QBiz: DHFL Crisis Puts Over 1,00,000 Fixed Deposit Holders at Risk
Top business stories of the day.
1. DHFL Crisis Puts Over 1,00,000 Fixed Deposit Holders at Risk
More than 1,00,000 fixed deposit holders of Dewan Housing Finance Corp Ltd (DHFL) risk losing their savings as allegations of fraud and fund diversion grip the mortgage lender.
Instances of fund diversions, as revealed in a forensic audit by accounting firm KPMG, could potentially derail a resolution plan for DHFL that has been in the works for several months. The revelations have come as a setback for DHFL’s lenders, primarily commercial banks that have an exposure of Rs 38,342 crore to the finance company, as the government could initiate a probe by the Serious Fraud Investigation Office (SFIO). If SFIO starts an investigation, all repayments are likely to be frozen.
Under the proposed debt recast plan, lenders were to take a 51% stake in DHFL by converting a portion of the company’s debt into equity. This plan is being finalised under the 7 June stressed asset circular of the Reserve Bank of India.
2. AGR Payments: Reliance Jio Slams Peers, Questions Telecom Sector Stress
Reliance Jio on Wednesday attacked incumbent operators, saying it disagreed with “the threatening and blackmailing tone” of the Cellular Operators Association of India (COAI) letter.
In a letter on Tuesday night, the COAI had written to Communications Minister Ravi Shankar Prasad, claiming that the Supreme Court (SC) judgment on the adjusted gross revenue (AGR) will lead to a monopoly in the sector and the government’s digitisation programme will suffer.
The Supreme Court (SC) had on 24 October agreed with the Department of Telecom’s (DoT’s) definition of the AGR, asking the telcos to pay dues and interest amounting to Rs 1.33 trillion within three months.
3. RIL’s Fibre Asset Monetisation Plan Hits a Roadblock
Discussions between Reliance Industries (RIL) and a group of marque financial investors and sovereign wealth funds for a controlling stake of its pan India fibre InVIT — Jio Digital Fibre — appear to have stalled. Negotiations with the Abu Dhabi Investment Authority (ADIA)-led group that also included I Squared Capital, an infrastructure focussed fund, and GIC of Singapore have hit hurdles over differences in commercial and operating terms, said multiple people in the know. The three were acting together as a loose alliance. In parallel, GIC has also been evaluating joining Brookfield as a co-investor in Jio’s towers.
Along with the prospective investors, Mukesh Ambani’s family office was supposed to coinvest to reaffirm his commitment to the business.
(Source: The Economic Times)
4. SBI Seeks Higher Valuation on Improved FY21 Growth Outlook
The State Bank of India (SBI) chairman Rajnish Kumar on Wednesday, 30 October pitched for a higher valuation of the bank’s enterprise value, asking analysts to take into account the growth prospects of its subsidiaries, as well as forecasts of a better-than-expected performance in 2020-21.
Kumar said the bank’s performance is set to improve from FY21, following an improvement in asset quality and better growth. Speaking to analysts at the SBI analysts day function, he said the bank expects credit growth to pick up to more than 12% and slippage ratio—the ratio of fresh bad loans added—to fall to 1.3-1.5% by the next fiscal year. This is an improvement on the bank’s current year guidance on loan book growth of 10% and slippage ratio of around 2%.
5. IndiGo Shares Gain Most Since 2016 on $30-Bn Airbus Aircraft Order
Indian budget airline IndiGo headed for its biggest gain in more than three years after placing a blockbuster order with Airbus SE worth over $30 billion at sticker prices.
Shares of IndiGo’s operator InterGlobe Aviation Ltd surged more than 8% in Mumbai, in line for their best daily advance since early 2016. The stock is still below a record high of 1,898.85 rupees ($26.76) hit on 30 September after slipping through October.
6. Relief for PMC Bank Depositors as RBI Moves to Sell Attached Assets
The Reserve Bank of India-appointed administrator has asked the Economic Offences Wing of the Mumbai Police to release properties attached in the Punjab & Maharashtra Cooperative (PMC) Bank case so that they can be auctioned, a move that could provide relief to aggrieved account holders.
The city police will soon seek court approval to hand over the assets to the RBI administrator, two people with knowledge of the matter told The Economic Times.
(Source: The Economic Times)
7. No Plans to Shut Down 2G Services, Says Airtel CEO
Bharti Airtel Ltd plans to keep its 2G networks operational since they continue to fetch substantial revenue, chief executive officer Gopal Vittal said, even as the telco has started shutting its 3G networks due to thinning revenue from them.
“Airtel has no plans to shut down its 2G network as substantial revenue is coming from 2G phone users even in circles like Delhi...also older devices do not have VoLTE (Voice over Long-Term Evolution) integration," Vittal said in a post-earnings call with analysts.
Voice over Long-Term Evolution (VoLTE) is a standard for high-speed wireless communication for mobile phones. In India, only Jio operates a pure 4G-VoLTE network. Airtel, India’s second-largest telecom operator by revenue, is in the process of phasing out 3G to focus solely on 2G and 4G. Vodafone Idea operates 2G, 3G and 4G networks.
8. India Will Not Sign any Free-Trade Agreement in a Rush, Assures Goyal
India would not sign any free-trade agreement (FTA) in a "rush" but will engage with the world without compromising the interest of domestic industry, Commerce and Industry Minister Piyush Goyal said on Wednesday, 30 October.
He said India would enter into an FTA or comprehensive partnership agreement on its terms and would do what would be best for the people and national interest.
"In terms of RCEP (Regional Comprehensive Partnership Agreement), a lot of wrong information have been spread all over. Let me assure each one of you that India will no more sign any FTA in a rush."
9. AirAsia India Plans to Take Fleet Size to 100 in Five Years
After growing at a very slow rate in its first five years of operations, AirAsia India plans to expand its fleet more than fourfold to 100 aircraft in the next five years.
“We have firmed up plans to add 14-15 planes every year starting next year for the next five years. We have remained a small player in the Indian market till now with just 23 planes, which will increase to 29 planes by the end of December,” said a senior executive, who did not wish to be identified.
The executive said the lowcost carrier, a 51:49 joint venture between Tata Sons and Malaysia’s AirAsia Berhard, will become an impactful player in the market once its fleet grows to 50 aircraft.
(Source: The Economic Times)
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