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Modi government thinks it owns RBI, says Chidambaram




New Delhi, Dec 13 : Attacking the Narendra Modi government over its differences with RBI Governor Urjit Patel who resigned on Monday midway through his term, former Union Finance Minister P. Chidambaram on Thursday said the Modi government thinks it owns the RBI.

He also hoped that the new Governor, Shaktikanta Das, although a vocal supporter of the much-debated demonetisation, would stand up for the central bank’s autonomy.

“This government thinks it owns the Reserve Bank of India (RBI). This government thinks the RBI is another department of the government. This government thinks if CBI is listening to them, why is RBI not listening?” Chidambaram said at an event here.

“This government simply does not understand what a central bank’s independence is,” he added.

The former Finance Minister slammed the government for its eagerness to get hold of the central bank’s reserves, which apparently became the bone of contention between the government and Urjit Patel and ultimately led to his resignation.

“This government is like ‘I have one hoard of cash, so much cash lying there. I can’t meet my fiscal deficit this year, my GST revenues are less than expected, I have not provided for the food subsidy, I have not provided for Ayushman Bharat programme, and I need money in my election year. What do I do? There is this pot of gold. Now I want to reach that pot of gold’. That’s the only aim of this government,” he said.

Stressing that RBI’s independence is crucial, he said it “worries” him that the government has appointed a perceived “yes man” as the central bank’s boss.

“It worries me that they (government) have appointed two persons to two key posts, both of whom were vocal supporters of demonetisation. It worries me,” he said.

However, he “hopes” that the new RBI Governor would not buckle under pressure from the government and would keep the central bank’s autonomy intact.

“I sincerely hope, and I would appeal to Mr. Shaktikanta Das, that you (Das) are now the RBI Governor. You are no longer ex-Secretary Economic Affairs, you are the Governor of central bank of India. Therefore, you must stand up for the autonomy and rights of India’s central bank,” he added.

Asked about his differences as then Finance Minister with then RBI Governor D. Subba Rao, Chidmabaram said those were the “usual differences” that Finance Ministers across the world have with their central bank Governors.

He pointed out that Rao never resigned over these differences unlike the case of Urjit Patel who put in his papers on December 10, around 10 months before his three-year tenure could end.

He also said that the RBI suffered a blow to its reputation among the world’s central banks due to demonetisation and has not recovered its image to this day.

“Urjit Patel should have walked out on November 19 itself. He delayed his resignation. Perhaps he gave benefit of doubt to the government and thought perhaps the government would retrace its step. But everything that happened after November 19 proved the government was pressing ahead its agenda,” the senior Congress leader said.

Asked if Patel erred in endorsing demonetisation of Rs 500 and Rs 1,000 currency notes announced by Prime Minister Narendra Modi on November 8, 2016, Chidambaram said: “Of course, he (Patel) was wrong. He should not have called a Board meeting in Delhi, a hurriedly called truncated Board meeting to pass a resolution endorsing demonetisation. He should have stood his ground. He was wrong.”

“He suffered a huge reputational slide by endorsing demonetisation and the RBI suffered reputational damage in the world. I don’t think RBI has recovered its reputation among the central banks of the world after demonetisation,” he added.


Markets open on positive note



Sensex Nifty Equity

Mumbai, Feb 20: The 30-scrip Sensitive Index (Sensex) on Wednesday opened on a positive note during the morning session of the trade.

The BSE Sensex opened at 35,564.93 before touching a high of 35,581.14 and a low of 35,520.21.

It was trading at 35,528.69 up by 176.08 points or 0.50 per cent from its Tuesday’s close at 35,352.61.

On the other hand, the broader 50-scrip Nifty at the National Stock Exchange (NSE) opened at 10,655.45 after closing at 10,604.35.

The Nifty is trading at 10,656.25 in the morning.


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PF funds’ investment in IL&FS bonds have no government guarantee: Finance Ministry



IL&FS Financial Service

New Delhi, Feb 19 (IANS) The provident and pension fund trusts that invested in the IL&FS bonds now fear loss of money as the debt-ridden company’s bonds are unsecured debt, and the Finance Ministry says superannuated bonds do not carry any government guarantee and all such instruments have to face all market-related risks.

“Since these are investments in bonds, the government does not ensure any guarantee on them as such and if these are invested in stock markets, they carry the market risks as applicable. It is between the bond issuer and bond holders…,” the Finance Ministry said in response to IANS queries.

Thousands of crores of money of more than 15 lakh employees of both public and private sector companies have exposure to IL&FS bonds.

However, queries sent to the EPFO Commissioner and Labour Minister Santosh Gangwar remained unanswered.

Over 50 funds that manage retirement benefits of over 15 lakh employees have exposure to IL&FS. PF trusts of state electricity boards, public sector undertakings (PSUs) and banks are among them. The provident and pension fund trusts have filed intervening applications in the National Company Law Appellate Tribunal (NCLAT) stating that they stand to lose all the money since the bonds are under unsecured debt.

Usually, retirement funds have a low-risk appetite and invest in “AAA” rated bonds (which IL&FS bonds used to be once upon a time) and get assured returns with low interest rates.

The worries of pension and provident fund trusts come from the classification of IL&FS profiling its companies as to which can meet the dues obligations. Many important trust managing funds of PSUs like MMTC, IOC, Hudco, SBI and IDBI are among those filing petitions. From private sector, HUL and Asian Paints are among the petitioners.

IL&FS is currently under resolution process at the National Company Law Tribunal (NCLT). The process will decide under Section 53 of the IBC the order of priority for distribution of proceeds of the process.

The beleaguered company has informed the NCLT that of the 302 entities in the group, 169 are Indian companies, out of which only 22 are emerging as those which can meet all obligations (green), while 10 firms can pay to only secured creditors (Amber). There are 38 companies of IL&FS (red) which cannot meet any obligations of payment, and 120 entities are still being assessed.

These PF and provident funds trusts are worried that if payment is limited to secured creditors, then only financial creditors like banks will receive the dues while unsecured bond-holders will be get any payments.

IL&FS bonds attracted investments by PF trusts as it had the shareholding of SBI and LIC giving its bonds the comfort factor.

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Sachin Bansal invests Rs 650 crore in Ola




Bengaluru, Feb 19 (IANS) Internet entrepreneur and Flipkart co-founder Sachin Bansal has invested Rs 650 crore, or about $92 million, in ride-hailing platform Ola in his personal capacity as investor, the company said in a statement on Tuesday.

This investment is part of Ola’s larger Series J funding round. It is also the largest investment by an individual in Ola to date, it said.

“Ola is one of India’s most promising consumer businesses that is creating deep impact and lasting value for the ecosystem. On one hand, they have emerged as a global force in the mobility space and on the other, they continue to build deeper for various needs of a billion Indians through their platform, becoming a trusted household name today,” Bansal said.

He further said he has known Ola founder Bhavish Aggarwal as entrepreneur and friend over the years and that he has great respect for what he and the team at Ola have built in 8 years.

“We are extremely thrilled to have Sachin onboard Ola as an investor. Sachin is an icon of entrepreneurship and his experience of building one of India’s most respected businesses ground up, is unparalleled,” Ola CEO Bhavish Aggarwal said.

Ola integrates city transportation for customers and drivers onto a mobile technology platform ensuring convenient, transparent, safe and quick service fulfilment, the statement added.

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