The Reserve Bank of India (RBI) informally reminded banks of the need to make additional provisioning for ‘standard’ telecom loans and specific telecom exposures with a high probability of turning non-performing. Meanwhile, in a relief for telecom companies, the competition watchdog dismissed a complaint against Vodafone Idea, Reliance Jio, Bharti Airtel and Sify. India’s market regulator nudged CARE Ratings to remove S B Mainak, accused of interfering with the company’s assessment of IL&FS, as chairman. A slim revival in industrial production in November had prompted Finance Minister Nirmala Sitharaman to see green shoots of recovery. But that turned out to be a blip, as factory output again contracted 0.3 per cent in December. Here is more on what happened this week.
- The RBI has informally reminded banks of the need to make additional provisioning for ‘standard’ telecom loans and specific exposures in the sector with a high probability of being declared non-performing assets (NPAs) in their books down the line. This is the first move on the treatment to be accorded to the sector’s exposures by banks following the Supreme Court’s (SC’s) order of October 24, 2019. The SC order had said telephony players were to pay past airwave charges and licence fee dues, according to the adjusted gross revenue.
- The Competition Commission has dismissed a complaint against Vodafone Idea, Reliance Jio Infocomm, Airtel and Sify Technologies which alleged that they were charging higher rates for overseas inbound calls as compared to the ceiling fixed by telecom regulator Trai. The order came on a complaint filed by Canada-based Teleclub (Alberta Ltd), which is an international telecom carrier.
- S B Mainak resigned as chairman of CARE Ratings, the company said in a stock exchange notification after the market regulator reportedly asked for his removal. The Securities and Exchange Board of India (Sebi) nudged the rating agency after a forensic report said Mainak had asked his staff to not change the ratings of the bankrupt shadow banker Infrastructure Leasing and Financial Services (IL&FS).
- Factory output contracted in December and retail inflation shot up to a 68-month high in January, data showed after the government cited seven economic indicators to claim that the economy was recovering. The National Statistical Office said that the index of industrial production (IIP) shrank 0.3 per cent in December from a 1.8 per cent expansion a month ago, while retail inflation accelerated to 7.59 per cent in January from 7.35 per cent in the previous month.
- State governments are unlikely to get the full compensation promised for shortfall in goods and services tax (GST) collection as the finance ministry says the amount will be given only through money collected from the cess imposed for this purpose. A key ministry official said states should agree to hike GST or cess rates in the Council meeting, the date for which is yet to be fixed. Earlier, the impression was that whatever losses states bore would be fully compensated to them for five years from the date of GST rollout.
- Making the direct tax dispute resolution scheme attractive, the Union Cabinet expanded its scope to cover litigation pending in arbitration forums and debt recovery tribunals (DRTs). The scheme will also include cases related to revision and small-value search disputes. The Cabinet also reduced the disputed amount by half for those assessees who got favourable orders but the income-tax department challenged those.
- Organisers of the world's biggest mobile technology fair are pulling the plug over worries about the coronavirus outbreak from China. GSMA said that this year's edition of Mobile World Congress will no longer be held as planned in Barcelona, Spain, on February 24-27. It had sought to hold out against growing pressure to cancel Mobile World Congress, an annual tech extravaganza that had been expected to draw more than 100,000 visitors from about 200 countries, including 5,000 to 6,000 from China.
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