IDBI Bank revamp: Government keen to bring large investors on board

NEW DELHI: The government is trying to get at least two large institutional investors to buy stake in state-run IDBI Bank, a move aimed at transforming the lender along the lines of private sector rival Axis Bank. "Initial discussions have been held with some players who evinced interest," a senior government official said on condition of anonymity. 

"The government has already shown its intent in transforming the bank and is open to offering board seats to such investors." In his 2016-17 Budget speech, Finance Minister Arun Jaitley had said that IDBI Bank's transformation process has already begun. 

"Government will take it forward and also consider the option of reducing its stake to below 50%," he had said. The public sector lender has taken an approval for a qualified institutional placement (QIP) of Rs 3,771 crore.

"Now that banks are coming clean on their bad loans, there will be more interest from investors, as they will have a clear assessment of the bank's financials," said the official quoted earlier. Shares of IDBI Bank have been trading firm in anticipation of this transformation. They gained 1.12% in intra-day trade on the Bombay Stock Exchange on Friday, before shedding some of the gains to close the day 0.75% up at Rs 67.15. 

ET had earlier reported that the government is in talks with World Bank Group member, International Finance Corporation, for selling up to 15% stake in the lender. "There are a few players. It is too early to discuss names," the official added. Minister of State for Finance Jayant Sinha had also told ET that the government is willing to give a strategic role to investors. 

"Depending on who the investors are and what stake they are willing to subscribe for, we are willing to discuss for them playing a more strategic role, which would potentially include a board seat as well," he had said. IDBI Bank had reported a net loss of Rs 2,183.68 crore, the largest ever by an Indian lender, for the quarter to December. Its gross non-performing assets (NPAs) rose to 8.94% of the gross advances at the end of December from 6.92% at the end of the September quarter. 

A senior executive at the bank said they are in touch with the finance ministry over their proposed QIP offer. "We have already conducted roadshows, the finance ministry is fully supportive of the bank's capital raising plans," he said, adding that the bank is considering a range of options to augment its capital base. "The QIP will be launched depending on the need and market conditions." 

Last month, IDBI Bank approved the proposal for preferential issue of capital to Life Insurance Corporation of India, aggregating up to Rs 1,500 crore. The government has committed.`25,000 crore towards capital allocation in state-run lenders this fiscal. Gross NPAs at state-run banks surged to 7.3% of advances at the end of December, almost double of 3.84% at the end of March 2013.

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Accounting flaws in transfer of liabilities to power cos: CAG

"While unbundling the erstwhile Board (PSEB), Government of Punjab placed a financial burden of Rs 25,097.64 crore on the two successor entities -PSPCL and PSTCL - by passing unfunded liabilities to them," said a latest report of Comptroller and Auditor General of India (CAG) on PSUs for 2014-15.

While unbundling of erstwhile Punjab electricity board, two new entities -- PSPCL and PSTCL -- were saddled with liability of over Rs 25,000 crore even as the state government had decided to provide clean opening balance sheets to the successor companies, says a CAG report. "While unbundling the erstwhile Board (PSEB), Government of Punjab placed a financial burden of Rs 25,097.64 crore on the two successor entities -PSPCL and PSTCL - by passing unfunded liabilities to them," said a latest report of Comptroller and Auditor General of India (CAG) on PSUs for 2014-15. The erstwhile Punjab State Electricity Board (PSEB) was unbundled into two successor companies - Punjab State Power Corporation Limited (PSPCL) and Punjab State Transmission Corporation Limited (PSTCL) on April 16, 2010. 

Punjab government had framed 'Punjab Power Sector Reforms Transfer Scheme, 2010, for providing and giving effect to the transfer of functions, undertakings, assets, rights, liabilities, proceedings and personnel of the Board which was amended under the provisions of the Electricity Act, 2003, as per report. 

"We observed that liabilities of erstwhile Board (PSEB) amounting to Rs 25,097.64 crore (loss written off of Rs 10,751.64 crore and terminal benefits of Rs 14,346 crore) were transferred to the two successor entities, either by incorrect accounting or by not recognising clear liabilities in the opening Balance Sheet," CAG said. Though from the time of conception of the scheme of unbundling, Punjab government had decided to provide clean balance sheet to the successor entities and not to transfer past accumulated losses yet the new entities were saddled with huge liability to begin with, noted CAG in its report. 

The erstwhile Board had accumulated losses of Rs 10,180.35 crores at the time of unbundling, which did not appear in the balance sheets provided to the two successor companies. This was done by setting off these losses against the capital reserve created by revaluation of land assets held by the erstwhile Board, CAG observed. The adjustment of accumulated losses against reserve created on land revaluation was in violation of generally accepted accounting principles as the revaluation reserve does not represent a realised gain and is the result of a book adjustment, report further said.

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Buying from MSMEs: In FY16, 38 PSUs met 20% target

New Delhi, March 20:  

A total of 38 Central public sector undertakings (PSUs) have achieved the target of 20 per cent public procurement from medium, small and micro enterprises (MSMEs) in 2015-16.

This was revealed in a review meeting chaired by MSME Minister Kalraj Mishra here on Friday.

There are a total of 298 Central PSUs, according to official figures.

Mandatory buying

“Thirty eight CPSUs have achieved the target of 20 per cent public procurement from MSMEs in the just concluded financial year,” said an official release by the Ministry, after the meeting, attended by representatives from 44 Central PSUs, was held to review the implementation of the 20 per cent public procurement policy made mandatory from April 2015.

Incidentally, in a review meeting held in February this year, the Ministry had found that the share of MSME procurement by Central PSUs was less than 10 per cent, against the mandatory 20 per cent, and that of SC/ST entrepreneurship less than 0.2 per cent, against the mandatory 4 per cent, according to an earlier Ministry statement. 

Mishra had then directed Secretary (MSME) to identify the top 50 Central PSUs and get a meeting organised at Minister’s level to “sensitise” them toward meeting the requirement of the public procurement target. 

Boosting start-ups

To promote start-ups, in Friday’s meeting Mishra also urged Central PSUs to relax the norms of ‘prior experience and prior turnover’ for enterprises that can deliver the goods as per prescribed technical and quality specifications.

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The 5 Highest Paid Executives in The Financial Sector (JPM, C)

Successfully guiding major financial firms through economic disasters can be a lucrative business, as shown by the skyrocketing salaries of countless executives in the financial sector. Not only do they earn big paychecks, but they are also among the most influential and powerful people in the world. While executives in the financials sector may not make quite as much as the top hedge fund managers, not many would complain with salaries like these.

JPMorgan Chase CEO and Chairman of the Board, James Dimon

James “Jamie” Dimon became CEO of JPMorgan Chase & Co. (NYSE: JPM) in 2005 and its chairman of the board in 2006. He was Bank One’s president and CEO before the two banks merged in 2004, and also played pivotal roles at Citigroup (NYSE: C), the Travelers Group, Commercial Credit Company and American Express (NYSE: AXP).

Dimon is credited with successfully guiding the company through the Great Recession, and JPMorgan shares have soared under his leadership. As a reward, his annual compensation package totals more than $27.7 million. Bank CEOs typically make a fraction of successful hedge fund managers, but Dimon has managed accumulate a net worth of $1.1 billion, as of February 2016.

Ameriprise Financial Chairman and CEO, James Cracchiolo

James "Jim" Cracchiolo has been chairman and CEO of Ameriprise Financial, Inc. (NYSE: AMP) since 2005, when American Express Financial Corporation completed its spinoff from American Express Company. Cracchiolo joined the company’s former parent in 1982, holding several senior executive positions.

Cracchiolo is credited with a successful transition to independence for Ameriprise and improving the company’s position as one of the largest diversified financial services firms in the United States. As a reward for the success of Ameriprise, Cracchiolo receives an annual compensation package valued at $24.5 million.

BlackRock Chairman and CEO, Larry Fink

As chairman and CEO of BlackRock Inc. (NYSE: BLK), Larry Fink is one of the most influential money managers in the world. As of February 2016, BlackRock has an astounding $4.6 trillion in assets under management, making it the largest money management firm in the world. The company manages the portfolios of the vast majority of the largest corporations in the world and was contracted to help revive the economy by the US. government following the Great Recession.

Fink has been the company’s CEO since co-founding BlackRock in 1988 under the corporate umbrella of The Blackstone Group (NYSE: BX). He has lead the massive mergers and acquisitions with Merrill Lynch and Barclays and receives an annual compensation package totaling more than $23.8 million.

Goldman Sachs Chairman and CEO, Lloyd Blankfein

As chairman and CEO of Goldman Sachs (NYSE: GS), Lloyd Blankfein heads one of the world’s most prestigious and wealthiest financial firms. The company’s CEO since 2006, Blankfein immediately became one of the highest paid executives on Wall Street as a reward for the company’s success, earning as much as $54 million in 2007.

Before taking the helm, Blankfein managed the Goldman Sachs currency and commodities division and was in charge of the fixed income, currency and commodities division (FICC) and equities division.

Blankfein came from humble beginnings, growing up in the housing projects of Brooklyn and has amassed a fortune valued at over $1 billion. Blankfein receives an annual compensation package valued at $23 million.

American Express Chairman and CEO, Kenneth Chenault

Kenneth Chenault joined American Express Co. (NYSE: AXP) in 1981, and when he was named the company’s chairman and CEO in 2001, he became only the third black CEO of a Fortune 500 company. Chenault serves on the boards of several major organizations and is also a member of the President’s Council on Jobs and Competitiveness. Chenault receives an annual compensation package from American Express valued at $22.4 million.

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Sell assets of guarantors if firms don't repay loans: Govt to banks

Gross NPAs of PSBs rose to Rs 3.61 lakh cr while that of private lenders were at Rs 39,859 cr at the end of Dec'15

In order to effectively deal with Vijay Mallya type loan default cases, government Friday directed public sector banks to immediately invoke personal guarantees of promoter directors and recover loans from them in case the companies fail to repay.

Issuing the directive to heads of PSBs, the Finance Ministry regretted they seldom recover loan from guarantors in case of loan default by companies.

"It has been observed that there are a less number of cases where action has been taken for recovery against guarantors for attachment of assets owned by them and sell the same for recovery of defaulted loan," it said while issuing the directive in consultation with the RBI.

The ministry further told banks that "it would be prudent to take steps against guarantors immediately when no sign of revival is visible".

Asking banks to approach Debt Recovery Tribunal (DRT), it said action against guarantors should be taken under SARFAESI Act, Indian Contract Act and relevant legislations.

Exit of beleaguered industrialist Mallya to London early this month created huge uproar in Parliament as well as outside. Various companies associated with him owe over Rs 9,000 crore to different banks.

Mallya and his group firms are being probed by several agencies including Enforcement Directorate.

Gross NPAs of PSBs rose to Rs 3.61 lakh crore while that of private lenders were at Rs 39,859 crore at the end of December 2015.

Gross NPA ratio, as percentage of advances, rose to 7.30% while for private banks, it stood at 2.36% as of December-end.

In the event of default in repayments or loan by the borrower company, all directors are liable to repay the guaranteed loan with interest as the liability or the guarantor is co-extensive with the principal debtor (borrower).

"Action can be taken against the guarantor without suing the principal debtor for recovery and even if the decreed amount is covered by mortgage decree," the ministry said.

As per the law, if a guarantor has given any pledge of share held by him, the steps should be taken to sell the pledged share, under the Indian Contract Act.

The directive said that if the guarantor has not created any security Internet over his property but owns property and other assets, the banks should move DRT for their attachment and sale.

The banks, it said, should also keep a watch on periodical statement of book-debts and receivables submitted by the borrower and take steps for attachment and recovery of such book-debts under SARFAESI.

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German SMEs to invest Rs 3,000 cr in Make In India projects

German Small and Medium Enterprises (SMEs) have pledged to invest over Rs 3,000 crore for the Make in India initiative for setting up of new manufacturing plants and projects. The German SMEs (Mittelstand) have committed an investment of over Rs 3,000 crores for Make In India under the Make in India Mittelstand (MIIM) initiative, said Indias Ambassador to Germany Gurjit Singh during a business event held at the Indian Embassy in Berlin.

The investments will result in setting up of 15 new manufacturing plants, 6 expansion projects and 2 pilot projects covering the states of Maharastra, Gujarat, Karnataka and Tamil Nadu. MIIM, launched in September 2015, is an investment facilitation programme being implemented by the Indian Embassy in Berlin with the support of Department of Industrial Policy and Promotion (DIPP) and Investment and Technology Promotion (ITP), Division of the Ministry of External Affairs to attract investments by German Mittelstand (SME) companies.

According to a release by the Indian Embassy in Berlin, during the first six months of the MIIM programme, 26 German companies have committed to Make In India with the support of the MIIM programme. In the last six months, three companies from the area of wind turbine technology, consumer appliance have announced their entry into India with significant investments.

Five companies have successfully formed their Joint Ventures (JVs) and incorporated their Wholly Owned Subsidiaries (WOS) in India during the period. Five more companies are in the process of setting up their JVs/WOS in the coming months, it said.

Dirk Wiese, member of German Parliament and Member of the Indo-German Parliamentary Friendship Group said that the MIIM programme was the perfect complement for the Mittelstand- driven German economy. He also highlighted the role played by the Make In India programme in strengthening the Indo-German economic partnership. Mario Ohoven, President of the German Association for Small and Medium-sized Businesses, at the event promised support of his association towards the MIIM programme.

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Maharashtra Budget 2016: Rs 25,000 crore outlay for agriculture sector

Finance Minister of Maharashtra Sudhir Mungantiwar (R) and MoS Finance Deepak Kesarkar before presenting the states budget for 2016-17 in the legislative assembly in Mumbai (PTI)

Maharashtra government tweaked certain taxes such as VAT and offered some exemptions for sugarcane and profession tax.

The Maharashtra Budget for 2016-17 has proposed Rs 25,000 crore for the farm sector in view of a severe drought in the state.

It also tweaked certain taxes such as VAT and offered some exemptions for sugarcane and profession tax.

Presenting the second Budget of the Fadnavis government on Friday, Maharashtra Finance Minister Sudhir Mungantiwar raised the Motor Vehicle Tax on two and three wheelers.

This tax will be based on engine capacity - up to 99cc, 8%; 100cc to 299cc 9 per cent, 300cc and above 10%. Institutional and imported vehicles will be subjected to double the rate of tax.

VAT on coconut hair oil sold in packs of up to 500 ml has been enhanced to 12.5%.

Exemption from levy of Sugarcane Purchase Tax for the year 2015-16 will be given to the sugar factories which export sugar as per the government policy, Mungantiwar said.

He also announced an amnesty scheme for Profession Tax enrolment holder.

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