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NCLAT Restores Cyrus Mistry As Chairman of Tata Group and Other Top News Today

Professor of Financial Economics and Part-time Value Investor, Transfin.
Dec 18, 2019 1:31 PM 5 min read
Editorial

Cyrus Mistry restored as Chairman of Tata Group by NCLAT. GST Council meets today; rate hike unlikely. Facebook mulls hiring users as contractors to fact-check content on its platform.

 

  

BANKRUPT

With close to 3% of INR6.04L cr worth of loans sanctioned under the scheme having turned bad at the end of March 2019, could Mudra become the source for the next bad loan crisis?

Loans Turning Bad: Former RBI Governor Raghuram Rajan had flagged the potential credit risks in schemes such as Pradhan Mantri Mudra Yojana (PMMY), popularly known as the Mudra scheme. Previous RBI Governor Urjit Patel too had warned the government against nudging public sector banks (PSBs) to over lend and pump-prime the economy and boost preferred sectors, stating that doing so would lead to higher bad loans and fiscal deficit. But all warnings seem to have fallen on deaf ears.

 

The NPAs on Mudra loans by PSBs, which also included regional rural banks, jumped to INR17,250cr as on March 2019 vs INR7,277cr last year, INR3,790cr in 2017 and INR596cr in 2016.

 

In a written reply to a question in the Rajya Sabha, the government had submitted that close to 3% of INR6.04L cr worth of loans sanctioned under the Pradhan Mantri Mudra Yojana have turned bad at the end of March 2019. With the number of loans turning bad increasing under the scheme, could Mudra become the source for the next bad loan crisis? Click here for the entire scoop.

 

As God As My Witness: The Industrial & Commercial Bank of China is looking to recover over $680mn from Anil Ambani, invoking what they say is a personal guarantee he gave in 2012 to secure a $925mn loan for now debt-ridden Reliance Communications. A trial will commence next year. 

 

In his version, Anil Ambani had only authorized his employees to furnish a non-binding “personal comfort letter” to lenders, including ICBC, China Development Bank and the Export-Import Bank of China. Somehow, that letter of comfort morphed into what the banks now argue to be an iron-clad guarantee under English law. In this regard, London Judge David Waksman noted, "I consider it extremely unlikely that his role was really limited to simply chairing board meetings with little or no interest or role in what RCom was doing, especially in the context of a major refinancing which was needed urgently." Deccan Herald

 

COMPANIES

Cyrus Mistry restored as Chairman of Tata Group.

Back to Pavilion: The National Company Law Appellate Tribunal (NCLAT) today restored former Tata Group Chairman Cyrus Mistry as the Chairman of the Group.

 

The NCLAT also held the appointment of N Chandrasekaran, the current Chairman of Tata Sons, as Executive Chairman as "illegal".

 

FYI: Cyrus Mistry, who was the sixth chairman of Tata Sons, was ousted from the position in October 2016. 

New regulations for the NBFC sector to be brought in a steady and non-disruptive manner.

The RBI has been closely monitoring the Non-Banking Financial Companies (NBFCs) sector and is looking to tighten regulation steadily and in a non-disruptive manner, as the sector is slowly recovering from the IL&FS crisis.  

 

Some regulations rolled out in the recent times include mandating the appointment of a chief risk officer. The Central Bank has also mandated that NBFCs should have liquidity coverage ratio (LCR) requirement to take care of asset-liability (ALM) mismatches. Livemint

 

Meanwhile...: Uday Kotak, Managing Director and Chief Executive Officer of Kotak Mahindra Bank remarked that the financial system in India is in a massive Darwinian mode as only the fittest lenders are able to survive. “Sector after sector has seen that it is going to be more consolidated than ever before. Consolidation in the Indian economy is happening more out of mortality and less out of combinations,” noted Mr. Kotak. Financial Express

 

 TAXATION 

Advance tax collection from companies fell 5.2% in Q3; personal income tax collection witness marginal growth.

Up and Down: The collection of advance tax paid by companies fell 5.2% in the October-December quarter of this fiscal year. Meanwhile, personal income tax collection saw marginal growth during the same period. 

 

Advance corporation tax collection fell to INR73,000cr in Q3 vs INR77,000cr a year ago. Personal income tax paid in advance rose to INR33,000cr against INR24,000cr over this period in FY19.

 

"The collection figures state there is a need for cuts in direct tax collection targets at least for the corporate sector. It is also disturbing because the Centre’s fiscal deficit has crossed the target for 2019-20 by 2.4% by October itself." BS

GST Council meets today.

DND: The GST Council meets today to explore ways and means to maximise revenue collection by checking tax evasion.

 

A GST rate hike is, however, unlikely.

 

The government has set a INR1.10Lcr monthly GST collection target in the remaining four months of this fiscal year. Moneycontrol

 

NEW TECH

Online tutoring platform BYJU's net losses narrow in FY2019.

Cutting Down: In the financial year ended March 2019, online tutoring platform BYJU's net loss stood at INR14.91cr, down from INR37.19cr for the same period last year. On a stand-alone accounting basis, BYJU's parent entity Think & Learn Pvt Ltd reported a net profit of INR19.63cr for FY19.

 

In July 2019, in its Series F funding round, BYJU's valuation surged to $5.5bn from the $3.5bn of December 2018. Deal Street Asia

Global urban air mobility space prepares to take off.

Lift Off: Rising urban congestion and trailing road infrastructure has enabled conditions for urban air mobility (UAM) vehicles to take off. Today, at least 60 companies around the world are working on developing and testing passenger UAM vehicles. The goal is to commercialise the space in the next decade, with air taxis taking centre stage. Who are the early adopters, what are the opportunities, what are the challenges? Here's an analysis of the UAM sector.

 

BIG TECH

Amazon tests sourcing fresh produce directly from farmers to sell online.

Straight Outta Farmland: Amazon is running a pilot project in Pune where fresh produce is sourced directly from farmers and sold online, removing all middlemen involved.

 

The farm-to-fork initiative will see Amazon Retail India work with dozens of farmers in the region. The fruits and vegetables will be sold online through the Amazon Fresh and Amazon Pantry platforms. If successful, the pilot project could be expanded to more cities in the country.

 

Food and grocery is the largest portion of India’s retail market. Organised retailers account for $25bn of India’s annual $580bn food and grocery market and the segment is expected to grow to $69bn by 2024, according to Axis Capital. ET Tech

Facebook mulls hiring users as contractors to fact-check content on its platform.

You Be the Judge: Speaking of pilot projects, another one is underway half-way around the world. Facebook is enlisting users as community reviewers to fact check content on its platform in order to detect misinformation faster.

 

The users will be hired as contractors to review content flagged as potentially false through machine learning, after which it will be sent to Facebook's third-party fact-checking partners. Reuters

FIN.

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