1. RBI Clamps Down on ‘Working Capital’ Loans: Livemint
The Reserve Bank of India (RBI) has asked banks to avoid approving long-term credit for periods up to 10 years under the garb of working capital loans to stressed companies, two bankers have been quoted saying in a Livemint report.
As the name suggests, working capital loans are typically given for short periods to cater to day-to-day cash requirements.
But, banks have been found, in some stressed cases, to be approving working capital loans for tenors as long as 10 years. By taking working capital and not a term loan, a stressed account can escape being classified as a restructured account.
RBI has now clamped down on this.
2. New Mining Law to Spur Cement, Steel M&As: Livemint
The Rajya Sabha on Monday approved an enabling legislation to make it easier for mergers and acquisitions (M&A) of steel and cement companies reeling in the aftermath of the collapse in global commodity prices, reports Livemint.
The legislation will also help alleviate a bad-loan crisis afflicting commercial banks, many of which have heavy exposure to steel and cement companies.
Since Lok Sabha has already approved the proposed law, The Mines and Minerals (Development and Regulation) (Amendment) Bill, 2016, is just one step away from becoming a law—it now only requires the President’s signature.
The legislation will facilitate UltraTech Cement’s deal with Jaiprakash Associates to acquire its 21.20 million-tonne cement capacity for Rs 15,900 crore.
Once the Bill is signed into law, there will be no bar on the transfer of mining leases.
3. Won’t Get Fair Trial, Says Mallya in Rajya Sabha Resignation Letter
Former liquor baron Vijay Mallya, wrote to the chairman of the Rajya Sabha and the chairman of the Parliament Ethics Committee, submitting his resignation as a Rajya Sabha MP on Monday.
The UB Group chairman, in a letter dated 2 May, said that he does not expect to get “a fair trial or justice”, reports Livemint.
Mallya said the allegations against him are blatantly false and baseless adding he was shocked that the department of financial services (ministry of finance) has provided factually wrong information to a Parliamentary Committee.
“Nevertheless, since I do not want my name and reputation to be further dragged in the mud, and since recent events suggest that I will not get a fair trail or justice, I am hereby resigning as a member of Rajya Sabha with immediate effect,” Mallya wrote.
On 25 April, the ethics committee of the Rajya Sabha gave Mallya a week to explain his conduct in the default on bank loans in excess of Rs 9,000 crore extended to his Kingfisher Airlines.
The government had earlier revoked Mallya’s diplomatic passport in an effort to get the businessman to return to India.
4. SBI Lowers Lending Rates by 5 Bps to 9.15 Pct Effective 1 May: FE
State Bank of India (SBI) on Monday revised downwards its lending rates based on marginal cost of funds by 5 basis points to 9.15 percent, making it favourable to get cheaper loans.
According to Financial Express, the new minimum lending rates are effective from 1 May. Last month, the lender had set the MCLR at 9.20 percent after the Reserve Bank cut repo rate by 25 basis points.
With this reduction, the home loan interest rate for women borrowers has come down to 9.35 percent, while for others it now stands lower at 9.40 percent.
5. IndiGo Shares Fall 4.5% Post Poor Q4, but Analysts Upbeat: ET
Investors dumped InterGlobe Aviation on Monday with the stock falling 4.5 percent after the company’s disappointing fourth quarter results. But analysts quoted in the Economic Times say that the fall is temporary and expect the stock to continue commanding premium valuations over its peers on expectations that the company will continue to hold a higher market share than its rivals.
“It should command a premium as it is the only airline to post profits consistently in the last seven years, and rapid fleet expansion in the next 3-4 years,” Motilal Oswal said, retaining ‘buy’ recommendation and target price of Rs 1,410.
The Economic Times Report
IndiGo’s capacity in the current fiscal is likely to increase by 34 percent, much ahead of its peers as the management plans to add 29 aircraft to its fleet, Kotak Institutional Equities said.
6. SEBI to Approve Most of Murthy Panel Recos: BS
The Securities and Exchange Board of India (SEBI) is likely to relax rules for investing in alternative investment funds (AIFs) on the suggestions of an expert panel headed by Infosys founder NR Narayana Murthy, reports Business Standard.
A decision is likely at SEBI’s board meeting scheduled for 20 May.
AIFs are funds established or incorporated in India for the purpose of pooling capital by Indian and foreign investors for predetermined investing.
7. MobiKwik Raises $50 Million Funds From Japanese and Taiwanese Investors: ET
MobiKwik Systems, which owns and operates online recharge and mobile wallet MobiKwik, has raised about Rs 332.6 crore in fresh capital, in a new round led by Japan’s GMO Payment Gateway and Taiwanese fabless semiconductor company MediaTek, reports Economic Times.
The Series-C round, which closed last month, also saw participation from the company’s existing investors Sequoia Capital and Asia-focused hedge fund Tree Line Asia. The post-money valuation of the company, however, was not revealed.
8. Jabong Struggles to Turn Around Business Amid Funding Crunch: Livemint
Online fashion retailer Jabong has seen a steep drop in its valuation as it struggles to turn around its business amid a funding crunch, according to Livemint.
In September 2014, Jabong was merged with four other international online fashion businesses by Germany’s Internet investment group Rocket Internet and Swedish investment bank Kinnevik to create a company called Global Fashion Group (GFG) that was worth €2.7 billion (around Rs 21,600 crore) then.
GFG raised about Rs.1,060 crore from Rocket Internet and Kinnevik last July, at a valuation of €3.1 billion. Barely 10 months later, GFG is now valued at only a third of that sum. Last week, GFG said it raised $339 million (€300 million) from Kinnevik and Rocket Internet at a valuation of $1.13 billion (€1 billion).
GFG’s new pricing implies Jabong’s valuation has slid from its previously disclosed worth of €388 million at the end of 2013.
9. L&T Finance Sacks Over 500 Employees Citing Poor Performance: FE
Leading non-banking lender L&T Finance Holdings, which used to have major presence in rural areas but has of late been scaling down exposure to the distress in the hinterlands, has given the pink slip to over 500 employees, reports Financial Express.
Company chairman and managing director YM Deosthale termed the sacking as “separation of staff from across the sectors based on their poor performance”.
He also warned of more stress in the rural areas. “We may see some stress in the farm sector for the next five to six months. The situation may improve only in the second half of the year, that too if there is normal monsoon,” he said.