Finance & Economy
  • SEBI comes up with its own twist to the Bharti-MTN deal
    • The Securities & Exchange Board of India (Sebi) has likely compounded the hurdles for Bharti Airtel in its efforts to create the world’s third-largest mobile phone company with South Africa’s MTN Group, unveiling a rule change on Tuesday which will make the deal more expensive for MTN.
    • What are the present rules?
      • In case of ADRs/GDRs, the receipts are issued by depositories (like Bank of New York) which are the legal owners of the underlying stocks. Often Indian companies strike an arrangement where the depositories vote in consultation with the board of the Indian company. RBI had stopped this practice among banks which had issued ADRs/GDRs
    • What has Sebi changed?
      • Till now, ADRs/GDRs were outside the takeover code. But from now on, if an ADR/GDR investor indirectly owns 15% equity it will have to make an open offer, provided there is an arrangement to exercise the vote
    • Does it throw a spanner in the proposed Bharti-MTN deal?
      • Since under the current plan MTN would subscribe to Bharti GDRs, Sebi's new rule could force MTN to make an open offer to Bharti shareholders in India. This makes the deal more expensive for MTN, if the open offer is fully subscribed.
    • What's the way out for Bharti?
      • Bharti can propose an agreement where MTN shareholders surrender their voting rights to the Bharti board. Bharti can then approach Sebi for an exemption to the open offer. But there are doubts whether the MTN board and MTN shareholders will agree to this. Alternatively, Bharti can increase the cash payout to ensure MTN's shareholding is below 15%.
  • Trading in 'directed credit obligations' to be allowed?
    • Wow; what a phrase? What are these "Directed Credit Obligations"?
    • Remember the priority sector lending mandate that is there for banks in India? It refers to them.
    • The RBI is now reportedly considering allowing in trading of these DCOs. What this means is that, if a bank has exceeded its priority sector lending beyond the mandated 40%, it can then sell it to others which have fallen short of their mandate -- ofcourse for a price.
    • Take a look at this report for a deeper understanding of the issues involved.
  • One more committee on petro pricing
    • And what it should do. Given that this is the third committee since 2004 to go into the vexed issue, and given also that the earlier committees had all come out with some meaningful suggestions which were not implemented, what should this committee do? Take a look at this well-written piece which will give us an insight / recap of the issue.
  • What's wrong with sub PLR lending?
    • The sub-PLR lending has now grown to nearly three-fourth of all bank lending, making the benchmark almost irrelevant.
    • As banks have the freedom to price loans below their BPLR, there is no pressure on them to lower it when their cost of funds declines. Resultantly, while new customers are able to shop around for better rates, the majority of existing borrowers of floating rate loans are denied the benefit of declining interest rates. This flexibility to lend below the BPLR is the reason banks jack up BPLRs quickly in a credit squeeze situation, but do not show the same promptness in lowering rates when the pressure abates.
  • On raisin production economics
    • There is a global shortage of raisins (dried grapes) since the leading producer, Turkey, had unseasonal snow last year which meant there was no flowering, hence fall in grape production. The other major raisin producing country, Australia, has switched to wine grape production, thus creating a demand.
    • However, India is not expected to benefit greatly. The three districts of Sangli, Solapur and Bijapur, the first two in Maharashtra and the last in Karnataka, are the main producers of the 80,000 tonnes or so of raisins produced in the country. Maharashtra’s two districts suffer from a lack of irrigation and power, preventing them from taking advantage of the global demand, according to a grape grower and raisin maker from the region.
    • In 2005, the last year for which data is available, Turkey overtook the US as the world’s largest raisin producer at a time when global raisin production exceeded 6 lakh tonnes.
  • India, China on global investors radar
    • CHINA, India and other Asian markets would be the preferred investment destinations over the next five years, says a survey. The bullishness in the emerging markets is because of the continued high growth and market size of China and India.
    • So says the UK Trade and Investment (UKTI) report, prepared in collaboration with the Economist Intelligence Unit.
    • Take a look at this news report for more details.
  • Ms. Bokova to head UNESCO
    • In what can only be described as a stunning upset, Irina Bokova, Bulgaria's former foreign minister and current ambassador to Paris became the first woman to head UNESCO, the Paris-based United Nations agency for education science and culture. She also became the first person from the former Soviet bloc countries to be nominated to this post.
    • Ms. Bokova was elected on Tuesday by the organisation's 58-member Executive Board, winning 31 votes to defeat her rival, Egypt's culture minister Farukh Hosni, who polled 27.
    • The Board will now forward her nomination to UNESCO's General Assembly to be held in November 2009.
    • This was the most thrilling and closely fought election in the organisation's history with the candidates tied at 29 votes each in the fourth round. If the tie had continued in Tuesday's fifth and final round, the winner would have had to be drawn from a hat. Such a move would have been unprecedented.
    • Take a look at this picture of Ms. Bokova.
  • Indian girl asks for urgent action on climate change
    • A 13-year-old Indian girl - Yugratna Srivatsava from Lucknow, speaking on behalf of the world’s three billion children, asked world leaders for urgent action on climate change.
    • The ninth grader from St Fidelis College spoke at the high-level summit convened by the U.N. Chief Ban Ki-moon. India was represented by Foreign Minister S.M. Krishna and Environment Minister Jairam Ramesh.
    • The summit is being held to mobilise political will ahead of the Climate Change Conference in Copenhagen in December, which is expected to yield a climate treaty to succeed the Kyoto Protocol.
    • The student from Lucknow is also on the youth advisory board of United Nations Environment Program’s (UNEP) youth organisation called ‘Tunza ‘(to nurture).
  • Kasparov takes early lead
    • You might remember the ongoing exhibition match between Chess's all time greats Anatoly Karpov and Gary Kasparov at Valencia, Spain.
    • Kasparov took two games lead in the match. These are played in the semi rapid format. Ten more games remain: two more in this same format and eight blitz games, in which each player starts with five minutes on the clock, with two seconds added after each move.
  • What's the name Jayanta Talukdar associated with?
    • Ans: Archery.
    • Take a look at this news report. We get a peek into the world of Archery championships. You have quite a few titbits in it which are worth remembering.