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Business Today

Business Today 30-Jun-19

A leading business magazine read by the business leaders for staying ahead and managing challenges that comes right away in the ever changing world of business.

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2 min.
time to fix financial holes

THE PROBLEMS IN India’s financial systems started showing up in 2015, shortly after the then RBI governor Raghuram Rajan forced banks to go for the Asset Quality Recognition exercise. The bad loans given by banks, which were hidden by the process of ever-greening till then, came to the fore. It was found that many public sector banks did not even have enough capital to continue lending. The government hoped the problem would be fixed by the Insolvency and Bankruptcy Code, which allowed lenders to take the defaulting borrowers to the National Company Law Tribunal and sell them off to recover money in a time-bound manner. In practice, it turned out that the banks had to take a huge haircut in the process – they had to write off 90 per…

1 min.

STAY CONNECTED WITH US ON www.facebook.com/BusinessToday@BT_India Trade Wars: Bigger US Retaliation Could Hurt Indian IT Industry Policy watchers think the US has kept its powder dry. If India does not step back now, more retaliation could follow businesstoday.in/us.tradewars-india PM Pushes for Big Labour Reforms; 43 Crore Unorganised Workers to Benefit Given the Modi government’s resolve to bring changes to the lives of the masses, labour reforms are sure to continue businesstoday.in/modi-reforms IndiGo, SpiceJet Stare at Tough Times with Vicious Fare War Ahead Though the fourth quarter results paint a rosy picture, it is not going to last long with the kind of new capacity expected to be added in the market over the next one year businesstoday.in/farewar-indigo.spicejet NEWS Hyundai Venue: ‘Baby Creta’ Strikes Right Notes At a killer price tag of ₹6.5 lakh, the car is a steal. Compared to other variants, it…

1 min.
transmission woes

Reserve Bank of India (RBI) Governor Shaktikanta Das has delivered a 75 basis points cut in the repo rate to 5.75 per cent since he joined in December last year. The rate cuts have come on the back of lower-than-targeted inflation and need to push economic growth, which fell to 6.8 per cent in 2018/19. But lower interest rates alone won’t improve the sagging fortunes of the economy. The banking sector has been passing through a difficult phase of asset quality deterioration and falling profitability over the last two-three years. Banks will mostly protect their margins and go slow in passing on the benefit of lower interest rates to borrowers. In fact, transmission of rates from banks to borrowers has always been an issue. So far, banks have transmitted some…

1 min.
no concentration

THE ASSET QUALITY deterioration in India Inc has made the Reserve Bank of India (RBI) a bit conservative. The apex bank has decided to reduce banks’ exposure to single as well as group borrowers. Group borrowers exposure has been capped at 25 per cent of capital, while single borrower exposure limit is 15 per cent. The bank’s exposure to a single NBFC has also been restricted to 15 per cent of the capital base. The RBI is actually talking about more stringent exposure limits for certain categories of NBFCs. In fact, it has capped exposure to a group of connected NBFCs to 25 per cent of the capital base. There is relief, however, for government companies. They are allowed to borrow more as they will not be considered part of…

1 min.
easier participation

SEBI’S DISCUSSION paper on FPI regulations does a good job at harmonising related circulars and clarifications at one place, while addressing the core concerns that restrict FPI participation. The market watchdog has recommended simplifying the registration process, easing of KYC norms and widening the scope of FPI investments. If things go as they seem, the 10 per cent FPI limit on investment in listed stocks could be hiked; sectoral caps could also be revised. FPIs will be allowed to invest in unlisted companies ahead of their initial public offerings. Besides, regulations could be relaxed to invest in real estate investment trusts, infrastructure investment trusts, and alternative investment funds. Besides, FPI classification across three categories could be rationalised. For one, pension and other well-regulated funds will be moved to category-I and…

1 min.
implementation issues ahead

THE DRAFT NATIONAL Education Policy 2019 put out by the government for comments from stakeholders stands out as an excellent text on what needs to be done. But then, when it comes to education, the devil lies in the detail. Consider higher education alone. Sadly, in many cases, there are key parts relating to running of institutions where government institutions themselves have limited powers. The IIM (Indian Institute of Management) Bill, for instance, does not provide IIMs much leeway on faculty salaries. The policy draft wants: “the higher education system in India must, at the earliest, be readjusted, revamped, and re-energised….” It does list out some fundamental shifts needed in the system architecture and on funding. It is also critical of the culture of coaching that has emerged for entrance…