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Saturday, March 7, 2020

economic news of india - world economic news - economics news for students - indian economy news

economic news of india - world economic news - economics news for students - indian economy news


YES crisis begins to unravel, Rana Kapoor arrested for laundering

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MUMBAI: The Enforcement Directorate (ED) arrested Yes Bank founder Rana Kapoor under money laundering charges in the wee hours of Sunday, officials said.They said Kapoor was placed under arrest around 3 am under the provision of the Prevention of Money Laundering Act (PMLA) as he was allegedly not cooperating in the probe.Rana was questioned by the ED sleuths for over 20 hours after the central agency raided his residence on Friday night.He will be produced before a local court during the day to obtain custody, the officials said.

Italy locks down its North to fight a virus

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ROME: Italy will quarantine the entire Lombardy region around Milan to limit the spread of the coronavirus as well as areas around and including Venice and the cities of Parma and Rimini, Italian media reported Saturday.A draft of a government resolution obtained by Italy's Corriere Della Sera newspaper and other media said movement into and out of the regions would be severely restricted until April 3.Milan is the Italian financial capital and has a population of just under 1.4 million people.The entire Lombardy region is home to 10 million.The government decree also covers parts of the Veneto region around Venice as well as Emilia-Romagna's Parma and Rimini.Those three cities have a combined population of around 540,000 people.It was not immediately clear from either the decree or the media reports as to when the measure would go into effect.Corriere Della Sera said it was "imminent".Italy has borne the brunt in Europe since the novel coronavirus first emerged in China late last year.The Mediterranean country of 60 million people has recorded 233 deaths and 5,883 infections in the past two weeks.The virus has not spread to all 22 Italian regions and the first deaths are being recorded in Italy's less well medically equipped south.The World Health Organization (WHO) urged Italy on Friday to keep "a strong focus on containment measures".The government degree said people in the quarantine zones would be advised to stay at home as much as possible.It shuts down all night clubs as well as gyms and swimming pools.Bars and restaurants will remain open but must ensure that everyone is seated at least a metre (three feet) apart.It stresses that entry into and out of the new quarantine zones would only be allowed for "serious reasons".Until now, Italy had quarantined 11 villages with a combined population of 50,000 people in the Lombardy region and parts of the area around Venice.The month-long ban on entry to places such as Venice could deliver a crippling blow to the city's already-struggling tourism industry.There was no immediate word on whether the Italian Stock Exchange in Milan would remain open."I cannot fail to stress that the draft decree of the prime minister is -- to say the least -- messed up," Lombardy region president Attilio Fontan was quoted as saying by Italy's Sky TG24 rolling news channel.The draft decree says that those who violate the restrictions could be punished by fines and jailed for up to three months.

Why bureaucracy remains an old- boys' club

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When Anna Rajam Malhotra (née George) got selected to the Indian Administrative Service (IAS) in 1951, her appointment order had a built-in caveat: she would have to leave the service if she ever married.Malhotra, who was India's first woman IAS officer, however, demonstrated resilience to build an accomplished career. She clinched the post of sub-collector of Hosur even as the then chief minister of Madras state, C Rajagopalachari, was disinclined towards such an experimentation.Later, she learnt to ride a horse and shoot a revolver, in an apparent demonstration that she was no less than her male colleagues.But Malhotra, hailing from Kerala's Ernakulam district, had to get the better of something personal. She fell in love with her IAS batch mate RN Malhotra, knowing that her career might be choked by red tape if they decided to tie the knot."They had a very late marriage due to such a weird, sexist rule. But the government finally relented," says TR Raghunandan, a former IAS officer & author of Everything You Ever Wanted to Know About Bureaucracy.Raghunandan hails from a family of four IAS siblings. His eldest sister, Renuka Vishwanathan, became the first woman district magistrate in Karnataka. "Several top politicians have denied women civil servants their due. My sister Renuka also struggled a lot to get what was due to her," he adds.Such sexist rules have ceased to exist. Besides, ministers know that denying a promotion to a deserving woman candidate could spawn a controversy.Why then have women bureaucrats failed to clinch coveted posts such as cabinet secretary, director of premier investigating agencies or chairman of the railway board? "My experience is," says Meena Agarwal, a former Indian Railway Accounts Service (IRAS) officer, "your gender does not matter much in top bureaucratic positions. In some cases, deserving women officers face a hurdle because the pool of equally deserving male candidates is much larger." Agarwal, who was later made the secretary of the 7th Central Pay Commission, adds the situation will change when more women reach higher grades. 74531175 Sometime, an officer's cadre could play spoilsport, says a senior railway officer on condition of anonymity. In the railways, for example, Vijayalakshmi Viswanathan — the first woman to become a financial commissioner on the Railway Board, in 2002 — could have possibly moved up. But when the chairman's post fell vacant, her disadvantage was that she was from the IRAS cadre. The railways unofficially prefer engineering and traffic service officers in top posts, the senior officer adds.The winds of change for senior women civil servants began to blow in 2001 when Chokila Iyer was made foreign secretary, the top post for a foreign service officer. Two other women diplomats — Nirupama Rao and Sujatha Singh — also reached the same position later. In the finance ministry, three women officers became chairperson of the Central Board of Direct Taxes in quick succession between 2004 and 2006. Shobha Majumdar was the first to occupy the post.Ahead of the 2009 full budget, Sushma Nath headed the expenditure department of the finance ministry. In 2011, she became the first woman finance secretary. Agarwal, who was then a joint secretary in the department, recalls that the additional secretary and three joint secretaries were women at that time. "We used to enter our conference hall and exclaim 'no man around!'." 74531126 In 2011, Praveen Mahajan became the first woman to head the Central Board of Excise and Customs, later renamed the Central Board of Indirect Taxes and Customs.In the Indian Police Service (IPS), Archana Ramasundaram scripted history in 2016 when she was made the director general of Sashastra Seema Bal, becoming the first woman cop to head a central police force. Two most popular names among celebrity women cops are Kiran Bedi (India's first woman IPS officer) and Kanchan Choudhary Bhattacharya (the first woman officer to be appointed as director general of police and on whose life popular TV serial Udaan was based).But these inspiring stories cannot hide the reality that after seven decades of Independence, the nation hasn't had a woman cabinet secretary — the top post in the bureaucracy. No woman officer is in the queue either. In 2009, Sudha Pillai came close. She became the most senior IAS officer after Duvvuri Subbarao was made RBI governor. But the government decided to extend the tenure of the incumbent, KM Chandrasekhar, for a year.Did her gender come in the way? Pillai, who was appointed member-secretary of the erstwhile Planning Commission later, refuses to comment on the issue.The railways could see a woman head sooner. Many officers see Archana Joshi, an assistant general manager in Northern Railway, as a potential member (traffic), if not chairperson of the Railway Board. But there are no such names doing the rounds for cabinet secretary. Though an officer is appointed cabinet secretary for two years, the unwritten convention has been to give multiple extensions. This eliminates the chances of other senior IAS officers bagging the post.Pillai advices younger officers to remain focussed. "A woman officer getting elevated as cabinet secretary has to happen eventually. My advice to young women officers would be not to jockey for posts, be fair in dealings, be prompt in file disposal and keep your reputation for integrity razor-sharp."

YES Bank crisis: Its time for govt to fix the system

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The Modi government has a major problem at hand. No, it has nothing to do with the Citizenship (Amendment) Act or the protests against it. The weak economy is an issue and so are fears about the spread of Covid-19. But the problem I am talking about has to do with the banking and financial system, which has undergone a lot of stress in the past decade or so due to bad loans, bad management and lax regulation.While there is no panic run on banks or debilitating loss of confidence in the system, the government should be worried about the increasing vulnerability and unviability of key players in the financial system. Consider these facts: in the past oneand-a-half years, two banks and a nonbank lender have failed and had to be placed under RBI moratorium. While Yes Bank is in the process of being rescued, a solution to revive PMC Bank is not yet in place. Last year, DHFL became the first major non-bank lender to be placed under moratorium and is now in the process of being sold.Some public sector banks are probably bankrupt if not for the implicit sovereign on their borrowings and deposits. One had to be expensively rescued using policyholders' money from LIC.Some other non-bank lenders are also in trouble. Credit flow is an issue & with big banks focusing on lending to large nonbank lenders, the smaller ones are getting squeezed out. They are being forced to conserve cash, stop lending and turn away opportunities.Finance Minister Nirmala Sitharaman's push to open the lending spigots has eased the situation somewhat but there is still a long way to go. The slowing economy has also not helped matters.These kinds of failures could have easily caused political nightmares. PM Modi and the BJP's success in navigating these potential landmines combined with the weakness of the Opposition means the party and the government have not yet had to pay a heavy political price.But that could change. If large sections of the public tomorrow start believing their money in the banks is unsafe, it could end up creating a panic of immense proportions.India has not had a major financial system panic for decades thanks to nationalisation and deft management by the RBI during past crises. Even the massive fraud at PNB in 2018 did not lead to mass withdrawals.But private banks have become too big to fail. And with the growth of non-bank lenders, the explosion in financial market activity and the interconnectedness of everybody, the stage is set for mass convulsions, if things are not quickly brought under control.Neither of these scenarios bode well for the BJP. They can point out that most of the banks' problems began when the UPA was in power and that they have done a lot to strengthen the system. This is correct and one can point to capital infusion into public sector banks and the launch of the Insolvency and Bankruptcy Code in support of the argument. Bankruptcy courts have proved successful in not only recovering money for lenders but also for putting the fear of god among promoters. Banks have also managed to recover a decent amount from the cases settled so far.But the problem is that the banking system's weakness persists and the argument that the Congress is solely responsible is becoming stale. The BJP has had six years to study, understand and act on the weakness and its record on prompt action has been less than stellar.Recap bonds for public sector banks should have been done in 2015, not in 2017, and the mergers could have been announced anytime in the past six years. This would have front-loaded the reforms and given banks enough time to absorb the mergers and use the money to provide fully for the losses. A lot of market panic and lossescould also have been avoided.Yes Bank is another classic example of delayed action. It was clear from last year that the bank is going to struggle to raise money. A quick rescue plan put together over the weekend with the markets closed could have made the government and the RBI look strong, nimble and purposeful. Instead, both are now fending off attacks and trying to take "strong action" in a bid to change the narrative.The government now has a fantastic opportunity ahead of it in the next few years. Crashing oil prices could boost fiscal gains and wariness over supply chain concentration in China can drive FDI inflows to India. Structural reforms, low corporate tax and low interest rates can spur growth and drive the economy towards the $5-trillion target by 2024. The opportunity should not be frittered away by lax regulation and delayed action in the banking and financial sector. Views expressed are author's own.

IndiGo waives rescheduling charges till Mar 31

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MUMBAI: Budget carrier IndiGo on Saturday announced waiving of rescheduling charges on flight bookings till March 31 due to the situation arising out of the coronavirus outbreak on existing and new domestic and international bookings made between March 12 and March 31, IndiGo said in a statement. The cancellation fee, however, remains. "We understand that some passengers are concerned about committing to travel, given the current coronavirus issue. To take this anxiety away and make their travel hassel-free, we are waiving our normal change fee on all travel during the next two weeks and for all new bookings made in that period," IndiGo Chief Commercial Officer William Boulter said in the statement.This will enable IndiGo fliers to book their flights at "affordable" fares with flexibility of rescheduling without change fee, if needed, he said. "While the coronavirus is a serious challenge for all of us, we believe that measures such as this will help alleviate its effect on India's travel," Boulter added. A passenger will have to pay the fare difference in case of rescheduling the journey to a later date, as per the terms and conditions. Also, the customer will have to intimate the airline three days in advance for rescheduling of the journey.

Will not stop coal-based power plants immediately without a plan: RK Singh at ET GBS 2020

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Power and renewable energy minister R K Singh said the country needs coal-based plants for now and he is not in favour of shutting them down immediately. He also said that the much-awaited tariff policy could soon be finalised with home minister Amit Shah-led group of ministers agreeing to most of the recommendations at its first meeting on Friday. "If you tell me to shut down coal based-plants tomorrow, I will not do it because it is important for me to raise standards of our people," Singh said on Saturday at The Economic Times Global Business Summit. His statement comes on the back of Chief Justice of India SA Bobde's remark that all thermal power plants in the country should be shut down to check air pollution. Singh said India's per capita electricity consumption is among the lowest in the world and come June the country's power demand was expected to grow putting pressure on the coal-fired projects. "The proposed tariff policy has been received well by the group of ministers and I expect the group to meet just once more to finalise the draft that will then be taken to Cabinet for approval," Singh said. Speaking at a session on National Infrastructure Pipeline - Can this mega push revive the Indian Economy?' he said that all stressed power plants are expected to come on stream. "We are adding renewables but there is space for coal as we are adding new consumers," adding the country registered 26.4 lakh new consumers under Saubhagya.Of the 32 odd stressed power plant, 14 have come out of stress. With coal availability, 5000-mw power purchase agreement aggregation schemes, and new connections, the demand for electricity is likely to increase, Singh said.He also said that the government will bring out a new scheme to revive state-owned power distribution companies under which the grants, aids and finance from Power Finance Corp and Rural Electrification Corp will be available only to states that undertake trajectories to reduce commercial losses to 12%.

SBI says YES Bank rescue math by Monday, due diligence underway

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State Bank of India (SBI) on Saturday said it has time till Monday to respond back to the Reserve Bank of India (RBI) on the draft scheme for rescue of Yes Bank, India's fifth private lender. SBI Chairman Rajnish Kumar told a press conference in Mumbai that the bank's legal team has been doing due diligence on draft scheme proposed by RBI for bringing the bank back to health.A day after superseding the Rana Kapoor-promoted Yes Bank board and capped cash withdrawals at Rs 50,000 (Rs 5 lakh in exceptional situations), RBI on Friday came out with the "draft reconstruction scheme" under which SBI will bring in Rs 2,500 crore for a 49% stake in the crisis-ridden private sector bank.Kumar said SBI will try to implement the resolution plan before the RBI deadline. There is no question of YES Bank's merger with the state-run bank, he said. Buying a 49% stake in Yes Bank would involve an investment of Rs 2,400 crore, that is if it decides to go alone. Kumar also said many potential investors, 23 in total, have approached SBI after seeing the investment scheme."Whether SBI takes a 49% or 26% stake in Yes Bank will depend on the investment involved. We are also examining the interest received from some other investors. SBI board will take the final call on this," Kumar said.The reconstruction scheme envisages increasing the authorised capital of the bank manifold to Rs 5,000 crore from Rs 800 crore. Sources in the government said the RBI has decided against merging Yes with SBI because it would have put pressure on the balance sheet of the government-owned lender.Kumar asserted it us purely an investment from SBI's standpoint and SBI shareholders' interest would be fully protected.The scheme proposes full repayment of all deposits, dilution of equity, and write-off of Rs 10,800 crore of additional tier one (AT-1) bonds. Kumar refused to comment on the 81 bonds being written off in the draft scheme.

YES rescue bid may hit a wall from some foreign investors

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Mumbai: Several institutional investors are planning to come together to oppose the central bank's proposal to write down Yes Bank's perpetual bonds — tier-I bonds in market parlance — that total more than ₹8,400 crore.Investors of these outstanding bonds are discussing the possibility of advising the bond trustee to legally challenge the write-down proposal, sources with direct knowledge of the matter told ET.Their main contention is that tier-I bonds are senior to equity, and cannot be written down without reducing equity.Fearing such a move even before the central bank announced the reconstruction proposal, trustee Axis Bank said in a letter dated March 4 to Yes Bank that, "the debenture holders are extremely apprehensive the issuer bank will not be in a position to honour their obligations to the holders of AT-1 bonds and may act prejudicial to their interests."According to an institutional investor, the information memorandum of the perpetual bonds says it cannot be written down unless equity is also reduced."Debt cannot be junior to equity... we hope it is not there in the final scheme," the person said.Investors believe that the cost of issuing similar bonds would climb by as much as 200 basis points from previous levels."This is the first time investors got a knock on perpetual bonds in India," said Ajay Manglunia, managing director – fixed income, JM Financial. "It would hit hard the primary issuance market as risk premium may shoot up to 200 basis points." "Unless the draft restructuring scheme changes the particular proposal, the perpetual bond market is likely to turn choosy," he said.Investors in Yes Bank perpetual bonds, compliant with Basel III norms, a global standard for banks, stand to lose their money if the RBI draft restructuring scheme is approved."The instruments… shall stand written down permanently, in full, with effect from the appointed date," the central bank said. "No account holder shall be entitled to get any compensation from the reconstructed bank on account of the changes occurred in the reconstructed bank by virtue of the scheme."Perpetual bonds are a quasi-debt instrument where there is no fixed maturity but normally they have a "call option" after a stipulated period, giving an exit route for investors. Yes Bank perpetual bonds have not been traded in the past few days, with a particular perpetual series falling under the said category yielding 19.11% on March 2.In the past two months, these bonds traded as high as 38%.

Curbing fake, hate content on riots: Social media companies

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Social media platforms said they are working to quell fake news and misinformation around the Delhi riots and that over time they have built new features to clearly highlight credible content.This comes after home ministry officials in a meeting on Tuesday told platforms such as Twitter, Facebook, WhatsApp, YouTube to report and flag hate speech and objectionable content that may lead to law and order problems.Twitter said it effectively tackled abusive content and coordinated disinformation linked to the Delhi riots and prevented certain hashtags that were inciting hate based on religious affiliation from trending, while YouTube said it quickly removes videos violating its policies and complies with legal requests from authorities.At the meeting, home ministry officials took up matters like provocative content by non-verified accounts, which have been a key source of misinformation particularly on Twitter, people familiar with the matter said.Several instances of accounts peddling propaganda without any checks were shared with social media platforms and they were urged to reduce response time in removing hateful content or face legal action, sources said. Delhi Police has registered 26 FIRs against various social media accounts for "provocative content"."We swiftly took down content and accounts that were in violation of our rules, including dehumanising language and material that could trigger offline harm," a Twitter spokesperson said in response to ET's queries."Twitter is the only uniquely open service where inaccurate content was also debunked in real time by people, including law enforcement, trusted journalists and news media organisations which helped protect the public...our teams were and continue to take action judiciously, consistently and impartially on any content that violates our policies," the person said.Facebook and WhatsApp did not respond to emails seeking comments as of press time Friday.Pratik Sinha, founder of fact checking website Alt News, said misinformation is to do with all platforms. "There has been an enormous amount of misinformation across platforms; it has been unrelenting," he said. "The claims these platforms make of quelling misinformation... none of them are actually effective."A social media executive, however, said the platforms have been working on the issue. "It is always nice to blame social media platforms," the person said on condition of anonymity. "But are conference halls and their owners held accountable if someone makes a defamatory speech in a hotel? Users must also act responsibly."A YouTube spokesperson said over the last year, the company has worked to ensure that credible content showed up when people search for news-related topics. "We've changed our search and discovery algorithms to surface credible content, built new features that clearly label and prominently surface news sources on our homepage and search pages, and introduced information panels to help give users more sources where they can fact check information for themselves," the person said.

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