BE WARY OF MONOPOLY IN TELECOM SECTOR: ANIL AMBANI
MUMBAI: Anil Ambani on Tuesday said the telecom sector is in “ICCU” with government and lenders most at risk, and warned of a monopolistic market emerging.
He also promised to get RCOM out of its difficulties by March 2018, saying its lenders are supportive of all its actions.
With the entry of his elder brother Mukesh Ambani-promoted Reliance Jio wrecking the already competitive market, Anil Ambani said we are “potentially” moving towards a market with limited competition and feared that it may turn into a “monopoly”.
“The wireless or mobility sector, from any dimension you look at, is in the ICCU. It is not in the general ward, it is not in the ICU, it is in the ICCU,” Ambani said at Reliance Communications’ (RCOM) annual general meeting.
“It is a systemic threat for government, for its revenues, it’s a systemic threat for our banking sector and it is what I call creative destruction of a sector,” he said. Noting that over the years as the number of operators coming to six from over over a dozen, he said there was a sharp erosion in competitive landscape where nearly all global companies who were here have exited.
“I am sure they see things that allow them to write-off large amounts of money and exit India. It cannot be the power of the market that is forcing them to leave but it has got to be from other dimensions of the sector which is forcing them to leave,” he said.
Ambani said fresh lending to the sector has completely halted after Reserve Bank’s caution to banks in April and wondered how can the once sunshine sector maintain service quality as it requires Rs 1 trillion in investments annually . Warning that the industry is heading towards a monopolistic situation, he said “If customer is supreme and consumer is king, can we afford to be an oligopoly, a duapoly or a monopoly?” Ambani claimed that RCOM, which has a debt of Rs 45,000 crore and has been given a moratorium till this December, has the support of all its lenders including the Chinese ones and promised to get the company back.
GOVT ASKS BANKS TO REJIG FEES TO BOOST E-CHANNELS
MUMBAI: The government has written to the Indian Banks’ Association (IBA), asking lenders to rework their charges for customers in a manner that incentivises digital transactions over cash transactions.
In a recent communication to the IBA, the finance ministry’s department of financial services has said that banks should consider cross-subsidisation of low-value digital transactions by high-value digital transactions or cash transactions. “Banks should proactively promote digital transactions and take all necessary steps to make them cheaper for customers than cash transactions,” the communication said.
Some bankers see the finance ministry’s statement on cross-subsidising low-value digital payments with cash transactions to mean that banks should start imposing charges on some cash deals. “Banks may re-examine the current policy of allowing certain number of free cash transactions, while charging for every digital transaction,” the circular said.
Through its department of financial services, the finance ministry has been pushing public sector banks to go digital. The directions to the IBA are seen as a move to get private banks on board. Although the government has the power to issue directions to the Reserve Bank of India to come out with guidelines, it has never in its history exercised this option.
Last year before demonetisation, a report on digital payments by Ashish Das, professor of statistics at IIT-Mumbai, had suggested that banks disincentivise cash to promote electronic payments. “Our recommendation was that banks should not charge for electronic fund transfers. If you charge, the customer will choose to withdraw cash and make the payment even though this is the more expensive option for the bank,” said Das.
The government has set a target of 2,500 crore digital transactions per month by the end of the current fiscal. The target is only for retail transactions and includes payments through the Unified Payments Interface (UPI), Unstructured Supplementary Service Data (USSD) messages, Aadhaar Pay, Immediate Payment Service (IMPS) and cards.
According to Das, the government should promoting digital transactions through campaigns to achieve the target. “Hopefully, the burst in payments will come after October when banks integrate UPI with BharatQR from next month,” said Das. BharatQR is a feature that will enable customers with the BHIM/UPI app to make payments by merely scanning a bar code in stores.
Last month, the ministry of electronics and information technology asked all banks to have a board-level digital payments committee to promote electronic transactions. In banking circles, it is widely expected that the government will announce fresh digital initiatives from October 2.
GST COLLECTION AT RS 90,669 CRORE IN AUGUST
NEW DELHI: The government has collected Rs 90,669 crore in Goods and Services Tax (GST) for August, the second month of the indirect tax regime rollout.
According to the revised estimate, the GST mop-up for July stood at Rs 94,063 crore, up from the initial projection of Rs 92,283 crore.
“The total revenue of GST paid under different heads (up to September 25, 2017) is Rs 90,669 crore,” an official statement said, adding these figures do not include GST paid by 10.24 lakh assessees who have opted for composition scheme.
Of this, as much as Rs 14,402 crore has come in from the Central GST (CGST), Rs 21,067 crore from State GST (SGST), Rs 47,377 crore from Integrated GST (IGST) and Rs 7,823 crore from compensation cess levied on demerit and luxury goods.
It is to be noted that the last date for payment of GST as well as filing of GSTR 3B return for the month of August was September 20, 2017.
The statement further said that there are still a number of assessees who have not filed their returns either for July or August 2017.
The increase in the above stated figures will be informed in due course, it said.
Total number of taxpayers who were supposed to file monthly returns for August is 68.20 lakh, of which, as on September 25, 37.63 lakh GSTR 3B returns have been filed, it said.
The GST was implemented across the country in place of more than a dozen central and state levies like excise duty, service tax and VAT was implemented from July 1.
In July, the GST collection was Rs 92,283 crore from 64.42 per cent of the total taxpayer base.
Of this, as much as Rs 14,894 crore has come in from the Central GST (CGST), Rs 22,722 crore from State GST (SGST), Rs 47,469 crore from Integrated GST (IGST) and Rs 7,198 crore from compensation cess levied on demerit and luxury goods.
Many assessees have been filing the returns for July 2017 belatedly and till August 31, 2017 and the total GST paid for July is Rs 94,063 crore, it said.
GOVT WORKING TO REMOVE A KEY HURDLE IN DOING BUSINESS
NEW DELHI: The poor track record on enforcement of contracts haunts businesses, with India faring poorly. But the law department is seen to be moving slowly to fix the problem that spans from an agreement to bundle a mobile handset with a tariff plan to contracts between a multinational and a domestic company.
On the World Bank’s Ease of Doing Business (EoDB) rankings, where India was ranked a low 130th among 190 countries, it was ranked 170th when it came to enforcing contracts, raising demands for the government to quickly address the concern.
While the plan has been thrashed out, it emerges that a proposal made from one wing of the law and justice ministry is not being acted upon by another wing. A task force headed by justice secretary Snehlata Srivastava has already prepared the blueprint with a few amendments proposed to existing statutes, while also seeking to enact a new law that will help put in place a framework for conciliation and ease the pressure on courts.
The absence of progress on this front is seen to be detrimental not just to the EoDB rankings, due to be released next month, but more importantly to the investment climate as foreign investors often shy away from India, citing the weak legal framework on the issue. After all, to get a verdict of a Rs 3-lakh contractual dispute can take almost four years in a civil court in Mumbai. And, if the case goes to higher courts, the wait can be a few years more and by then the cost can be more than the amount involved.
It’s been months since the task force finalised the report which, among a host of issues, made a case for e-filing and e-summons in district courts and ensuring that the number of adjournments are limited so that the number of pending cases comes down. In fact, the large number of adjournments — against the ideal situation of three — is being cited as a major problem area, something that the judiciary has to tackle, sources said.
What is held up due by the law department are amendments to the Commercial Courts Act to explicitly provide for setting up of courts at the district level, which will deal with cases up to Rs 1 crore. The government plans to designate five district and city civil courts in Delhi and Mumbai as “commercial courts” to tackle the problem of cases getting clogged in high courts.
In addition, the government is contemplating either enacting a new law or amending the Arbitration and Conciliation (Amendment) Act, 2015 to provide legal backing to pre-litigation mediation and reduce the number of cases coming to the courts. The view in the task force is that this can done through incentives such as refund of court fee or even some tax rebates, as is the practice in Singapore.
The government has also requested high courts in Delhi and Mumbai to implement pre-litigation voluntary mediation for the time being. Sources said the Delhi government’s experience has been very favourable as of the 47,000 petty cases, such as disputes involving neighbours and family members, 17,000 cases had been sorted out through this process.
SEBI TIGHTENS BROKER-CLIENT CONTACT RECORD RULES
Mumbai: To stop unauthorised trading activities by brokers in their clients’ accounts, markets regulator Sebi on Tuesday asked brokers to store all records of orders placed by clients which are accepted in a court of law. These records include written documents signed by the client, recording of telephone conversations, emails from authorised email IDs, log for online transactions, SMSs or any other form of proof that is legally verifiable.
“When dispute arises, the burden of proof will be on the broker to produce the above records for disputed trades,” Sebi said in a notification. The new rules will come into effect on January 1, 2018.
These guidelines have been put in place after Sebi found out that despite some measures taken by it, there were several investor complaints that pointed towards unauthorised trades by brokers. “It has now been decided that all brokers shall execute trades of clients only after keeping evidence of the client placing such order,” the circular said. Sebi also said that whenever a client gives an instruction for trade on phone, the broker should “mandatorily use telephone recording system to record the instructions and maintain telephone recordings as part of its records”.
At present, a system similar to the one Sebi is putting in place is applicable for trades in the commodity derivative markets. However, no such requirement is there in stocks, stock derivatives and currency derivatives markets. The regulator also asked the stock exchanges to implement these new rules and report compliance to it.
There have been several instances where brokers, often to generate commission for themselves, trade in their clients’ accounts without proper authorisation. At times, such trades lead to huge losses for the clients while at the same time generate brokerage fee for the broker. The regulator is trying to stop such practices.
NO EXCLUSIVE PACTS FOR INDIA POST PAYMENTS BANK
Mumbai: India Post Payments Bank (IPPB) will follow a business strategy of putting up payment platforms in the form of public infrastructure that can be used by all players. The bank has said that it would not enter into an exclusive deal with any participant.
“Of the 11 payments banks that are licensed, we are the only one that is government-owned. There is a difference in terms of our business objective. We do not seek profit but want to create public value,” said A P Singh, CEO, IPPB.
“We will be putting up payment infrastructure that can be used by all — banks, e-wallet companies, insurance companies. Basically, we will shun exclusivity and there will be no discrimination on anyone coming on our platform,” said Singh. He was speaking at the Digital Money 2017 conference that marked 10 years of the digital payment industry.
IPPB, which was launched in January, has opened eight access points — four in Jharkhand and four in Chhattisgarh. “Since, we are a post office and have a large customer base, acquiring customers is not a problem. But getting them to transact is a huge challenge,” said Singh. He added that offering higher interest rates on savings was not working.
IPPB has started business with a paid up capital of Rs 125 crore from the government. It has also received Rs 375 crore as grant-in-aid according to the Output-Outcome Framework for Schemes 2017-18 for the department of posts.
“The grant is to deepen and widen the market, not just for us but for everyone. The postman will do assisted transactions and help self-service transactions,” added Singh.Speaking at the summit Srikrishnan H, MD & CEO, Jio Payments Bank (a joint venture between Reliance Industries and SBI), said that the journey for digital finance through the e-wallet route did not seem to be valid any more and the stored value model is not holding good.