We can’t have an affluent promoter and a sick company. Promoters must bring in money. Without doing anything that will kill the business of industry, banks will have to take steps to recover the NPAs. — P Chidambaram, Finance Minister

New Delhi, March 18
Cautioning promoters of defaulting companies, Finance Minister P Chidambaram today asked banks to take firm steps to recover loans, saying the country can’t afford to have "affluent promoters and sick companies".

"We wish banks take firm steps to recover non-performing assets (NPAs). Promoters have to bring in additional money and companies have the duty to pay back loans. The message has gone to the banks," Chidambaram said.

NPAs of PSU banks have become a big source of concern as the numbers in the private sector banks are much lower. Recently, there has been criticism of Vijay Mallya’s lifestyle while Kingfisher Airlines went down.

Addressing a press conference after meeting the heads of PSU banks and financial institutions here, Chidambaram said while the reasons for the NPAs are understood, the banks will take more steps to deal with the rising NPAs without hurting the industry.

"We can’t have an affluent promoter and a sick company. Promoters must bring in money. Without doing anything that will kill the business of industry, banks will have to take steps to recover the NPAs," he said. Affluent promoters and sick companies have been the story of Indian economy for many years as some promoters siphon off money and leave the company in doldrums which endangers the banks loans.

Gross NPAs of PSU banks have risen from Rs 71,080 crore as on March 2011 to Rs 1.55 lakh crore as on December 2012.

The Finance Minister said stalled projects in sectors like power, coal, iron, steel and road transport is a matter of concern. As many as 215 projects with an investment of Rs 7 lakh crore are currently stalled and banks have disbursed about Rs 54,000 crore loan towards it, Chidambaram said.

As far as new projects are concerned, he said, they are also in the same five sectors. There are 126 new projects for which the outlay is Rs 3.55 lakh crore and amount sanctioned by banks against these was Rs 43,000 crore.

"Real problem is in road and power. There are 68 new projects in the road sector. There are 40 new projects in the power sector. We have to get them going," he said adding the ministries concerned would look into the matter so that projects are accelerated.

On liquidity situation, Chidambaram said the Reserve Bank Governor will take steps in the monetary policy review tomorrow.

"The RBI Governor is also aware of issues of liquidity and tomorrow is the monetary policy and am sure he will address the issue of liquidity," he said. 

New Delhi, March 18
The Mahindra group today launched its first electric car 'e2o' priced at Rs 5.96 lakh (on road Delhi, after state subsidy), almost three years after it acquired Bangalore-based electric car maker Reva.

The group also said it has plans to extend the electric mobility technology to its two-wheelers, while seeking support from the central government for pushing eco-friendly vehicles.

"The launch of the Mahindra e2o marks an important milestone for the Mahindra Group...it advances the group's efforts at redefining sustainable urbanisation with the creation of an ecosystem that includes mobility solutions along with other environment friendly innovations," Mahindra Group chairman Anand Mahindra told reporters here.

The two-door, four-seater car is powered by new generation lithium-ion batteries and a three phase induction electric motor. It has driving range of 100 km per charge, which takes 5 hours for one full charging. The fully automatic car is aimed for city driving.

It has also a host of features like GPS navigation system, keyless entry, start/stop button, regenerative braking feature, which puts energy back into the car's batteries and charges them every time it is slowed down or brakes are applied.

Commenting on the market expansion plans for the e2o, Mahindra & Mahindra President (Automotive and Farm Equipment Sectors) Pawan Goenka said: "We will launch it in eight other cities over the next three to four weeks. The prices will vary as it would depend on how much subsidy state governments will give to the electric car." In Delhi, the government has given a total of 29 per cent subsidy on the electric car as a result of which the company has been able to sell it at an on-road price of Rs 5.96 lakh, he said, adding it would be more expensive in other cities.

The 'e2o' will also be launched in Mumbai, Bangalore, Pune, Ahmedabad, Hyderabad, Chandigarh, Pune and Kochi. — PTI

New Delhi, March 18
With moderation in economy and core inflation, pressure is mounting on the RBI to cut interest rate by up to 0.50 per cent and address liquidity concerns to boost growth.

While Finance Minister P Chidambaram expressed hope that RBI would address liquidity issues at its mid-quarterly review tomorrow, SBI chairman Pratip Chaudhuri said a 0.50 per cent interest rate cut was needed.

"I think Governor is also aware of the issues about liquidity and tomorrow is the monetary policy. I am sure he will address the issue of liquidity," Chidambaram said after meeting the chiefs of PSU banks here.

The minister said many PSU banks were having SLR in excess of statutory requirement of 23 per cent and earning interest on them rather than lending to corporates.

Chaudhuri said: "We have requested 50 basis points in CRR and 0.50 per cent cut in Repo. We have also requested to increase the export credit refinance which is currently 50 per cent of the rupee credit. We have requested them to increase it to 100 per cent".

Reflecting tight liquidity situation, banks today borrowed Rs 1.42 lakh crore from RBI under the repo window.

"SBI liquidity is comfortable. We are sitting currently on Rs 30,000-40,000 crore and the government is also disbursing capital so that liquidity improves," Chaudhuri said.

Core or manufactured inflation came down to 3.8 per cent in February, the lowest in 35 months. However, overall WPI inflation remained high at 6.84 per cent mainly on account of high food prices.

While the January factory output numbers have showed signs of improvement, growing at 2.64 per cent, the economy is estimated to have grown at a decade's low of 5 per cent in the current fiscal. — PTI 

New Delhi, March 18
Global rating agency Moody's today said India's high food inflation is credit negative for the country as it hurts government finances and curtails the ability of the RBI to deal with monetary issues.

"Sustained food inflation is credit negative because it exacerbates India's macroeconomic challenges of slowing growth, high inflation and large fiscal and current account deficits," Moody's Investors Service said in credit outlook report.

While Fitch and Standard and Poor's have downgraded their outlook on India to "negative" from "stable", Moody's Investors Service has assigned a "stable" outlook. The Wholesale Price Index for February showed that food prices increased by 11.4 per cent year-on-year, raising overall inflation for the month to 6.8 per cent, despite a deceleration in core inflation to 3.8 per cent. Moody's said India's current pace of food inflation is faster than the global average. "Moreover, although food inflation is not desirable anywhere, it has particularly credit negative implications for India because of its economic structure and policy framework," it added. — PTI 

New Delhi, March 18
India may slash import of crude oil from Iran by as much as 27 per cent this fiscal because US and European sanctions have made it difficult to ship oil from the Persian Gulf nation.

India may, in the financial year ending March 31, import just about 13 million tonne of crude oil from Iran, down from 18.1 million tonne shipped in the 2011-12 fiscal, sources said.

The US and EU have shut down the use of their financial systems for Iranian crude trade, and Washington recently imposed more treasury sanctions on trade with Iran - making imports from the Islamic nation even more difficult - in the hope of starving Tehran of cash that would force it to give up its nuclear programme.

Iran says its nuclear programme is for peaceful purposes. While India can't deposit dollars or euros in any foreign bank for importing crude from Iran because of the sanctions, insurance companies are refusing to cover refineries that use oil from the Persian Gulf nation.

Sources said in the current fiscal Iran has slipped four places to become India's seventh-largest crude oil supplier.

Iran, which was India's second biggest supplier of crude oil after Saudi Arabia in 2010-11, supplied 9.7 million tonne during the April-December period of the current fiscal.

The supplies from Iran were behind Saudi Arabia's 24.8 million tonne, Iraq's 17.2 million tonne, Venezuela's 15.1 million tonne, Kuwait's 13.2 million tonne and UAE's 11.4 million tonne. India had last fiscal (2011-12) relegated Iran to the third spot with 18.1 million tonne of imports. These were behind 32.5 million tonne from Saudi Arabia and 24.1 million tonne from Iraq. Sources said Iran had in 2009-10 supplied 21.2 million tonne, which came down to 18.5 million tonne in 2010-11 and to 18.1 million tonne in the year after. — PTI

New Delhi, March 18
The Petroleum Ministry has appointed a committee headed by Vijay Kelkar to prepare a roadmap for enhancing domestic production of oil and gas so as to substantially reduce the nation's import dependency by 2030.

India currently imports 80 per cent of its oil needs and about half of its natural gas requirement. The government wants to cut down reliance on imports to half.

Towards this objective, the ministry "constituted a Committee headed by Dr Vijay Kelkar to prepare a roadmap for enhancing domestic production of oil and gas and sustainable reduction in import dependency by 2030," an official statement said.

The Committee has been asked to submit its report to the government within six months.

India produces around 33 million tonne crude, which is enough to meet just about 20 per cent of the demand for fuel. Natural gas production at 114 million standard cubic meters per day is just half of the demand.

The panel has been asked to suggest "steps to be taken for enhancing domestic oil and gas production from the unconventional energy sources and institutional mechanism (required) for appraisal of Indian sedimentary basins to the extent of 75 per cent by 2015 and 100 per cent by 2025.”

The Committee would also review institutional mechanism for acquisition of oil and gas assets abroad as well as pursuing diplomatic and political initiatives for import of gas from neighbouring and other countries with emphasis on transnational gas pipelines.

Besides, steps to be taken for ensuring adequacy of finances for R&D required for building knowledge infrastructure in E&P activities and steps to be taken for development of gas transportation infrastructure for establishing countrywide marketplace are also included in its terms of reference.

New Delhi, March 18
The CDMA telecom operators, who hold spectrum beyond the initial frequencies that were allocated to them, have been asked by the government to pay a one-time fee amounting to about Rs 3,033 crore.

The Department of Telecom (DoT) has sent a notice to the CDMA telecom operators in which it has said they will have to pay one-time spectrum charges for excess spectrum held by the incumbent telecom service providers.

The DoT has said, "For CDMA spectrum holding above 2.5 Mhz in 800 Mhz band, the rate for one-time spectrum charges shall be applicable from January 1, 2013."

It further says the charges will be levied on additional spectrum for the rest of the licence period and operators not willing to pay these charges will be allowed to surrender their spectrum held over 2.5 Mhz.

The DoT has issued rates to be charged annually for each megahertz of frequencies, based on the reserve price that was fixed for spectrum auction held on March 11.

The government hopes to collect around Rs 3,033 crore from the one-time spectrum fee on all CDMA players, a move which could also lead to the telecom operators seeking legal recourse.

The telecom operators will have an option to pay these charges in equal annual instalments in a manner that the last one ends one year before their licence expires.

Reliance Communications, Tata Teleservices, Sistema Shyam (SSTL), BSNL and MTNL hold spectrum beyond 2.5 megahertz (Mhz) in a few telecom service areas.

SSTL, which recently won 3.75 Mhz spectrum in eight circles, will not have to pay one-time spectrum fee for these areas but the spectrum held by the company in Rajasthan falls under the ambit of the order.

New Delhi, March 18
Tata group is pressing for expansion in Africa through its various business verticals, expecting its revenue from the continent to grow by 30 per cent every year from the current level of $2.3 billion.

While Tata Motors is looking to set up new assembly facilities through local partners in countries like Tunisia and Kenya, the group's hospitality chain Taj Hotels Resorts and Palaces is also considering "proposals from three-four" countries to set up new properties. "The business models which work in India can work in Africa and we would like to widen and deepen our business in Africa," Tata Sons Ltd Brand Custodian and Chief Ethics Officer Mukund Govind Rajan told mediapersons here.

He said the group is currently present in 20 countries in Africa through its nine different companies with a total revenue of $2.3 billion. The group has so far invested a total of $1.7 billion in the continent.

When asked about revenue growth from the continent in future, Tata Africa Holdings Managing Director Raman Dhawan said: "It is expected to grow at around 30 per cent every year." — Reuters

Mumbai, March 18
Banks in India may require additional capital of up to Rs 2.6 lakh crore by 2018 as they migrate to the capital intensive Basel-III framework, Standard & Poor's said today.

"We estimate Indian banks will require minimum additional capital of about Rs 69,100 crore to meet the RBI’s 8 per cent requirement for the common equity tier 1 and capital conservation buffer ratio," it said.

"The additional requirement would go up to Rs 2.6 lakh crore given a tendency for banks to hold higher-than-minimum capital and the limited market for hybrid instruments in India," the rating agency added.

The Basel-III is the new framework designed by central banks across the world in the wake of 2008 financial crisis and primarily aims at having deeper capital buffers to meet any eventuality.

Starting April 1 this year, the country's banks will start implementing the new rules released by the sector regulator RBI and will fully migrate to the revised standards in the next five years.

"The higher capital requirement under Basel III will increase the pressure on Indian banks to raise capital and can lead to some changes in the industry," the S&P statement said, adding the top-tier banks are better-placed to manage the transition — PTI