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Pollution costs India $80 bn a year: World Bank
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BS REPORTER
New
Delhi, 17 July
Environmental
degradation costs India about ₹ 8 crore,
equivalent to 5.7 per cent of the country’s gross domestic product ( GDP),
on an annual basis according to a World Bank report released on Wednesday.
The
report, Diagnostic Assessment of Select Environmental Challenges in India,
focuses on particle pollution from the burning of fossil fuels, which has
serious health consequences amounting to about three per cent of India’s
GDP, along with losses due to lack of access to clean water supply,
sanitation and hygiene and natural resources depletion. Of this, the
impacts of outdoor air pollution account for the highest share at 1.7 per
cent, followed by cost of indoor air pollution at 1.3 per cent.
The
higher costs for outdoor/ indoor air pollution are primarily driven by an
elevated exposure of the young and productive urban population to
particulate matter pollution that results in a substantial cardiopulmonary
and chronic obstructive pulmonary disease mortality load among adults.
According
to the World Bank report, India can make green growth a reality, by putting
in place strategies to reduce environmental degradation at the minimal cost
of 0.02 per cent to 0.04 per cent of average annual GDP growth rate.
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New banks might queer the pitch for state - owned ones
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VRISHTI BENIWAL
New
Delhi, 17 July
As
the Reserve Bank of India (RBI) prepares to dole out licences to corporate
houses and others for launching new banks, India’s 26 public sector banks (
PSBs) are watching the situation carefully. For it could prove a shot in
the arm for Finance Minister PChidambaram, who wants some of them to merge
with their bigger peers.
With
new private banks in the play, the going could become more difficult for
the old- school state- run banks, already losing business and market
position, forcing them to think hard towards consolidating and forming
larger entities to garner big- ticket deals. An executive with a small
state- run bank said, “ PSBs are already staring at shrinking margins and
rising bad loans due to economic downturn and they fear worse when a new
breed of private sector banks mushrooms. Small state- run lenders are worried
that new bank licences may make their survival difficult, forcing them to
fulfil the government’s wish of consolidating with bigger banks.” On July
1, RBI had received 26 applications for new bank licences. While the
government is saying no cap has been prescribed, RBI has made it clear all
eligible applicants may not get a licence, the first of which might be
given by March 2014. Since the eligibility criteria are stringent, not more
than half a dozen might be able to meet them.
This
might be a breather for the PSBs, as just a couple of new banks might not
be able to deal amajor blow to the state- run banks, which have 70 per cent
of market share. The entry of YES Bank and Kotak Mahindra Bank about a
decade ago did not have much impact on PSBs.
However,
this could be temporary relief because the expansion of new banks would
come at the cost of PSBs.
“New
banks will take good clients of PSBs, as existing private sector lenders
would not let them poach their clients.
New
banks will be superior in terms of quality of official, who did While old
private sector banks fear consolidation the most, small and include Punjab
and Sind Bank, Dena Bank, United Bank of India, Bank of Maharashtra, Andhra
Bank, Vijaya Bank, Corporation Bank, UCO Bank, Oriental Bank of Commerce
and Syndicate Bank.
The
official, however, added consolidation would still not be a cakewalk for
the government unless it agrees to reach out to bank employee unions, which
are resisting the move. When it takes State Bank of India at least two years
to complete amalgamation of a subsidiary, other banks would take even
longer, due to the differences in their culture and geography, he added.
According
to RBI guidelines, it is mandatory for new banks to open 25 per cent of
branches in rural areas but in metros, most of their growth is likely to
come from unsatisfied customers switching over from PSBs. Some loyal
customers might, however, prefer to stick to public sector banks. These
customers consider their money safe with a government institution.
“The
aim for new bank licences is financial inclusion. But how would that be
met? When PSBs are not ready to go to remote areas because viability is not
there, why would a private bank invest there? So, new banks might not be
viable in the initial years of their operation. However, government
spending on programmes like food security will generate demand in rural
areas and that may provide an opportunity to these banks,” said a former
executive of a large government bank.
Current
account and savings account deposits of PSBs are coming under pressure and
many are expected to report a dip in their business income at the end of
the quarter ended June, compared with the one ended March. Consolidation
can help PSBs achieve economies of scale. The banking system saw about a
dozen mergers between 1990 and 2000, and 15 amalgamations in the last
decade. While mergers of banks with weak financials dominated the first
decade, the second saw mergers between healthy banks, driven by commercial
reasons.
In
December 2009, the finance ministry had called chiefs of five leading
public sector banks — Punjab National Bank, Canara Bank, Union Bank of
India, Bank of Baroda and Bank of India — to take their views on
consolidation. Owing to stiff opposition from employee unions, the idea was
dropped.
This
is the first of a three- part series on how new bank licences would impact
public sector lenders TRANSACTION BOOK
Merger
targets
Last
year, the finance ministry divided banks into seven pools. The large bank
in each group handholds small banks to improve their functioning.
Any
amalgamation might happen within these groups
Punjab
National Bank:
Dena
Bank, Vijaya Bank BankofBaroda: IDBI Bank, UCO Bank Bankof India: Oriental
Bankof Commerce, Andhra Bank Union Bankof India: United Bankof India,
Punjab & Sind Bank
Central
Bankof
India:
Indian Bank, Allahabad Bank, BankofMaharashtra Canara Bank: Indian Overseas
Bank, Syndicate Bank, Corporation Bank State Bankof India: State
BankofHyderabad, State Bankof Mysore, State BankofBikaner & Jaipur,
State BankofPatiala, State Bankof Travancore
Key
numbers of public sector banks ( 2012- 13)
Deposits
57,45,697 Investments 17,59,106 Advances 44,72,773 Total assets 69,61,966
Net NPA* ratio 2.01% Capital adequacy ratio 13.13%
*Non-
performing assets; figures in ₹ crore Source:
IBA
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Sebi offers hand of friendship to PEs
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NSUNDARESHA SUBRAMANIAN
New
Delhi, 17 July
The
Securities and Exchange Board of India ( Sebi) has offered to address the
concerns of the private equity ( PE) and venture capital sector working
closely to remove several tax and regulatory anomalies that arise from
the new Alternative Investment Fund ( AIF) regulations.
The
industry, hitherto unregulated, came within the fold of Sebi with the
notification of these regulations in May last year.
Sebi
Chairman U K Sinha assured that the regulator will reconsider the cap on
investments that can be made by the employees of an alternative
investment fund ( AIF) in it.
According
to the Sebi AIF regulations, ₹
25 lakh is the investment threshold for employees or directors of the
AIF. “ We have received representations asking why there is aceiling of ₹ 25 lakh for employees.
We
are open to reconsidering this provision,” Sinha told the fund managers.
According
to the regulations, an AIF should have a minimum corpus of ₹ 20 crore and should not have
more than 1,000 investors.
In
the first formal public interaction with the regulator at a conference of
the Indian Private Equity and Venture Capital Association — IVCA Conclave
2013 — on Tuesday, the PE industry sought more encouragement for raising
rupee funds, extension of tax pass through status for category Iand
category II funds and flexibility in capital structure for fund managers.
At
present, domestic institutions such as insurance companies, pensions and
banks are not allowed to invest in AIFs. Also, although the government
this year allowed the tax passthrough status for entities registered
under the Sebi venture capital funds ( VCF) regulations, this move fell
in a grey area as the VCF regulations got replaced by the AIF
regulations.
Sinha
added that he was in favour of pass- through tax status for all
categories of alternative funds. He offered to recommend the same to the
government. “ There is scope for all of us to approach the government,”
he said.
Another
problem faced by the fund managers was the apparent lack of co-
ordination among the multiplicity of financial sector regulators. Both
the finance minister and the Sebi chairman assured that the Financial
Stability and Development Council, headed by the finance minister, would
address such issues and meet once in three months.
PEs
were told they could bring to the minister’s notice if there were any
conflicting positions made by the regulators, which could, then, be taken
up for discussion in the council.
Sinha
also readily agreed to aproposal to bring out a joint study sponsored by
the IVCA and the regulator to put forth the various aspects of the PE
segment, which could help mitigate the great degree of pessimism in the
government and regulatory circles. Sebi also assured the segment it would
not push for safety net in initial public offers and was open for
suggestions to changes in the de- listing guidelines.
“We
need to interact and understand each other’s concerns. We need to talk
and move forward,” said Sinha.
Says
it wants the sector to develop, assures changes in the framework
UK
Sinha, Chairman, Sebi ALTERNATIVES NEEDED
|Tax
pass through status not available for majority of funds |Restrictions on
investments in AIFs by insurance firms, banks, MFs etc |Lock- in
provisions in initial public offerings |Stringent provisions in delisting
regulations |Cap on investment by employees and directors at ₹ 2.5 million
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‘Neyveli share- sale plan defies public holding
intent’
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SAMIE MODAK
Mumbai, 17 July
The Securities and Exchange
Board of India ( Sebi)’ s decision to allow the Tamil Nadu government
to buy the Centre’s stake in Neyveli Lignite Corporation ( NLC) to meet
minimum public shareholding norms has faced criticism from advocates of
sound corporate governance practices. Though the move would help cut
the Centre’s stake in NLC below 90 per cent in letter, the sale of
shares from the Centre to a state defeated the objective of diverse
ownership and better free- float, said a former Sebi official, as well
as officials at corporate governance advisory firms.
Currently, government holding
in NLC stands at 93.56 per cent. To meet Sebi’s minimum public
shareholding norms, it has to be cut to less than 90 per cent before
August 9.
The government’s decision to
divest shares in NLC had met stiff opposition from Tamil Nadu- based
political parties; about 30,000 workers of the company had gone on
strike.
After discussions, Sebi allowed
four Tamil Naduowned entities that would qualify as qualified
institutional bidders to acquire stake from the government.
“The spirit ( of minimum public
shareholding, or MPS) is to ensure wider holdings and increase the
depth of trading of securities. By allowing state PSUs ( public sector
undertakings), whose business isn’t securities trading, Sebi hasn’t
applied this first principle and the logic of MPS gets flawed,” said
Shriram Subramanian, founder and managing director, InGovern Research
Services.
In 2010, the government had
amended the Securities Contract ( Regulation) Rules, making it
mandatory for private companies to have at least 25 per cent public
holding ( 10 per cent for PSUs). The objective behind the move was to
ensure disperse ownership to curb manipulation by having more
liquidity.
Amit Tandon, managing director,
IIAS, believes the manner in which a company complies with the norms is
critical. “ If it is achieved through a process that gives any investor
a chance to participate at a market clearing price, the minimum public
shareholding criterion should be considered being fulfilled,”
he said. Turn to TSI, Page 15
> EGoM clears 3.56% stake sale in Neyveli via IPP
A panel of ministers, headed by
Finance Minister P Chidambaram, on Wednesday cleared disinvestment of
3.56 per cent stake in Neyveli Lignite through an institutional
placement programme ( IPP). The Department of Disinvestment has
originally planned to divest five per cent of its stake in the Tamil
Nadubased mining company. The Cabinet had last month approved the same.
Since the IPP mode is allowed only to meet the pubic holding norm
minimum 10 per cent, the department would now sell only 3.56 per cent
or over 55.8 million shares. “ The DoD has written to Sebi, seeking
preference to Tamil Nadu state PSUs,” Disinvestment Secretary Ravi
Mathur told reporters after ameeting of the empowered group of ministers,
adding the department would now file the offer document with Sebi and
after that, the issue would hit the market. Sources, however, said the
issue was likely only in the first week of August. PTI
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SC orders transfer of all Sahara appeals in OFCD case
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BS REPORTER
New Delhi, 17 July
The Supreme Court on Wednesday
directed the transfer to itself of matters pending before the
Securities and Appellate Tribunal ( SAT) and the Allahabad High Court
arising out of the applications filed by the Sahara group. The court
expressed displeasure over interference by other forums in a matter
decided by the apex court.
“We are annoyed by the SAT
order. How can they interfere?” judge K S Radhakrishnan said.
The directors of Sahara India
Real Estate and Sahara Housing Invest had moved SAT, while Sahara India
Parivar, the partnership firm that offered infrastructure facilities to
the two companies collecting money, had moved the Lucknow bench of the
Allahabad High Court, following an order by the Securities and Exchange
Board of India ( Sebi) to attach the properties of the group in
February. The attachment order came during the course of the execution
of a Supreme Court order on August 31, 2012, which directed the two
companies to refund ₹
24,029 crore collected from about three million investors, along with
interest of 15 per cent. Sahara had raised this sum by issuing
optionally fully convertible debentures ( OFCDs).
Sebi had ordered the attachment
after the companies failed to deposit the full amount, according to a
Supreme Court- directed timeline.
So far, the companies have
deposited ₹
5,120 crore, less than a quarter of the original sum. They claim the
rest has been refunded to the OFCD holders directly.
Before adjourning the matters
of contempt proceedings to July 24, the bench of judges Radhakrishnan
and J S Khehar wondered why the companies didn’t comply with the
court’s clear orders for the past several months. At one point, they
said they would hear any further defence by Sahara in the matter only
after the group deposited the amount. “ If you don’t comply, we would
order personal appearance,” Radhakrishnan said.
Sebi counsel Arvind Datar
pressed for the appearance of Sahara group chief Subrata Roy, saying he
was the promoter of the two errant companies and controlled the
entities.
He added according to a
petition filed before the Lucknow bench of the Allahabad High Court,
Roy was named the person in charge of Sahara India Parivar, holding 67
per cent stake, according to the firm’s partnership deed.
Roy’s counsel Aryama Sundaram
argued Roy wasn’t party to the Supreme Court order and didn’t have
direct interest in the two companies. “Any decision on the contempt
proceedings should not be made without hearing me,” Sundaram said.
As time ran out, the court
decided to defer the matter to next week.
Earlier, Sebi had submitted its
seventh status report in the matter. It said of the 1,000 responses
from Sahara OFCD holders, only 12 were genuine. It noted several
discrepancies.
Datar said, “ In 146 cases, the
names and details of the bond holders could not be found in the DVDs (
submitted by the group).” In another 130 cases, while bondholders asked
for refunds, the DVDs showed they had already been
refunded. Turn to TSI, Page 15
>
SC adjourns matter to next week
after hinting at “ personal appearance” by group officials
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