Volume XXXIV Number 4 October 22, 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 3

C. AGRICULTURE & RURAL DEVELOPMENT 12

D. INDUSTRY 13

E. INTERNATIONAL ECONOMICS 13

F. MANAGEMENT 14

– 1 –

BANKERS' BRIEF Vol. XXXIV No. 4October 22, 2018

"Continued liquidity stress may have deeper impact on NBFCs: Moody's" – Non-bank financialcompanies (NBFCs) are likely to be impacted significantly if the liquidity situation, triggered by InfrastructureLeasing & Financial Services (IL&FS) default, continues to remain tight, according to a report. Prolongedliquidity distress will significantly erode NBFIs' credit standing, and prove negative for the broader economyand structured finance sector, according to the agency – (BB152459, FE Oct 16, 2018 p 10)

"Kreditch gets RBI licence to operate as NBFC" – Kreditech has been licensed by the RBI to operate asan NBFC with the first-of-its-kind licence in Indian financial history for digital lending business and app-based financing, according to the Germany-based company. – (BB152458, FE Oct 16, 2018 p 10)

"PNB second best PSB in Aadhaar generation" – Punjab National Bank has been awarded as it emergedas the second-best PSB in terms of total Aadhaar generation and update. Its Ketetong, (Tinsukia) branch inAssam is the third best performing PSB branch in terms of Aadhaar generation and update. UIDAI recentlyorganized Aadhaar Excellence Awards for banks. – (BB152461, FE Oct 16, 2018 p 10)

"Satin Creditcare partners with IndusInd Bank" – Microfinance company Satin Creditcare Network Limitedsaid it has entered into a strategic Business Correspondent (BC) partnership with IndusInd Bank. Our businessstrategy is to strike the right balance between secured and unsecured lending and enhance the quality of ourportfolio, the company's chairman and managing director, H P Singh, said in a release. SCNL has alsodiversified into housing finance and BC partnerships with other banks/NBFCs.– (BB152462, FE Oct 16, 2018 p 10)

"SBI launches YONO shopping festival" – Are you an SBI customer, using the bank's YONO app andlooking for some great deals during this festive season? If yes, then here's good news for you. The StateBank of India has launched its YONO Shopping Festival, whereby apart from getting exclusive deals, SBIcustomers can get up to 40% discount on the purchases made by them. The festival will be held betweenOctober 16 and October 21, 2018. According to the SBI, currently, 85 plus e-merchants are associated withYONO, and during the YONO Shopping Festival (YSF), one can get best-in-class offers and discounts up to40% from top 14 e-commerce merchants in electronics, fashion, home furnishing, gifting, jewellery, accessoriesand travel space. – (BB152460, FE Oct 16, 2018 p 10)

"South Indian Bank: Unaudited financial results for the quarter and half year ended 30th September2018" – An advertisement feature. – (BB152456, FE Oct 16, 2018 p 5)

"WPI inflation rises to 2-month high of 5.13%" – Inflation-based on wholesale prices spiked to a two-month high of 5.13 percent in September, mainly due to hardening of food prices as well as rise in cost ofpetrol and diesel. The Wholesale Price Index (WPI) based inflation stood at 4.53 percent in August and 3.14percent in September last year. – (BB152455, FE Oct 16, 2018 p 2)

Sabnavis, Madan – "Saving grace: Small savings do not pose a threat to banks" – With digitizationcatching on and the India post possibly becoming a successful Payments Bank, the concept of small savingsmay narrow down to those which exclude deposits. An article. – (BB152457, FE Oct 16, 2018 p 8)

ECONOMY"Brace for slowdown: RBI surveys point to fragile growth momentum" – An editorial.

– (BB152440, BS Oct 15, 2018 p 9)

"Govt to achieve Rs.80,000 cr disinvestment target: Garg" – Edited excerpts from an interview with S CGarg, Economic Affairs Secretary. He shares his views on import curbs, the government's divestment targetand the possibility of US sanctions if India continues importing Iranian crude to address rising fuel.– (BB152429, Mint Oct 15, 2018 p 16)

– 2 –

"Home run for Indian statistical service" – Pravin Srivastava, Chief Statistician of India.The new chiefstatistician's reputation for diligence could have a salutary effect on the government at a time when thequality of its data is under intense scrutiny. A report. – (BB152398, BS Oct 12, 2018 p 15)

"Rate hike off the table in FY19, says SBI report" – Based on its inflation trajectory projection, the SBI'sEconomic Research Department (ERD) believes that a rate hike by the RBI is now off the table in FY19.However, it cautioned that continued deceleration in food prices, particularly in rural areas, remains a seriouscause for concern and could open up a Pandora's box in an election year.– (BB152423, HBL Oct 15, 2018 p 13)

"State of Indian economy" – The monetary policy report 2018 released by the RBI provides detailed insightsinto the state of the economy. A graphical report. – (BB152436, BS Oct 15, 2018 p 4)

"The problem is in the financing of CAD: apart from US Fed rate hike,foreign funds are flowing outbecause of interest rate-inflation mismatch, says Surjit Bhalla" – Excerpts from an interview withnoted economist and part-time member of Prime Minister's Economic Advisory Council Shri Surjit Bhalla.– (BB152497, HBL Oct 18, 2018 p 9)

EMPLOYMENT"A job at hand: pushing fixed-term employment is the right step, but details need to be worked out"

– An editorial. – (BB152496, HBL Oct 18, 2018 p 8)

EMPLOYMENT/UNEMPLOYMENTVyas, Mahesh – "Unemployment, really" – Surjit Bhalla contested CMIE's labour growth estimates by

suggesting it had got the female labour participation rates wrong. CMIE explains why it is right and howdemonetisation cost jobs. An article. – (BB152418, IE Oct 13, 2018 p 9)

FOREIGN EXCHANGE RESERVES"Forex reserves dip below $400b again" – India's foreign exchange reserves fell below the $400-billion

mark again as the week ended October 5 saw a $916-million dip amid market turmoil and pressure on thelocal currency. The reserves stood at $399.609 billion, according to RBI data. The foreign currency assets,which capture the depreciation of reserves held in other global currencies such as pound sterling and yen, fellmore than a billion, which indicates that the fall in reserves was mainly due to change in valuation. ForexReserves Dip Below $400b again. – (BB152416, ET Oct 13, 2018 p 6)

FOREIGN TRADE"Trade worries: Exports shrink again in Sept, worst plunge in 26 months" – Merchandise exports

witnessed the worst contraction in 26 months in September despite a weak rupee, thanks mainly to anunfavourable base, while trade deficit eased from a near-five-year high to touch a five-month trough of $14billion. Exports had last shrunk in March (by 0.7%). A report. – (BB152453, FE Oct 16, 2018 pp 1, 2)

INFLATION"Retail inflation up, stays below 4% target: Economists say oil prices, exchange rate may lead to rate

hike in December review" – Retail inflation rate measured by the consumer price index (CPI) rose to3.77 per cent in September from 3.69 per cent in the previous month, remaining below the Reserve Bank ofIndia's (RBI's) target of 4 per cent. Though the rate justifies the RBI's status quo stance in the policy rate, atleast from inflation point of view, economists believe that oil prices, exchange rate, and higher procurementprices would put pressure on the central bank to hike rates in its December review. The food inflation rateremained subdued at 1.08 per cent in September, though higher than 0.29 per cent in August. A report.– (BB152414, BS Oct 13, 2018 p 4)

– 3 –

"WPI inflation rises to 2-month high of 5.13%" – Inflation based on whole-sale prices spiked to a two-month high of 5.13% in September, mainly due to hardening of food prices as well as rise in cost of petrol anddiesel. The WPI based inflation stood at 4.53% in August and 3.14% in September last year. A report.– (BB152463, FE Oct 16, 2018 p 2)

MONETARY POLICY– INFLATION TARGETING

Rajadhyaksha,Niranjan – "The great Indian inflation puzzle" – An article.– (BB152483, Mint Oct 17, 2018 p 14)

SMALL SAVINGS SCHEMES– INTEREST RATES

Sabnavis, Madan – "Small savings do not pose a threat to banks" – With digitisation catching on and theIndia Post possibly becoming a successful payments bank, the concept of small savings may narrow down tothose which exclude deposits. An article. – (BB152465, FE Oct 16, 2018 p 8)

BANKING"Tightening regulatory norms put pressure on banks" – Excerpts from an interview with Rajeev Kumar,

Secretary, Department of Financial Services. The mega proposal to amalgamate Bank of Baroda, DenaBank and Vijaya Bank to create India's third-largest bank has not gone down well with the market. WithBank of Baroda - presumably the stronger bank - also grappling with a high level of stressed assets over thepast two to three years, there is a lot of scepticism on whether the consolidation will drive true synergies.Given the dodgy history of bank mergers in India, is this another feeble attempt to rescue weak banks? Hesays that with all the reforms introduced to clean up the banking system, a repeat of past issues is unlikely.We need big financial institutions in India and consolidation is the way to go.– (BB152392, HBL Oct 12, 2018 p 6)

Sabharwal, Manish – "Bank as a trustee: It's not a passing shower but climate change for banks.About time" – Seven big changes in the policy environment for banks began in April 2016 with the governmentpassing the Insolvency and Bankruptcy Code (IBC). This historic reform ended bank impotency, confrontedcrony capitalism, and enabled asset redeployment. In April 2017, the RBI refurbished its decades-old promptcorrective action framework with mandatory three-tier action on troubled banks based on a transparentmatrix of capital, asset quality, profitability and leverage. In June 2017 the RBI directed banks to refer allaccounts with total outstanding loans greater than Rs.5,000 crore, with at least three-fifths (60 per cent)classified as non-performing as on March 31, 2016 to the IBC. An article.– (BB152417, IE Oct 13, 2018 p 8)

ALLAHABAD BANK"Allahabad Bank conferred with Aadhaar Excellence Award by UIDAI" – Allahabad Bank, a premier

nationalized Bank of the country has been conferred the 3rd position by UIDAI (Unique Identification Authorityof India) in the category of Best Performing PSBs in terms of average Aadhaar generation and update.– (BB152391, HBL Oct 12, 2018 p 2)

BANDHAN BANK"Bandhan Bank gets SEBI exemption for share-sale: Earlier, the RBI had pulled up the bank for its

failure to bring down promoter holding" – SEBI has exempted Bandhan Bank from restrictions placedon share sale by its promoters. SEBI stipulates a one-year lock-in on the sale of equity shares by promotersin a newly-listed company. A report. – (BB152410, HBL Oct 13, 2018 p 9)

– 4 –

BANK OF BARODA"Bank of Baroda chief's term extended by one year" – The government has granted a year's extension to

Bank of Baroda's Managing Director & Chief Executive Officer, PS Jayakumar, with effect from October12. – (BB152394, HBL Oct 12, 2018 p 6)

DCB BANK"DCB Bank posts Rs73 cr profit in Q2" – Private sector DCB Bank reported a net profit of Rs 73 crore for

the quarter ended September 2018, up 25 per cent on annual basis. Its gross NPA was 1.84 per cent of grossadvances, against 1.8 per cent a yer ago. – (BB152504, IE Oct 18, 2018 p 12)

"DCB Bank: extract from unaudited results for trhe quarter and half year ended September 30,2018" – An advertisement. – (BB152502, BS Oct 18, 2018 p 20)

FEDERAL BANK"Federal Bank net up a tad as higher provisioning bites:impact of Kerala floods may continue for the

next three to four quarters,says CEO" – Federal Bank, posted a 0.9 per cent increase in net profit at Rs266.04 crore for the quarter ended September 30, 2018, due to higher provisioning. The private sector lenderhad registered a net profit of Rs 263.70 in the second quarter of 2017-18. A report.– (BB152477, HBL Oct 17, 2018 p 6)

"Federal Bank: standalone unaudited financial results for the quarter and half year ended September30,2018" – An advertisement. – (BB152485, FE Oct 17, 2018 p 15)

Iyer,Aparna – "Federal Bank rides out Kerala floods but growth metrics need to sustain" – FederalBank's investors are happy that the massiv floods in Kerala did not capsize the lender's boat, despite morethan half of its business originating from the state. The bank's shares rose about 4% since it announced itsresults for the September quarter. An article. – (BB152498, Mint Oct 18, 2018 p 4)

HDFC BANK"New HR head at HDFC Bank" – HDFC Bank has appointed Vinay Razdan as the head of Human

Resources. He will be responsible for the entire human resource function of the bank. He has replaced PhilipMathew, the erstwhile Chief People Officer of HDFC Bank. He joins the bank from Idea Cellular, where hewas the Chief Human Resources Officer (CHRO). – (BB152408, HBL Oct 13, 2018 p 6)

ICICI BANK"Chanda Kochhar seeks more time to appear before SEBI" – ICICI Bank's former managing director

and chief executive officer (MD and CEO), Chanda Kochhar, has sought more time to appear before theSecurities and Exchange Board of India (Sebi) for a personal hearing, said a source in the know. A report.– (BB152434, BS Oct 15, 2018 p 3)

"ICICI Bank files fraud case against Shrenuj promoter:case in US court against promoter Doshi, 10executives of Shrenuj, other firms" – ICICI Bank has moved a US court against 11 executives ofMumbai-based diamond company Shrenuj and Co. for allegedly defrauding the bank, and has sought torecover over $12 million from them, besides interest and legal fees. A report.– (BB152482, Mint Oct 17, 2018 p 7)

"ICICI Bank launches pre-approved vehicle loans" – To help customers buy vehicles during the festivalseason, ICICI Bank has launched a pre-approved loan facility for its savings account holders. The loan of upto Rs 20 lakh will cover as much as 100 per cent of the on-road price of the car.– (BB152495, HBL Oct 18, 2018 p 5)

"RBI approves 3-year term for Bakhshi as CEO of ICICI Bank" – The RBI approved the appointmentof Sandeep Bakhshi as the MD and CEO of ICICI Bank for a three-year term. A report.– (BB152476, HBL Oct 17, 2018 p 6)

– 5 –

INDUSIND BANK"IndusInd Bank net profit rises 4.6% to Rs.920 cr: Makes Rs.275-crore contingency provision on

exposure to IL&FS, group companies" – Private sector lender IndusInd Bank posted a subdued 4.6 percent increase in net profit at Rs.920.25 crore for the second quarter of the fiscal due to a one-off prudentialcontingency provision of Rs.275 crore on exposure towards troubled Infrastructure Leasing and FinancialServices group. A report. – (BB152445, HBL Oct 16, 2018 p 6)

"IndusInd Bank: Unaudited financial results for the quarter/half year ended September 30, 2018" –An advertisement feature. – (BB152450, Mint Oct 16, 2018 p 9)

"Satin Creditcare partners with IndusInd Bank" – Microfinance Company Satin Creditcare Network hasentered into a business correspondent partnership with IndusInd Bank. – (BB152468, FE Oct 16, 2018 p 10)

Karthik,Hamsini – "IndusInd Bank: IL&FS worries spook street, Q2 net profit grows at 5%" –Growth slowest in 42 quarters due to contingency provision related to loans to IL&FS. An article.– (BB152471, BS Oct 16, 2018 p 10)

Merwin, Radhika – "Loan growth drives core performance" – An article.– (BB152446, HBL Oct 16, 2018 p 6)

JAMMU & KASHMIR BANK"J&K Bank: extract of standalone reviewed financial results for the quarter/half year ended 30th

Sept. 2018" – An advertisement. – (BB152487, BS Oct 17, 2018 p 18)

KARNATAKA BANK"Karnataka Bank Q2 net profit up 20% at Rs.112 cr" – Karnataka Bank registered a net profit of Rs.111.86

crore in the second quarter of 2018-19 against a profit of Rs.93.38 crore in the corresponding period of theprevious fiscal, recording a growth of 19.79 per cent during the period. A report.– (BB152406, HBL Oct 13, 2018 p 6)

"Karnataka Bank to focus on destressing asset portfolio" – Karnataka Bank will focus on furtherstrengthening the collection mechanism to destress the asset portfolio, according to Mahabaleshwara MS,Managing Director and CEO of the bank. Addressing regional heads and executives of the bank, in Mangaluru,he said the reduction in gross NPAs during the second quarter of 2018-19, and control in slippage ratio andcredit cost, augur well for the bank's future. The strong performance of the bank should act as a springboardfor further growth in all business areas in the ensuing quarters of the current fiscal. A report.– (BB152449, HBL Oct 16, 2018 p 6)

"The Karnataka Bank Ltd.: Reviewed financial results for the quarter/half year ended September30, 2018" – An advertisement feature. – (BB152404, HBL Oct 13, 2018 p 5)

KOTAK MAHINDRA BANK– BANK BRANCHES

"New branch opening pace has come down" – The pace of opening new bank branches has come downsince the last two-three years thanks to the rise in digital transactions, according to a top official of KotakMahindra Bank. Over 85 per cent of the bank's transactions take place in digital mode, its Joint ManagingDirector Dipak Gupta said. "...But, nationally,we will continue opening branches. But it is not at the samepace as it was let's say two years, three years back. Because, a lot of customer acquisition today happensdigitally." A report. – (BB152412, FE Oct 13, 2018 p 10)

PUNJAB NATIONAL BANK"PNB plans to sell non-core assets worth Rs.8,600 crore" – Punjab National Bank (PNB) has identified

various assets, including its housing finance arm, for sale and hopes to realise Rs.8,600 crore from these non-core assets during the current fiscal. A report. – (BB152447, HBL Oct 16, 2018 p 6)

– 6 –

"PNB second best PSB in Aadhaar generation" – Punjab National Bank has been awarded as it emergedas the second-best PSB in terms of total Aadhaar generation and update. Its Ketetong, branch in Assam isthe third best performing PSB branch in terms of Aadhaar generation and update.– (BB152467, FE Oct 16, 2018 p 10)

– FRAUDS

"PNB Fruad: ED attaches over Rs218-crore assets of Mehul Choksi,others" – The EnforcementDirectorate seized assets worth over Rs218 crore, including diamonds and flats abroad, in the nearly Rs13,000 crore loan fraud case probe, the agency said. Three provisional orders under the Prevention ofMoney Laundering Act were issued by the central investigating agency's zonal office for attachment of theproperties. A report. – (BB152500, FE Oct 18, 2018 p 7)

SOUTH INDIAN BANK"South Indian Bank posts Rs.70-cr profit" – South Indian Bank has announced Q2 FY19 results with a

quarterly net profit of Rs.70.13 crore against Rs.4.32 crore in the corresponding period of the previous fiscal.Expressing satisfaction on the overall business performance, V G Mathew, Managing Director and CEO,told reporters that a clear shift of focus to retail, agriculture and MSME, has consistently started deliveringimprovement in the bank's performance. A report. – (BB152448, HBL Oct 16, 2018 p 6)

"South Indian Bank: unaudited financial results for the quarter and half year ended 30th Sept. 2018"– An advertisement. – (BB152464, FE Oct 16, 2018 p 5)

STATE BANK OF INDIA"SBI launches YONO shopping festival" – SBI's digital service platform YONO will launch a six-day

shopping festival beginning October 16 in which customers using the app for shopping via online portals canavail of discounts. – (BB152466, FE Oct 16, 2018 p 10)

"SBI sees bad loan provision falling after 2 quarters" – State Bank of India, the country's largest lender,sees its provision for bad loans remaining high for at least the next two quarters, after which it will startsoftening as it steps up efforts to improve asset quality, according to Rajnish Kumar, chairman of the bank.– (BB152413, FE Oct 13, 2018 p 11)

"SBI signs MoU with NBI Kathmandu to facilitate transform its Human Resources" – Country'slargest lender State Bank of India recently entered into a Memorandum of understanding (MoU) with NationalBanking Institute (NBI), Kathmandu (Nepal) to establish a mutually beneficial strategic alliance fordevelopment of NBI's human resources in the areas of education, training and research. Under this MoU,State Bank of India's Strategic training Unit will impart education, training and development to facilitatetransformation of NBI's HR department. SBI and NBI will share available infrastructure and administrativefacilitates in organising press conferences, seminars, workshops, study and group discussions.– (BB152390, HBL Oct 12, 2018 p 2)

UNITED BANK OF INDIA"UBI's unique proposition should not be ignored" – Edited excerpts from an interview with Ashok Kumar

Pradhan, MD, United Bank of India. – (BB152489, ET Oct 17, 2018 p 14)

"United Bank's performance can only improve now: The bank will use 4C formula to make aturnaround by Q4, says its MD & CEO" – Excerpts from an interview with Ashok Kumar Pradhan,Managing Director & CEO, United Bank of India (UBI). He said bank which has been under the RBI'sPrompt Corrective Action (PCA) framework for crossing the threshold of net non-performing assets (NPAs)and breach of capital requirements, expects to make a turnaround in the fourth quarter of FY19. He spokeabout the way forward. Where the IL&FS issue is concerned, I would blame it entirely on the rating agency.Even till as late as August they were enjoying AA and AAA rating and all of sudden it was reduced to junk.– (BB152424, HBL Oct 15, 2018 p 17)

– 7 –

YES BANK"RBI refuses extension to YES Bank chief Kapoor" – The RBI wants YES Bank to appoint a successor

to its MD and CEO Rana Kapoor by February1,2019. A report. – (BB152494, HBL Oct 18, 2018 p 5)

"YES Bank selects Korn Ferry to find successor to Rana Kapoor" – Private sector lender YES Bankhas selected global leadership advisory firm Korn Ferry to help find a successor to its Managing Director andCEO Rana Kapoor. – (BB152393, HBL Oct 12, 2018 p 6)

"YES Bank wants Kapoor to give back his bonuses: The board's recommendations follow adverseobservations made by RBI" – Yes Bank Ltd's board has recommended clawing back of bonuses paid tomanaging director and chief executive Rana Kapoor for two years ended 31 March 2016 following adverseobservations made by banking regulator. A report. – (BB152425, Mint Oct 15, 2018 pp 1, 6)

CHINAWeinland,Don – "The crackdown on 'accidental banks'" – Created to soak up bad debts from commercial

banks, a group of state-owned asset managers grew into investment vehicles that fuelled the country'soverseas expansion. Now Beijing is slamming on the brakes. An article. – (BB152505, FT Oct 12, 2018 p 9)

ASSET MANAGEMENT COMPANY / ALTERNATIVE INVESTMENT FUND– NPAs RESOLUTION

"AMC/AIF for banks to resolve bad loans faces roadblocks: no consensus among lenders to implementSunil Mehta Committee recommendtions" – The Sunil Mehta Committee's recommendation for floatingan independent AMC and an AIF to help banks resolve their big-ticket stressed assets is unlikely to get offthe drawing board due to lack of consensus among lenders. A report.– (BB152475, HBL Oct 17, 2018 p 6)

BANK FRAUDS"CVC report suggests tough measures to curb banking frauds" – In a move that will aid investigation

agencies in their probes against bank frauds, the CVC shared its analysis report on the top 100 bankingfrauds in the country with the RBI, the ED and the CBI. Vigilance commissioner T M Bhasin said that thereport focused on the modus operandi, amount involved, type of lending consortium or individual, anomaliesobserved, loopholes that facilitated the perpetration of the fraud concerned and the systemic improvementsrequired to plug the gaps in the system and procedures. A report. – (BB152484, Mint Oct 17, 2018 p 17)

BANK LENDING– NON-BANKING FINANCE COMPANIES

"State Bank's decision to lend to NBFCs will bring back some confidence into the market" – Editedexcerpts from a discussion with P K Gupta, managing director, SBI; K V S Manian president (corporate,institutional and investment banking), Kotak Mahindra Bank; Neeraj Gambhir, independent expert; and RSivakumar, head (fixed income), Axis Mutual Fund discuss the debt squeeze.– (BB152430, Mint Oct 15, 2018 p 16)

Iyer, Aparna – "Did banks turn away from NBFCs this year?" – Indian banks seem to have turned waryof non-banking financial companies (NBFC) months before doubts on their liquidity position began to scareinvestors. The adjoining chart shows that bank loans to NBFCs fell by Rs.6,000 crore during April-August.This is in contrast to the Rs.82,000 crore loans given by banks to the economy in the same period. Consequently,the share of NBFCs in outstanding bank credit as of August fell marginally to 6.31% in August from 6.46%in March. A report. – (BB152426, Mint Oct 15, 2018 p 4)

– 8 –

BANKERS' INVESTIGATIONS"O P Bhatt, other SBI staff under CBI lens for loans to Mallya: Forensic audit not conducted despite

poor health of Mallya's company" – The Central Bureau of Investigation (CBI) is examining the role oftop State Bank of India (SBI) officials in disbursing loans to businessman Vijay Mallya - whose extradition isbeing sought from the UK - allegedly without conducting due diligence. Mallya is wanted in India for questioningover allegations of fund diversion and money laundering regarding loans made to Kingfisher Airlines. FormerSBI chairman O P Bhatt along with more than a dozen senior officials of the lender are under the CBIscanner. A report. – (BB152399, ET Oct 12, 2018 p 1)

"PSU banks want govt to set up oversight panel: Want committee to examine any charges madeagainst top execs before govt action" – State-run banks have asked the government to set up an oversightcommittee to examine allegations made against managements before any formal action is taken over allegationsof wrong doing. The chief executives of some state-owned banks had sought such a setup, seeking paritywith private lenders, citing the example of ICICI Bank. Their concern was that action against executives atstate-run lenders was being taken with undue haste. Some of these issues were also raised during the annualfinancial review of PSBs (public sector banks) held last month. A report.– (BB152441, ET Oct 15, 2018 p 11)

BANKING REGULATOR-RBIGupta, J N – "Ad Hoc actions hurt: time for RBI to put its house in order" – The RBI, in its 83 year

history has not made to the front page news as often, as it did in first nine months of 2018, facing questionson its credibility and capability. An article. – (BB152472, ET Oct 16, 2018 p 9)

– AUTONOMY

Desai, Meghnad – "Risky gambit for RBI's autonomy" – The Swadeshi Jagaran Manch (SJM), whichhas recently succeeded in getting one of its members on RBI's board, believes in autarkic economic policies.Investment into the country can only come if the world out there respects its economic policies as rationaland prudent. An article. – (BB152432, FE Oct 15, 2018 p 8)

CENTRAL COUNTERPARTIES"Central Counterparties: RBI unveils norms for governance, capital requirements" – The RBI has

come out with new directions relating to capital requirements and governance framework of CentralCounterparties and a framework for recognition of foreign CCPs. Every applicant seeking authorisation as aCCP should have a minimum networth of Rs 300 crore, the central bank said. A report.– (BB152474, IE Oct 16, 2018 p 11)

CROP LOANS– INTEREST SUBVENTION

"RBI to 2% interest subvention on crop loans: move will help farmers affected by natural calamities"– To provide relief to farmers availing short-term crop loans and those affected by natural calamities, theRBI said an interest subvention of 2% p.a. will be made available to banks for the first yer on the restructuredloan amount. A report. – (BB152492, HBL Oct 18, 2018 p 5)

CYBER FRAUDS"Timely action by bank limits fraud to Rs.19 cr" – In the biggest ever cyber-banking fraud of Mumbai this

year, foreign-based cyber criminals on October 2 hacked into the server of SBM Bank (Mauritius) Ltd. Andalso allegedly into Society for Worldwide Interbank Financial Telecommunication (SWIFT) System andattempted to siphon off Rs.147 crore from the bank, and transferred it to various bank accounts in London,New York, Paris and Tokyo. However, timely actions taken by two foreign banks in whose account fundswere transferred ensured that the loss was limited to Rs.19 crore. A report.– (BB152419, HT Oct 13, 2018 p 5)

– 9 –

DATA LOCALIZATION"RBI refuses to budge on data localisation: Dead line ends on Monday; 80% firms have complied

with the rule but card companies seek more time" – The Reserve Bank of India (RBI) will stick to itsdata-localisation directive and the October 15 deadline to comply with it, the central bank strongly communicatedin a meeting with payments services providers. – (BB152396, BS Oct 12, 2018 pp 1, 6)

"The right move" – The RBI has done well to stand firm on dta localisation. An editorial.– (BB152478, HBL Oct 17, 2018 p 8)

Chakrabarti,Saubhik – "Well done RBI, your turn GoI: Centre must do three things to complementCentral bank's data storage rule" – Oct 16, is a good day for Indian policymaking. RBI didn't budge as itsdeadline for financial data localisation ended on October 15. If GoI deems personal payments data as notcritical and if Parliament accepts that, the discipline brought about by RBI's insistence will be severelyaffected. An article. – (BB152473, ET Oct 16, 2018 p 12)

DEBIT CARDS"Debit card volumes: Payments banks beat small PSBs" – The volume of point-of-sale (POS)-based

transactions reported by debit card users of three payments banks - Airtel Payments Bank, Fino PaymentsBank and Paytm Payments Bank - is now higher than those made by debit card holders of some mid-sizedpublic sector banks (PSBs), data from the Reserve Bank of India (RBI) showed. Catching up: * Airtel, Fino,Paytm logged 2.15 million transactions in August; * This is higher than the number reported by some smallPSBs. A report. – (BB152431, FE Oct 15, 2018 pp 1, 4)

DEFAULTERS"Probe agencies want banks to alert them about defaulters" – Probe agencies want to create a system

whereby they are alerted in advance about economic offenders. And for this, they want banks to pitch in.Consider this: Before they declare NPAs of a defaulter, banks can suggest probe agencies to issue a lookoutcircular to ensure the defaulters do not leave the country. Probe agencies have submitted a suggestion to thiseffect to the Centre. A report. – (BB152488, ET Oct 17, 2018 p 8)

FINANCIAL SECTOR"Silver lining for India is intervention happened before the NBFC crisis could spin out of control" –

The jury for the 14th India Business Leader Awards, comprising Uday Kotak, MD and CEO, Kotak MahindraBank, Zarin Daruwala, CEO,Standard Chartered; Rajnish Kumar, chairman SBI, Vani Kola, MD,KalaariCa;pital; Nimesh Kampani, chairman, JM Financial ; Sanjay Nayar, CEO, KKR India; Kalpana Morparia,CEO, JP Morgan India; Harsh Mariwala, chairman, Marico; and Rajiv Memani, chairman, EY India, callingfor reimagining the financial sector and seeking better co-ordination between regulators. Excerpts.– (BB152499, Mint Oct 18, 2018 p 10)

FOREIGN BANKS IN INDIA– MORGAN STANLEY

"Morgan Stanley strengthening tech capability, bets on start-ups" – Deepening its engagement in India,Morgan Stanley is inching towards a strong collaboration with the start-up ecosystem. It is also strengtheningits in-house capabilities in new technology areas by adding more engineers to its captive centres in thecountry. For the first time, the financial services giant conducted its CTO innovation summit out of Bengaluruthis week. It has been holding this summit in the Silicon Valley for the last 18 years. The main objectivebehind this initiative is to connect with emerging start-ups in the country that are working in the domain ofartificial intelligence (AI). A report. – (BB152435, BS Oct 15, 2018 p 3)

– 10 –

INSOLVENCY AND BANKRUPTCY BOARD OF INDIA– INSOLVENCY PROFESSIONAL AGENCY

"IBBI allows multilateral financial entities to take up to 15% stake in IPAs: Other regulated financialentities can also pick up stake in an Insolvency Professional Agency" – Insolvency regulator IBBIhas allowed a multilateral financial institution to acquire and hold up to 15 per cent equity stake in an InsolvencyProfessional Agency (IPA). A report. – (BB152405, HBL Oct 13, 2018 p 6)

INSOLVENCY AND BANKRUPTCY CODE"IBC: Firms cope with changing landscape" – Financial creditors till July had realised claims of approximately

Rs.474 billion in 26 cases where resolution plans were submitted under the Insolvency and Bankruptcy Code(IBC) since its enactment. But the figure pales in comparison with the behavioural change that the Code hasbrought about. A report. – (BB152438, BS Oct 15, 2018 p 6)

Merwin,Radhika – "IBC delays are hurting banks, economy" – The 180-day deadline shouldn't be trifledwith, while settling points of law, there must be a time limit for interim litigations. An article.– (BB152479, HBL Oct 17, 2018 p 8)

– NBFCs

"Financial service providers outside the purview of IBC, says NCLAT" – The National Company LawAppellate Tribunal and NCLT (Mumbai Bnech), in recent judgments, have observed that financial serviceproviders such as NBFCs are outside the purview of the IBC. A report.– (BB152493, HBL Oct 18, 2018 p 5)

– NPA RESOLUTION

"Experts call for aligning competition law with IBC for faster NPA resolution" – The Corporate AffairsMinistry-appointed panel to review the Competition Act should look at aligning the law with the Insolvencyand Bankruptcy Code (IBC) 2016, according to legal experts. There are still grey areas such as adherencewith CCI-specified merger control procedures for cases going through insolvency process. Aligning thecompetition law with IBC could help in faster resolution of non-performing assets (NPAs) in the bankingsystem. A report. – (BB152403, HBL Oct 13, 2018 p 4)

INTEREST RATESRoongta,Harsh – "Some justice for existing borrowers?" – If retail borrowers start a metoo campaign, all

lenders would have to plead guilty. And the Supreme Court finally, seems to have stepped in to stem this rot.When interest rates go down, banks tend to increase the spread for older customers, and their EMIs staysame. An article. – (BB152501, BS Oct 18, 2018 p 14)

KYC NORMS"With Aadhaar nixed, banks seek new KYC norms: IBA fears lack of clarity following apex court

ruling will impact operations, writes to RBI" – The Indian Banks Association (IBA), the industry bodyrepresenting banks and financial institutions, has written to the Reserve Bank of India (RBI) seeking revisedKYC (know your customer) guidelines following the recent Supreme Court verdict on Aadhaar. The banksare worried about the impact on business due to the lack of clarity following the ruling. A report.– (BB152402, HBL Oct 13, 2018 p 1)

MOBILE WALLETS"RBI makes phone wallet payments seamless" – Users of mobile wallets may soon be able to transfer

funds from one wallet to another, with the central bank releasing rules for the same. The rules on interoperabilityof prepaid payment instruments do not force PPIs such as wallets to permit such transfers,instead,theseguidelines are for participating PPI issuers, who choose to adopt interoperability.– (BB152481, Mint Oct 17, 2018 p 6)

– 11 –

MONETARY POLICYMalik, Rajeev – "The MPC's approach lacks clarity" – The monetary policy committee owes many

answers if it wants to enhance its transparency and credibility. What matters is the trajectory of inflation,irrespective of what is impacting it. An article. – (BB152452, Mint Oct 16, 2018 p 14)

Sambamurthy, B – "Is RBI losing control?" – The MPC appears to be diluting its powers. An article.– (BB152480, HBL Oct 17, 2018 p 9)

PAYMENTS REGULATORY BOARDBarman, R B – "No reason for a payments board" – There must be transparency about how the proposed

independent board will be an improvement over the RBI. The draft Payment and Settlement System Bill,2018, seeks to foster competition, consumer protection, systemic stability and resilience in payments sectorby providing a level playing field to non-bank players like fintech companies. It proposes an independentpayments regulatory board for this. The assumption appears to be that banks, even if they use cutting edgetechnology, cannot meet escalating demand and the Reserve Bank of India (RBI) is not flexible enough. Is itpossible that in the name of such regulatory reforms, public interest will be compromised? An article.– (BB152427, Mint Oct 15, 2018 p 15)

PRIVATE SECTOR BANKS– BANK CHARGES

"Some pvt banks look to increase charges on remittances: Move aimed to offset GST levied ontransactions undertaken by banks' business correspondents" – Private banks that are being chargedgoods and services tax on transactions undertaken by their business correspondents are starting to increasetheir charges on remittances. At least two large private sector lenders in the domestic money remittancebusiness have increased charges by at least 20 basis points. – (BB152400, ET Oct 12, 2018 p 7)

– LEADERSHIP

"The rise and fall of an older generation of bankers" – Change is coming to some of India's top private banks asregulators shunt aside a previous generation of leaders in a bid to improve corporate governance and get togrips with a mountain of bad loans. A report. – (BB152409, HBL Oct 13, 2018 p 6)

PROMPT CORRECTIVE ACTION– PUBLIC SECTOR BANKS

"PCA necessary to stabilize weak banks, says RBI's Acharya" – Reserve Bank of India (RBI) deputygovernor Viral Acharya said that any relaxation of the prompt corrective action (PCA) imposed on weakbanks should be avoided. Without the PCA imposition, some banks would have incurred even higher lossesand required even more of taxpayer money for recapitalisation. The reduction in lending at PCA banks isbeing more than offset by credit growth at healthier banks. A report. – (BB152411, Mint Oct 13, 2018 p 23)

PUBLIC SECTOR BANKS– EXPORT FINANCE

"Centre to urge PSBs to ease lending to exporters" – Responding to the crisis faced by exporters due toa sharp dip in credit flow to the sector, the Finance Ministry has urged public sector banks (PSBs) to loosentheir purse strings. "The liquidity crunch being faced by small exporters is a matter of concern for thegovernment. The issue was discussed by the Commerce Ministry with the Finance Ministry, which will holda meeting with public sector banks to direct them to lend more to exporters," according to a governmentofficial. A report. – (BB152422, HBL Oct 15, 2018 p 13)

– 12 –

– FINANCIAL RESULTS

"Another muted quarter for public sector banks:NPAs, mark-to-market losses will keep provisioningat elevated levels" – After every quarter of disappointing performance in the past, investors had hoped theworst might be behind for bad loan-ridden PSBs. However, it seems they might have to wait some more.Despite some expected moderation in slippage, the Sept.quarter is also expected to be relatively muted,thanks to sustained provisioning pain and high funding cost. Thus, overall earnings as compared to the year-ago period are expected to remain under pressure, with many reporting losses. Some banks though, could seesequential improvement. A report. – (BB152486, BS Oct 17, 2018 p 11)

– RBI NOMINEES

"RBI wanted to pull out nominees from public sector bank boards,Govt says no" – The FinanceMinistry is learnt to have turned down the RBI's demand for withdrawing its nominee directors from theboards of public sector banks, arguing that in these times of stress in the banking sector, the banking regulator'spresence is important, sources familiar with the matter said. A report. – (BB152491, IE Oct 17, 2018 pp 1,2)

RECOVERY OF LOANS,NPAs– GUARANTORS

"Ending guarantors' impunity" – Wake-up call for errant promoter-guarantors. An editorial.– (BB152397, BS Oct 12, 2018 p 9)

SMALL FINANCE BANKS– AU SMALL FINANCE ABNK

"AU Small Finance Bank: Statement of unaudited financial results for the quarter and half year endedSeptember 30, 2018" – An advertisement feature. – (BB152442, ET Oct 15, 2018 p 11)

– AU SMALL FINANCE BANK

"AU Small Finance Bank Q2 net up 34%" – AU Small Finance Bank reported 33.95 per cent rise in netprofit to Rs.91.41 crore for the second quarter of 2018-19. The bank had reported a net profit of Rs.68.24crore in the July-September period of 2017-18. – (BB152420, IE Oct 14, 2018 p 15)

– ESAF SMALL FINANCE BANK

"ESAF SFB completes private stock placement" – ESAF Small Finance Bank has announced the completionof private placement of its common stock worth Rs.464 crore. – (BB152407, HBL Oct 13, 2018 p 6)

WRITING-OFF LOANSJaitley, Arun – "It's resolution, not waiver: Loan 'write-offs' are for tax benefits and capital optimisation,

not corporate doles" – The reclassification and transparent Asset Quality Review (AQR) led to the NPAsof PSBs increasing from Rs.2.26 lakh crore in March 2014 to Rs.8.96 lakh in March 2018. An article.– (BB152443, ET Oct 15, 2018 p 12)

AGRICULTURE & RURAL DEVELOPMENT

AGRICULTURE RESEARCHBhaskar, Bhuwan – "Agriculture R&D spend: A reality check" – To fulfil its objective of doubling farm

incomes by 2022, the govt must hike R&D spend and facilitate private investments. An article.– (BB152395, HBL Oct 12, 2018 p 9)

– 13 –

INDUSTRY"Industrial output growth loses steam, falls to 4.3% in August" – Industrial output growth faltered in

August, dipping to a 3-month low of 4.3 per cent as manufacturing growth slowed down and mining activitiescontracted. In July, the Index of Industrial Production (IIP) had moderated slightly to 6.6 per cent, down fromthe 6.8 per cent in June. The cooling of growth can be attributed mainly to the manufacturing segment,constituting the bulk of the index at 77.6 per cent, growing by only 4.6 per cent, significantly lower than the6.9 per cent rise in July. A report. – (BB152415, BS Oct 13, 2018 p 4)

INFRASTRUCTURE LEASING AND FINANCIAL SERVICES (IL&FS)"NCLAT grants IL&FS relief against lenders: Says moratorium is merited in the 'public interest'

and to shield debt-laden company" – In a breather to the beleaguered IL&FS, the National CompanyLaw Appellate Tribunal (NCLAT) passed an interim order granting a moratorium on all creditor actionsagainst the debt-laden group. A report. – (BB152444, HBL Oct 16, 2018 pp 1, 6)

NON-BANKING FINANCE COMPANIES"Continued liquidity stress may have deeper impact on NBFC: Moody's" – NBFCs are likely to be

significantly impacted if the liquidity situation, triggered by IL&FS default, continues to remain tight, accordingto a report. Prolonged liquidity distress will significantly erode NBFIs' credit standing, and prove negative forthe broader economy and structured finance sector, the agency said. A report.– (BB152469, FE Oct 16, 2018 p 10)

Bandyopadhyay, Tamal – "An AQR for the NBFC sector?" – If the sector stumbles, it will lead to a creditcrunch and hit domestic consumption and growth. An article. – (BB152439, BS Oct 15, 2018 p 8)

Sridhar,R – "Off balance sheet solution can resolve NBFCs' crisis of confidence" – An article.– (BB152490, ET Oct 17, 2018 p 14)

– DIGITAL LENDING

"Kreditech gets RBI licence to operate as NBFC" – Kreditech has been licensed by the RBI to operte asan NBFC with first-of-its kind licence in Indian financial history for digital lending business and app-basedfinancing, the Germany based company said in a release. – (BB152470, FE Oct 16, 2018 p 10)

– STATE BANK OF INDIA

"NBFCs must be regulated on a par with banks'" – NBFCs were filling the gap in absence of lending byPSBs. Banks need to comeback and that is what the State Bank of India is doing. Edited excerpts from aninterview with Rajnish Kumar, Chairman, State Bank of India. – (BB152503, ET Oct 18, 2018 p 10)

INTERNATIONAL ECONOMICS"The rising stock of global economic risks" – The sustainability of global growth will depend on how the

emerging risks are managed. An article. – (BB152451, Mint Oct 16, 2018 p 14)

"The world economy: The next recession" – Pre-emptive action calls for initiative from politicians, whichis conspicuously absent. This week's market volatility suggests time could be short. The world should startpreparing now for the next recession, while it still can. An article. – (BB152433, FE Oct 15, 2018 p 9)

CHINA"China's building boom sets regions on course for potential $6tn 'debt iceberg'" – China could be

facing a 'debt iceberg with titanic credit risks' after a boom in infrastructure projects by local governments,S&P Global has warned. A report. – (BB152437, FT Oct 17, 2018 pp 1, 2)

– 14 –

USA"US economy's urban-rural split widens" – Growth mainly concentrated in densely populated areas with

highly educated workers. A report. – (BB152507, FT Oct 16, 2018 p 2)

FINANCIAL CRISISSinghal, Rajrishi – "Next financial crisis might reveal new fault lines" – An article.

– (BB152428, Mint Oct 15, 2018 p 15)

FUND MANAGEMENT"Global fund management" – A weekly report. – (BB152506, FT Oct 15, 2018 Sup.pp 1-16)

INTERNATIONAL MONETARY FUND (IMF)"De-escalate, fix global trade, not destroy it" – Edited excerpts from an interview with Christine Lagarde,

MD, International Monetary Fund. She hopes global trade tensions will ease. Markets plunged across theworld on Thursday, sparked by a crash in US equities owing to worries over the escalating trade war.Lagarde, who was in the Indonesian island to attend the annual meetings of the IMF and World Bank Group,also said now is the time to prepare for monetary tightening as the US economy picks up.– (BB152401, ET Oct 12, 2018 p 11)

MANAGEMENT

INDIAN ACCOUNTING STANDARDS (IND-AS)Sontanam, Satya – "What's new in Ind AS" – With Ind AS 115 replacing Ind AS 18/11, the way companies

account for revenue has undergone a few changes. As an investor, here's what you should look out for. Anarticle. – (BB152421, H Oct 14, 2018 Pt. II p 8)

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