The Tribune, Chandigarh, India

	Scope of loan scam widened FM asks banks and financial institutions to scrutinise exposure to cos named Sanjeev Sharma Tribune News Service New Delhi, November 25 Widening the ambit of the probe into the corporate and housing loan scam, finance minister Pranab Mukherjee today directed all public sector banks (PSBs), financial institutions and insurance companies to scrutinise their exposure to various companies mentioned in the CBI application filed in the Court in which several bankers were arrested. Indicating a larger concern over lending practices in banks, he also asked them to initiate a fresh NPA review. Since names of several corporate houses have been reportedly named in the CBI application, this would mean that the borrowing by these companies from the public sector banking system would come under scrutiny. The CBI had carried out arrests of senior banks and insurance companies officials on bribery charges to give corporate loans. The finance minister directed that they should carry out an independent evaluation on the asset quality, documentation and compliance of other prudential requirements in the companies mentioned in the CBI application. According to a ministry statement, the Finance Minister today held a review with the officers of the Department of Financial Services on the situation arising out of the CBI case involving a few banks and LIC Housing Finance Company. Among the banks named include Central Bank, Punjab National Bank, Bank of India and insurance company, LIC. The Department of Financial Services (DFS) indicated during the review that an initial assessment has indicated that these are isolated instances of alleged illegal gratification. DFS also conveyed that as per information available with them, the asset quality in these cases have not been impaired. The Finance Minister directed that while the CBI will take necessary action as per their mandate, banks and financial institutions should be instructed to take appropriate action against these individuals. The Finance Minister further indicated that the Board of Directors of the banks and financial institutions should carry out a fresh assessment of NPAs in these institutions. He said that the banks and financial institutions should strengthen the NPA monitoring and management in their institutions to ensure that advance action is taken to identify incipient sickness and take appropriate action thereon. He directed that they should ensure that all procedures and due diligencesconsistent with Board approved guidelines have been adhered to while approving the loans by the competent authority. The finance minister also directed that the DFS regulatory authorities and institutions should take immediate action to review and strengthen the procedures further in this regard.
	‘Integrity of corporate debt market needs improvement’ Sanjeev Sharma Tribune News Service New Delhi, November 25 Former Reserve Bank of India (RBI) governor, Y V Reddy responding to the housing finance scam which came to light on Wednesday has said that there is a need to improve the integrity of the corporate debt market, which is often non-transparent and plagued by conflict of interests. Reddy told The Tribune that the core of the issue is private placement of debt instruments issued by corporates. “I have been worried about private placements in the corporate debt market which are to the tune of 90 per cent. It is non-transparent and there is conflict of interest. I would say there is need to improve integrity of the debt market and I have had discomfort over this issue”. He added that there is no systemic banking risk and the general norms of transparency and disclosure are of global standards. The other dimension of this problem is that housing titles and documentation are not organised. Reforms in the financial and real sector have to go together, he said. The CBI had arrested R R Nair, CEO, LIC Housing Finance and four other senior officers of public sector banks and financial institutions including LIC, Bank of India, Central Bank of India and Punjab National Bank on bribery charges to give corporate loans. CBI said it had busted a racket wherein Money Matters, a private financial services company, its CMD and other associates were allegedly bribing senior officials of public sector banks and financial institutions for facilitating large scale corporate loans. They were also gathering confidential business information from financial institutions. On the issue of corporate houses being allowed into banking, he said in financial sector regulation, the risk is about entities that are too big to fail and how to handle that. “Now the risk is also about entities that are too powerful to regulate,” he said. Reddy added it will be useful to analyse transactions of last few years of corporates in their sponsored mutual funds, insurance companies and other entities to see if there have been synchronised operations and also find out issues about conflict of interest. He said corporates are already allowed sponsored NBFCs, mutual funds and insurance companies. The only thing left is banking. “Some people argue that why not give banking also while others say that it is already enough since the risk is that they will become too powerful,” he said. He said globally, in some places they don’t give licences to corporate houses while in other places they put firewalls. Reddy is releasing a book titled Gobal Crisis, Recession and Uneven Recovery. As central bank governor, he is credited with steering India during the global financial crisis in 2008. On the financial crisis in Europe, he said that as a zone it is balanced, but some countries there have too much debt while Germany has a lot of surplus. On Europe, the global worry is one of sentiment and also what happens to it in terms of austerity packages and next stage will be restructuring of loans by the banks.
	President Patil says India ready for second green revolution Geetanjali Gayatri in Dubai Tribune news service November 25 Indo-UAE friendship got a new colour today with Indian President Pratibha Devisingh Patil urging industrialists from the two countries to partner in the initiative to ‘Go Green’. Declaring open the India Trade and exhibition Centre in Sharjah, she stated that India was all set for a second green revolution and prodded UAE, too, to jump on the bandwagon. Industrialists from both countries were present at the occasion. She asked investors to look beyond the traditional trading sectors of oil and gas and come together to cooperate in agriculture, chemicals and fertilizers, while inviting them to invest in infrastructure development in a big way. “Both of us should together go green because you need it as much as we do. Let us come together in this initiative,” she said after inaugurating the India Trade and Exhibition Centre in Sharjah, set up with the purpose of holding industry and state-specific exhibitions and to guide investors seeking to test the waters in the UAE. Interestingly, the building housing the Centre has been built using red stone to resemble the historical Red Fort in Delhi to lend a sense of Indianness and identity to it. This, too, didn’t go unnoticed with the President stating that the Centre reminded her of Delhi’s Red Fort. Back in Dubai after the inauguration, she was received by traditionally-dressed Arabs including Abdul Rahman Saif Al Guhrair, Chairman of the Dubai Chamber of Commerce and industry. The head of the Indian business delegation, VRS Natrajan, addressing members of the Dubai chamber said that the two countries needed to enlarge the trade basket and emphasis on the rail and transportation sector. The business meetings held today marked the end of her five-day goodwill tour of the UAE to ‘hardsell’ India as an attractive destination for foreign direct investment, while reconnecting with Indians. She concluded her last speech by saying “Shukran” (thank you in Arabic) in an obvious attempt to cement the goodwill by relating to them.
	Hoteliers demand setting up of tourism council Neeraj Bagga Tribune News Service Amritsar, November 25 The hospitality industry brings in millions of dollars to the exchequer and employs over 15 million workers directly. However, industrialists in the sector grapple with multiple central and state government agencies for operational needs, President, Hotel and Restaurant Association of North India (HRANI), SS Shirvani, said. Shiravani advocated setting up of a National Council of Tourism to enhance liaison and understanding between various ministries, central agencies and offices of the chief ministers. He said currently, the Ministry of Tourism had been reduced to a felicitation body and vests no power with itself to directly redress their complaints. The Association may hold its convention next year in the holy city. To provide teeth to the National Council, it should have representatives from tourism minsitry, finance ministry, labour ministry and the chief minister’s office and other concerned agencies to speedily sort out the troubles and implement new plans. The HRANI, which has 1500 members, is a constituent of the pan-India organization, Federation of Hotel and Restaurant Association of India. It liaisons with governments, its allied agencies, conducts training programs, activities and recommends implementation of results of seminars and conventions to the appropriate authorities. About the number of tourists visiting India, he said the figure was paltry 5.6 million tourists annually in comparison to 23 million in Malaysia, 59 million in China, 30 million in Hong Kong and 15 million in Dubai. Around 10 million Indians travelled out of the country.
	Airfares cannot be exorbitant: Patel Tribune News Service New Delhi, November 25 The government has said air fares on every sector and route should have a lower and higher price band, which must be pre-notified on websites of the respective airlines. Airlines cannot be allowed to charge ‘exorbitant fares’, Civil Aviation Minister Praful Patel today said, adding that errant firms would be dealt with strictly. “Fares on lower and higher price band on every sector will have to be notified. It has to be in the public domain on each airline's website on what would be the fares on higher price band,” Patel said on the sidelines of an aviation conference. Passengers have been particularly complaining about the Delhi-Mumbai route, where fares have risen by a significant margin in the recent past. This route accounts for 70 per cent of the total domestic air traffic. Responding to reports that spot bookings for certain routes, including Delhi-Mumbai, soared to as high as 300 per cent post Diwali, he said: “This kind of predatory pricing can not be justified, it is unfair to the passengers” Last week, civil aviation regulator DGCA had asked domestic airlines to maintain transparency in publishing fares across various categories, including basic fare, taxes and other hidden costs. “Furnish a copy of the route-wise tariff across its network in various fare categories, in the manner it is offered in the market, to DGCA on the first day of every calendar month,” a circular issued by DGCA said.
	Stricter re-verification norms may dent telcos’ net further Tribune News Service New Delhi, November 24 Already facing a dip in margins due to stiff competition from start-up telecom firms seeking to wean away subscribers, mobile operators’ earnings are likely to dip more due to the stricter verifications norms brought in by the government. The trend of subscribers moving out has already begun in some parts of the country as a result of the new verification laws brought in by the government and is expected to increase further. The GSM operators’ umbrella organisation Cellular Operators Association of India (COAI) is also of the view that profits of mobile telecom industry may shrink on account of strict subscriber verification norms and levy of charges on erection of cell towers by state governments. Poor infrastructure in rural areas coupled with stringent norms of customer verification before providing services is a deterrent for mobile penetration in most parts of the country, COIA Director-General Rajan S Mathews has said. While operators spend a huge sum in verifying the customers, they are also paying crore as taxes for setting up towers. Activation of a single customer costs around Rs 600-700. The cost for setting up of towers has also risen from Rs 50,000 to Rs 5 lakh. Reports said that some telecom operators are already incurring losses and the situation may further deteriorate with the new development. It could also herald an era of mergers and acquisitions.
	Ldh-Delhi air route beset by cancellations KS Chawla Ludhiana, November 24 The Ludhiana-Delhi air service, started on May 13 this year, has failed to provide boost to industrial activity in the region. Industrialists and businessmen are wary of irregular flights and also 11th hour cancellations of flights. Poor visibility conditions usually lead to cancellation of the flights. When the flight was initiated, there was a lot of political posturing on claiming credit for bringing the service to Sahnewal. Sukhbir Singh Badal, Deputy Chief Minister and Manish Tiwari, MP jostled for credit. Another problem that plagues the route is ill-conceived timing. Ludhiana industrialists want timings changed to morning (from Ludhiana) and evening so that they can and return to Ludhiana in the evening.