News digest: IL&FS crisis, OYO raises $1 billion, PCA framework, and more

From IL&FS crisis, OYO raises $1 billion to PCA framework, BS brings you up to date with the latest news

Beleaguered IL&FS may get a lifeline with LIC, SBI likely to increase stake

Infrastructure Leasing & Financial Services (IL&FS) could get a lifeline, with public sector behemoths Life Insurance Corporation (LIC) and State Bank of India (SBI) likely to increase their stakes in the beleaguered infrastructure lending company through a rights offering as a means of infusing fresh capital.

LIC is IL&FS’ largest shareholder with a 25.34 per cent stake, while SBI, which owns 6.42 per cent, is the seventh-largest stakeholder in the company. 

The prospect of the two public sector financial institutions raising their stake was discussed in a meeting chaired by Finance Minister Arun Jaitley on Tuesday. Economic Affairs Secretary Subhash Chandra Garg, Reserve Bank of India Deputy Governors Viral Acharya and BP Kanungo, LIC Chairman VK Sharma and SBI Chairman Rajnish Kumar were also present. Read more 

OYO raises $1 bn from investors led by Softbank; firm now valued at $5 bn

Forget about the crash in the Indian equity market. Indian hospitality start-up OYO has raised a massive $1 billion (Rs 72.63 billion) from four existing investors led by SoftBank. The latest fundraising is estimated to value OYO, which operates in the budget hospitality space, at around $5 billion (Rs 363 billion), a five-fold increase since September last year, when the last funding round took place. OYO was not even a unicorn (a start-up valued at $1 billion and above) before this funding round.

This e-series funding round makes OYO the most valued hospitality company in the country, ahead of Tata Group’s Indian Hotels Company (which owns the Taj brand of hotels) and EIH (which owns the Oberoi brand of hotels). BSE-listed Indian Hotels and EIH have a market cap of Rs 147 billion and Rs 87 billion, respectively. Read more 

Yes Bank to seek RBI nod to extend MD & CEO Rana Kapoor's term beyond Jan

The board of YES Bank will seek extension of Managing Director (MD) and Chief Executive Officer (CEO) Rana Kapoor till the next annual general meeting (AGM) in September 2019, the lender said in a filing on the BSE.

The private lender said in its notification on Tuesday that the board will request the Reserve Bank of India (RBI) to extend Kapoor’s term up to at least April 30, 2019, citing Kapoor’s “role in the bank since inception” and “the time-consuming challenges of finding a new successor”.

In case the RBI approves the request, the board plans to seek further extension up to September 30, 2019, for the statutory AGM process to be completed. Read more 

Govt to consider PSBs' demand for PCA relaxation for the banking system

The Union government on Tuesday said it will consider demands from public sector banks (PSB) to approach the Reserve Bank of India (RBI) on relaxing the Prompt Corrective Action (PCA) framework for the banking system in the country.

Finance Minister Arun Jaitley held the annual performance review meeting of PSBs on Tuesday and discussed wide-ranging issues, including the need for early capitalisation of banks this fiscal year.

“Bankers have certain expectations which I have told them we will consider. Some of them (banks) mentioned that the PCA guidelines should be revisited as they are indirectly affecting their lending ability. The government be more upfront in capital requirement of some of these banks,” Jaitley said in a press conference, after a day-long review meeting. Read more

After Whatsapp, Instagram founders quit amid tensions with Zuckerberg

The founders of Instagram are leaving Facebook Inc. after growing tensions with Chief Executive Officer Mark Zuckerberg over the direction of the photo-sharing app, people familiar with the matter said.

Kevin Systrom and Mike Krieger, who have been at the company since Instagram’s acquisition by Facebook in 2012, had been able to keep the brand and product independent from Facebook. Lately, they were frustrated with an unusual uptick in day-to-day involvement by Zuckerberg, who is now more reliant on Instagram for Facebook’s future growth.

Without the founders around, Instagram is likely to become more tightly integrated with Facebook, making it more of a product division within the larger company than a separate app, the people said. Read more