New Delhi, August 1
The government today approved liberalisation of FDI norms in a dozen sectors, including 100 per cent in telecom and higher caps in insurance and defence sectors, to boost the sagging economy.

Although a high-level meeting chaired by Prime Minister Manmohan Singh on July 16 had decided to relax foreign investment norms in several sectors, the proposals were formally approved by the Cabinet today, sources said.

In the contentious insurance sector, it was decided to raise the sectoral FDI cap from 26 per cent to 49 per cent under automatic route under which companies investing do not require prior government approval. It was also decided to allow 49 per cent FDI in single brand retail under the automatic route and beyond through the Foreign Investment Promotion Board (FIPB) route.

In case of PSU oil refineries, commodity bourses, power exchanges, stock exchanges and clearing corporations, FDI would be allowed up to 49 per cent under automatic route as against current routing of the investment through FIPB.

In basic and cellular services, FDI was raised to 100 per cent from current 74 per cent. Of this, up to 49 per cent would be allowed under automatic route and the remaining through FIPB approval.

In credit information firms, 74 per cent FDI under automatic route has been been allowed.

Mumbai, August 1
In yet another bid to strengthen the rupee, the RBI today made it mandatory for foreign institutional investors (FIIs) to obtain the consent of holders of participatory notes (P-Notes) and derivative instruments before hedging.

In a notification issued here, RBI said FIIs must have a mandate from the P-Note or Offshore Derivative Instrument holder allowing them to hedge. “Further, the bank is expected to verify such mandates, in cases where this is rendered difficult, they may obtain a declaration from the FII regarding the nature or structure of the PN/ODI establishing the need for a hedge operation and that such operations are being undertaken against specific mandates obtained from their clients,” the notification said.

RBI officials said the tighter hedging rules were enacted to ensure that currency traders do not indulge in an unnecessary speculation.

The new rules immediately caused the rupee to recover after falling to 60.90 against the dollar in early trade. The Indian currency swung to positive territory at 60.29 against the dollar before closing at 60.44 today.

On July 15, the Reserve Bank put in place measures to restore stability in the forex market, including raising the Marginal Standing Facility and bank rates to 10.25 per cent.

New Delhi, August 1
Faced with a tight liquidity condition, HDFC Bank and Axis Bank have raised fixed deposit (FD) rates by up to 4 per cent, a move which may be followed by others.

HDFC Bank has raised fixed deposit rates by 1 per cent for maturities between 15 days to 6 months one day effective July 27, as per information available on its website.

The bank has increased the interest rate by 0.75 per cent for maturity buckets less than 1 year but over 6 months one day.

Axis Bank has raised interest rate on term deposits with maturity between 14-29 days by 4 to 8 per cent, while in case of 7-14 days the increase is by 3.5 to 7.5 per cent on bulk deposits above Rs 1 crore, effective today. — PTI

New Delhi, August 1
A major crisis erupted at National Spot Exchange today after it suspended most trades on its platform, prompting the government to order an enquiry by the commodity regulator FMC, while SEBI also began a separate probe amid a crash in shares of two listed group companies.

The government said it was seriously looking into the matter and has sought a report from Forward Markets Commission (FMC) within a day. The Consumer Affairs Ministry, Finance Ministry and SEBI are keeping a close watch on the situation, Food and Consumer Affairs Minister KV Thomas said.

National Spot Exchange Ltd (NSEL), that provides an electronic platform to farmers and traders for spot trading in farm products and bullion among others, said it would meet all obligations towards brokers and clients who have traded on its platform. Speculations, however, were rife about potential default on payouts running into Rs 5,000-6,000 crore.

As a result, the share price of NSEL's promoter entity Financial Technologies (India) Ltd fell by 65 per cent to touch a 52-week low, while another group firm Multi Commodity Exchange (MCX) saw its stock plunging by 20 per cent.

NSEL's move to suspend trade in all contracts, except for 'e-series' products like gold and silver, came a fortnight after government asked it not to launch new contracts.

The bourse blamed "loss of trading interest" and "abrupt structural changes in marketplace" for suspension of trade.

However, there have been speculations that the bourse did not have adequate stock of commodities to make the delivery. NSEL said it was deferring settlement for all pending contracts for 15 days, raising concerns about potential defaults and liquidity problems at brokers and clients level.

SEBI has also launched a separate probe and is looking into potential violations of rules related insider trading, fraudulent trade practices and possible payment defaults. FMC is seeking clarifications from NSEL about the rationale behind its decision to defer the settlement, while government said the problem is the exchange's "own creation".

The Consumer Affairs Ministry is the nodal ministry for commodity trading markets and therefore NSEL comes under its purview. — PTI

New Delhi, August 1
The Supreme Court today directed the CBI to respond within four days to Reliance Telecom’s (RTL) plea for recalling an apex court order denying all the accused in the 2G scam the right to approach any court other than the court holding trial and the SC.

A Bench comprising Justices GS Singhvi and KS Radhakrishnan passed the order on RTL’s application challenging the April 11, 2011, order of the Supreme Court. RTL contended that the SC had effectively struck down Article 226 of the Constitution under which litigants had the right to approach the high court challenging trial court verdicts.

The SC had passed the 2011 order to ensure speedy trial in the 2G scam cases by eliminating the role of high courts. RTL, however, argued that this was “in violation of Articles 14 and 21 of the Constitution” besides the provisions of the Criminal Procedure Code.

“The right to approach the high court under Article 226/227 forms a part of the basic structure of the Constitution. The right to file a petition under Section 482 of CrPC is also a statutory right,” RTL said.

Meanwhile, the Supreme Court clarified that the government should not slap any damages or penalty on any of the telecom companies (affected by the cancellation of 122 licences) for the period after June 1, 2012.

The Bench passed the order after Loop Telecom said the DoT had sent a notice to it demanding Rs 140 crore as penalty for abruptly winding up its services.

New Delhi, August 1
Goldman Sachs, a leading global bank, today downgraded Indian stocks to underweight and recommended investors to stay selective on concerns of economic growth recovery.

"The investment case for India has turned less favourable. Growth recovery looks elusive, macro vulnerabilities are rising and positioning remains extended," the bank said in a research report.

"We see further earning cuts and limited room for re-rating. We downgrade India to underweight and recommend investors to stay selective," it said. The report, however, favours export-facing sectors, strong balance sheet companies and thematic alpha trades.

Yesterday, Finance Minister P Chidambaram had said he expected the economy to grow between 5.5-6 per cent in the current fiscal on the back of global challenges and slowdown in investment.

Goldman Sachs noted that recent activity data has been sluggish with no signs of a pick-up in investment demand. The external funding environment has also become more challenging causing the RBI to tighten liquidity.

Rupee may remain under pressure and the RBI may keep liquidity tighter for the next 3-6 months, it said.

The report expects earnings to grow 5 per cent and 11 per cent this year and next, which is below consensus expectations. — PTI

Gurgaon, August 1
The last few decades have seen numerous success stories in IT, telecom and other sectors and given us a glimpse of what entrepreneurship can do for the country’s economic growth. Even though India has a rich legacy of entrepreneurs, entrepreneurship education in the country in modern times is still in its early stage. There is a critical need to develop a vibrant eco-system for budding entrepreneurs in the country as entrepreneurship has a large role to play in improving employment.

This was stated by Union Minister of State for Micro, Small and Medium Enterprises KH Muniyappa at the launch of Indian School for Entrepreneurship and Enterprise Development (iSEED) here today.

Established by a group of professionals, the institute will have a campus in Gurgaon and will commence its flagship one-year PG programme in entrepreneurship from June 2014. The short-term courses for budding entrepreneurs and start-ups will begin this year.

The founders of iSEED include Dr Harsh Mishra, a professor of strategy and entrepreneurship at MDI, Gurgaon; Anil Misra, a professor of finance at MDI; and Sanjeeva Shivesh, a former strategy consultant and a visiting faculty member at MDI.

The iSEED president, Dr Harsh Mishra, observed: “Entrepreneurship education has been largely undertaken by business schools as a token exercise. We offer only one programme and that is on entrepreneurship. Our endeavour is to impart best-in-class knowledge and latest global thinking on entrepreneurship.”

New Delhi, August 1
The government will sell its stake in three companies —State Trading Corporation (STC), ITDC and Neyveli Lignite Corporation —tomorrow to raise around Rs 380 crore.

"The EGoM cleared the floor price for stake sale in STC and ITDC through an OFS. The issue will hit markets tomorrow," Disinvestment Secretary Ravi Mathur said.

Yesterday, the EGoM on disinvestment had cleared the 3.56 per cent stake sale in Neyveli Lignite Corporation (NLC) through an Institutional Placement Programme (IPP) at a price band of Rs 58-60 a share. — PTI