Tap equity market: Govt tells 5 PSU banks

The central government has asked five state-owned banks to raise capital from the markets to meet their requirements for the fiscal year 2017-18. The Department of Financial Services has asked the relatively strong public sector banks (PSBs) — Canara Bank, Bank of Baroda (BoB), Indian Bank, Vijaya Bank, and Syndicate Bank — with a fairly good market capitalisation to not depend on the government’s recapitalisation plan.

“We have asked five strong banks that have consistently performed well, to raise funds on their own from the market. We are encouraging them to tap the market as their market capitalisation is fairly good,” said a government official.

“Three banks — Vijaya Bank, Syndicate Bank, and Indian Bank — are small but with good fundamentals and a good market price. We have encouraged them to tap the market,” the official said.


The Budget has allocated Rs 10,000 crore for the recapitalisation of state-owned banks as part of Indradhanush, the seven-pronged strategy to revive PSBs.

According to government officials, these five banks are capable of raising funds on their own and won’t need capital support from the government.

Each of these PSBs is looking to raise between Rs 1,000 crore and Rs 6,000 crore from the market, easing pressure on the exchequer. Further capital infusion in these relatively strong banks appears unlikely.

Canara Bank is the fourth-largest bank by market capitalisation, behind State Bank of India (SBI), BoB, and Punjab National Bank.

PSBs require capital for meeting Basel-III norms and cleaning-up balance sheets as non-performing assets (NPAs) have mounted to unacceptably high levels. Canara Bank had raised about Rs 1,250 crore through a rights issue to its shareholders in the last fiscal year. It earned a net profit of Rs 1,122 crore during 2016-17, against a net loss of Rs 2,813 crore in the previous financial year. Its gross NPAs rose 8.1 per cent to Rs 34,202 crore as of March 31.

BoB earned a net profit of Rs 1,383 crore in FY17, against a net loss of Rs 5,396 crore in FY16. Its NPAs increased by 5.4 per cent to Rs 42,719 crore at the end of 2016-17.

Vijaya Bank is looking to raise Rs 1,000 crore in the current fiscal year from the market. The bank’s net profit for 2016-17 rose 96.56 per cent year-on-year to Rs 750.48 crore and operating profit was up by 56.32 per cent to Rs 2,421.15 crore.

Indian Bank, on the other hand, reported 278.39 per cent growth in net profit for the quarter ended March 31, 2017, to Rs 319.40 crore, compared to Rs 84.49 crore in the year-ago period. It may consider a follow-on public offer to raise Rs 1,000-1,200 crore.

Union Finance Minister Arun Jaitley had announced in the Budget that additional allocations would be made beyond the Rs 10,000 crore for the fiscal year if required. However, government officials said that in the normal course, more capital might not be needed. But, in the case of consolidation of PSBs, more capital may be required.

After SBI’s merger involving six of its subsidiaries, the second round of consolidation of two big banks — Canara Bank and BoB — with smaller ones is being deliberated.

Of the Rs 1.8 lakh crore capital requirements for adhering to Basel-III norms, the Centre, through Indradhanush, had promised Rs 70,000 crore over a four-year period beginning 2015-16. Banks were asked to raise the remaining Rs 1.1 lakh crore.

Of the amount promised by the Centre, PSBs received Rs 25,000 crore in the previous two years and will receive Rs 10,000 crore this year, followed by an equivalent amount in FY2018-19.

Tap equity market: Govt tells 5 PSU banks

Modi in US: GST to be a game-changer for India, PM tells top US CEOs

Prime Minister Narendra Modi on Sunday said India has now emerged as a business-friendly destination, more so with the upcoming implementation of landmark GST beginning next month, while asking CEOs of top US companies to invest in the country.

Modi also said India attracted largest foreign direct investment (FDI) as a result of the NDA government policies in the last three years, during his interaction with a group of CEOs of top 20 American firms.

In a round table interaction with the group, including Tim Cook of Apple, Satya Nadella from Microsoft, Sunder Pichai from Google, John Chambers from Cisco and Jeff Bezos of Amazon, Modi listed out steps taken by his government in the last three years and next moves.


ALSO READ: Growth of India presents win-win partnership: Modi to top US CEOs

“The whole world is looking at India. 7,000 reforms alone by GOI for ease of (doing) business and minimum government, maximum governance,” Gopal Bagley, spokesman of the Ministry of External Affairs said in a tweet from inside the meeting, quoting the prime minister.

India’s growth presents a win-win partnership for the country and the US, and American companies have a great opportunity to contribute to that, Modi told the CEOs, according to Bagley.

“The implementation of the landmark initiative of GST could be a subject of studies in US business schools,” Modi said.

ALSO READ: Modi in US: PM to meet top CEOs, discuss GST, Make in India gains, H1B visa

During the hour-long interaction, at the Willard Hotel, where he is staying, Modi gave a patient hearing to the wish-list of the CEOs.

Among other CEOs present at the meeting were Shantanu Narayen from Adobe, Ajay Banga from Mastercard, David Farr from Emerson, Doug McMillon and Punit Renjen from Deloitte Global. Mukesh Aghi, president of the US India Business Council, was also present at the meeting.

Posting a group picture of the prime minister with the CEOs, Bagley said, “strengthening the Indo-US economic partnership”.

In a recent policy document, USIBC said the US-India commercial and strategic relationship supports global security, promotes economic growth and creates jobs for both countries and the global economy.

“Today, as we witness a paradigm shift in the erstwhile global order, an opportunity has emerged for both countries to set new standards in bilateral ties that will be bound by their shared values,” USIBC said.

Noting that US-India trade has tripled over the last decade, reaching a historic high of nearly $110 billion in 2015, USIBC said there is an opportunity for both the countries to also sync their regulatory and standards system to increase trade and investment.
ALSO READ: H-1B visa unlikely to be thorny issue in Modi-Trump talks: USIBC

In a separate statement, Jagdip Ahluwalia, executive director of Indo American Chamber of Commerce of Greater Houston, said the United States and India share a very symbiotic relationship, and Modi’s first face to face visit with Donald Trump is important to strengthen the relationship between the two.

“On behalf of Houston, the energy capital of the world and home of the world’s largest Medical Center the IACCGH and the strong Indian American community hope to welcome Prime Minister Modi to Houston in the not too distant future,” Ahluwalia said.

Modi in US: GST to be a game-changer for India, PM tells top US CEOs

SBI chief Bhattacharya earned Rs 2.37 cr less than ICICI Bank chief in FY17

SBI, one of the world’s 50 largest banks, pays only a small fraction to its top management as compared to private sector players like ICICI Bank and HDFC Bank.

Former RBI governor Raghuram Rajan had flagged the low remuneration issue last August saying it makes difficult for state-owned banks to “attract top talent, especially a lateral entry”.


According to annual reports of various banks, SBI chairman Arundhati Bhattacharya took home Rs 28.96 lakh last fiscal, which is a pittance when compared to remuneration her counterparts in private banks receive.

In comparision, ICICI Bank MD and CEO Chanda Kochhar received a basic salary of Rs 2.66 crore last fiscal besides Rs 2.2 crore performance bonus. In addition, she received allowances and perquisites of over Rs 2.43 crore.

Similarly, Shikha Sharma, MD and CEO of Axis Bank, took home a basic salary of Rs 2.7 crore and Rs 1.35 crore as variable pay, besides host of perk and allowances, like Rs 90 lakh HRA.

Yes Bank MD and CEO Rana Kapoor, who also happens to be promoter of the bank, took home Rs 6.8 crore as salary in 2016-17.

HDFC Bank’s Managing Director Aditya Puri saw his remuneration rise marginally to Rs 10 crore and exercised stock options worth over Rs 57 crore during the last fiscal.

Speaking about public sector banks at a banking conference in Mumbai, Rajan had said state-owned banks tended to overpay at the bottom but underpay their top executives.

He jokingly said he himself was underpaid and the disparity made it harder to attract talent from outside at the top level in public sector banks.

On the business front, SBI, after merger with its subsidiary banks, caters to 42.04 crore customers with a market share of 23.07 per cent and 21.16 per cent in deposits and advances, as opposed to 18.05 per cent and 17.02 per cent respectively, before the merger.

The nearest rival of SBI, post-merger, will have a market share of 5.96 per cent and 7.04 per cent in deposits and advances respectively.

Remuneration comprises various components including basic salary, allowances and perquisite, PF, superannuation allowances, gratuity and performance bonus and payment of performance bonus is deferred over a multi-year period.

Not only such high disparity in compensation makes it difficult for the government to hire top managers laterally at public sector banks, as pointed out by Rajan, it also impacts the motivation of public sector managers who have to fiercely compete with their private sector peers.

SBI chief Bhattacharya earned Rs 2.37 cr less than ICICI Bank chief in FY17

140 killed, 100 injured as overturned oil tanker explodes in Pak

At least 140 people were today charred to death and over 100 others injured after an oil tanker overturned and burst into flames as crowds rushed to collect petrol that spilled out to a highway in the Bahawalpur district of Pakistan’s Punjab Province.

The oil tanker coming from Karachi to Lahore overturned early this morning on the national highway at the Ahmedpur Sharqia area of the district, some 400 km from Lahore, after its tyre burst.



The fire was apparently caused by someone who lit a cigarette after people from nearby localities gathered on the highway to collect spilt petrol, officials said.

The blaze from the oil spill engulfed scores of residents, killing 140 people and injuring over 100 others.

District Coordination Officer (DCO) Bahwalpur Rana Salim Afzal termed it a “huge tragedy” in the history of Pakistan.

“At least 123 people were killed before getting any medical help while the rescue officials shifted more than 100 injured to the district headquarters hospital and Victoria Hospital in Bahawalpur where the condition of most of them is critical,” Afzal said, adding some 50,000 litre petrol spilled from the oil tanker.

He said women and children are among the victims.

Rescue 1122 official Jam Sajjad said 140 people were killed in the fire and the toll may rise further as a number of injured are in critical condition.

He said most of the dead bodies are completely charred and they will be identified only by DNA test.

Muhammad Hanif, 40, who suffered burns, told reporters at Victoria Hospital that he was present at his house when his cousin called him informing that the village people were rushing to the highway to collect “free oil”.

“My cousin told me to pick bottles and come out of the house. When I came out of the house I saw many people rushing towards the highway and some going there by motorcycles. Me and my cousin Rashid reached the highway and joined the people busy in collecting the petrol spilling from the tanker. Suddenly the tanker burst and the people gathered near it were burnt alive. Rashid and I were a little away from the tanker therefore we are alive,” Hanif said.

He said it was “greed” of the villagers which took them to the “valley of death”.

The Punjab government said three helicopters are shifting the critically burnt people to Multan’s combined military hospital and Nishter Hospital for providing better health facilities.

Regional Police Officer Bahawalpur Raja Rifat said the motorway police personnel had reached the spot when the oil tanker overturned.

“The people from nearby village Mauza Ramzan had also gathered there. The police personnel asked them to leave the place but they started collecting petrol. Suddenly the tanker exploded and within seconds the fire erupted giving no chance to the people present there to leave the place,” Rifat said.

Dozens of motorcycles and cars were also burnt at the site.

“Most people reached the site on motorcycles to collect spilling petrol,” he said.

Punjab Chief Minister Shahbaz Sharif directed the authorities to ensure best medical treatment to the injured. He also sent his chopper for shifting the injured to Multan hospitals.

Prime Minister Nawaz Sharif President Mamnoon Hussain, PTI chairman Imran Khan and PPP chairman Bilawal Bhutto condoled the tragedy.

Army chief Gen Qamar Javed Bajwa ordered the Army to assist the civil administration in the rescue effort.

Army helicopters have been deployed in the rescue operations.

The tragedy came a day ahead of Eid ul-Fitr celebrations in the country, marking the end of the holy fasting month of Ramazan.

140 killed, 100 injured as overturned oil tanker explodes in Pak

Watch: Militants kill CRPF officer, hide in Srinagar school; encounter on

An encounter is underway at DPS Srinagar, Kashmir, as security forces are attempting to flush out militants holed up in the school. The militants took refuge in the school after attacking CRPF personnel in the city’s Pantha Chowk area on Saturday evening.

According to a Times Now flash, two soldiers have been injured in the ongoing encounter.

“The exchange of firing between security forces and militants began at around 3:40 am and is going on intermittently,” a police official said about the ongoing encounter.

In Saturday evening’s attack, one CRPF sub-inspector was killed and one constable was injured. The CRPF personnel had been deployed on road opening duty near the school on the Srinagar-Jammu national highway.

According to India Today, Lashkar-e-Taiba has claimed responsibility for the Saturday attack.

Watch: Militants kill CRPF officer, hide in Srinagar school; encounter on

Rs 10,247-cr retro tax: Cairn set up maze of arms to transfer Indian assets

UK’s Cairn Energy, which became the first company to face coercive recovery in retrospective tax action, had created a maze of subsidiaries in a span of just six months to transfer Indian assets, an event that led to a demand of Rs 10,247 crore as dues.

According to documents accessed by PTI, Scotland-based Cairn Energy till 2006 held Indian assets, including the prolific Rajasthan oil fields, through nine Indian subsidiaries.



What followed was creation of layers of subsidiary firms and transfer of Indian assets. The tax department said the company made capital gains out of the restructuring, hence the tax demand.

When contacted, Cairn Energy spokesperson justified the structure, saying the company chose India listing over the option of getting the Indian company listed on UK bourses.

The structure it built had been presented to Sebi, the erstwhile Foreign Investment Promotion Board (FIPB) and the Reserve Bank of India in 2006 in a “transparent” manner.

On June 26, 2006, Cairn first created Cairn UK Holding Ltd (CUHL) and transfered the Indian assets to it. In return, it got 221.44 million shares of CUHL on June 30, 2006. It also got another 29.78 million shares for sale of 29.78 million pound debt on September 1, 2006.

On August 3, 2006, Cairn India Holding Ltd (CIHL) was incorporated in Jersey, Channel Islands — a tax haven — as a wholly-owned subsidiary of CUHL.

The Indian assets were transfered to CIHL which issued 221.44 million shares to CUHL, UK, on August 7, 2006. CUHL also sold debt of 29.78 million pound to CIHL, for which the Jersey firm issued another 29.78 million shares.

So, CUHL in all acquired 251.22 million shares of CIHL at one UK pound sterling apiece.

Thereafter, CUHL, UK, on October 12, 2006, sold 41.49 million shares of CIHL to newly-incorporated Cairn India Ltd, which transfered to the British firm Rs 5,037 crore for the same.

Three more such share transfers happened between November and December 2006. In all, the four transactions put together, 251.22 million shares of CIHL were sold to Cairn India for Rs 26,681 crore.

The income tax department, documents showed, calculated the cost of acquisition as 251.22 million pound (Rs 2,178 crore) considering the price at which the debt was transfered.

So, the capital gains CUHL made were calculated at Rs 24,503 crore (Rs 26,681 crore gained minus acquisition price of Rs 2,178 crore), the documents showed.

The tax department felt that a short-term capital gain tax should apply as CUHL had acquired 251.22 million shares of CIHL at the cost of 251.22 million pound in August-September 2006. The same was then sold to Cairn India within few months.

Cairn India was thereafter listed on stock exchanges through an initial public offering (IPO) that raised Rs 5,261 crore.

The short-term capital gain of Rs 24,503 crore at the hand of CUHL was confirmed by income tax tribunal ITAT in March, following which a demand note was sent seeking Rs 10,247 crore.

With the British firm not paying, the tax authorities first appropriated the Rs 1,500 crore of past tax refund that was lying and then took over USD 104 million of dividend income due to it from Cairn India.

“The interactions with multiple agencies of the Indian government underscores the extent to which Cairn transparently disclosed all elements of the contemplated transaction in India. Cairn is of the view that the company conducted the transaction in complete candour and openness with the Indian government,” Cairn Energy spokesperson said.

Cairn, he said, “can demonstrate that the 2006 transaction structure and the formation of holding companies was a function of the mandatory Indian securities and other regulations and they had definite economic purpose”.

“Cairn’s case is that none of the 2006 transactions was taxable in India according to the law in force at the time, which was also evident from the Indian government’s past practice, and that the detailed steps of those transactions were fully disclosed,” he said.

Rs 10,247-cr retro tax: Cairn set up maze of arms to transfer Indian assets

Has India fallen off US radar? Reasons why PM’s visit will be ‘low-key’

In a far cry from the Madison Square Garden extravaganza in 2014, Prime Minister Narendra Modi’s ongoing visit to the US could be a “low-key” affair, according to sections of the media. Apprehensions and possible challenges ahead of the maiden meeting between US President Donald Trump and PM Modi seem to have taken precedence over grand galas.

The Washington Post has described the current visit as “no-frills” and one lacking in the “pomp” of PM Modi’s earlier trips during President Barack Obama’s time. Citing unnamed US officials, a Reuters report also described PM Modi’s two-day visit US as relatively “low-key”.

However, it appears that keeping things low isn’t just about figuring out where India-US ties are headed under the (relatively) new administration in Washington. Writing for the Times of India, Chidanand Rajghatta argues that the lack of fanfare this time is also for not “ruffling” any feathers in the Trump White House. This concern, he writes, is the reason behind keeping a meeting between PM Modi and US industry captains, including Amazon CEO Jeff Bezos, Apple CEO Tim Cook, Microsoft CEO Satya Nadella, and Google CEO Sundar Pichai, among others, low key.


Why could the event rub the Trump administration the wrong way? According to agency reports, the tougher H-1B visa regime under Trump will be one of the topics under discussion at the meeting. Rajghatta describes the meeting as an attempt at “quietly lobbying” Trump to tone down his “nationalistic rhetoric” when it comes to commerce. Such topics may not sit too well with Trump and co, especially if they are highlighted in the media with the same enthusiasm as everything else PM Modi has done in his past US visits.

ALSO READ: Modi in US: Indian community in US urges PM to raise H-1B issue with Trump

However, the biggest indication that things are different this time around comes from the Prime Minister’s planned interactions with the expat community in the US. According to agency reports, PM Modi will be attending an Indian-American community event in the Washington DC suburb of Virginia. The programme is likely to be attended by about 600 members of the community. Compare this to the crowd of 19,000 that cheered ‘Modi, Modi’ at Madison Square Garden in 2014. Rajghatta is of the view that this is part of a “conscious effort” to not offend Trump, who has shown that he is fond of boasting about the numbers he pulls during his rallies.

ALSO READ: Modi in US: PM to meet top CEOs, discuss GST, Make in India gains, H1B visa

Less noise, more focus on where ties are headed

In fact, it appears that the Indian side is more concerned about keeping the decibel low as it goes about assessing Trump’s policy towards India and the country’s position in the US’ foreign policy calculus under the new administration.

“Many decisions he (Trump) has taken so far have the potential to undermine important American interests — and India’s interests as well,” explained Tata Chair for Strategic Affairs Ashley J Tellis says in an interview with Asian Age ahead of the visit. “I think Trump has an intuitive sense about India’s relevance. But unlike Presidents Bush and Obama, I do not think Trump views India’s significance in terms of a desirable global architecture — at least not yet. In fact, he seems deeply uncomfortable with any conception of international order,” Tellis added.

ALSO READ: Modi’s US visit: How PM can bolster Trump’s Presidency, add to his wins

Fears in New Delhi that India might have dropped off Washington’s radar do not seem to be too unfounded. “Since his inauguration, Trump has filled few key India-focused appointments in his government. As a result, engagement with the new US administration has been light,” writes Shailesh Kumar, senior analyst (Asia) at the Eurasia Group, a firm that helps investors and business decision-makers understand the impact of politics on the risks and opportunities in foreign markets.

In his interview, Tellis said Trump did not have an India policy yet. However, Kumar sees the lack of focus on India so far as something that PM Modi could use to his advantage. Kumar argues that Trump, unlike past Presidents, is still “impressionable with respect to South Asia”. This, Kumar says, could be leveraged by PM Modi to “strongly advocate” India’s views on the challenges in its neighbourhood – from the threat of terrorism from Pakistan to China’s continuing inroads into the region and its alliance with Islamabad.

ALSO READ: Modi’s US visit: India to get Guardian drones; F-16 jets on agenda too

However, by no means is this vacuum in India policy being viewed as a positive development. In a note cited by a Reuters report ahead of the visit, Kumar and Eurasia Group’s Sasha Riser-Kositsky wrote that there was a “palpable fear” in New Delhi about Trump’s lack of focus on India.

Worries over whether India has lost some of its significance in Washington are echoed by other analysts, too. Foreign policy writer and journalist, Seema Sirohi, in her article for thewire.in, writes that the meeting with Trump might be Modi’s most challenging with a foreign leader to date. “Modi will have to assess whether Indo-US relations will remain upwardly mobile and stay on the trajectory set by former presidents George W Bush and Barack Obama, or if ties will plateau in the short term under Trump,” Sirohi writes.

Has India fallen off US radar? Reasons why PM’s visit will be ‘low-key’