BPCL acquires 21% stake in Fino Paytech

Government-owned oil marketing company Bharat Petroleum Co Ltd (BPCL) has acquired 21 per cent stake in Fino Paytech. The latter had acquired a licence for payments bank last year.

BPCL has entered into an agreement for acquiring 21 per cent stake (on a fully diluted basis) of Fino Paytech for Rs 251 crore in an all-cash deal,” said BPCL in a notice to the exchanges.

Rishi Gupta, chief executive officer and managing director of Fino PayTech, said the partnership will be a win-win for both sides. “The extensive reach of BPCL distribution allows Fino Payments Bank to substantially improve its reach, especially in rural India. On the other hand, BPCL will be able to offer a variety of payments bank products to its customers and partners.”

A BPCL spokesperson added the company was in the process of rolling out various customer service initiatives in its core retail fuels business using the emerging technology solutions and this investment would provide a base for supporting this imitative.

“The partnership offers an excellent platform for providing customised offerings to different segments of customers and thereby driving the business of fuel and non-fuel offerings,” the spokesperson added.

Fino PayTech is looking at launching its banking operations by December-January and is yet to apply to the Reserve Bank of India for the final approval. The BPCL management has said it expects the transactions is closed by 31 December.

At the moment, the major shareholders of Fino Paytech include The Blackstone Group, ICICI Bank, IFC, HAV3 holding and Intel Capital.

Last year, out of the 42 applicants for payments bank licence, RBI granted in-principle licence to 11 applicants. Payments banks can accept deposits of up to Rs 1 lakh and offer current and savings account deposits.They can also issue debit cards and offer internet banking. But they are not allowed to lend or issue credit cards.

However, this year we saw three licensees, Tech Mahindra, a consortium of Dilip Shanghvi, IDFC Bank and Telenor Financial Services and Cholamandalam Investment company opting out of the payments bank race.

One of the key reasons for it is because profitability will be a challenge for these palayers. However, analysts believe that for the payments banks increasing these partnerships will be a key to improve their distribution reach to ensure a quick break-even.

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BPCL acquires 21% stake in Fino Paytech

Parties give thumbs up to GST, but with riders

With the Central Government likely to introduce the Goods and Services Tax (GST) Bill in the Rajya Sabha next Tuesday, most of the political parties have virtually given their consent to it, though with riders.

Hoping that there will be a discussion on the Bill next week, Minister of State for Parliamentary Affairs Mukhtar Abbas Naqvi on Saturday said a common consensus has almost emerged among all political parties for the passage of the Bill.

“We feel that a common consensus has almost emerged for the passage of the GST, which is an important law for the development and reforms in the nation, which will be beneficial to both the states and the country,” Naqvi told ANI.

However, with the main opposition the Congress and some other parties seeking certain amendments in the Bill before extending their support to the Bill, the BJP leader said, “We have held elaborated discussions with all political parties on the issue, which is still on. Besides, Finance Minister Arun Jaitley and other senior leaders of the Central Government are holding parleys with them.”

“Almost all political parties agree on it, and I hope that there will be a discussion on it the next week,” he added.

Congress MP Sandeep Dikshit, however, said if there emerges a way out, which is in the welfare of people, his party would welcome it.

“It’s nice that they are talking. We come to know from television that the government has agreed on the issue of 1 per cent additional tax and is holding discussions with the Congress on other two issues,” he told ANI.

Backing the introduction of the Bill, Janata Dal (United) chief general secretary and national spokesperson K C Tyagi said, “We are in favour of the GST Bill. Our chief minister and the party have supported it and as a member of the select committee, I have also supported it. It is in the economic benefit of Bihar.”

Naresh Agrawal of the Samajwadi Party has expressed his party’s concern over the provision of arrest and income of municipal bodies.

“Arun Jaitley should speak to us, as we also have some doubts and problems regarding the GST. He has made provision of arrest under the GST Bill and what will happen to the income of municipal bodies? These things should be made clear in the GST Bill,” he told ANI, adding that if Jaitley addresses those concerns, they will support the GST.

Parties give thumbs up to GST, but with riders

Pay Commission arrears to be paid at one go

All pending arrears for central government employees in lieu of the pay and pension components of the Seventh Pay Commission would be paid at one go, said a finance ministry circular issued on Friday.

“The arrears as accruing on account of revised pay consequent upon fixation of pay under CCS (RP) Rules, 2016, with effect from 01.01.2016 shall be paid in cash in one instalment along with the payment of salary for the month of August 2016,” the circular stated.

It also stated that the arrear claims would be paid without pre-check of the fixation of pay in the revised scales of pay.

In June, the Cabinet had approved recommendations of the Seventh Pay Commission on pay and pensions for the central government’s 4.7-million employees and 5.3-million pensioners.

On an average, the hike in basic pay and pension will be 2.5 times the existing structure.

However, the existing dearness allowance will merge with the basic pay.

The Cabinet, however, deferred a revision in allowances. A committee headed by Finance Secretary Ashok Lavasa will look into the recommendations in this regard because there was resentment among employees over suggestions to scrap four allowances. Till then, existing allowances will continue.

The pay panel had recommended abolishing 52 allowances and subsuming another 36.

Pay Commission arrears to be paid at one go

Apr-Jun fiscal deficit at 61% of FY17 target

The Centre’s fiscal deficit for the April-June quarter (Q1, first three months of this financial year) was Rs 3.26 lakh crore, about 61.1 per cent of the full financial year’s target of Rs 5.34 lakh crore.

For the corresponding period last year, the deficit was 51.6 per cent of the full year’s target. This indicates a greater front-loading of expenditure this time, plus below-par non-tax revenue receipts.

However, that increase in spending seems to have come from revenue expenditure, not capital spending, which was lower as a percentage of the full-year budgeted estimate as compared to last year.

“Both the magnitude and quality of the central government’s fiscal deficit worsened in Q1 as compared to the year-ago period, with a considerable rise in its revenue expenditure and a discomfiting year-on-year (y-o-y) decline in capital spending,” said Aditi Nayar, senior economist at ratings agency ICRA.

For these first three months, total expenditure was Rs 5.12 lakh crore or 25.9 per cent of the full-year target of Rs 19.78 lakh crore, compared with 24.2 per cent for the corresponding period last year.

Non-Plan spending was Rs 3.64 lakh crore, about 25.5 per cent of the full-year Budget Estimate, compared with 24 per cent for the corresponding period last year. Plan expenditure was 1.47 lakh crore or 27 per cent of the full-year estimate, from 24.7 per cent for the comparable period.

Non-Plan capital spending was 22.6 per cent of the full-year target for April-June, compared with 26 per cent for April-June 2015, while Plan capital spending was 18 per cent of the full-year estimate, compared with 23 per cent last year. Net tax revenue was Rs 1.57 lakh crore, about 15 per cent of the full-year target of Rs 10.54 lakh crore, compared with 11 per cent in 2015-16. Non-tax revenue was Rs 23,484 crore, only 7.3 per cent of the full-year target, compared with 18 per cent for April-June last year. Total receipts were Rs 1.85 lakh crore or 12.8 per cent of the 2016-17 Budget Estimate of Rs 14.45 lakh crore, compared with 11.8 per cent for the comparable period.

Apr-Jun fiscal deficit at 61% of FY17 target “The y-o-y decline in non-tax revenue in the first quarter of this fiscal reflects the impact of the telecom spectrum inflows in April 2015, related to the auctions that had been conducted in the March quarter of FY15,” said ICRA’s Nayar. “The receipts realised from tax revenues, spectrum auction proceeds and disinvestment would crucially affect the fiscal turnout in 2016-17, in the light of the rise in expenditure related to the pay commission’s recommendations.”

Apr-Jun fiscal deficit at 61% of FY17 target

Markets remain subdued; ICICI Bank dips ahead of Q1 nos

Markets have commenced the session on a subdued note tracking mixed global cues along with selling in banking majors leading the decline.

By 10:35 am, the S&P BSE Sensex dipped 48 points to trade at 28,161 and the Nifty50 slipped 2 points at 8,663. Broader markets are outperforming the benchmark indices- BSE Midcap and Smallcap indices are up 0.3%-0.5%.

ALSO READ: Top trading ideas from Chandan Taparia of Anand Rathi

On Thursday, indices shrugged off weak global cues to end higher following the expiry of July F&O derivative contracts after the recent developments in the parliament rekindled hopes of the GST Bill getting passed in the ongoing monsoon session of Parliament.

In overseas stock markets, Asian stocks witnessed a mixed trend. In Japan, the Nikkei 225 Average was currently down 0.4%. Investors are hoping for further easing of monetary policy from the Bank of Japan (BOJ) after the conclusion of a two-day monetary policy meeting today.

Strength in the yen against the dollar post last month’s Brexit vote and data showing a slowdown in the Japanese economy have triggered expectations of further easing of monetary policy from the BOJ. A stronger yen hurts the competitiveness of Japanese exporters. US stocks closed slightly higher yesterday amid declines in oil prices, as major tech stocks gained.

ALSO READ: Japanese central bank eases policy, expands ETF buying

Back home, foreign portfolio investors (FPIs) bought shares worth a net Rs 1,767.06 crore yesterday as per provisional data released by the stock exchanges.

The Reserve Bank of India (RBI) on Thursday allowed demat account-holders with depositories to bid for trades in the online anonymous bond trading platform of the central bank.

ICICI Bank and Larsen & Toubro are set to announce Q1 results today. ICICI Bank resulthas dipped around 3% and L&T has slipped over 1%.

ALSO READ: Buy Shriram Transport, Pidilite, Havells India: Motilal Oswal

Asian Paints has extended yesterday’s gains and is up almost 1% after the paints major posted robust earnings for the quarter ended June 2016.

India’s largest insurer Life Insurance Corporation of India (LIC) has signed an agreement with private sector lender Axis Bank as its bancassurance partner wherein the bank will distribute LIC’s products to its customers. Shares of Axis bank are up over 1%.

Eicher Motors has surged over 5% after the company reported a 58.61% rise in consolidated net profit to Rs 376.29 crore for the quarter ended June 30, 2016.

ALSO READ: What the boom in NBFCs tells us

UltraTech Cement said it participated in the auction of coal linkages for captive power plant sub-sector and won two linkages of 27,600 tons and 19,700 tons, respectively, from Dipka Mines (SCDG) in Chhattisgarh. The stock has risen around 1%.

Muthoot Finance has surged nearly 7% to Rs 340, also its record high on the BSE in intra-day trade, after the company reported 48% increase in net profit at Rs 270 crore for the quarter ended June 2016 (Q1FY17) compared with Rs 183 crore in the same quarter last year.

Markets remain subdued; ICICI Bank dips ahead of Q1 nos

Logistics stocks rally as govt paves way for GST bill clearance

Shares of companies in the logistics sector gained ground on Thursday on hope that the government will be able to secure clearance for a revised GST bill in the Rajya Sabha next week.

Also Read: How the deal was clinched

Snowman Logistics, GATI, Allcargo Logistics, VRL Logistics, Patel Integrated and Transport Corporation of India are some stocks in this segment that rallied, by 3.8-7.2 per cent. In comparison, the benchmark S&P BSE Sensex and Nifty50 indices ended the day at 28,209 and 8,666, up around 0.6 per cent each.

Click here to track logistics stocks LIVE

According to reports, the empowered committee of the finance ministers of states on Tuesday agreed that the revenue-neutral rate (RNR) would not be specified in the GST Constitution amendment Bill, raising hopes that it would be passed by the Rajya Sabha next week.

While the short-term macro economic implications of GST should be mixed, longer-term implementation should lift growth and enable greater government fiscal consolidation, analysts say.

“GST will be clearly positive, as gains from a more efficient tax system, greater price competitiveness (reduced costs) and the removal of interstate tax barriers should boost growth via higher exports and investments, structurally lower inflation, and raise government (central + state) tax revenues,” say Ravi Adukia and Saion Mukherjee of Nomura in a recent report.

Also Read: Maharashtra bats for 1% tax along with GST to compensate manufacturing states

Indranil Pan, chief economist at IDFC Bank also suggests that the GST will eliminate multiple levies and state boundaries which should lower cost of doing business. Moreover, the current inefficient supply chain due to higher logistics costs will see dramatic improvement in turnaround times and also lead to lower transportation costs, he says.

From sector perspectives, analysts at Nomura suggest that the GST will be generally positive for consumption-related sectors (auto, consumer durables, FMCG etc.).

Logistics stocks rally as govt paves way for GST bill clearance “Logistics should benefit from the removal of inefficiencies in interstate taxation and check posts. The services sector, however, should be impacted negatively due to the higher tax burden,” the Nomura report says.

Also Read: V S Krishnan: Model GST law and dispute resolution

Though most analysts expect the benefits of implementation of the GST bill to accrue over the long-term, they remain cautious on the related stocks in this space given the run-up in most counters over the past few weeks.

“Logistic stocks will once again run up on the development. Most stocks in this space are over-priced and the Bill, even if it is passed, is not likely to bring profits immediately to these companies. We advise caution,” said G Chokkalingam, managing director, Equinomics Research & Advisory.

Logistics stocks rally as govt paves way for GST bill clearance

Banking operations paralysed due to nationwide strike

Banking operations across the country were hit on Friday as around 1 million employees in around 40 private and nationalised banks struck work for a day to protest against the central government’s policies for the sector.

“The banks strike has evoked a good response nationwide as around 1 million have participated in it. Most of the nationalised banks are closed,” C H Venkatachalam, General Secretary of the All India Bank Employees Association (AIBEA), told IANS in Chennai.

Echoing this, K Thamaraiselvan, General Secretary of Andhra Bank Employees Union (Tamil Nadu unit) said: “The banking operations have been paralysed nationwide.”

The unions in the banking sector had given the strike call to protest the mergers in the sector, infusion of private capital in government banks and others.

The strike call was given by the United Forum of Bank Unions (UFBU) an umbrella body of nine unions in the banking sector viz., AIBEA, AIBOC, NCBE, AIBOA, BEFI, INBEF, INBOC, NOBW and NOBO.

“The strike involved around 1million employees and officers of public sector banks, old generation private banks and foreign banks totalling more than 80,000 branches,” Venkatachalam said.

According to Venkatachalam, unmindful of the adverse implications, the government was pursuing the reform measures in the banking sector like inadequate infusion of capital in public sector banks, which will result in reduction of government’s equity capital and create compulsion for higher extent of private capital leading to privatisation of banks.

“In the last 40 years, more than 40 private banks have collapsed. We cannot allow to take that risk again. Banks must continue in public sector in national interest,” he said.

According to him, the total deposits in the banks today are more than Rs 116 lakh crore and this cannot be placed at the doors of private players by privatising the banks.

He said the government wants to consolidate and merge 27 public sector banks to make them into some five or six big banks for the sake of global competition.

“We need efficient banks and not necessarily big banks. Big banks do not automatically mean strong banks. In many countries big banks have failed and they are in trouble,” he added.

He said privatisation of banks will not help in recovering bad loans totalling over Rs 13 lakh crore and may result in handing over the banks to a loan defaulter.

Criminal action against wilful loan defaulters should be taken instead of dealing with them with a velvet hand, he added.

Meanwhile, industry body Assocham on Friday urged UFBU to call off their strike as customer transactions worth about Rs 12,000 crore-Rs 15,000 crore would be affected.

“Public sector banks (PSBs) are already less profitable and have relatively higher ratios of non-performing assets (NPAs) compared to private sector banks, and such a complete halt of banking transactions following UFBU’s decision to go on strike might result in significant losses,” D.S. Rawat, secretary General of The Associated Chambers of Commerce and Industry of India (Assocham) said in a statement in New Delhi.

“With a view to revamp the functioning of the PSBs, banking sector reforms is the need of the hour,” he added.

Banking operations paralysed due to nationwide strike