New Delhi, June 10
The rupee got pounded today losing as much as a breathtaking 110 paisa in a single day to sink to a all-time low of 58.16 to the dollar exacerbating the weakness in the economy already reeling under a decade low GDP growth and high current account deficit (CAD).

Weak capital inflows, strength of the dollar against other currencies and high CAD led to the rout of the rupee today which breached the 58 mark and is now in an unchartered territory.

The Finance Ministry tried to stem the damage with Economic Affairs Secretary Arvind Mayaram saying, “If you see weakening of all currency vis-à-vis dollar, rupee is also not unaffected in that sense. But I think there is panic in the market which is unwarranted.”

The rupee has now fallen 8% since the beginning of May. A weaker rupee will lead to overseas travel becoming costlier, increase in the price of imports like crude oil and gold, make the overseas borrowings of companies more expensive and hit their balance sheets and will import inflation. On the positive side, it will help exports which have been struggling.

The Assocham asked the RBI to intervene and check the slide in rupee as a weak rupee coupled with FII outflows, particularly from the Indian debt market, has serious implications for the economy.

“The erosion in rupee value, though in line with other emerging markets, against the US dollar, has come at a time when the industry at last was hoping that the worst was over the economy, with the Wholesale price Index (WPI) receding and chances improving for the RBI to cut the policy interest rates,” Assocham president Rajkumar Dhoot said.

FIEO president M Rafeeque Ahmed said this kind of volatility might be good in the short term but would impact the long-term interest of exporters. He said such high volatility creates uncertainty which hits the economy and business confidence. He added a depreciating rupee would have an impact on the current account deficit, fiscal deficit and inflation.

Dipen Shah, Head of Private Client Group Research, Kotak Securities said the markets were volatile today but ended the day in the negative, dragged down by concerns on the rupee. “The rupee made new life-time lows in the morning and traded near the 58 levels on continuing concerns about CAD and reversal in FII flows. FIIs have turned net sellers in equities over the past few sessions. In the last few days, the debt market has also seen outflows from FIIs, which further pressurises the rupee,” he said.

• A weaker rupee will lead to overseas travel becoming costlier, increase in the price of imports
• It will make the overseas borrowings of companies more expensive and hit their balance sheets and will import inflation
• It will help exports which have been struggling

Mumbai, June 10
The Reserve Bank today imposed a fine of Rs 5 crore on Axis Bank, Rs 4.5 crore on HDFC Bank and Rs 1 crore on ICICI Bank for violation of KYC norms and anti-money laundering guidelines after inquiring into charges levelled by a online portal Cobrapost.

“After considering the facts of each case ... the Reserve Bank came to conclusion that some of the violations were substantiated and warranted imposition of monetary penalty...” the central bank said in a statement.

The penalty follows scrutiny carried out by the RBI of books of accounts, internal control, compliance systems and processes of these three banks at their corporate offices and some branches during March and April 2013.

The scrutiny was conducted to investigate into the allegations of contravention of Know Your Customer (KYC) or anti-money laundering guidelines against them following expose by the online portal.

Although the investigation did not reveal any prima facie evidence of money laundering, the RBI said, “Any conclusive inference in this regard can be drawn only by an end-to-end investigation of the transactions by tax and enforcement agencies.” It further said a similar scrutiny was being conducted at corporate offices of 36 other banks and "the process of follow up action in respect of these banks is at different stages of its completion.”

Based on the findings of the scrutiny, the Reserve Bank had issued show cause notices to each of these banks, in response to which the individual banks submitted written replies.

The penalty, it said, was imposed after considering the facts of each case and individual bank’s reply, as also, personal submissions, information submitted and documents furnished.

The scrutiny of these three banks, the RBI said, revealed violation of certain regulations and instructions issued by the central bank from time to time. — PTI

New Delhi, June 10
Major failures in the previous two spectrum auctions in the face of alleged strong cartelisation by the top telecom operators, the Department of Telecom (DoT) may have no other option but to reduce the base price of the spectrum in all wavelengths.

Sources in the Telecom Ministry said the issue of spectrum pricing was being discussed and the price of 900 MHz and 1800 MHz spectrum bands may be reduced to ensure that there were enough bidders during the auction which may happen over the next few months. Reports said the DoT might conduct the third round of spectrum auction within 70 days of receiving an approval from an Empowered Group of Ministers (EGoM) headed by Finance Minister P Chidambaram.

The sources said there was still no clarity on what would be the pricing that the government may decide on while putting the spectrum on auction.

Having kept high base price in two previous auctions, the government faced strong embarrassment at the hands of the telecom operators. In the first auction, they did not participate at all and in the second, nobody came forward for the GSM band while there was just one operator for the CDMA spectrum, who had lost almost its licences as a result of the Supreme Court order.

The sources said after failure of two rounds of auction, the DoT may explore pricing methods for fixed priced allotment of spectrum. The concept would be discussed by a committee and the suggestions on the broad parameters presented to the DoT.

The government has already said reduction in price of 2G spectrum that will now be put up for auction is one option before the EGoM is approached. Top level Telecom Ministry officials have said that the government was looking at conducting the auction of the GSM and CDMA spectrum and also in the 1800 MHz band over the next 90 days.

The Comptroller and Auditor General had said the failure of the previous two auctions in November 2012 and then in March 2013 was a result of the cartelisation among incumbent players — Bharti Airtel, Vodafone India and Idea Cellular — who are at present the only likely takers for the resource.

The companies abstained from participating stating they were eligible for extension of their licences and therefore would not be participating in the process of open market price discovery till the time their issue was sorted out.

New Delhi, June 10
Within days of hiking import duty on gold, Chief Economic Advisor Raghuram Rajan today said the government could take more steps to curb demand for the precious metal amidst widening current account deficit.

“We have taken a number of measures to curb the import of gold. The government will never say its end of it,” he said. Last week, the government increased import duty on gold to 8%, the second such hike within six months. The monthly gold imports have averaged 152 tonnes in first two months of the fiscal as compared to an average of 70 tonnes seen in the 2012-13 financial year.

High gold imports is one of main reasons behind high CAD, which touched a record high of 6.7 % of GDP in December quarter of last fiscal. The CAD is likely to be in the range of 5 per cent for the 2012-13 fiscal. As per experts, a CAD of 2.5% is sustainable. — PTI

New Delhi, June 10
The Supreme Court today said it was not inclined to entertain a PIL seeking a CBI probe into allegations of substandard drugs being manufactured and sold by Ranbaxy Laboratories Ltd unless the petitioner provided evidence in support of his contentions.

A Bench comprising Justices Gyan Sudha Misra and Madan B Lokur told advocate Manohar Lal Sharma, the PIL petitioner, that he should have approached the drug controller or any other appropriate authority before coming to the SC.

In the PIL, Sharma has mainly cited news reports on the company reaching a $500 million settlement with the United States' Food and Drug Administration (FDA) for selling substandard drugs.

The SC Bench, however, said it was possible that the quality of the drugs exported to the US was different from that of the medicines being sold in India. Also, the US and Indian laws and rules governing quality of medicines were possibly not similar, it noted.

The Bench further clarified that it did not want the company to suffer just "because of your craze for publicity." It asked the petitioner to produce laboratory test results showing that the drugs were of poor quality or complaints from hospitals and patients in this regard. The SC also asked the petitioner advocate to produce the order of the US court under which the settlement was allowed.

Granting time for complying with the requirements, the Bench posted the case next hearing on June 12. The Bench said it could have dismissed the PIL, but was not doing so in view of the seriousness of the matter.

Chandigarh, June 10
The Confederation of Indian Industry has welcomed the announcement of setting up of a dedicated industrial corridor from Amritsar to Kolkata. This corridor will give the much needed boost to industry in the northern and eastern region.

CII Northern region chairman Jayant Davar said this was a historic initiative that would transform the lives of 40 per cent of India's population, residing in the northern and eastern states, through which this corridor will traverse.

“To implement it in true spirit and to realise the potential of this project, better coordination between the centre and state agencies and inter-state industrial and economic policies would play a crucial role,” he said.

“If implemented in the right spirit, this corridor can well prove to be a boon for ailing industry in the region. Transparency in awarding contracts and adhering to project time lines would also be critical to ensure that its desired objectives are met,” he added.

CII Punjab State Council chairman DL Sharma said this region is rich in entrepreneurial spirit and the new corridor will open new vistas for expansion of existing manufacturing sector here, besides creating new manufacturing hubs and zones.

BRIEFLY

Economic growth 'below trend': OECD
London: India's growth prospects continue to remain ‘below trend’ even as most of the major economies are witnessing moderate improvements, the Organisation for Economic Co-operation and Development (OECD) said today. While economic activities are close to trend rates in China, growth seems to be firming up in the United States and Japan. — PTI

CIL board okays FSA renewal
New Delhi: The board of state-owned Coal India Ltd (CIL) has given approval to renew the existing fuel supply pacts with the non-power producers, but with riders. “The CIL board...accorded its approval for renewal of the existing fuel supply agreements (FSAs) with the non-power producers...with...conditions,” the company said in a letter to its subsidiaries. Sectors such as cement and sponge iron constitute the non-power producers clientele for CIL. — PTI

AI eyes 20% hike in revenue in 2013-14
London: Beleaguered Air India's fortunes seem to be shoring up with the airline estimating that its total revenue would go up 20 per cent by the end of the current financial year. The national carrier's total revenue is expected to go up from Rs 16,130 crore in 2012-13 to Rs 19,393 crore in 2013-14, Civil Aviation Minister Ajit Singh said. According to the minister, AI also estimates that its EBITDA (earnings before interest, taxes, depreciation and amortisation) would increase from Rs 19.45 crore in 2012-13 to Rs 1,040 crore in the current fiscal.— PTI