Business & Finance - Current Affairs for November, 2016

Cognizant said it would buy Dutch digital marketing and customer experience agency Mirabeau BV, to expand its digital expertise in the Netherlands and Europe. It did not disclose the terms of the transaction.

Mirabeau works with brands such as KLM, ING, Air France, Maxeda, MoneYou, LeasePlan.com, and Transavia.

The 15-year old digital firm has 260 specialists who will join Cognizant after the close.The acquisition aims to develop strategies, and then design, prototype, and scale meaningful product and service experiences.

This is the second acquisition by Cognizant in North EU.

In Oct, the company purchased Norwegian IT and BPO services provider Frontica Business Solutions for about $128 million.

The IT-BPM sector is currently valued at US$ 143 billion.

It is expected to grow at a Compound Annual Growth Rate (CAGR) of 8.3 per cent year-on-year to US$ 143 billion for 2015-16.
The sector is expected to contribute 9.5 per cent of India’s Gross Domestic Product (GDP) and more than 45 per cent in total services export in 2015-16.

India’s IT Sector

• With 67 per cent of the US$ 124-130 billion market, India is world’s largest sourcing destination for IT industry.
• Employs about 10 million workforces.
• Expected to grow at a rate of 12-14 per cent for FY2016-17 in constant currency terms.
• Sector is also expected triple its current annual revenue to reach US$ 350 billion by FY 2025.
• With more than 4,200 start-ups, India ranks third among global start-up ecosystems.

The Insolvency and Bankruptcy Board of India on 23^rd Nov 2016 notified 3 sets of regulations.

Regulations inter alia providing for Registration, Regulation and Oversight of Insolvency Professionals

These regulations were notified under the Code and will come into effect from 29^th Nov 2016

All these regulations provide for registration, regulation and oversight of insolvency professionals as part of the Code

Who Can Register as Insolvency professionals?

• These include CA, Advocates, CS and Cost Accountants with 10 years practice/employment
• Graduate with 15 years post qualification management experience on passing Limited Insolvency Exam
• Anyone who passes the National Insolvency Examination
• Limited liability partnership, registered partnership or company can be recognised as the insolvency professional entity under certain conditions
• Insolvency professional can use the organisational resources of recognised insolvency professional entities

Airtel has launched India’s first live payments bank aimed at testing systems and processes ahead of full scale launch across the nation. The payments bank has rolled out a pilot of its banking services in Rajasthan.

Airtel Payments Bank is a subsidiary of Bharti Airtel.

Account can be opened with Aadhaar based paperless e-KYC with no extra documents and customer’s Airtel mobile number which would be his/her bank account number.

Company intends to give interest rate of 7.25 percent per annum on deposits in savings accounts.

Customers across Rajasthan will now be able to open accounts at Airtel retail outlets.

These outlets will also offer banking services- banking points will be formed at 10,000 Airtel retail outlets.

Extra benefits like money transfer to any Airtel bank account in India, personal accident insurance, easy deposit and withdrawal facility from within the Airtel retail bank will be available to customers.

Company will also have a network of 100,000 merchants across Rajasthan accepting digital payments from Airtel Payments Bank.

This offers cashless purchase of goods and services using bank accounts or wallets.

Airtel now becomes the first payment bank to go live in India.

About Airtel Payments Bank

• Airtel Bank is a fully digital and paperless bank
• MD and CEO : Shashi Arora
• Pilot project to take 4-6 weeks. Services will be made available across the nation after that

Reserve Bank of India on 21st Nov 2016 relaxed prudential norms in income recognition, asset classification and provisions pertaining to advances. Decision came following the withdrawal of INR 500 and 100 rupee notes.

Taking into consideration the problems being faced by small borrowers in repaying their loan dues, RBI has decided to provide additional 60 days time, provided that the value of the loan or crop loan is less than INR 1 crore.

Term loans, housing loans and agriculture loans whether business or personal with sanctioned amount of INR 1 crore rupees on the books of any bank or NBFC will be eligible for relaxation.

Loans sanctioned by NBFC (MFI), NBFCs, Housing Finance Companies and PACs and by State Cooperative Banks to DCCBs are also eligible for the same.

It also applies to dues payable between Nov 1 2016 and Dec 31 2016.

Dues payable before Nov 1 and after 31 Dc 2016 will be covered by the extant instruction for the respective regulated entity with regard to recognition of NPAs.

Additional time given shall not apply to defer the classification of an existing standard asset as substandard and not for restructuring of loans.

RBI: Apex Bank of India

• Founded in April 1, 1935 in Kolkata
• Current Governor: Urjit Patel
• Reserve: 363 billion USD

RBI has proposed the opening of an Islamic window in conventional banks for gradual introduction of Sharia compliant or interest free banking in the nation

• Both GoI and RBI are exploring the possibility of introduction of Islamic banking for long to ensure financial inclusion of all sections of society that remain excluded on account of religious reasons
• Given the complexity of Islamic finance and numerous regulatory and supervisory channels and that Indian banks have no experience in the field, Islamic banking may be introduced in a gradual manner
• Conventional banking products may be needed for introduction through Islamic Window of conventional banks following necessary notification by the government
• “Introduction of full-fledged Islamic banking with profit-loss sharing complex products may be considered at a later stage on the basis of experience gained in course of time,” the RBI has told Finance Ministry in a letter
• Islamic or Sharia banking is a finance system based on not charging interest
• Charging interest is prohibited under Islam
• The apex bank’s proposal is based on examination of legal, technical and regulatory issues regarding feasibility of introducing Islamic banking in India on the basis of recommendation of the Inter Departmental Group (IDG).
• RBI also prepared a technical analysis report sent to the finance ministry

Work areas include the following:

1. Operationalisation of Sharia boards and committees,
2. Feasibility of extending deposit insurance to Islamic banking deposits,
3. Identifying the financial risk and suggesting appropriate accounting framework for these products
4. In the annual 2015-2016 report, the apex bank has said that some sections of Indian society remain excluded for religious reasons that preclude them from using banking products with element of interest
5. The plan for Sharia bank was opposed by certain political and non political groups
6. The Committee on Financial Sector Reforms headed by former RBI governor Raghuram Rajan opined a closer look at interest free banking in the nation.

General Electric on 15th Nov 2016 acquired two tech startups to build the AI capability to compete with IBM’s Watson product

• Acquisitions of Bit Stew Systems and Wise.io will expand its Predix platform for industrial internet applications, which connects big machines such as power plants and aircraft engines to databases and analytical software.
• Terms of the deals weren't publicly disclosed.
• Wise.io is based in Berkeley California and has advanced machine learning technology
• AI has a branch called machine learning which allows computers to adapt to new data without fresh programming
• Bit Stew is a Vancouver based Canadian firm backed by GE’s venture capital arm
• It applies machine learning to large data sets associated with utilities, aviation, oil and gas production and manufacturing, according to the company's web site.
• IBM’s Watson is among the better known AI systems which enables computers to perform intelligent actions such as recognising voices and making decisions

Government of India has asked banks to use indelible ink to ensure that people do not withdraw more than the permissible limit by going to different bank branches

• The government has noted that the same people have been coming again and again to withdraw money and this is causing long lines
• People are also trying to convert black money by sending many people to different branches
• Branches will now resort to indelible ink marks for over the counter withdrawals
• Government has also asked religious institutions which receive donations in smaller denomination notes to deposit these in bank accounts to increase their supply in circulation
• There are enough currency notes with the banks and the system according to the government which is closely monitoring the supply of cash and essential commodities
• To prevent infusion of fake currencies in vulnerable areas, the government has also constituted a special task force to keep a watch.
• Technology team has been formed to popularise the use of e-wallets and ensure ATM recalibration progresses apace
• Economic Affairs Secretary Shantikanta Das also clarified that the phenomenon of colour running in the new INR 2000 notes was normal
• In rural areas, people are taking the name of farmers to prevent tax: agricultural income in rural areas is tax free
• The steps have been taken to enable bona fide farmers to withdraw cash for purchase of seeds, fertilisers and sowing operations

After TCS, Cyrus Mistry was removed as chairman of TATA Global Beverages, whose board voted for Harish Bhat instead.

• TATA Global Beverages is a company that makes Tetley and Eight O’Clock Coffee
• Bhat is a TATA Group insider
• He joined the entity in 1987 under TATA Administrative Services
• He earlier worked as COO of Titan and also authored the “ TATA Log: Eight Modern Stories From a Timeless Institution.”
• This is the second time that Mistry has been removed from a TATA entity
• TCS earlier replaced him with Ishaat Hussain as the interim chairman
• 7 of the 10 directors present in the board voted against Mistry as chairman of TATA Global Beverages
• Mistry’s office has said the statement is illegal as the matter of removal of the chairman was not on the agenda and the meeting concluded as Mistry was chairman
• Two independent directors, Darius Pandole and Analjit Singh also opposed the bid at committing illegal acts.
• Mistry found support in the boards of Indian Hotels Company, TATA Chemicals, TATA Motors and TATA Steel
• The boards company happened before the sacking of Mistry as chairman of TATA Sons on 24th Oct
• Ousted chairman Mistry has countered allegations he contributed to rising expenses and impairments at TATA Sons
• “In the five years, several group centre (GCC) members held what were deemed “non-executive” roles in Tata Sons. They, including Mr. Ratan Tata, drew their compensation as commissions from Tata Sons instead of salaries. Several erstwhile directors of Tata Sons drew additional parallel commissions from operating group companies,” the statement released by Mistry said
• TATA Sons also bore the office costs of Chairman Emeritus Ratan Tata, according to Mistry who said the figure was at INR 30 crore in 2015 and a significant amount was used for corporate jets.
• Mistry also pointed to investments of a questionable nature including the INR 400 crore investment in Nagarjuna Refiners and some investment in SASOL JV with South Africa’s SASOL in cola to liquid)
• “One investment in Piaggio Aero, a company in the aerospace sector with a friend of Mr. Tata, was especially distressing. Tata Sons decided to exit the company at a commercial loss of Rs 1,150 crore. This was after the efforts of Mr. Bharat Vasani (Chief legal Counsel Tata Sons) and Mr. Farokh Subedar (COO at Tata Sons) who managed to recover Rs. 1,500 crore, overcoming the objections of Mr. Ratan Tata who in contrast favoured increasing investments in that company. Today, the company is, for all practical purposes, nearly bankrupt,” Mr Mistry’s office said in a statement.

GoI on 11th Nov 2016 eased cash-holding limits of banking correspondents and enhanced fund flow to post offices as part of steps to ease liquidity for millions hit by demonetisation of INR 500 and 1000 rupee notes

• Cash holding limits of banking correspondents has been raised to INR 50,000 per day
• Banks have also been given the flexibility to raise the limit further in appropriate cases
• Currently, there are 1.2 lakh correspondents in the country with a rural presence that is strong
• Till now, each of the correspondents had different cash holding limits depending on the rules that banks set
• These correspondents have also been given the right to withdraw funds from respective banks multiple times, rather than only once as previously permitted
• Banking correspondents are those individuals which are empowered by banks to carry out numerous activities such as collecting deposits, exchange of old notes, disbursal of small loans, loan recovery, interest collection, pension products among others
• Likewise, supply of cash to branch post offices will be enhanced with 1.3 lakh branch post offices in India empowered to exchange and collect the the deposits of old demonetised INR 500 and 1000 rupee notes
• Banking correspondents and post office networks have 2.5 lakh banking points, according to the government
• Micro ATMs will also be deployed throughout the nation to dispense cash against credit and debit cards
• Government departments have also been asked to use e-payment systems to ease cash demand
• Task force has been set up under RBI deputy governor to oversee the cash supply situation and the recalibration of arms
• The exemption of using INR 500 and 1000 notes in government hospitals, petrol stations and notified milk vendors has been extended till Nov 24 midnight.
• Many android apps have also come about to deal with the situation like 'How to submit 500, 1000Rs Note' providing details like how to exchange or deposit or submit old notes at petrol pumps, post offices and banks as well as details on the new notes
• Other apps, like 'Change Rs 500, 1000 Notes' give vital information on new notes or share documents like the request slip used in exchanging old notes and answer frequently asked questions.
• There is even a mobile game called Modi Rules with a tag line Let’s kill black money

Government on 13th Nov 2016 raised daily cash withdrawal limits from ATMs to INR 2500 from INR 2000 and eased other rules

• The limit for exchanging old INR 500 and 1000 notes in bank and post office counters have been raised from existing INR 4000 to 4500.
• Weekly limit of INR 20,000 for withdrawal from bank accounts have been increased to INR 24,000
• Existing daily cash withdrawal limit of INR 10,000 from bank branches has been removed
• Issuance of new series of INR 500 notes has commenced
• Banks have been advised to increase the issuance and use of mobile wallets and debit as well as credit cards to provide them to those customers and establishments not having access to these non-cash means of payment
• Last date for submission of annual life certificate for the government pensioners which is to be submitted in Nov each year has been extended to January 15, 2017
• Customers are advised to deal in non-cash based transaction methods like NEFT, RTGS, IMPS, E-wallets

RTGS: Real Time Gross Settlement
NEFT: National Electronic Funds Transfer
IMPS: Immediate Payment Service

Ten UK based companies have pledged to invest 29.29 million pound to train about 20 lakh people in India by 2020.

• 10 UK companies have committed to support India’s Make in India ad Skill Indian initiative at global level according to UK India Business Council.
• Companies are among the largest investors in India.
• Firms include HSBC, Vodafone, Reckitt Benckiser, OCS, Rolls Royce, Aviva, Marks & Spencer and GSK.
• Areas covered include apprenticeships. career development, training and all important certification support.
• UKIBC is a membership based NPO founded in 2007 to foster trade and business relations between the UK and India.

The RBI on 8th Nov 2016 issued a new series of notes for INR 500 and 2000 rupee denominations with newer sizes and improved features.

• New designs will be visually impaired by having features making it accessible for all sections.
• The INR 2000 rupees note which is the first under the denomination will be called the Mahatma Gandhi (New) Series and has a design of the low cost mission to Mars, the Mangalyaan on the reverse.
• The base colour of the note will be magenta.
• The banknotes in the Mahatma Gandhi New Series will not carry the inset letter and the year of printing 2016 will be on the banknote’s reverse. It will also bear the signature of Dr. Urjit R Patel.
• Note has other designs, geometric patterns aligning with overall colour scheme at obverse and reverse.
• The only security features of the INR 2000 note include latent images, coloured strip security threads, watermarks and other features.
• The rumour of a tracking chip on notes is untrue.
• The new design in the INR 500 rupee note denomination will be a different colour, size, theme and pattern and have a new set of security features.
• The note will be stone grey in colour and the predominant theme will be Delhi’s Red Fort.
• Government has further said that demonetisation scheme is to ban INR 500 and 1000 notes currently in circulation and deposits up to INR 2 lakh will be below the taxable income.
• Clarification also said government will get reports of cash deposits above INR 2.5 lakh made between Nov 10 and Dec 30.
• Deposits made above INR 10 lakh will be treated as cases of tax evasion and along with imposing an additional penalty of 200 percent will be levied on deposits that do not match tax declarations.

PM Narendra Modi has announced that INR 1000 and 500 rupee notes will cease to be legal tender from 12:00 am 9-10 Nov 2016.

• The announcement was made through a special nationwide televised address on Nov 8, 2016.
• PM Modi also appealed that those in possession of the notes can deposit it in accounts in banks and post offices from Nov 10 to Dec 30.
• Those unable to deposit the notes within the deadline for some reason can further change them till March 31, 2017 by furnishing ID proof namely Aadhaar card and PAN card.
• He also announced new currency notes of INR 500 and 2000 rupee denomination to be introduced.
• Major objective behind the Government’s decision is to ban the existing currency denomination is to curb black money in the market and phase out fake currencies.
• ATMs will dispense only INR 2000 per day later to be increased to INR 4000 per day.
• Till Nov 11, midnight, hospitals will accept INR 500 and 1000 notes on basis of prescription, they can buy medicines from drug stores on hospital shops.
• Government buses ticket booking counter and airlines will accept them for booking tickets till Nov 11 midnight.
• Petrol and CNG outlets, crematoriums and international airports will also have the leeway to accept INR 500 and 1000 notes till Nov 11.
• ATMs will be closed on Nov 9 and 10.
• Banks will be closed on Nov 9 for public transactions.

India has risen to second spot on the global business optimism index.

• According to the latest Grant Thornton International Business Report, India has ranked second on the optimism index and the first spot was taken by Indonesia.
• Philippines came in third.
• High business optimism was also complimented by the rise of employment expectations.
• India has regained top position on this parameter while profitability expectations have also moved up.
• India continues to be among the top five countries in this index.
• But in revenue expectations, India has slipped to third position from the top in the previous quarter.
• India is much ahead of China where only 30 percent respondents expect an increase in revenue while 85 percent of the respondents have voted in favour of increasing revenue in India.
• Political events such as Presidential elections in the US and Brexit have damaged global economy, according to the index.

RBI has issued guidelines for forex hedging by global companies.

• The guidelines are on how Indian subsidiaries of MNC companies can hedge their currency exposure risk in the nation.
• RBI indicated on 4th Nov indicated that subsidiaries looking to hedge their exposure outside of exports and imports could use foreign exchange currency rupee derivatives, OTC and exchange-traded products.
• Profits and loss arises from hedging transactions in India as reflected in books of domestic subsidiaries of MNC among other guidelines.
• RBI is aiming to widen the scope of activities where hedging is permitted.
• Market participants and banks can submit their comments about the proposed guidelines by Nov 11, the RBI has said.

TATA Consultancy Services, India’s largest IT services provider has said University of New South Wales Australia has signed an MoU to pursue technology research collaboration.

• The agreement will enable University of New South Wales and TCS to work in areas of common interest such as machine learning, CR, robotics, data analytics and cloud computing.
• The MoU also opens up research on scholar exchange and internship for students from UNSW.
• TCS has formed an alliance with UNSW and deepens ties with Australia’s academic research community.
• This is part of the COIN or Co-Innovation Network.

Two days after Twitter’s India head Rishi Jaitly resigned, MD for SE Asia, India and MENA region Parminder Singh announced he quit the company.

• Maya Hari has been announced as the new MD for SE Asia and India reporting to Aliza Knox, Vice President Asia Pacific.
• To realign future goals and cut costs, Twitter has reduced nine percent of its workforce.
• Twitter India head Rishi Jaitly also quit the company recently.
• Twitter cut 300 jobs in 2015 after Dorsey took over as CEO full-time.
• Twitter has 3860 employees as of June 30 this year and paid out USD 168 million in stock based compensation in Q2.

Zensar Technologies, an RPG group company on 2nd Nov signed a definitive agreement to acquire UK based Foolproof and three wholly owned subsidiaries in the UK and one subsidiary in Singapore.

• The amount for the acquisition has not been publicly disclosed.
• As per terms of the agreement, Foolproof will become the wholly owned subsidiary of Zensar Technologies (UK) Ltd, the company said in a regulatory filing to the Bombay Stock Exchange.
• On completion of the deal, Foolproof will operate under its own brand name and will continue to be managed by its founders Peter Ballard and Tom Wood.
• The firm also said the deal will be financed by internal accruals and will be earning per share (EPS) positive for the company.
• With the purchase, Zensar expects about 30 per cent of its revenue will be through Digital services.
• Founded in 2002, Foolproof is headquartered in London with offices in Norwich and Singapore.

Finnish telecom giant Nokia on 2nd Nov 2016 has indicated that it has finalised an acquisition of former French American rival Alcatel Lucent.

• Nokia has struck a deal to purchase the other firm in April 2015 but has struggled to buy up the remaining shares.
• By January it held a controlling interest of around 7%, but a public exchange offer to buy the rest dragged on as small shareholders held out for a better price.
• "The closing of the deal today, marked by the purchase of all outstanding Alcatel-Lucent shares, means Nokia will now start eliminating the complexity and costs of running two separate public companies," Nokia said in a statement.
• In 2013, the company bought 50 percent of its network activities from Germany’s Siemens.
• Nokia was the world's top mobile phone maker between 1998 and 2011 but was overtaken by South Korean rival Samsung after failing to respond to the rapid rise of smartphones.

Rishi Jaitly, Twitter’s India head who helped popularise the adoption of the micro-blogging website among government departments to respond to citizen queries, has quit the firm.

• Jaitly was the vice-president for Asia Pacific, which includes India, West Asia and North Africa for Twitter.
• He came from the Knight Foundation in 2012 to Twitter.
• The decision to resign was announced on a Twitter storm.
• Twitter was created by J Dorsey, B. Evans and 2 other founders.