QBiz: Govt Mulls Exiting BPCL, SCI; Anil Ambani Threatened at AGM
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1. Govt Mulls Exiting BPCL, SCI; Slashing Concor Stake to 25%
In what could be a pathbreaking disinvestment move, a panel of secretaries has proposed that the government exit four public sector undertakings (PSUs) — fuel retailer Bharat Petroleum, Shipping Corporation of India, and power companies THDC and NEEPCO—while paring its holding in Concor from around 55 percent to 25 percent.
The two power PSUs may be purchased by NTPC and the government will try to push the entire process of selling its stakes in these five firms this year itself.
The plan will have to be cleared by the Union cabinet before the sale process can commence, officials familiar with the development told TOI. A source said following the recommendations of the committee, the proposal will be moved for cabinet approval in the next two weeks.
(Source: The Times of India)
2. In a First, Anil Ambani Threatened With Class Action Suit at AGM
Massive erosion of wealth due to poor performance leading to frequent rating downgrades has forced irate shareholders of the Anil Ambani Group companies to complain against the management and threaten to file class action suit.
Speaking at the AGM of Reliance Power on Monday, 30 September, a shareholder even threatened to make history by filing the country's first class action suit against the group companies, if the issues he raised are not addressed in the next two-three months.
The shareholder, who claimed to be a corporate lawyer from the city, also said he has lost over 90 percent of the value of over Rs 3 crore investment in three of the seven Reliance Group companies.
(Source: The Economic Times)
3. Canara, Corporation Bank Rush to Meet RBI Deadline, Introduce Repo Linked Loan Products
Rushing to meet the RBI deadline of 1 October, many public sector lenders like Canara and Corporation Bank announced launch of repo rate linked lending rate for faster transmission of interest rate cut to borrowers.
Earlier this month, the Reserve Bank of India (RBI) made it mandatory for banks to link their retail and MSME loans to external interest rate benchmarks effective 1 October for faster transmission of rate cut to borrowers.
With banks launching this product, rates for home, car and personal loans will come down.
(Source: The Financial Express)
4. Despite the ‘Sop’ Opera, Govt Sticks to Fiscal Deficit Target
The government on Monday, 30 September announced that it will borrow Rs 2.68 lakh crore during the second half of the current fiscal, beginning 1 October. It also made it clear that there will be no change in the fiscal deficit target for now.
Meanwhile, the fiscal deficit for the first five months (April-August) has been nearly 79 percent of the Budget Estimate of Rs 7.03 lakh crore. Normally, borrowing is front-loaded during the first half, and hence, it is less in the second half. Accordingly, the second half borrowing will be Rs 2.68 lakh crore or 37.75 percent of the Budget Estimate. First-half borrowing was at Rs 4.42 lakh crore or 62.25 percent.
(Source: The Hindu BusinessLine)
5. Large Withdrawals Led to RBI Imposing Curbs on PMC Bank
Large withdrawals of deposits from Punjab & Maharashtra Co-operative Bank (PMC Bank) in a span of two-three days forced the Reserve Bank of India (RBI) to put curbs on the troubled bank, according to a person aware of the matter.
These withdrawals, which started on 19 September, amounted to more than 5 percent of total deposits on some days, the person said on condition of anonymity.
These large-scale withdrawals, coupled with news of a build-up in non-performing assets and attendant capital erosion, prompted the central bank to step in and place restrictions on 23 September.
6. NBFCs Back in Favour, Raise Rs 40K Crore From Banks in FY20
Banks have lent close to Rs 40,000 crore to finance companies during the first five months of the current fiscal as credit demand slipped, with credit to industry (manufacturing sector) falling by Rs 1.2 lakh crore (-1.2 percent).
This makes loans to non-banking finance companies (NBFCs) the highest growth segment for banks after home loans. Home loans grew by Rs 54,662 crore. Among other major segments, loans to services also shrunk by Rs 65,411 crore (-2.7 percent)
Although personal loans continue to be the fastest growing segment, within this, credit to consumer durables contracted by Rs 815 crore (-13 percent). Interestingly, the RBI had recently reduced the risk weightage on consumer loans to encourage more loans to this segment.
(Source: The Times of India)
7. Forever 21 Fashion Chain Files for Bankruptcy
Low-price fashion chain Forever 21, a one-time hot destination for teen shoppers that fell victim of its own rapid expansion and changing consumer tastes, has filed for Chapter 11 bankruptcy protection.
The privately held company based in Los Angeles said Sunday, 29 September it will close up to 178 stores. The company once had more than 800 stores in 57 countries.
“Forever 21’s restructuring will focus on maximizing the value of our US footprint and shuttering certain international locations,” the company said in a statement. “As such, and as part of our filing, we have requested approval to close up to 178 stores across the US. The decisions as to which domestic stores will be closing are ongoing, pending the outcome of continued conversations with landlords. We do, however, expect a significant number of these stores will remain open and operate as usual, and we do not expect to exit any major markets in the US,” it said.
(Source: Hindustan Times)
8. Suppressing Criticism a Sure Fire Recipe for Policy Mistakes: Raghuram Rajan
People in authority have to tolerate criticism and suppressing criticism is a sure fire recipe for policy mistakes, former Reserve Bank of India Governor Raghuram Rajan said Monday, 30 September. In an essay on LinkedIn, Rajan said governments that suppress public criticism do themselves a gross disservice.
“People in authority have to tolerate criticism. Undoubtedly, some of the criticism, including in the press, is ill-informed, motivated, and descends into ad-hominem personal attacks. I have certainly had my share of those in past jobs. However, suppressing criticism is a sure fire recipe for policy mistakes. If every critic gets a phone call from a government functionary asking them to back off, or gets targeted by the ruling party’s troll army, many will tone down their criticism. The government will then live in a pleasant make-believe environment, until the harsh truth can no longer be denied,” Rajan wrote in his essay.
(Source: The Indian Express)
9. Indiabulls Plunges 38% on Probe Order
Shares of Indiabulls Housing Finance Ltd on Monday, 30 September nosedived over 38 percent, its biggest ever fall after the Delhi High Court sought the response of the Centre and the RBI on a plea probe into the alleged illegalities, siphoning of funds and violations committed by the promoters.
The stock also came under pressure after Reserve Bank of India (RBI) initiated prompt corrective action (PCA) plan on Lakshmi Vilas Bank, which may jeopardise Indiabulls Housing’s merger proposal with the lender.
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