Transfin.

Yes Bank Shareholders Approve Raising ?10,000cr ($1,402m) Through Equity

Yes Bank shareholders approve raising ?10,000cr ($1,402m) through equity. Government considers banning non-audit services by statutory auditors. Anil Ambani ordered to pay $100m in conditional order for Chinese banks. US adds record-breaking 225,000 jobs in January.

 

 

ECONOMY

RBI to conduct long-term repo operations on February 17th, 24th.

In It For the Long Term

The RBI is set to conduct the first tranche of its long-term repo operations on February 17th with three-year repo of ?25,000cr ($3,505m), followed by another on February 24th for an equal amount.

 

The move is aimed at providing cheaper money to banks at the repo rate, improving liquidity in the banking system and facilitating flow of credit to the economy.

 

Currently, the repo operations are of short-term, usually overnight, wherein banks can borrow money from the RBI at the prevailing repo rate. [Indian Express]

 

LIC seeks to offload stake in IDBI.

Value Lies in the Eyes of the Beholder

The Life Insurance Corporation of India (LIC) is looking to offload its 51% stake in IDBI Bank ahead of the RBI mandated 12-year timeline in a bid to unlock value in IDBI Bank ahead of its proposed IPO.

 

LIC owns 51% in the lender after it acquired shares from the government in January last year. The government still owns 47% stake which it plans to divest in the secondary market. [ET]

 

COMPANIES

 

Tata Steel reports net loss at ?1,229cr ($172m) in Q3.

Preparing for the Worst

India’s largest private steel company, Tata Steel yesterday reported a consolidated net loss of ?1,229cr ($172m) in Q3 vs a profit of ?1,753cr ($245m) a year ago, on the back of lower steel prices and weak demand. 

 

Consolidated revenue fell 8.9% YoY to ?35,520cr ($4,980m) during the period under consideration, even though steel sales rose 13% to 7.31 million tonnes (mt) from 6.47 mt a year ago.

 

TV Narendran, CEO and MD of Tata Steel, said: “the European operations made a loss (in Q3FY20) as it felt the brunt of the overall slowdown and the consequent shrinking of spreads. This adversely affected our consolidated performance.” [Financial Express]

 

Yes Bank shareholders approve raising ?10,000cr ($1,402m) through equity.

The shareholders of YES Bank on Friday cleared a proposal to raise up to ?10,000cr ($1,402m) by issuing equity shares or convertible securities - a move that could help enhance the private sector lender’s capital adequacy. [Hindu BusinessLine]

 

REGULATIONS

Government considers banning non-audit services by statutory auditors.

Making Way

The Ministry of Corporate Affairs (MCA) is reportedly considering a series of steps to safeguard the independence of statutory auditors in India including a possible ban on these entities offering any non-audit services.

 

MCA is also exploring ways to break the “oligopoly" of the Big Four, facilitating the growth of homegrown audit firms and making the audit market more competitive and transparent. This could possibly include limiting the number of statutory audits one firm can take up, according to a discussion paper prepared by the Ministry. [Livemint]

 

Government to reintroduce FRDI Bill, no timeline in place yet.

On the Anvil

The Government is in the process of reintroducing the Financial Resolution and Deposit Insurance (FRDI) Bill, but the timeline has not been decided, Finance Minister Nirmala Sitharaman said on Friday. 

 

Zooming Out

Former Finance Minister, Arun Jaitley, had, in August 2017, introduced the FRDI Bill in the Lok Sabha. The Bill proposed a comprehensive resolution framework for revival or closure of financial institutions, including commercial banks, insurance companies, NBFCs and co-operative banks. However, it was later withdrawn following concerns raised over the ‘bail-in’ clause.

 

The development comes shortly after the government raised deposit insurance from ?1L to ?5L in the Union Budget 2020. [Business Today]

 

FALL FROM GRACE

Anil Ambani ordered to pay $100m in conditional order for Chinese banks.

Reliance Group Chairman Anil Ambani has been directed to pay $100m within six weeks towards a conditional order granted to three Chinese banks pursuing the recovery of over $680m owed to them as part of a loan agreement by a UK court on Friday. 

 

Three Chinese banks - Industrial and Commercial Bank of China, China Development Bank and the Export-Import Bank of China are suing Anil Ambani for or more than $700m, including interest for defaulting on a loan they gave Reliance Communications (RCom) in February 2012, which RCom defaulted on. The banks claim Ambani provided a personal guarantee for the loan, but Ambani disputes this. 

 

The Reliance Group indicated that it plans to appeal against the ruling, which will involve a process of seeking permission to appeal.

 

Meanwhile, a spokesperson said that the order pertained to an alleged personal liability of Mr Ambani and will have no bearing on the operations of the Reliance Infrastructure Limited, Reliance Power Limited and Reliance Capital Limited. [ET]

 

Anil Ambani tells UK court his ‘net worth is zero’. 

Former billionaire Anil Ambani, once the sixth richest man in the world declared to a UK court that his "net worth was zero" and that he was bankrupt. 

 

"The value of Mr Ambani's investments has collapsed since 2012. The Indian telecom sector in particular has been dramatically hit by the Indian government's change of policy in relation to the grant of spectrum," noted his defence.

 

"Whereas Mr Ambani's investments were worth more than $7bn in 2012, they are now worth $89m, and his net worth is zero once his liabilities are taken into account... Quite simply, he was a wealthy businessman, now he is not," said his barrister Robert Howe. [TOI]

 

US

US adds record-breaking 225,000 jobs in January.

The US economy added a record-breaking 225,000 in January. Some of the January job gains came in industries, such as construction and leisure and hospitality, that benefited from mild winter weather. 

 

However, manufacturing, traditionally a creator of higher-wage jobs, lost 12,000 positions during the period.

 

Wages climbed 3.1% from a year earlier, a touch stronger than December’s rise of 3%. [The Guardian]

 

White House looking to double AI research budget.

The US is engaged in a race of sorts with China when it comes to technological development, AI in particular.

 

And towards this end, the 2021 budget proposal would reportedly increase AI R&D funding to nearly $2bn, and quantum to about $860m, over the next two years. More on this here

FIN.

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