Top 10 biz headlines: Fresh bank director norms, RIL faces headwinds & more

From RBI planning to come up with fresh fit-and-proper norms for directors on bank boards to Union Bank of India labeling Suzlon Energy Ltd as a bad loan, here are the top business headlines on Monday

1) After 12 years, RBI set to modify fit-and-proper norms for bank directors

The Reserve Bank of India (RBI) will come up with a fresh set of fit-and-proper norms — last revisited in November 2007 — for directors on the boards of banks. 

The new terms of reference for appointing directors — on state-run and private banks’ boards — are expected to streamline appointments to such posts, taking into account the vocations from which directors are to be drawn and their eligibility, and the role of the nomination committee and the terms of its engagement. (Read more here) 

2) Q1 results: Net profit of 113 firms up 10.8%, sales growth at 10-qtr low

The earnings season for the April-June 2019 quarter has started on a slow note for Corporate India, with early birds reporting a slowdown — both in top line and bottom line growth.

The combined net profit of 113 companies that have declared their results for the first quarter (Q1) of 2019-20 (FY20) so far was up 10.8 per cent year-on-year (YoY), down from 12.7-per cent YoY growth reported during the fourth quarter of 2018-19 and 13.5 per cent growth a year ago. (Read more here) 

3) Etihad, Hinduja Group back at the deal table for grounded Jet Airways

The names of Etihad Airways and Hinduja Group have resurfaced as contenders for submitting a joint expression of interest (EoI) to revive Jet Airways, which is facing insolvency proceedings. Even before Jet had landed up at the National Company Law Tribunal (NCLT), Etihad and Hindujas were in the fray to invest in the grounded airline but subsequently they opted out.

A source in the know said the two sides were again holding discussions and examining funding requirements to pay off creditors and kick-start the airline, which shut operations on April 17. (Read more here) 

4) IndiGo to expand board to 10 directors, promoters yet to make peace

After more than 10 hours of deliberation spread over days, a decision has been taken to expand the IndiGo board to 10 directors. Four of them will be independent directors.

Currently, it’s a six-member board, including two independent directors. The contours of the IndiGo board and the number of directors have been a contentious issue with co-promoter Rakesh Gangwal pointing at corporate governance lapses in the company. (Read more here) 

5) RBI blames banks for Mudra loan defaults; bankers say can't help

The Reserve Bank of India (RBI) has held banks’ poor credit appraisal responsible for their high bad debts arising out of Mudra (Micro Units Development and Refinance Agency) loans, according to sources. RBI Governor Shaktikanta Das also discussed the issue in a meeting with public sector bank (PSB) chiefs on Friday.

Bad debts for Mudra loans have spiked for PSBs, and, at the end of 2018-19 (FY19), stand at 9.3 per cent of advances. Loans under the Pradhan Mantri Mudra Yojana (PMMY) were Rs 3.22 trillion in FY19, according to the PMMY website. (Read more here)

6) Reliance Industries faces headwinds from US-China rift, exports down 4.5%

Reliance Industries’ (RIL’s) petrochemicals business has taken a hit owing to trade tensions between the US and China.

In addition to the impact on crude oil prices, the demand and margins for certain petchem products have been under stress owing to the trade war. “The US-China trade war is impacting regional polymer margins and causing the diversion of US cargo to Southeast Asia and West Europe,” the company said in its post-result presentation to investors. (Read more here)

7) Air India stops promotions, appointments as govt prepares to sell stake

Air India has stopped giving promotions for its employees and recruiting new personnel as the government prepares for the disinvestment of the debt-laden airline, an official, who did not wish to be named, said Sunday.

The government is expected to soon start the disinvestment process for Air India, which has a debt burden of more than Rs 50,000 crore.

For the disinvestment process, the official said the airline's books of accounts till July 15, have been closed and those financials would be used while seeking bids. (Read more here)

8) Govt looks to cut stake in select state-run entities to up to 26%

The government is looking to cut its stake in certain state-run entities to up to 26 per cent, which would set the stage for some large strategic sales, reported the Economic Times on Monday. 

According to the report, a government official said that a draft note would be put out for consultation before the proposal is finalised. Further, the official added that the department of investment and public asset management (DIPAM) would be directed to formalise a Cabinet note by the end of this month. If implemented, said the report, the move would provide more options for the government to achieve its Rs 1.05-trillion disinvestment target for the current financial year. The official told the financial daily that a threshold of 26 per cent is being considered since the company law allows a shareholder with stake of over 25 per cent to block a resolution in a company.  

9) DHFL lenders may offer 6-month moratorium on loan repayments

Dewan Housing Finance's (DHFL's) lenders might propose this week a six-month moratorium on the repayment of about Rs 80,000 crore in outstanding loans under the inter-creditor agreement, reported the Economic Times on Monday. Further, private equity investors are likely to buy a fifth of the embattled home financier post the debt recast, said the report.  

Citing unnamed sources, the report said that during the moratorium, DHFL would only pay the due interest on outstanding bonds. 

10) Suzlon gets a bad loan tag from Union Bank 

Union Bank of India has labeled Suzlon Energy Ltd as a bad loan, with more banks expected to follow suit as the stressed wind turbine maker struggles to repay its lenders, reported LiveMint on Monday, citing unnamed sources who were aware of the development. 

According to the report, one of the sources said that for the quarter ended June 30, the state-run lender has updated the account's status as non-performing in the central bank's Central Repository of Information on Large Credits database.