Volume XXXIV Number 14 December 31, 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 12

D. INDUSTRY 12

E. SMALL SCALE INDUSTRY 13

F. INTERNATIONAL ECONOMICS 13

G. MANAGEMENT 14

– 1 –

BANKERS' BRIEF Vol. XXXIV No. 14December 31, 2018

ECONOMY"ICICI Bank expects GDP growth at 7.2% in FY19" – Remaining bullish about the economy, private

sector lender ICICI Bank expects GDP to grow by 7.2 per cent in 2018-19, and the Centre's fiscal deficit toexceed the full-year target by 0.2 per cent to 0.3 per cent of the GDP. A report. – (HBL Dec 22, 2018 p 5)

"RBI seriously underestimated NBFC problem... Googlies like IL&FS should not have happened"– Ex-Chief Economic Adviser Arvind Subramanian says imposing a lot of cost on a lot of people was'instrinsic to demonetisation's success', notes the reasons why growth has not been robust, repeats thatworking with government was the best job he has had, defends the GST, and asserts that the RBI also needsto be accountable for a lot of things. Idea Exchange with former CEA Dr Arvind Subramanian.– (FE Dec 23, 2018 p 4)

"We have anchored inflation to a lower level, we now need to bring down interest rates" – Editedexcerpts from an interview with Sanjeev Sanyal, Principal Economic Adviser in the Finance Ministry. Hesaid not just for RBI, we need to take boards more seriously for all regulators and govt institutions.– (Mint Dec 26, 2018 p 16)

Desai, Ashok V – "Economist unbound: Free from the responsibilities of office, Arvind Subramanian,former chief economic advisor to the government, has produced an insider's account of thechakravyuh of policy-making in India." – 'On Counsel: The Challenges of the Modi-Jaitley Economy' byArvind Subramanian. A book review. – (IE Dec 22, 2018 p 15)

Maira, Arun – "The shape of growth matters" – Some recommendations in NITI Aayog's 'Strategy forNew India @ 75' are a cause for concern. An article. – (H Dec 27, 2018 p 9)

Singh, Nirvikar – "An economic strategy for India" – The need is to fix stressed sectors quickly - these areagriculture, infrastructure (including power), exports and banking. An article. – (FE Dec 24, 2018 p 7)

Singhal, Rajrishi – "Two different reports but with similar action replays" – As the year-end draws near,two studies have been released, independent of each other, but both wishing to improve India's economy. Thefirst is titled "An Economic Strategy for India" and is authored jointly by a group of 13 economists, includingformer Reserve Bank of India governor Raghuram Rajan, Ford International professor of economics atMassachusetts Institute of Technology Abhijit Banerjee and chief economist for the International MonetaryFund Gita Gopinath. A few days later, the government's think tank Niti Aayog released its report called"Strategy for New India@75". An article. – (Mint Dec 24, 2018 p 17)

Srivats, K R – "Coming out of the wobble, slowly" – 2018 was bogged down by banking sector woes,corporate governance issues. An article. – (HBL Dec 25, 2018 p 4)

EMPLOYMENT/UNEMPLOYMENTTripathi, Shashank – "Citizen-led employment generation is what's needed" – The next decade will be

decisive for India to use its growing demography to foster inclusive growth. This next decade is a "do or die"moment for slaying unemployment. Employment opportunities will require focus on smaller districts thathouse majority of population. An article. – (Mint Dec 21, 2018 p 14)

EXTERNAL COMMERCIAL BORROWINGS"RBI caps outstanding ECBs at 6.5% of GDP: Sets rule-based dynamic limit" – The Reserve Bank of

India (RBI) has announced a cap for funds raised via external commercial borrowing (ECB) at 6.5% of thecountry's GDP. Based on GDP figures for March 31, 2018, 'the soft limit works out to $160 billion,' accordingto the central bank statement. – (H Dec 21, 2018 p 13)

– 2 –

FOREIGN EXCHANGE RESERVES"Forex reserves decline by $613.9 mn" – The country's foreign exchange reserves declined by $613.9

million to $393.12 billion in the week to December 14, on account of a fall in foreign currency assets,according to the RBI data. In the previous week, the reserves had increased by $16.6 million to $393.734billion. – (IE Dec 22, 2018 p 12)

GST"GST council: With rate cut for 23 items, 28% slab 'moving to sunset'" – The Goods and Services Tax

Council on Saturday cut the tax rates on 23 commonly used items, including TV screens, movie tickets andpower banks, but deferred a tax cut on cement owing to its huge revenue implication. The move was in linewith the policy of reducing the tax rates to boost compliance and consumption and giving a leg-up to industrieshamstrung by high input costs. The rate cuts would be effective from January 1, 2019. FM hints at plan toreduce GST on cement; panels to review taxation of real estate, services. A report.– (FE Dec 23, 2018 pp 1, 11)

NITI AAYOG"NITI Aayog is looking into farm distress issue" – Edited excerpts from an interview with Rajiv Kumar,

chairman, NITI Aayog. He speaks on why farm loan waivers are not the answer to the agrarian crisis inIndia. – (Mint Dec 21, 2018 p 13)

"Statement of intentions: NITI Aayog's document sets out economic goals, but there's no roadmap"– An editorial. – (HBL Dec 21, 2018 p 6)

Ninan, T N – "If wishes were horses..." – One of the features of the Modi government is its willingness toset ambitious targets for various programmes, and then to make a determined effort to achieve the goals set.An article. – (BS Dec 22/23, 2018 p 9)

BANKING"Non-food credit growth rises 15.07%" – The growth in non-food bank credit rose by 15.07% year-on-year

during the fortnight ended December 7 from 14.92% in the previous fortnight. The growth comes off arelative weak base; in 2017 banks were lending cautiously as they were grappling with loan losses anddemand from companies was muted. Deposits with the banking system grew 9.66% y-o-y to Rs.118.84 lakhcrore as on December 7, compared to deposits amounting to Rs.108.37 lakh crore in the previous year. Thedeposit rate growth has been below 10% since over a year from August 4, 2017 owing to the high deposits onaccount of demonetisation, also impacting loan growth. Again, borrowings had shifted to the money markets- bond and commercial paper markets - in 2016 and 2017 since interest rates in those markets was lower. Areport. – (FE Dec 21, 2018 p 10)

"States with fiscal space can go for farm loan waivers" – Excerpts from an interview with Arun Jaitley,Finance Minister. – (BS Dec 26, 2018 pp 1, 6)

Jagannathan, K T – "A year of disruptions for the banking sector" – NPA rule, IL&FS fiasco, RBI-Govt.stand-off impact industry. An article. – (H Dec 26, 2018 p 14)

ALLAHABAD BANK"Allahabad Bank eyes up to Rs.800 cr from divestment: Lender aiming to bring down NPAs to

Rs.24,000 crore by the end of FY19" – Allahabad Bank is expecting Rs.600-800 crore from divestmentbefore March 31, 2019. The bank is also expecting the government to infuse additional capital into it. "Wehave already received a capital investment of Rs.3,054 crore from the government last month," according toCh S S Mallikarjuna Rao, Managing Director and Chief Executive Officer of Allahabad Bank. A report.– (HBL Dec 27, 2018 p 5)

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"Allahabad Bank working hard to meet Rs.1,000 crore recovery target in Q3, says MD" – AllahabadBank has set a cash recovery and upgrade target of Rs.1,000 crore for the October-December quarter toclean up its balance sheet, and the lender is working "very hard" to achieve it, according to the managingdirector and chief executive officer S S Mallikarjuna Rao. A report. – (FE Dec 24, 2018 p 2)

BANDHAN BANK"Bandhan may merge with Gruh to cut stake" – Bandhan Bank is understood to be exploring an acquisition

of Gruh Finance - a subsidiary of HDFC - as part of its efforts to dilute promoter shareholding. Gruh Financewas promoted by HDFC and the Aga Khan Foundation in 1986. The company had commenced operationsfrom Ahmedabad, but has since expanded its network to 194 offices across 11 states. A report.– (TI Dec 22, 2018 p 15)

BANK OF BARODA"BoB shareholders to consider 10-cr new share issuance under ESPS next month" – Shareholders of

Bank of Baroda will meet next month to consider issuing up to 10 crore new shares under Employee SharePurchase Scheme (ESPS). An extraordinary general meeting of the shareholders will be held on January 21to consider the proposal, Bank of Baroda (BoB). A report. – (FE Dec 27, 2018 p 10)

BANK OF INDIA"Bank of India eyes Rs.1,200 crore from exiting life insurance arm Star Union" – Bank of India is

looking to raise Rs.1,000-1,200 crore by selling its entire 28.96 percent stake in life insurance joint venture,Star Union Dai-Ichi Life Insurance. The bank will soon float a request for proposal for exiting the JVcompany. A report. – (FE Dec 21, 2018 p 10)

CENTRAL BANK OF INDIA"Hopeful that we will exit PCA in FY20: Central Bank to sell up to Rs.10,000-cr. bad loans to asset

reconstruction firms this fiscal, says its MD" – Edited excerpts from an interview with Pallav Mohapatra,managing director and chief executive officer, Central Bank of India. He said bank has adopted a four-pronged strategy to become profitable again. He expects profitability to return in the January-March quarter.– (H Dec 24, 2018 p 14)

"We are on track to close the financial year with a nominal profit in Q4" – Edited excerpts from aninterview with Pallav Mohapatra CEO of Central Bank of India. Central Bank of India has managed toimprove on most financial metrics since it was brought under the prompt corrective action (PCA) framework.The bank is working to turn in a profit in Q4FY19 and a full-year profit in FY20. – (FE Dec 25, 2018 p 10)

CORPORATION BANK"Bharathi named MD & CEO of Crop Bank" – P V Bharathi has been appointed as managing director and

chief executive officer of the Corporation Bank, according to an order issued by the Personnel Ministry.Bharathi is at present Executive Director, Canara Bank. – (FE Dec 25, 2018 p 10)

ICICI BANK"Srikrishna panel seeks replies from Chanda, others" – The ICICI Bank-appointed committee set up

under retired Supreme Court judge B N Srikrishna is reaching closure in its probe on allegations of code ofconduct and conflict of interest by the bank's former managing director (MD) and chief executive officerChanda Kochhar in the Rs.32.5-billion ICICI Bank-Videocon loan case. Based on the probe findings so farin the matter, the committee has sought replies from Kochhar, ICICI Bank, and other involved entities. Thecommittee is expected to complete the investigations and submit the report by the third week of January. Areport. – (BS Dec 24, 2018 pp 1, 6)

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IDFC FIRST BANK"IDFC First: Mgmt buyout turns into bank" – IDFC First has the distinction of being the first management

buyout converted into a bank, according to MD & CEO, V Vaidyanathan. The new entity, created after themerger of IDFC Bank and Capital First, is expected to trade on the stock exchanges mid-January with afocus on retail. In India, employees have remained employees and owners have remained owners. This is thefirst time that someone has stepped out and done something like this. A report. – (TI Dec 21, 2018 p 15)

PUNJAB NATIONAL BANK"PNB launches special card for Kumbh Mela" – Punjab National Bank (PNB) has launched a special card

for Kumbh Mela 2019. The bank has partnered with the Uttar Pradesh government to create a model fordigitisation at this edition of Kumbh Mela. – (FE Dec 25, 2018 p 10)

"PNB resolves: National anthem will be played at every Annual General Meeting" – Punjab NationalBank, wracked by the Nirav Modi scam, has decided that the national anthem will be sung at every AnnualGeneral Meeting (AGM) and Extraordinary General Meeting (EGM), usually held to seek shareholders'approval on key decisions. – (IE Dec 26, 2018 pp 1, 2)

STATE BANK OF INDIA"Rythu Bandhu scheme a much better option than waiving farm loans, says SBI chairman" – Edited

excerpts from an interview with Rajnish Kumar, chairman, SBI. He said income support is better than a farmloan waiver. – (Mint Dec 21, 2018 p 13)

"SBI invites bids from banks for Rs.20,000-cr QIP" – State Bank of India (SBI) has sought bids frommerchant bankers to run the process for its qualified institutional placement (QIP) of shares worth up toRs.20,000 crore. – (FE Dec 25, 2018 p 10)

"SBI submits to Kerala HC: Outsiders not to be inducted for core functions: Court disposes of writpetition filed by the staff union" – The High Court of Kerala has disposed of a writ petition by the StateBanks Staff Union (SBSU) after recording a submission that 'no personnel will be inducted for carrying outany essential function of State Bank of India (SBI).' A report. – (HBL Dec 24, 2018 p 17)

"SBI to raise Rs.20.4 billion via Basel III bonds issue" – State Bank of India (SBI) said it would raiseRs.20.45 billion by issuing Basel III-compliant bonds. – (BS Dec 22/23, 2018 p 5)

– BANK CHARGES

"SBI's service charges among the lowest: MD" – State Bank of India (SBI) Managing Director P KGupta said that the charges for various services offered by the bank are among the lowest in the industry.Various services offered by the bank, including ATM transaction and cash deposits, come at a cost, but thecharges have been kept low in the larger interest of customers, – (HBL Dec 26, 2018 p 5)

UNION BANK OF INDIA"Union Bank's tech-based monitoring system to stem growth of bad loans" – To stem accretion of bad

loans, Union Bank of India is putting in place a technology-based monitoring mechanism to identify stress ina loan almost 60 days before it gets categorised as a first-stage special mention account (SMA). A report.– (HBL Dec 22, 2018 p 5)

YES BANK"Armed with data analytics Yes Bank to offer products based on predictability model" – Yes Bank is

focusing on data analytics to understand customer behaviour and offer a right mix of products based on apredictability model. The bank has already diversified into retail segment and now harnessing data analyticsto come up with models that help understand customer behaviour, according to Rajat Kanwar Gupta, BusinessAnalytics Head, Yes Bank. A report. – (HBL Dec 26, 2018 p 5)

– 5 –

"What put Rana Kapoor and his clan in a spot?: Deeper digging into a family succession plan and theconflicts it spawned brings out more Reliance ADAG connections to Yes Bank promoter companies"– A report. – (ET Dec 27, 2018 p 15)

"Yes Bank is in a position to deal with mishaps better" – Edited excerpts from an interview with RajatMonga, Senior Group President, Yes Bank. Rajat Monga's stint at Yes Bank is as old as that of the lenderitself. Perhaps, few in the professional hierarchy know the bank better. He said that things can only get betterfor the private-sector bank. – (ET Dec 25, 2018 p 14)

"Yes Bank transformation series 2018: Helping Indian MSMEs leverage tech to boost exports" – Atthe seventh edition of the Yes Bank Transformation Series, some of India's brightest minds offer solutions topromote India as an MSME export hub. A report. – (Mint Dec 26, 2018 p 11)

ASIA– CENTRAL BANKS

"Asia's central banks have no reason to hike rates in 2019" – Weaker economic growth and tepid pricepressures in Asia will leave central banks in the region with few reasons to tighten policy next year - especiallyas U.S. rate hikes slow - unless a new bout of currency weakness forces them to do so. A report.– (HBL Dec 21, 2018 p 5)

JAPAN– BANK OF JAPAN

"BoJ keeps policy steady, sticks to recovery view" – The Bank of Japan maintained its ultra-loose monetarypolicy and reaffirmed its view the economy is on a solid footing, even as fears of slowing global growth joltmarkets and lowered prospects for hitting its 2 percent inflation target. A report. – (IE Dec 21, 2018 p 14)

SAUDI ARABIA"Saudi's NCB, Riyad Bank in talks to create mega lender" – National Commercial Bank, Saudi Arabia's

biggest lender, started initial talks with Riyad Bank for a merger a deal that would create the Gulf's third-biggest lender with $182 billion in assets. – (Mint Dec 26, 2018 p 2)

USA– FEDERAL RESERVE

"Fed makes fourth rate rise of year but signals slower pace in 2019" – The Federal Reserve defiedpressure from Donald Trump and equity investors by boosting rates for the fourth time this year even as itflagged risks from stormy markets and slower overseas growth. A report. – (FT Dec 20, 2018 p 1)

"Fed's new era of quantitative tightening sparks anxiety" – Powell's pledge to reduce the Central Banks'sbalance sheet prompts sharp equities sell-off. A report. – (FT Dec 21, 2018 p 23)

Roach, Stephen S – "US Monetary Policy: In defence of the US Fed" – Notwithstanding howls of protestfrom market participants, the Fed should be congratulated for its steadfast commitment to policy normalisation.An article. – (FE Dec 27, 2018 p 8)

ATMs"More ATMs may disappear as they are sucking cash out of banks: Earning less than what they

spend on ATMs, banks want an increase in interchange fee to stay afloat" – With banks losing moneyby operating ATMs, they now seem to be whittling down these machines. In the first seven months of thecurrent financial year, the number of ATMs in the country was down by 2,093. Banks have told the FinanceMinistry and the Reserve Bank of India that they are earning less than what they are spending on the ATMs.A report. – (HBL Dec 26, 2018 p 5)

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BANK CHARGES– PUBLIC SECTOR BANKS

"PSBs mop-up over Rs.10,000 crore from people not maintaining minimum balance, using ATMsmore" – Twenty-one public sector banks (PSBs) have collected more than Rs.10,000 crore in 42 monthsfrom the general public for not maintaining minimum balance and charges for additional ATM transactionsbeyond the permitted free facility. A report. – (HBL Dec 22, 2018 p 4)

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

"Scheme on BoB, Dena & Vijaya Bank merger likely by Dec-end" – The scheme of amalgamationspelling out the contours of the merger of Bank of Baroda (BoB), Vijaya Bank and Dena Bank is expectedto be finalised by the end of this month. As per the requirement, the scheme of amalgamation will be placedbefore Parliament, which is in session till January 8. A report. – (FE Dec 24, 2018 p 2)

BANK RECAPITALISATION– PROMPT CORRECTIVE ACTION

"Bank bailout" – It is short-sighted to prioritise PCA banks in the recapitalisation exercise. An editorial.– (HBL Dec 26, 2018 p 6)

– PUBLIC SECTOR BANKS

"An amendment to the prompt corrective action Act will definitely boost lending by banks" – Ananalysis of the government's liquidity boost for public sector banks by a panel comprising Anil Gupta, vicepresident and sector head, financial sector ratings, ICRA; R K Bakshi, former executive director, Bank ofBaroda; V G Kannan, chief executive officer, Indian Banks' Association; Jindal Haria, associate director,India Ratings; and Sameer Narang, chief economist, Bank of Baroda. Edited excerpts.– (Mint Dec 21, 2018 p 13)

"Capital idea?: The banks recapitalisation plan is per se not bad but funds must be distributedprudently" – An editorial. – (H Dec 24, 2018 p 8)

"Capital infusion in PSBs may not help growth, says Citi" – The capital infusion in India's public sectorbanks will ensure that the lenders remain solvent, but it may not necessarily help in their growth, according toglobal brokerage Citi. A report. – (ET Dec 22, 2018 p 6)

"Govt to infuse Rs.41,000 cr more into PSBs; seeks Parliament nod: Rs.83,000-cr top-up will helpsome PSBs come out of PCA framework: Jaitley" – The Centre proposes to infuse over Rs.83,000crore into public sector banks. To implement this, the Finance Ministry has sought approval for expenditurefrom Parliament. The government already has approval to infuse Rs.42,000 crore, and now, through thesecond Supplementary Demands for Grants introduced in the Lok Sabha, it has sought approval for anotherRs.41,000 crore that will be utilized for 'recapitalisation of PSBs through issue of government securities'. Areport. – (HBL Dec 21, 2018 p 1)

"Seeds of a crisis" – If recapitalisation is not linked to reform, imprudent lending could lay the ground for thenext banking calamity. An editorial. – (IE Dec 24, 2018 p 8)

Bandyopadhyay, Tamal – "Bank recap no different from farm loan waiver" – Farm loan waivers destroythe credit culture. Recapitalisation without a change in the way the public sector banks function widens thecracks in the edifice of banking. An article. – (BS Dec 24, 2018 p 8)

Basu, Debashis – "PSBs: Capital infusion won't fix them" – An article. – (BS Dec 24, 2018 p 9)

BANKING REGULATOR - RBI"Changing stance: Fed, ECB decisions leave RBI with a tricky choice" – An editorial.

– (BS Dec 21, 2018 p 9)

– 7 –

"Guv moves to resolve bell curve issue" – Reserve Bank of India Governor Shaktikanta Das is personallylooking into the contentious new promotion policy of the central bank, paying heed to popular demand. Thenew policy, which is more stringent and put the bottom 25% of RBI officers in terms of performance as "non-promotable", created a stir in the bank with both junior and senior officers protesting against it. A report.– (ET Dec 22, 2018 p 6)

"Pension issue unresolved, RBI stares at union agitations" – With the year coming to an end, and nocommunication on the issue of updating pension yet, the Reserve Bank of India (RBI) could be headingtowards big agitations in the New Year. The government was expected to communicate by month-end its nodfor improvement of the RBI's pension scheme, but that has not been done yet. A report.– (BS Dec 26, 2018 p 4)

"Talking up a virtual storm: RBI deputy governor Viral Acharya's lecture deserves to go down inhistory as the definitive talk of the year." – The October speech by Viral Acharya, the Reserve Bank ofIndia's (RBI) deputy governor, perhaps deserves to go down in history as 2018's definitive talk. A report.– (Mint Dec 25, 2018 p 9)

Mukherjee, Andy – "Is the assault on the RBI's autonomy just starting?" – An article.– (HBL Dec 22, 2018 p 5)

Srinivasa-Raghavan, T C A – "Why should the government own the RBI?" – An article.– (BS Dec 22/23, 2018 p 9)

– INTERIM DIVIDEND

"Govt wants Rs.100 bn interim dividend: Reserve Bank had paid the same amount last financialyear" – The government is asking the Reserve Bank of India for at least Rs.100 billion in interim dividend for2018-19 as it looks to meet a tough fiscal deficit target in the face of possible goods and services tax (GST)shortfall and additional expenditure commitments. A report. – (BS Dec 21, 2018 p 4)

– RESERVES

"Bimal Jalan to head panel to decide size of RBI's reserves" – The Reserve Bank of India (RBI) set upan expert committee, headed by its former governor Bimal Jalan, to suggest how the central bank shouldhandle its reserves and whether it can transfer its surplus to the government. The committee, which has beenformed to review the existing economic capital framework (ECF), will have former RBI deputy governorRakesh Mohan as its vice chairman. Other members are RBI central board directors Bharat Doshi andSudhir Mankad; deputy governor N S Vishwanathan; and economic affairs secretary Subhash ChandraGarg. The panel will submit its report within 90 days of its first meeting. A report.– (Mint Dec 27, 2018 pp 1, 7)

Sanghvi, Rashmin C – "Why RBI cannot pay Rs.3.6 trillion to govt: Neither the foreign exchange,nor the gold, and certainly not the revaluation reserve should be available for spending by anyone"– Media claims that the Reserve Bank of India (RBI) has a reserve of Rs.9.6 trillion. The government wantsa portion of this money to be transferred to it for its expenses. Let us examine the accounting and economicdetails. As per the balance sheet of the RBI, the total share capital and reserves are Rs.67.26 billion. Thereis no other reserve on the balance sheet. All the amounts actually represent liabilities payable, or provisionsmade by the RBI. An article. – (BS Dec 27, 2018 p 6)

– RETIRED TOP OFFICIALS

"RBI mulls cooling-off period for its retired top officials: Those aspiring for posts of CEO, chairmanof firms may have to wait for 3 years" – The Reserve Bank of India (RBI) has come up with a new normfor its top officials who want to take up the job of a chairman or chief executive of any other entity, postretirement. According to central banking sources, the RBI has mandated a three-year cooling-off period forretired officials before they can take over as chairman or chief executive of any other entity. While makingthis new rule, global best practices have been cited. However, to join as a director of any company's board,the one-year cooling period mandate continues. A report. – (H Dec 24, 2018 p 13)

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CORPORATE INSOLVENCY RESOLUTION PROCESS"NCLAT stays insolvency proceedings against ECL" – The National Company Law Appellate Tribunal

(NCLAT) stayed an order passed by the National Company Law Tribunal (NCLT) to initiate corporateinsolvency resolution process against Eastern Coalfields (ECL), a subsidiary of state-run Coal India (CIL). Areport. – (FE Dec 23, 2018 pp 1, 11)

CURRENCY NOTES"RBI to release new Rs.20 bank note with additional features" – The Reserve Bank of India (RBI) will

soon introduce a new Rs.20 currency note with additional features, according to a document of the centralbank. – (Mint Dec 26, 2018 p 5)

CYBER SECURITY"Banks' twin cybersecurity woes: Talent shortage, cash crunch: Some outsource job to big four" –

Nearly two and a half years after the Reserve Bank of India (RBI) published a cybersecurity framework forall commercial banks, banks are having a tough time finding the people needed to give them the necessaryprotection. While top banks outsource a significant cyber-security exercises and operations to consultanciesand security firms, many smaller banks stand to lose out because they lack the same deep pockets. A report.– (BS Dec 21, 2018 p 4)

EXECUTIVES EXITS"Why 2018 was 'a year of exits' in the banking sector" – A report. – (HBL Dec 27, 2018 p 5)

FINANCIAL SECTOR REGULATORS"Toward cleaner, leaner financial products" – While financial sector regulators have been moving regulations

to make products better for the household, the big change that is needed is the convergence of the regulatorsthemselves. An article. – (Mint Dec 27, 2018 p 14)

INDUSTRIAL RELATIONS IN BANKS– STRIKES

"PSB officers on strike, protesting merger" – A nation-wide strike by a union of public sector bank officers,demanding immediate wage revision, partially impacted banking operations across the country. A report.– (BS Dec 22/23, 2018 p 4)

"Strike hits banking operations" – The United Forum of Bank Unions (UFBU) said its one-day all-Indiabank strike was a "total success". As many as one lakh branches and offices of 21 public sector banks(PSBs) were closed. About 10 lakh bank employees and officers from these bank branches joined the strike.– (HBL Dec 27, 2018 p 5)

"We don't want to strike, but hardly have any options left: Bank officers now among the lowest paid,says General Secretary of NCBE" – Even as the banking sector braces for two strikes, a top trade unionleader feels that customers are discerning enough to understand the plight of bank employees. "We don'twant to strike work since it is our own institutions that suffer in the bargain," according to S K Bandlish,General Secretary, National Confederation of Bank Employees (NCBE). A report.– (HBL Dec 21, 2018 p 5)

INSOLVENCY AND BANKRUPTCY CODE"Experts differ on invoking Section 74 of the IBC: Some say it is necessary to retain the seriousness

of resolution process, others believe such measures could deter bidders" – The issue of whether toinvoke Section 74 of the IBC, which details provisions for punishment of company officials who breach themoratorium or terms of the resolution plan, has divided experts. While some say that invoking the section isnecessary to retain the seriousness of the insolvency resolution process, others believe that such stringentmeasures could deter bidders. A report. – (BS Dec 27, 2018 p 4)

– 9 –

"IBC@2: The code on the ground" – The honeymoon period is over for the Insolvency & BankruptcyCode. The challenge will be to sustain the momentum gained over the last two years, as more debtors comeinto the system. A recent study by Vidhi Centre for Legal Policy and EY takes stock of the hits and misses ofthe journey so far, and the road ahead. A graphical report. – (BS Dec 24, 2018 p 11)

"In a resolution plan under IBC, personal guarantors can't step into creditor's shoes: Thus, theliability of a personal guarantor survives a resolution process under the IBC: NCLAT" – TheNational Company Law Appellate Tribunal (NCLAT) has ruled that a personal guarantor's right to subrogationagainst a corporate debtor can be taken away in a resolution plan under the Insolvency and Bankruptcy Code(IBC). Simply put, a personal guarantor has no right to step into the shoes of a creditor against the 'corporatedebtor' (company going through IBC) in case of a resolution plan under the IBC. A report.– (HBL Dec 25, 2018 p 5)

"Insolvency law: Government mulls easing related-party rule: May give blood/familial relatives achance to show they don't have business ties; move to maximise asset value" – The government isconsidering relaxing the 'related party' criterion under the Insolvency and Bankruptcy Code (IBC) to make itless restrictive and give conditional approval to certain relatives of defaulting promoters to bid for stressedassets. Sources told FE that through changes in section 29A of the IBC people related to defaulters by bloodor other familial relationships could be declared only "deemed to be related" and given a chance to rebut thatassumption on grounds like "we have not worked together in any business in the last 3-5 years and so on" withsupportive evidence. A report. – (FE Dec 27, 2018 pp 1, 2)

"Liquidation under bankruptcy code a long and tedious journey" – Attachments of assets by variousprobe agencies for past investigations is a key issue for delays in liquidation. A report.– (Mint Dec 26, 2018 p 6)

"Patience with the IBC: Time to reform will be after behavioural changes" – An editorial.– (BS Dec 21, 2018 p 9)

Mamidanna, Kalyan – "Insolvency & Bankruptcy Code: How we're legalising the 'Bezzle" – Anarticle. – (ET Dec 22, 2018 p 8)

– RECOVERY OF NPAs

Gupta, Bharat – "Towards higher EoDB ranking: Improving recovery in IBC is key" – Barring a fewsought-after assets, recovery is expected to be low for the current lot of NPAs primarily due to vintage,quality and complexity. An article. – (FE Dec 25, 2018 p 9)

MONETARY POLICY– INFLATION TARGETING

Kohli, Renu – "Monetary policy in 2018: Targeting inflation in uncertain times wasn't easy" – MPC'spredicaments were palpable as most elements remained misaligned. But, can anyone really predict Food CPIfor the next 12 months correctly? An article. – (FE Dec 25, 2018 p 8)

PRIVATE SECTOR BANKS– ROAD SECTOR

"Pvt Banks lead in highway funding" – Private sector lenders such as HDFC Bank, Axis Bank, ICICI Bank,IndusInd, L&T Finance, Kotak Mahindra, RBL and Standard Chartered have come forward to fund highwayprojects in a major way as stressed public sector banks remain shy of providing finance to the sector. Datacollated by the government showed private sector players have stepped in to provide loan for more than halfof the 59 projects where construction companies have tied up funds. Similarly, they have committed toprovide funds for 17 out of the 20 projects where the process of financial closure is underway. A report.– (TI Dec 25, 2018 p 15)

– 10 –

PROMPT CORRECTIVE ACTION– PUBLIC SECTOR BANKS

"Banks under PCA sitting on cash pile: Though banking system faces liquidity crunch, banks underlending restrictions see deposits grow" – Commercial banks, under the prompt corrective action (PCA)framework of the Reserve Bank of India (RBI), are sitting on a pile of cash as they don't have too manyoptions to lend, even as the banking system is scrambling for liquidity. The 11 public sector banks under thePCA, enjoying 25% market share among commercial banks, are facing restrictions on lending while theirdeposit mobilisation has been healthy. A report. – (H Dec 26, 2018 p 13)

PROVISIONING"Essar Steel exposure: RBI allowed banks reprieve on 100% provisioning in Q2: Lenders may

repeat request for December quarter if the account does not get resolved in Q3 or, at least, inearly January" – The Reserve Bank of India (RBI) had allowed banks a dispensation from maintaining100% provisions against their exposures to Essar Steel in the July-September quarter, two senior bankerssaid. The regulatory relief had been granted on a joint request from banks, who were expecting a full resolutionin the account during the October-December quarter. Essar Steel, which owed banks Rs.44,397 crore at theend of March 2017, has seen furious bidding activity as well as a high level of litigation. A report.– (FE Dec 21, 2018 p 10)

– IL&FS

"Banks hit by IL&FS crisis look for relief" – There are some IL&FS Group companies, subsidiaries andjoint ventures where there is cash flow, but there is no repayment. At the same time, we have to makeprovisions due to non-payment of dues," according to the chief executive of a public sector bank. As a result,the Indian Banks' Association has requested the RBI to relax the provision requirement required for banks'exposure in the IL&FS Group. A report. – (H Dec 21, 2018 p 10)

PUBLIC CREDIT REGISTRY"RBI shortlists TCS, Wipro, IBM to set up Public Credit Registry" – The Reserve Bank of India has

shortlisted six major IT companies, including TCS, Wipro and IBM India, to set up a wide-based digital PublicCredit Registry (PCR) to capture details of all borrowers and wilful defaulters. The proposed PCR will alsoinclude data from entities such as SEBI, the Corporate Affairs Ministry, the Goods and Service Tax Network(GSTN) and the Insolvency and Bankruptcy Board of India (IBBI) to enable banks and financial institutionsto get a 360-degree profile of the existing, as well as prospective, borrowers on a real-time basis. A report.– (HBL Dec 24, 2018 p 16)

PUBLIC SECTOR BANKS"Anyone here for PSU banks?" – No one seems to care about the stunning loss in value. An editorial.

– (FE Dec 26, 2018 p 6)

– AUDIT REPORTS

"CVC examining audit reports of PSBs, insurers" – Central Vigilance Commission (CVC) has startedexamining audit reports of state-run banks and insurance companies to check incidents of fraud and suggestcorrective measures. The move assumes significance with banks reporting large scale fraud cases and thehigh number of bad loans or non-performing assets. Vigilance Commissioner T M Bhasin told the CVC isgetting a review done of central statutory reports, concurrent auditors' reports and other auditor reportsthrough chief vigilance officers of all public sector banks and insurance companies. A report.– (BS Dec 27, 2018 pp 1, 8)

– 11 –

RECOVERY OF NPAs– PUBLIC SECTOR BANKS

"PSBs' recovery against NPAs doubles this year: Banks recover Rs.60,713 cr in first half of '18-19"– Public sector banks reported recovery of Rs.60,713 crore against non-performing assets in the first half ofthe current year, which is double of the amount recovered in the corresponding period last year and moresignificant returns on high-value accounts are expected, according to the government. A report.– (TI Dec 27, 2018 p 7)

RETAIL FINANCE"Retail lending jumps 21% in Q2" – The retail lending business saw a 21% year-on-year (y-o-y) growth

during the second quarter of this financial year, led by a 32% y-o-y volume growth in credit card loans. Thenumber of retail loan accounts increased by 28% to over 107 million by the end of September, according to areport published by TransUnion CIBIL. – (FE Dec 25, 2018 p 10)

Bhattacharya, Arundhati – "Banking sector was positive on retail finance" – 2018 has been a year ofgrowth in personal finance, but the future is far brighter. An article. – (Mint Dec 27, 2018 p 12)

RETAIL PAYMENT"RBI launches payment survey in 6 cities" – The Reserve Bank of India (RBI) will capture payment habits

of individuals in six cities, including four metropolitan towns. For the purpose, the central bank has launcheda 'Survey on Retail Payment Habits of Individuals (SRPHi)'. The survey will cover a sample of 6,000 individualsfrom various socio-economic backgrounds across six cities - Delhi, Mumbai, Kolkata, Chennai, Bengaluruand Guwahati, according to the RBI. A report. – (ET Dec 27, 2018 p 9)

SMALL FINANCE BANKS– FINCARE SMALL FINANCE BANK

"Fincare SFB aims to woo urban customers to grow deposit base" – Fincare Small Finance Bank (SFB)aims to attract urban depositors by luring them to its swanky new branches and offering higher interest rates,its managing director and chief executive officer (MD and CEO) Rajeev Yadav said in an interview.– (Mint Dec 26, 2018 p 6)

URBAN COOPERATIVE BANKS"RBI must release a vision document for UCBs to thrive" – Excerpts from an interview with Satish

Marathe, Patron, Sahakar Bharati, an all-India organisation for promoting the co-operative movement in thecountry. To strengthen the urban co-operative banking sector, the Reserve Bank of India needs to come upwith a vision document in the light of the experience gained from reviving banks under the aegis of the TaskForce on Co-operative Urban Banks (TAFCUB). UCBs are best placed to serve the needs of localcommunities. So, we want the RBI to come out with a vision document for the sector to thrive. We want thecentral bank to have adequate powers to regulate this sector. A report. – (HBL Dec 21, 2018 p 5)

RBI CIRCULAR"7.75% Savings (Taxable) Bonds, 2018 - Operational Guidelines" – (RBI Circulars RBI/2018-2019/95

IDMD.CDD.No.1637/13.01.299/2018-19 dated 27.12.2018)

"Auction of Government of India Dated Securities" – (RBI Circulars RBI/2018-2019/94 Ref.No.IDMD/1631/08.02.032/2018-19dated 24.12.2018)

"Filing of Security Interest relating to Immovable (other than equitable mortgage), Movable andIntangible Assets in CERSAI" – (RBI Circulars RBI/2018-2019/96 DBR.Leg.No.BC.15/09.08.020/2018-19 dated 27.12.2018)

"Inclusion of "ESAF Small Finance Bank Limited" in the Second Schedule of the Reserve Bank ofIndia Act, 1934" – (RBI Circulars RBI/2018-2019/97 DBR.No.Ret.BC.16/12.06.152/2018-19 dated27.12.2018)

– 12 –

AGRICULTURE & RURAL DEVELOPMENT

AGRICULTURAL SECTOR"Doubling farmers' income by 2022 not possible, one has to be very realistic, says Ashok Gulati" –

An interview with Agri economist Ashok Gulati. On what exactly is wrong with India's farm sector and whatneeds to be done for a sustainable solution. Unfortunately farmers will get a strayed with this (loan waiver)and then they will get only 25% of what their outstanding loans are...over a three year period.– (Mint Dec 24, 2018 p 13)

Ray, Atmadip – "No silver lining for farm sector" – Loan waivers merely provide short-term relief and suchdecisions miss the big picture. An article. – (ET Dec 26, 2018 p 15)

DEBT WAIVER SCHEMES"Loan waivers may affect credit offtake: For the last 2 years, credit growth in the agri sector has

been lacklustre; in fact much lower than the previous years" – Banks are bracing themselves formore stress in the agriculture sector in coming quarters on account of farm loan waivers by various stategovernments. This might impact credit offtake in farm lending, which is witnessing a slowdown due to write-offs. According to the Reserve Bank of India (RBI) data, for the last two years, credit growth in the agriculturalsector has been lacklustre, and much lower than what it was in the previous years. A report.– (BS Dec 21, 2018 p 6)

Rao, K Srinivasa – "Loan waivers: Not a panacea for farm distress" – Instead of diverting precious fiscalresources towards loan waivers, these could very well be used to reach out to the farming community atlarge-by creating an environment where farmers voluntarily come forward to undertake farming using moderninfrastructure to command the right price and give the deserved respectability to the profession. It's tough todifferentiate between wilful defaulters and genuinely stressed borrowers. The blanket loan waiver putsgenuine borrowers who have repaid loans on time in a spot. An article. – (FE Dec 27, 2018 p 9)

FARM LOANS– NPA NORMS

"Bring NPA norms for farm loans on par with other credit segments" – As much as Rs.37,000 crore ofagriculture loans can be saved from being classified as non-performing assets (NPAs) if the NPA classificationnorms for Kisan Credit Card and crop loans are aligned with other segments of cash-credit business, accordingto a suggestion in State Bank of India's research report 'Ecowrap'. A report. – (HBL Dec 22, 2018 p 5)

INDUSTRY

LIC"Let sunlight into LIC's closet affairs: It is too vital an institution to stay dark" – An editorial.

– (ET Dec 21, 2018 p 12)

"LIC top leadership may see a complete reshuffle in 2019: However, it is not clear when the govt willset in motion the selection process for the top posts" – With Life Insurance Corporation of India (LIC)Chairman Vijay Kumar Sharma nearing retirement and three of its managing directors to follow suit in thenext few months, the organisation is likely to see a rehaul at the top. This is, unless the central governmentrenews Sharma's term. A report. – (BS Dec 25, 2018 p 5)

– IDBI BANK

"LIC-IDBI Bank deal gets RBI approval" – The Reserve Bank of India (RBI) has given its approval to theLIC-IDBI Bank deal and the stressed bank is learnt to have received around Rs.6,000 crore from theinsurance behemoth as the first instalment for the proposed acquisition of a majority stake– (FE Dec 21, 2018 p 10)

– 13 –

MANUFACTURING SECTOR"Textile, iron & steel shine: RBI: Manufacturing posts strong sales growth in Q2" – Manufacturing

sector, particularly textile and iron and steel segments, maintained its pace of sales growth in the secondquarter of 2018-19 as compared to the year-ago period, according to the RBI. Demand condition in themanufacturing sector "maintained its pace in the September quarter 2018-19 as reflected in strong salesgrowth (year-on-year)", as per the RBI analysis of 2,700 listed private sector non-financial companies. Areport. – (FE Dec 27, 2018 p 7)

Singh, Vibha – "Transforming India into a manufacturing hub" – Make in India programme is helpingindustries facilitate investment, foster innovation, enhance skill development and protect intellectual property.Going by the official data, there has been a positive growth in India's industrial production. An article.– (ET Dec 27, 2018 p 14)

NATIONAL HOUSING BANK"Liquidity concerns: National Housing Bank's refinance cap hiked to Rs.50,000 cr" – The Reserve

Bank of India (RBI) is learnt to have allowed the National Housing Bank (NHB) to raise its refinance limitto Rs.50,000 crore from Rs.30,000 crore for its current financial year that started on July 1. The move willsubstantially improve the financial might of the NHB, an arm of the RBI, to step in should the liquiditysituation worsen, especially for small players, in the coming months. – (FE Dec 27, 2018 pp 1, 2)

NON-BANKING FINANCE COMPANIES"RBI cancels registration of 1,490 NBFCs in two years: Kolkata tops list with 617 cancellations,

Delhi second with 203" – Stepping up oversight over credit companies, the Reserve Bank of India hascancelled the registration of 1,490 non-banking financial companies (NBFCs). These included NBFCs thatfailed to meet prudential norms and those that voluntarily surrendered registration. Kolkata tops the list with617 cancellations, and New Delhi stands at second spot with 203, followed by Mumbai at 190, according tothe data provided by the RBI for parliamentary questions (Lok Sabha). A report. – (BS Dec 24, 2018 p 4)

SMALL SCALE INDUSTRY

MSMEsRaju, B Yerram – "Pain points for the MSME sector" – The RBI has its task cut out as it sets about

addressing the sector's credit and viability concerns. An article. – (HBL Dec 27, 2018 p 6)

Sahoo, Pravakar – "MSMEs need much more than finance" – MSMEs need holistic support, startingfrom access to raw material, production processes, product development and access to markets. An article.– (FE Dec 26, 2018 p 7)

SIDBI"SIDBI plans to raise Rs.50 bn via bonds" – Small Industries Development Bank of India (SIDBI) has

planned to raise up to Rs.50 billion through bonds in the backdrop of a rise in its refinancing activity. Ratingagency Icra has assigned "AAA" rating for the proposed bond offering. A report. – (BS Dec 27, 2018 p 3)

INTERNATIONAL ECONOMICSGreene, Megan – "Prepare for a synchronised global slowdown" – The US, European and Asian central

banks are on the alert as the economy weakens. An article. – (FT Dec 20, 2018 p 9)

CHINAKynge, James – "Beijing can take drastic action to spur economy or watch it deteriorate" – Over the

past year, China's economy has looked like it is veering towards its 'busted flush' scenario. An article.– (FT Dec 21, 2018 p 24)

– 14 –

INTERNATIONAL TRADE"World economy set to feel the delayed trade war pain in 2019: Recent data underscore concerns

that trade will be a drag on US growth next year" – While 2018 was the year trade wars broke out, 2019will be the year the global economy feels the pain. Bloomberg's Global Trade Tracker is softening amid afading rush to front-load export orders ahead of threatened tariffs. And volumes are tipped to slow furthereven as the U.S. and China seek to resolve their trade spat, with companies warning of ongoing disruption. Areport. – (ET Dec 27, 2018 p 13)

MANAGEMENT

CORPORATE SOCIAL RESPONSIBILITY"CSR spend rises 47% in 4 years to FY18: Survey" – Companies in India spent Rs.7,536.3 crore on

corporate social responsibility (CSR) activities in 2017-18, a 47 per cent rise compared to 2014-15, accordingto a survey. "This is a significant rise, clearly demonstrating higher expenditure towards CSR activities fromthe mandated year, 2014," according to the KPMG India CSR Reporting Survey 2018. A report.– (BS Dec 27, 2018 p 3)

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