Bank Scrips Take Off as RBI Light­ens NPA Load

SBI, ICICI & Axis Bank ma­jor gain­ers on Dalal Street as cen­tral bank’s bit­ter medicine on NPAs takes ef­fect

The Economic Times - - Front Page -

Mum­bai: Banks don’t have to pro­vide for po­ten­tial losses on loans in the case of Pink City Ex­press­way, BSES Ya­muna and BSES Ra­jd­hani, and are mostly likely to get re­lief in case of Na­gar­juna Oil af­ter RBI de­cided to re­view the list of 150 tru­ant firms fol­low­ing rep­re­sen­ta­tion from lenders that many have im­proved their per­for­mance. The late Wed­nes­day com­mu­ni­ca­tion from the Re­serve Bank of In­dia (RBI) con­tained the names of Pink City Ex­press­way and the two BSES com­pa­nies, along with Jaiprakash As­so­ci­ates and Coastal En­er­gen.

Bank­ing of­fi­cials con­firmed that th­ese three com­pa­nies have been taken off the list. ₹ 253.05 88.55 62.15 46.00 205.50 131.90 194.20 157.90 96.95 467.60

“If you are not ca­pa­ble of (serv­ing) more sub­scribers please stop (adding more),” Ro­hatgi said. He dis­puted the as­ser­tion of tele­com com­pa­nies that they don’t gain from call drops.

“Ev­ery time a call ter­mi­nates, you call again, they gain,” he said. Ro­hatgi was de­fend­ing the TRAI reg­u­la­tion or­der­ing tele­com com­pa­nies to pay con­sumers at the rate of one ru­pee per dropped call sub­ject to a max­i­mum of three calls daily. He also pointed out that the or­der was not set in stone: “This is any­way not for­ever. It will be re­viewed in six months.”

Ro­hatgi ques­tioned the con­tention of the tele­com com­pa­nies that their fi­nances would be badly hit by the penal­ties.

“What is their griev­ance? That they will lose one day’s rev­enue? It is not some­thing that the court should ex­am­ine at all,” he said. “Does the whole country not talk of call drops? The av­er­age is 4.73%,” he said. “The in­vest­ment just does not match the in­crease in sub­scriber base. The idea is to have or­derly growth with consumer sat­is­fac­tion and rea­son­able re­turns.” The tele­com com­pa­nies are con­stantly in­vest­ing in the busi­ness, a lobby group told ET.

The tele­com in­dus­try is buy­ing spec­trum worth $8-10 bil­lion each year and then in­vest­ing an­other $7-8 bil­lion in in­fras­truc­ture, af­ter which tel­cos pay 15% in li­cence fees and spec­trum us­age charges. So, we are con­stantly in­vest­ing in the busi­ness,” said Ra­jan Mathews, di­rec­tor- gen­eral of the Cel­lu­lar Op­er­a­tors As­so­ci­a­tion of In­dia, in an email. COAI rep­re­sents top GSM tel­cos such as Bharti Air­tel, Voda­fone In­dia and Idea Cel­lu­lar, be­sides new­comer Re­liance Jio In­fo­comm.

Ro­hatgi said TRAI’s levy was the least in­va­sive method that could be used to gal­vanise the sec­tor into deal­ing with consumer con­cerns. “We could very well come up with a pro­posal mak­ing it manda­tory for all of them to in­vest 50% of their re­turns in in­vest­ment,” he told the bench of Jus­tices Kurian Joseph and RF Na­ri­man.

‘NOT A PER­MA­NENT SO­LU­TION’

Na­ri­man sug­gested that the levy was hardly a per­ma­nent so­lu­tion, al­lud­ing to the six-month con­di­tion. “This is an ad hoc gift to the consumer,” he said. “In fact, every­thing is ad hoc, not bet­ter.”

Ro­hatgi said hand­sets made by Nokia, Eric­s­son and Huawei have tech­nol­ogy that trig­gers codes in­di­cat­ing whether a call drop was due to the fault of the user or the ser­vice provider. He claimed that 64% of call drops were at­trib­ut­able to tele­com com­pa­nies and only 36% to user-re­lated fac­tors such as low bat­tery.

“The ar­gu­ment that a large pro­por­tion of call drops is due to fac­tors be­yond their con­trol is com­pletely wrong. The ar­gu­ment is, we don’t care. Just be­cause an il­lit­er­ate man who recharges for Rs10 signs a con­tract, has he signed his death war­rant?” Ro­hatgi said. “Most call drops are at­trib­ut­able to you. This (call drop charge) is ame­lio­ra­tive. Even an in­ter­fer­ence with sig­nals is a tech­ni­cal is­sue.”

He re­jected the ar­gu­ment that lack of spec­trum was to blame. In­stead, it was lack of op­ti­mi­sa­tion of spec­trum, he said. Ro­hatgi also said tel­cos don’t just have to pro­vide clear sig­nals out in the open, they also have to do so in­side build­ings. It was meant to be just in the open dur­ing the roll­out pe­riod and not for­ever, he said.

He said In­di­ans were al­ready ex­posed to greater ra­di­a­tion lev­els legally than in other coun­tries and the dif­fi­culty of set­ting up tele­com tow­ers could not be used to jus­tify call drops.

Ro­hatgi will con­tinue with his ar­gu­ments next Tues­day. The tele­com com­pa­nies have said they are not to blame for call drops and can­not be pe­nalised for it, given the dif­fi­culty in set­ting up tele­com tow­ers. They have also said the call-drop penalty charge would drive the sec­tor into the ground.

CMP (`) % CHANGE

San­gita Me­hta & Biswa­jit Baruah

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