New Delhi, May 13
The Finance Ministry has asked public sector banks to explore the possibility of setting up a holding company and a special purpose vehicle (SPV) to raise funds for the expansion as the government may not be able to provide more than Rs 8,000 crore additional capital support this fiscal.

This was stated by Financial Services Secretary GS Sandhu after Finance Minister P Chidambaram reviewed the annual financial performance of government banks here today.

Issuing a stern warning to wilful defaulters, the secretary said banks might go in for a change in management of the defaulting party, if it fails to clear dues.

He said, "There will be tough action against wilful defaulters, which can include even the change of management because so much money is stuck. Banks have to provide huge amount in terms of provisioning, about Rs 90000 crore goes into provisioning. So we want to recover that. If the original borrower does not come up with some option for repayment, then we will call some other person, if he is able to provide that, then the assets could be handed over to the other person."

The bad loans or non-performing assets situation of state-owned banks improved to 4.44 per cent for the three-month period ended March 2014 as against 5.07 per cent at the end of December 2013.

Sandhu said various options such as ESOPs, SPV model and holding company model were discussed at the meeting by which banks could raise funds from market to meet their capital requirement.

However, no decision on any of the options was taken in want of clearances from regulators such as SEBI and IRDA.

"We have been telling banks that they should come out with out-of-box options because they will also have the responsibility to raise funds from the markets," he said. One option, he said, a bank could set up a SPV to which it will transfer its real estate assets. The bank then can pay rental or lease to the SPV to create an income stream for the SPV.

"Based on this income stream, the SPV will raise money from the market," he added.

Under the bank-wise holding company model suggestion, he said the bank would transfer all its subsidiaries to the new company which in turn could tap market for funds.

"The RBI has approved it (holding company model). We are waiting for SEBI's reply then we will go ahead," he said.

Another option, he said is perpetual bond route to raise capital.

"The RBI has agreed to it as well. IRDA has more or less agreed, we are waiting for their final approval," he added.

Govt should cut stake in state banks: RBI

The government should cut its stakes in state banks to below 50% and establish "fully empowered" bank boards, a committee appointed by the RBI proposed on Tuesday. 

New Delhi, May 13
The government today cleared private equity major KKR's proposal to acquire stakes in two pharmaceutical companies in deals worth over Rs 1,400 crore, including a 38 per cent stake buy in Gland Pharma.

In the first proposal, the Cabinet cleared KKR Floorline Investments acquisition of a stake in Hyderabad -based Gland Pharma through a combination of primary investment into the company and share purchase from EILSF, an existing investor.

The private equity major is to snap up a 37.98 per cent stake in Gland Pharma.

Besides, the Cabinet gave its nod for another proposal where KKR would acquire a 24.9 per cent stake in Gland Celsus Bio Chemicals.

In January, fair trade watchdog Competition Commission of India approved the deals.

KKR, Gland Pharma and Gland Celsus had entered into the share purchase agreements on November 27 last year. KKR had also entered into a shareholders' agreement with the promoters of Gland Pharma and EILSF Co-Invest, an existing private equity investor in Gland Pharma.

New Delhi, May 13
Comptroller and Auditor General of India Shashi Kant Sharma today said the country’s highest audit body was working on the telecom sector audit and would be ready with its report by the yearend.

He said the CAG would present its report on oil and gas exploration to Parliament soon.

Addressing the Assocham’s annual summit on corporate frauds, Sharma said, “Let there be no doubt that the principle which is applicable to spectrum applies to all natural resources, which belong to the public and where revenue is to be shared with the government, and the CAG is duty bound to report all such matters to Parliament. In fact, work on telecom audit is already in progress and I am hopeful that our first report would be ready before the yearend.”

“We will conduct performance audit of some ongoing public private partnership (PPP) projects shortly,” Sharma said.

He said, “None of this is aimed to harass the private firms, but to uphold the constitutional scheme of accountability.”

The CAG is likely to audit PPP projects in across sectors where there is use of natural resources and revenue sharing with the government.

“As to the doubt on the expertise of CAG to carry out such audit, I can only put such doubts to rest by informing that the PPP audit is not a new area to the institution of CAG. The CAG has expertise in various domains, including gas, electricity, transport, infrastructure etc. Our institutional competence is well recognised, even in international audits, and the institution takes pride in that,” he said.

New Delhi, May 13
The forum headed by Parthasarathi Shome has identified 29 issues in direct taxes and 47 issues in indirect taxes that merit clarifications or amendment of procedures.

The forum was set up in July last year for exchange of views between industry groups and the government on tax-related issues. It also provided the government an opportunity to explain its stand on tax-related matters to the industry.

The forum held 18 meetings during August-September 2013 and discussed issues related to direct and indirect taxes concerning an industry group or sector, but did not entertain the grievances of any individual taxpayer.

During the two-month period, the forum met representatives of various industry groups and discussed matters related to the information technology sector, manufacturing sector, infrastructure sector, services sector, insurance sector, export sector, and international taxation.

It has identified total 76 tax issues that merited removal of the obstacles and clarifications or amendment of procedures. These issues were sent to the respective boards for further examination. The Finance Minister discussed these issues with the two boards and took final decisions to remove the difficulties faced by taxpayers. 

New Delhi, May 13
The Bank of Baroda today reported a 12.48 per cent rise in net profit at Rs 1,157.27 crore for the quarter ended March 31, 2014.

The bank had reported a net profit of Rs 1,028.85 crore in the January-March quarter of the 2012-13 fiscal.

BRIEFLY

NTPC cancels Rs 210 crore contract with Punj Lloyd
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Maruti Alto crosses 25 lakh unit sales mark
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CCI orders fresh probe involving Google
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Motorola launches budget smartphone Moto E
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Airtel raises $2 billion in dual currency bond sale
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