Even as the RBI has come under criticism for its audit of PNB books, the central banker has gone ahead and appointed a high powered committee under eminent tax expert, Y H Malegam, to look into the reasons and prevent such frauds in the future. The committee will look into the gap between what the RBI recommends in terms of NPA provisioning and what the banks declare. The committee also includes other eminent names like Bharat Doshi and S Raman. RBI said that it had warned banks thrice in 2016 to tighten SWIFT procedures but little action had been apparently taken by these banks.
IT lobbying body, NASSCOM, has painted a very rosy picture of the IT industry in the fiscal year 2018-19. NASSCOM expects the IT industry to grow at the rate of 7-9% in the fiscal year 2018-19 and this is likely to be supported by a 7.8% growth in IT exports. The IT industry has been facing turbulence in the last quarters as large IT companies adjust to the new digital reality. Globally, BREXIT, rising protectionism and a slowdown in technology spending continue to be the major risks for the IT sector. Even in terms of jobs, NASSCOM expects the IT industry to create at least 100,000 fresh jobs during the year.
SEBI has allowed the NSE and the BSE to offer cross-currency derivatives to provide more currency hedging options to the traders and the investors. This will include options on euro-dollar, pound-dollar and dollar-yen pairs. There will also be rupee options with other currencies on the other side. Trading in cross currencies will be extended till 7.30 pm daily to avoid the migration of currency markets to other global markets like DGCX. The total open interest of currency contracts on the BSE and NSE is Rs.33,000 crore and this is likely to substantially increase once cross currencies start trading.
In the aftermath of the Nirav Modi, Mehul Choksi and the Rotomac fiasco, the RBI has decided to tighten norms for offshore borrowing. RBI also wants to keep a close tab on dollar borrowings as any likely strength in the dollar could seriously impact the solvency of these companies. The US is likely to increase Fed rates by 100 basis points this year and that is likely to result in a strengthening of the dollar. The RBI is obviously worried about the lax norms followed for dollar borrowings and does not want a crisis precipitated among foreign currency borrowers during the year.
The government announced the opening up of the coal sector to private competition, virtually ending the monopoly that Coal India and its subsidiaries enjoyed over coal mining over the years. To boost the supply of coal in India, the government is putting in place an auction process. Large global mining giants like BHP, Rio Tinto, Anglo American and Glencore are expected to participate in this bidding process which is likely to be done in a transparent manner. The accent will be on the use of innovative and safe technologies for mining. The revenues generated from auctions will go to the states which will help get the states to buy into this idea. The Indian power sector is still predominantly thermal in nature and it continues to be the largest consumer of coal produced. This move will also reduce import dependence.
The fraud surrounding the default by the owner of Rotomac Pens has now escalated to above Rs.3600 crore with little scope for getting the money back. Rotomac was badly hit by cheaper pens that flooded the market and had to borrow heavily to finance its diversification into unrelated areas. That was the genesis of the debt trap that Rotomac fell into. While the principal outstanding is around Rs.2900 crore, the balance is accounted for by outstanding interest. Like in the case of Nirav Modi and Mehul Choksi, the whereabouts of Vikram Kothari of Rotomac Pens is also not exactly known.
