several people with knowledge of the matter. Theinvestigations don't relate to his time at the regulator. A second case involving Chakrabarty pertains to allegationsof forgery made by Indian Overseas Bank against a travel company. Chakrabarty has denied all allegationsof wrongdoing. A report. – (ET Oct 3, 2018 p 1)

BANKING REGULATOR-RBIMohan, Rakesh – "Responsibility fulfilled" – In part 2 of the series, the author argues that some changes

made to the RBI board lack merit and examines the role of the central bank in regulating the payment andsettlement system. An article. – (BS Oct 4, 2018 p 6)

– INDEPENDENCE

Mohan, Rakesh – "Preserving the independence of the RBI" – In part 1 of a series, the author says ifproposals to set up an appellate body to review RBI's regulatory and supervisory decisions were to beimplemented, the whole supervisory process would get mired in constant litigation. An article.– (BS Oct 3, 2018 p 8)

BLOCKCHAIN TECHNOLOGY"Banks buy in to blockchain project" – More than 75 of the world's biggest banks are turning to blockchain

to fight the threat of new payments rivals in what will be the sector's largest application of the technology thatunderpins cryptocurrencies. More than 70 banks, including Societe Generale and Santander, are joining theInterbank Information Network that JPMorgan, Royal Bank of Canada and ANZ have been testing for 11months to see if blockchain technology can speed up payments that are not run of the mill. A report.– (FT Sep 26, 2018 p 13)

BUSINESS CORRESPONDENTS– DOORSTEP BANKING

"Post GST, private lenders may pull out deposit services from banking agents: Move may dent govtefforts to provide banking services in rural hinter land where correspondents play a big role" – Anumber of private banks could discontinue offering domestic money deposit services from their bankingcorrespondents (BC) fearing the levy of goods and services tax (GST) on these agents would make theseservices unviable. This could dent government efforts to provide banking services in the hinterland wherebanking correspondents provide doorstep banking. Several banks have already communicated their latestplans to their banking correspondent service providers while others are expected to pass on the tax, said anofficial with one such BC service provider. A report. – (ET Oct 2, 2018 p 11)

CAPITAL ADEQUACY"Govt, RBI move gives cushioning support to banks in managing capital adequacy" – A report.

– (HBL Sep 29, 2018 p 13)

– 7 –

COOPERATIVE BANKS– RUPEE CO-OPERATIVE BANK

"Rupee Bank gets another breather from RBI, submits proposal for relaunch" – The Reserve Bank ofIndia has extended its directions to the Rupee Cooperative Bank till November 30, giving the bank somemore time to try for a merger or relaunch the bank. A press release issued by Sudhir Pandit, chairman of theboard of administrators, stated that they had submitted a proposal for relaunching the bank. A report.– (IE Oct 4, 2018 Pt.II p 3)

CORPORATE CREDIT"Banking sector sees uptick in corporate loan demand: SBI saw 10% credit growth in Sept.: MD" –

The banking sector has begun seeing an uptick in demand for loans from the corporate sector across mostsegments, according to Dinesh Kumar Khara, managing director, State Bank of India. We are certainlyseeing loan demand, adding that this was happening across diversified sectors. Mr Khara was participating ina CII - Eastern Region banking colloquium. Yes, there is demand from public sector units, even large corporatesare setting up projects. – (H Sep 29, 2018 p 14)

CREDIT RATING AGENCIESPhilipose, Mobis – "What can be done about the credit rating problem" – Regulators are at the heart of

the problem related to credit rating agencies. An article. – (Mint Oct 4, 2018 p 8)

DIGITAL PAYMENTSRoongta, Prateek – "The top five trends in India's digital payment landscape" – Consumers are rapidly

switching to non-cash payment methods that provide simple and convenient ways to transfer money acrossbank accounts. An article. – (Mint Oct 1, 2018 Pt.II p 2)

FINANCIAL TECHNOLOGYBhunia, Abhirup – "Taking financial services to rural folk" – Fin-tech firms can play a major role, but the

challenges of low digital literacy and internet penetration must be addressed fast. An article.– (HBL Sep 29, 2018 p 8)

FOREIGN BANKS– CITIGROUP

Lokeshwarri, S K – "Citi Citi, bang bang: Citigroup's cosy ties with the US government form thebackdrop to episodes such as the 2008 crisis" – Borrowed time: two centuries of booms, busts andbailouts at Citi. A book review. – (HBL Oct 1, 2018 p 20)

HAIRCUT– IL&FS

"Lenders hopeful, but stare at haircut" – Lenders to the debt-laden IL&FS group of companies may haveto take a 10-15% haircut in many projects as buyers could bargain hard and bring down their receivables. Aclutch of lenders led by Bank of India (BoI) and State Bank of India (SBI), and including foreign banks, havelent Rs.34,480 crore, which is part of IL&FS' total consolidated debt of Rs.91,000 crore. A report.– (ET Oct 3, 2018 p 1)

IMMEDIATE PAYMENT SERVICE (IMPS)"Real-time payment service IMPS ranked No 1 globally" – India's Immediate Payment Service (IMPS)

is way ahead of similar real-time payment programmes around the world, including those in countries such asthe United States and China, according to a new report. – (HBL Sep 28, 2018 p 6)

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INSOLVENCY AND BANKRUPTCY BOARD OF INDIA"IBBI needs to have more powers" – Arguing for better regulation of the Committee of Creditors (CoC)

formed under the Insolvency and Bankruptcy Code, according to NCLAT Chairperson Justice SudhansuJyoti Mukhopadhaya. That the Insolvency and Bankruptcy Board of India (IBBI) should be given morepowers so that it can effectively regulate the entire insolvency ecosystem. – (IE Oct 2, 2018 p 11)

"Just the threat of IBC process made debtors pay up Rs.1 lakh crore" – Edited excerpts from aninterview with MS Sahoo, Chairman, Insolvency and Bankruptcy Board of India (IBBI). As the Insolvencyand Bankruptcy Board of India (IBBI) turns two, he dwells upon the efficacy of the new insolvency law inpreventing a pile-up of bad debts in future as well as good recovery from default cases where the law isapplied fairly early. He also says just the threat of IBC is forcing debtors to pay up, as operational creditorshave recovered more than Rs.1 lakh crore even before their insolvency applications were admitted by NCLTs.Commenting on the delay in the resolution of the large cases (only four of the 12 large cases recommendedby the central bank over a year ago have been resolved so far), he says every new law takes some timeinitially to be settled, after which the process picks up pace. – (FE Oct 1, 2018 p 2)

INSOLVENCY AND BANKRUPTCY CODEMukhopadhyay, Sukumar – "Insolvency and Bankruptcy Code enmeshed in legal action" – A dawn

of a new era. That is how the Insolvency and Bankruptcy Code recently enacted and worked up wasdescribed in news media and even by economists and analysts. Now after a group of power asset companieswent to the Supreme Court and has obtained time for no action till November 11, 2018, it is clear that the apexcourt has treated the issue of the Reserve Bank of India's (RBI's) policy initiative on realising dues from non-performing assets (NPA) as justiceable. An article. – (BS Oct 1, 2018 p 12)

– NCLT

"Insolvency cases: Govt plans eight special courts" – The government plans to set up eight special courtsunder the National Company Law Tribunal to handle rising number of cases under the insolvency law,according to a senior official. In recent times, there have been a substantial increase in the number of casesunder the Insolvency and Bankruptcy Code, which provides for market-determined resolution in a time-bound manner. As many as 6,326 companies had filed cases under the Code with the NCLT till June end. TheCorporate Affairs Ministry has proposed setting up eight special courts under the NCLT to deal with theinsolvency cases. – (BS Sep 28, 2018 p 4)

INTER-CREDITOR AGREEMENT– PROJECT SASHAKT

"ICA may become operational by mid-Oct" – The inter-creditor agreement (ICA), known to have beensigned by 33 institutions so far, is likely to become operational by mid-October, according to Sunil Mehta, non-executive chairman, Punjab National Bank, and head of the committee whose recommendations formed thecore of Project Sashakt. A report. – (FE Oct 4, 2018 p 10)

LIQUIDITY MANAGEMENT"RBI to infuse Rs.36,000 cr. to ease liquidity" – The Reserve Bank of India (RBI) has decided to infuse

Rs.36,000 through open market purchase of bonds in October as liquidity has tightened due to an uptick inloan demand in the festive season. – (H Oct 2, 2018 p 14)

Merwin, Radhika – "RBI's 'easing' can release Rs.2.5-lakh cr into the system: Yet, the central bankmay have to persist with OMOs for consistent liquidity infusion" – In a bid to calm shaken nerves andrestore confidence in the market, the RBI brought in liquidity measures that could release about Rs.2.5 lakhcrore into the system. An article. – (HBL Sep 28, 2018 p 6)

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LOAN PRICING"Lenders raise retail lending rate, MCLR" – Days ahead of the Reserve Bank's monetary policy

announcement, banks and housing finance companies have hiked the lending rates. Mortgage lender HDFCon Monday increased its retail prime lending rate (RPLR) by 10 basis points with immediate effect. WhileState Bank of India increased the marginal cost of funds based lending rate (MCLR) by 0.05 basis pointswith from Monday, ICICI Bank raised the MCLR by 10 basis points. – (IE Oct 2, 2018 p 11)

MINIMUM BALANCE NORM"Banks plan new products to ensure customers maintain minimum deposits: Lenders aiming to

dispel negative perception about banking industry" – Public sector banks will look for alternativeproducts to attract customers to keep minimum deposits in bank accounts. At present, all savings bankaccounts, except those under PM Jan Dhan Yojana, Basic Savings Bank Deposit (BSBD), salary accounts,kids' accounts and accounts of pensioners, attract charges if the minimum balance is not maintained. Areport. – (HBL Oct 3, 2018 p 6)

MOBILE BANKING"Mobile banking: Five pitfalls to avoid while using mobile banking services" – It is safer to login using

mobile apps for banking than that of logging through your mobile browser. Free wi-fi could be found inrestaurants, coffee shops, railway stations, airports and many other public places. But when accessing freewi-fi, it is important to note that the activity you are conducting may be visible to someone else. A report.– (FE Oct 2, 2018 p 13)

MONETARY POLICY"Monetary policy committee must focus on financial stability now" – Monetary policy watchers are

hoping that at its meeting this week, the MPC (monetary policy committee) goes beyond its expected guidanceon growth and inflation to comment on financial stability. A report. – (Mint Oct 3, 2018 p 4)

"Monetary policy: Fed chief defends caution on rate rises despite wage growth" – Rising wages in theUS do not suggest the country's jobs market is overheating, the Federal Reserve chairman said, as hedefended his cautious approach to lifting interest rates. A report. – (FT Oct 3, 2018 p 2)

"MPC should focus on inflation, not increase policy rate to defend the rupee: Sonal Verma" – Aheadof the Reserve Bank of India's upcoming monetary policy committee (MPC) meeting on 3-5 October, CNBCTV-18 assembled a 'Citizens' MPC' to discuss the issues expected to come up at the three-day meeting.Present in this panel were Pronab Sen, former principal adviser to Planning Commission; Sajjid Chinoy, chiefIndia economist at JP Morgan; Samiran Chakraborty, chief economist at Citi; Sonal Varma, India chiefeconomist at Nomura; and Soumya Kanti Ghosh, group chief economic advisor at State Bank of India (SBI).The discussion was followed by a vote on the expected rate hike, and RBI's policy stance. Edited excerpts.The thing that will drive RBI policy is how much inflation expectations have gone up in comparison to theAugust policy, according to Chakraborty. – (Mint Oct 3, 2018 p 11)

"No easy outs: RBI faces a real dilemma" – An editorial. – (BS Oct 4, 2018 p 7)

"RBI may raise policy rates by 25 bps on Friday, say economists" – The Reserve Bank of India's (RBI's)monetary policy committee (MPC) may raise policy rates by 25 basis points on Friday, for the third time thisyear, along with a change in stance to a hawkish one, amid surging crude oil prices and weakening rupee. Ofthe 15 economists surveyed by Mint, 14 expect RBI to raise repo rate, the rate at which it lends to commercialbanks, to 6.75%. Only one economist expects a 50 basis points hike to 7%. While a rate hike is unanimousnext week, most economists expect one more hike before the end of 2018-19. – (Mint Oct 1, 2018 p 8)

"The case for another interest rate hike" – A comparatively conservative policy stance will serve Indiabetter at this stage. An article. – (Mint Oct 1, 2018 p 18)

"Tricky call ahead" – The RBI faces a tough call on setting policy rates given the inflation and liquidityconcerns. An editorial. – (H Oct 1, 2018 p 8)

– 10 –

Bandyopadhyay, Tamal – "Policy rate has no relevance at this point, guidance is the key" – To arrestthe current account deficit, we need to encourage domestic savings. An article. – (Mint Oct 1, 2018 p 8)

Bhardwaj, Upsana – "Tough task ahead for monetary policy panel amid increasing global volatility"– An article. – (Mint Oct 3, 2018 p 8)

Chakraborty, Samiran – "Inflation momentum has slowed, but shadow of other macro concernslooms over MPC" – An article. – (Mint Oct 2, 2018 p 7)

Ghosh, Sugata – "MPC must go beyond inflation" – Market would be fishing for clues from the MonetaryPolicy Committee - its views on the crisis in the markets and how such concerns are addressed along with itsjob to rein in inflation. An article. – (ET Oct 1, 2018 p 7)

Malik, Rajeev – "The MPC faces the risk of losing the plot" – The MPC's neglect of the factorsaffecting the rupee's health has come back to haunt it. An article. – (Mint Oct 3, 2018 p 15)

Nayar, Aditi – "Expect RBI to hike rates" – Inflation risks posed by revised minimum support prices, highercrude oil prices and a weaker INR, would push up the headline CPI inflation to 4.6-5.0% in Q4 FY2019.Rising interest rates and higher commodity prices may impact consumer sentiment ahead of the festiveseason. An article. – (FE Oct 3, 2018 p 6)

Pattnaik, R K – "Given IL&FS crisis, MPC should hold rates" – Credit and money markets are indisarray, impacting monetary transmission. The first task is to address the liquidity rupture. An article.– (HBL Oct 3, 2018 p 8)

Rao, M Govinda – "Need cautious monetary and fiscal policies" – All factors considered, RBI shouldhold its policy rate, if not raise it by 25 bps. A rate cut now won't do much since banks will likely be unwillingto lend given NPA burden. An article. – (FE Oct 2, 2018 p 8)

Sanyal, Siddhartha – "MPC's difficult balancing act" – The Indian rupee will likely remain exposed to theebbs and flows of global tides in the near term. An article. – (Mint Oct 1, 2018 p 8)

Sinha, Dhananjay – "The RBI's monetary policy dilemma" – The wholesale price index inflation numberspoint toward continued input cost pressures. Despite the recent decline in headline inflation, the marketinterest rates have already hardened. An article. – (Mint Oct 4, 2018 p 16)

PUBLIC SECTOR BANKS– WRITING-OFF LOANS

"RBI data on public sector banks: In 4 yrs, write-off 7 times recovery" – Between April 2014 and April2018, the country's 21 State-owned banks ended up writing off Rs.3,16,500 crore of loans even as theyrecovered Rs.44,900 crore written off on a cumulative basis - or less than one-seventh the write-off amount- according to RBI data. The recovery takes place on the total cumulative write-off and not only on write-offfor a specific period. To put this number in perspective, the amount of bad loans written off by public sectorbanks (PSBs) during the four-year period is well over twice the projected budgetary expenditure on health,education and social protection for 2018-19, at Rs.1.38 lakh crore. Further, from April 2014 to April 2018, theloans written off by the 21 PSBs were over 166 per cent of the amount in the 10 years till 2014. NPAs wentup from 4.62 per cent in 2014-15 to 7.79 per cent in 2015-16, and climbed to as high as 10.41 per cent byDecember 2017. By the end of 2017, as a result of the AQR, gross NPAs of PSBs were up to aroundRs.7.70 lakh crore. A report. – (IE Oct 1, 2018 pp 1, 2)

STATUTORY LIQUIDITY RESERVES– LIQUIDITY MANAGEMENT

"RBI relaxes SLR rules to ease liquidity fears: Liquidity Coverage Ratio upped from 11% to 13% from Oct 1" –The Reserve Bank of India has allowed banks to dip into the Statutory Liquidity Reserves to resolve anyliquidity issues. Banks are required to maintain an SLR - the proportion of deposits that banks are mandatedto invest in central and state government securities - of 19.5 per cent of deposits. Now, banks can draw up to15 per cent of the deposits compared to 13 per cent earlier. A report. – (HBL Sep 28, 2018 p 1)

– 11 –

URBAN COOPERATIVE BANKS– SMALL FINANCE BANKS"RBI issues norms for urban coop banks becoming SFBs" – The Reserve Bank of India said urban

cooperative banks (UCBs) with minimum net worth of Rs.50 crore and maintaining capital to risk (weighted)assets ratio of 9 per cent and above, are eligible to apply for voluntary transition to small finance bank (SFB).A report. – (HBL Sep 29, 2018 p 15)

VARIABLE PAY FORMULA"New variable pay formula to cover loss-making PSBs too" – New variable pay formula: * IBA has

proposed a 8% hike in basic pay along with a new variable pay component based on individual performanceof Public Sector Bank. * Bank showing growth in operating profit from previous year will make cut fordolling out variable pay. * Bank with ROA of (-)0.75 and below and operating profit of at least 15 % will becounted as best performing bank. * Variable pay will be paid for 5 to 30 days salary of an employee. A report.– (BS Oct 3, 2018 p 4)

WAGE NEGOTIATIONS"Indian Banks' Association urged to improve wage hike offer" – Bank unions have told the Indian Banks'

Association that its proposal of offering a 6 per cent wage hike and an additional wage hike based on theperformance/profits of individual banks does not meet their demand for increase in wages. Responding to the6 per cent wage hike offer, C H Venkatachalam, General Secretary, All India Bank Employees' Association,said: "We pointed out that their (IBA's) offer is too inadequate and we asked them to improve their earlieroffer." A report. – (HBL Oct 2, 2018 p 1)

RBI CIRCULARS"Auction of Government of India Dated Securities"– (RBI Circular RBI/2018-2019/53 Ref. No. IDMD/

768/08.02.032/2018-19 dated 01.10.2018)"External Commercial Borrowings (ECB) Policy - Liberalisation"– (RBI Circular RBI/2018-2019/54

A.P. (DIR Series) Circular No.10 dated 03.10.2018)

AGRICULTURE & RURAL DEVELOPMENT

AGRICULTURAL CRISIS"Indian agriculture's problem of scale" – Loan waivers and electricity subsidies are band-aids at best; a

deeper transformation is needed. An article. – (Mint Oct 4, 2018 p 16)

INDUSTRY

INFRASTRUCTURE FINANCE"Why India needs a better model to finance infra projects" – When one of India's largest shadow bankers

- an institution with 169 subsidiaries that calls itself Infrastructure Leasing and Financial Services - admittedto a series of defaults last week, Indian markets came close to a crisis. Governments should ensure that theydo not do anything that will halt projects before they are finished. A report. – (HBL Oct 4, 2018 p 5)

INFRASTRUCTURE LEASING AND FINANCIAL SERVICES (IL&FS)"Govt okay with rejig of PSB loans" – Govt okay with rejigging of crisis-hit IL&FS' long-term loans from

PSBs With half of IL&FS assets being invisible. The government will be okay with restructuring the long-term loans the company has taken from public sector banks (PSBs), said sources in the government. This isbecause half of the leveraged company's assets are invisible. An official aware of the matter said IL&FSwould honour its short-term debts; only long-term debts would be restructured. With half of IL&FS assetsbeing invisible, the government is willing to allow a restructuring of loans. Long-term loans will be rolled over,said the official, adding that about Rs.200-billion non-current assets of the company were intangible andcannot be sold. A report. – (BS Oct 4, 2018 p 4)

– 12 –

"IL&FS finances need to be looked into and cleaned up, it's public money: Malini Shankar" – Editedexcerpts from discussion with Malini Shankar and Nand Kishore, new members of the IL&FS Board, joinArijit Basu, managing director, SBI, Kiran Karnik, former chairman, Satyam Computer Services, and SandeepParekh, founder, Finsec Law Advisors, discuss the future of IL&FS and the impact it can have on theindustry. – (Mint Oct 2, 2018 p 11)

"NCLT allows govt to take control of IL&FS board: New six-member board to prepare resolutionplan for the beleaguered firm" – In an attempt to salvage the debt-laden IL&FS, a special bench of theNational Company Law Tribunal (Mumbai) agreed to a petition by the Ministry of Corporate Affairs toconstitute a new six-member board to take charge of the beleaguered company. The existing 10-memberboard has been suspended, in effect giving the Centre direct control over the company. A report.– (HBL Oct 2, 2018 p 1)

"Turnaround plan: IL&FS defaults again; LIC, SBI may hike stake" – Even as debt-laden IL&FSdefaulted on more repayments on Saturday, the IL&FS board, at the company's annual general meeting(AGM), said it expects its largest shareholder, Life Insurance Corporation of India (LIC), as well as state-owned State Bank of India (SBI), to infuse more capital by subscribing to its proposed Rs.4,500-crore rightsissue. A report. – (FE Sep 30, 2018 pp 1, 11)

INFRASTRUCTURE SECTOR"A Pandora's box may have just been opened: From dependence on govt projects to delayed payments,

IL&FS crisis represents what the infra industry is going through" – The IL&FS saga has opened upa Pandora's box of issues that the infrastructure sector has been struggling with for years, and could causegreater harm in the days to come. While the IL&FS case per se may be one-off, there are issues that all theindustry players, irrespective of their financial strength and credit profile, are facing. A report.– (HBL Oct 3, 2018 p 5)

"Infra sector growth slows to 4.2% in August" – The growth of eight infrastructure sectors slowed downto 4.2% in August on account of a decline in production of crude oil and fertiliser. The core sectors hadexpanded by 7.3% in July 2018. The growth rate of the eight infrastructure sectors of coal, crude oil, naturalgas, refinery products, fertilisers, steel, cement and electricity was 4.4% in August 2017. A report.– (FE Oct 2, 2018 p 2)

MANUFACTURING"PMI: Manufacturing sector activity rises in September" – The country's manufacturing sector activity

improved in September amid gains in new orders, output and employment, according to a monthly survey.The Nikkei India Manufacturing Purchasing Managers' Index strengthened slightly in September to 52.2, upfrom 51.7 in August, as sales rose from both domestic as well as foreign clients. This is the 14th consecutivemonth that the manufacturing PMI remained above the 50-point mark. In PMI parlance, a print above 50means expansion, while a score below that denotes contraction. A report. – (FE Oct 2, 2018 p 2)

SMALL SCALE INDUSTRY

MSMEs– FINANCE

"Govt raises loan limit for MSMEs to over Rs.1 crore" – The government has enhanced the loan limit formicro, small and medium entrepreneurs to over Rs.1 crore under the Prime Minister Employment Generationprogramme. Giriraj Singh, Minister, Micro, Small and Medium Enterprises, said the government was lendingbetween Rs.25 lakh and Rs.1 crore to successful entrepreneurs at 15 per cent interest subsidy but suchentrepreneurs can now apply for loan over and above the limit. A report. – (HBL Oct 3, 2018 p 4)

– 13 –

SIDBI"SIDBI: Udyam Abhilasha" – On the occasion of birth anniversary of Mahatma Gandhi i.e. October 2, 2018,

SIDBI will be launching a national level Entrepreneurship Awareness Campaign, Udyam Abhilasha in 115Aspirational Districts identified by NITI Aayog in 28 states and reaching to around 15,000 youth. SIDBI willjoin to contribute to 'the transformation mission' unleashed for these districts. – (BS Oct 4, 2018 Pt. II p 3)

INTERNATIONAL ECONOMICS

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

INTERNATIONAL MONETARY FUND (IMF)"Gita Gopinath appointed IMF Chief Economist" – India-born economist Gita Gopinath was appointed

chief economist of the IMF, according to the IMF. Gopinath will succeed Maurice (Maury) Obstfeld, whowill retire at the end of 2018. She currently serves as the John Zwaanstra Professor of International Studiesand Economics at Harvard University. Gopinath is one of the world's outstanding economists, with impeccableacademic credentials, a proven track record of intellectual leadership, and extensive international experience,according to Christine Lagarde, Managing Director, IMF. – (BS Oct 2, 2018 p 1)

MANAGEMENT

CORPORATE SOCIAL RESPONSIBILITY"Govt sets up panel to review CSR framework" – The Centre set up a high-level panel to review the

existing framework of corporate social responsibility and formulate a road map for a coherent policy on CSR.The 11 member panel will be headed by Injeti Srinivas, secretary, ministry of corporate affairs and includesformer badminton player Prakash Padukone, among others. A report. – (TI Sep 29, 2018 p 20)

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