SBI not to finance disputed projects

In a clear indication of banks pulling out their hand in the aftermath of the Supreme Court ruling in the Greater Noida land acquisition case, State Bank of India on Friday said it would not finance real estate projects that were mired in disputes over land acquisition. “If in a particular area where there has been a difficulty, those will not be financed,'' bank Chairman Pratip Chaudhuri told reporters on the sidelines of a conference here.

Mr. Chaudhri's remarks come two days after the Supreme Court asked the U.P. Government to return the land acquired in Greater Nodia for realty projects. “How can we give a loan when there is no land, where there are no land rights,'' Mr. Chaudhuri said when asked about the bank's position on funding projects in disputed areas.

“Due diligence is important while advancing credit to the commercial real estate sector as the high interest regime is pushing up project costs and hence greater chances of default,'' National Housing Bank Chairman and Managing Director R. V. Verma said.

The Reserve Bank of India has already asked banks to be cautious while extending loans to commercial real estate projects in view of increasing bad assets. On Wednesday, the Supreme Court had upheld the Allahabad High Court order quashing the acquisition of over 156 hectares from farmers in Greater Noida by the Greater Noida Industrial Development Authority and its allotment to builders.

Finance Minister Pranab Mukherjee cautions banks on asset quality

NEW DELHI: Finance Minister Pranab Mukherjee has cautioned all staterun banks and financial institutions on the deterioriating asset quality. "They (banks) should exert themselves to devise suitable strategies for containing and rolling back non-performing assets ," he said. 

Mr Mukherjee on Friday did the annual review of the performance of public sector banks and financial institutions. The finance minister also assured the private sector of enough liquidity in the market and said that the government, which has Rs 4.17 lakh crore borrowing plans for 2011-12 , does not intend to elbow them out. "So far the borrowing programme is concerned, always we match it in such a way that the others in the market of borrowing are not elbowed out," he said. 

Mr Mukherjee expressed his satisfaction on the 22.44% credit growth recorded by the staterun banks in 2010-11 but cautioned on the moderation in the last quarter. Credit growth has moderated largely because of the hike in interest rates due to the tight monetary policy regime followed by the RBI since March 2010. 

Further banks have been more cautious in lending to certain sector such as real estate and power due to rising bad loans in these sectors. RV Verma, chairman of National Housing Bank , which is also the sectoral regulator for all housing finance companies, said that due diligence is very necessary while advancing credit to commercial real estate sector as high interest regime is pushing up project costs and hence there is greater chances of default. Mr Mukherjee expressed confidence in the resilience of Indian banks and advised banks' chairmen to undertake a comprehensive capital planning exercise, particularly in view of the Basel III capital adequacy benchmarks.

L&T Finance raises Rs 330 cr via pre-IPO placement

Bangalore: Ahead of its public share sale, L&T Finance Holdings Ltd has raised Rs 330 crore from US private equity (PE) firm Capital International.

The company placed 60 million equity shares with the investment fund at Rs 55 each, its parent Larsen and Toubro Ltd (L&T) said in a statement to stock exchanges on Thursday.

L&T Finance is preparing to raise Rs 1,750 crore through an initial public offering (IPO), the company said in a regulatory filing in March.

“This pre-IPO round is our first step to reach up to the IPO process,” N. Sivaraman, president, L&T Finance, said by phone from Mumbai. “We have got regulatory approvals. There are a few last bits for which approvals are being sought. It’s a bit too early to say when the issue will happen.”

L&T Finance, 99.9% owned by parent L&T, plans to use proceeds from its IPO to repay Rs 345 crore to its parent, enhance its own capital base by infusing Rs 570 crore into the company, and invest Rs 535 crore in L&T Infrastructure Finance.

Investors seem to like finance companies. Deal sizes in the banking, financial services and insurance space are getting bigger. In the first six months of this year, investors have put $740 million (around Rs 3,285 crore today) in 20 deals in the banking and financial services space, compared with $657 million in 20 deals in the same period a year ago, according to data from Venture Intelligence, which tracks PE and venture capital activity.

“For financial services, on a long-term basis, investors continue to be very bullish due to the underlying demand,” K.P. Balaraj, managing director,WestBridge Capital, said in an earlier interview.

For investors, non-banking financial companies (NBFCs) offer exposure to emerging economies as they can’t invest in banks due to regulatory controls. Under the Reserve Bank of India guidelines, no individual entity can take more than 5% stake in a bank without its approval.

“Similar to an investment in a bank, an investment in a(n) NBFC gives the investor an exposure to a wider economy by the very nature of its business, including retail, infrastructure and corporate,” said Avinash Gupta, leader, financial advisory, Deloitte Touche Tohmatsu India Pvt. Ltd.

In another deal on Thursday, International Finance Corp., or IFC, a member of the World Bank Group, said it has invested Rs 12 crore in Jain Irrigation Systems Ltd’s proposed NBFC.

Earlier in May, Magma Fincorp Ltd, a non-deposit taking NBFC, received a Rs 440 crore investment in a deal led by PE firm Kohlberg Kravis Roberts and Co LP, along with IFC.

On Thursday, L&T shares gained about 3% to end at Rs 1,861.25 apiece on the Bombay Stock Exchange, on a day the benchmark Sensex climbed 1.88% to close at 19,078.30 points.

Citigroup Global Markets India Pvt. Ltd, HSBC Securities and Capital Markets (India) Pvt. Ltd and JM Financial Consultants Pvt. Ltd are the global coordinators and book runners to L&T Finance’s IPO.

2G scam: Finance Ministry went along with A Raja, DEA tells JPC

NEW DELHI: The Finance Ministry resisted A Raja's decision not to auction the 2G spectrum, but eventually went along Telecom Ministry's views, a presentation by the Department of Economic Affairs before the Joint Parliamentary Committee probing the scandal said on Thursday. 

In what might exacerbate the perceived rift between Finance Minister Pranab Mukherjee and his predecessor, Home Minister P Chidambaram, DEA said that the note Chidambaram sent to the Prime Minister days after the 2008 spectrum allocation recommended that spectrum allocations made in the past be "treated as a closed chapter." That suggestion was in contrast with efforts made by the ministry in the preceding months to secure greater revenues for the exchequer from spectrum allocation. 

"A note was sent by the then Finance Minister to the Prime Minister on January 15, 2008, on the basis of the additional secretary's note and concept paper. An auction-based mechanism was recommended for future allocation of spectrum (beyond the 'start up' spectrum) with the spectrum allocations having been made in the past to be treated as a closed chapter," the DEA presentation said. 

This note was the source of the sharp criticism against Chidambaram by Public Accounts Committee chairman Murli Manohar Joshi's report. In its draft report, PAC said it considered it, "most unfortunate that the Finance Minister, the guardian of public exchequer and entrusted with principal task of mobilisation of resources, pleaded for treating the matter as closed instead of initiating stringent and swift action against those responsible for huge losses to the exchequer." 

Chidambaram had responded then saying it was a distortion of his note and his recommendation was for spectrum usage charges and not for the entry fee. The Prime Minister has maintained that he has acted on the basis of the advice of his ministers. In a series of letters in mid-2007, the Finance Ministry had asked the Department of Telecom to include the issue of spectrum pricing within the ambit of the group of ministers. 

DoT opposed this, saying spectrum pricing is within the normal scope of work carried out by that ministry. The Finance Secretary had brought this issue to the notice of the Cabinet Secretary as well. After several back and forths, in June 2007, DoT argued that spectrum pricing and charges for the use of spectrum was a dynamic issue and must be reviewed and considered from time to time in the context of the changing technology and international practices in consultation with the telecom regulator. "Thereafter, DEA did not take up the issue, either with DoT or with the Cabinet Secretariat," DEA says in the presentation.

News of the World shutting down amid scandal

LONDON

News International James Murdoch says he's satisfied that embattled executive Rebekah Brooks had no knowledge of phone hacking while she was editor of the scandal-ridden News of the World.

His comments came just hours after the Murdoch media empire unexpectedly jettisoned the News of the World on Thursday, the best-selling tabloid at the center of the phone hacking scandal.

The tabloid, long known for its dubious undercover reporting techniques, had gravely offended the British public by hacking into the cell phone voicemail of a missing teenage girl, possibly even interfering with the police investigation into her murder.

But Murdoch expressed confidence in Brooks' leadership during an interview broadcast on British media.

THIS IS A BREAKING NEWS UPDATE. Check back soon for further information. AP's earlier story is below.

LONDON (AP) -- The Murdoch media empire unexpectedly jettisoned the News of the World on Thursday, the best-selling tabloid at the center of an ugly phone hacking scandal.

The tabloid, long known for its dubious undercover reporting techniques, had gravely offended the British public by hacking into the cell phone voicemail of a missing teenage girl, possibly even interfering with the police investigation into her murder.

What was an acceptable, if illegal, tactic used to gather scoops on drug-using celebrities, philandering politicians or cheating film stars suddenly became completely unacceptable when missing children, the relatives of soldiers slain in Afghanistan or the families of victims of London's 2005 terror attacks were targeted.

Rupert Murdoch's son, James Murdoch, who heads European operations for the paper's parent company, said the 168-year-old weekly newspaper would publish its last edition on Sunday, without ads. The closure was spurred in part by the decision by many large advertisers to withdraw their ads in protest of the paper's gross intrusions of privacy.

News International says shuttering the scandal-wracked News of the World will cost about 200 tabloid staffers their jobs. Journalists at the paper had no advance word of the decision.

However, some analysts said decision may make strategic business sense for Rupert Murdoch if it allows him to salvage a controversial bid to fully take over the broadcaster British Sky Broadcast in a deal estimated at 12 billion pounds ($19 billion). Murdoch might even be able to fill the gap left by the News of the World with one of his other media properties.

"News Corp. has taken a bold decision to stop printing the News of the World and close the title. Mr. Murdoch was clearly not willing to jeopardize his bid for BSkyB," said markets analyst Louise Cooper of BGC Partners in London. "Murdoch has shown what a brilliant operator he really is."

She said the financial impact of the paper's closure will be small to parent company, far less than the value wiped off of News International's stock price by the hacking scandal.

News International spokeswoman Daisy Dunlop denied rumors that The Sun, the News of The World's sister paper that publishes Monday through Saturday, would become a seven-day operation to pick up the slack and restore Murdoch's financial position in the vital Sunday market.

"It's not true at the moment," she said.

She said employees laid off in the closure will be able to apply for other jobs within the sprawling media company.

The news of the shutdown and mass job loss sparked outrage at the paper's headquarters, especially because Rebekah Brooks -- the editor in charge at the time, now one of Murdoch's top lieutenants -- is keeping her highly paid executive position as News International chief.

The abrupt decision to shut the newspaper follows an extraordinary three days in which multiple revelations about intrusive phone hacking cost the paper its advertising base and reader support. The tabloid was found to have hacked into the phone message of a teenage murder victim and was suspected of targeting the relatives of slain soldiers in its quest to produce attention-grabbing headlines.

Britons of all stripes said they were disgusted and revolted by the Rupert Murdoch-owned newspaper's tactics and British lawmakers held an emergency debate on Parliament on Wednesday in which many condemned the paper.

The tabloid's executives had already admitted the widespread hacking of cell phones used by celebrities, film stars, royal aides and politicians and reached cash settlements with prominent victims. But the intrusion into -- and possible interference with -- an ongoing murder investigation of a child proved to be the final straw in losing the public's trust.

Police are now examining 4,000 names of people who may have been targeted by the paper.

Murdoch said in a memo to staff that all revenue from the final issue, which will carry no ads, would go to "good causes."

The announcement took British media-watchers -- and the newspaper's staff -- by surprise.

The News of the World, which sells close to 3 million copies a week, has acknowledged that it hacked into the mobile phone voice mails of politicians, celebrities and royal aides. A reporter and a private investigator working for the paper were jailed for phone hacking in 2007.

But in recent days the allegations have expanded to take in the phones of missing children who were found slain, the relatives of terrorist victims and families of soldiers killed in Afghanistan.

James Murdoch said if the allegations were true, "it was inhuman and has no place in our company."

"Wrongdoers turned a good newsroom bad," he said, "and this was not fully understood or adequately pursued."

"While we may never be able to make up for distress that has been caused, the right thing to do is for every penny of the circulation revenue we receive this weekend to go to organizations -- many of whom are long-term friends and partners -- that improve life in Britain and are devoted to treating others with dignity," he said.

Shares in News Corp. were up 1.6 percent at $18.22 on the Nasdaq index in New York, though they have fallen from above $18.50 since Tuesday.

Some of the tabloid's tactics had involved illegal payoffs to police officers for tips and information.

The Independent Press Complaints Commission announced a review Thursday into the corruption charges, which are apparently based on information provided to London police this week by the tabloid.

Police Commissioner Paul Stephenson said Thursday that any officers who took illegal payments should face criminal prosecution.

"I am more than ashamed -- I am determined to see them in a criminal court," Stephenson said.

The involvement of the independent commission means police will have impartial outside help in determining whether officers should face corruption charges.

Deborah Glass, deputy commissioner of the Independent Police Complaints Commission, said she will personally supervise the investigation into the possible News of the World payoffs. She said she wants to assure the public that the police have done everything possible to identify offenders.

Many in Britain have long assumed that some police got bribes from journalists. The practice was admitted in 2003 by Rebekah Brooks, then the editor of The Sun -- another Rupert Murdoch tabloid -- and now chief or Murdoch's U.K. newspaper operations, in testimony before Parliament. But details about suspected corruption are starting to emerge because of the increased focus on shoddy journalistic practices at Britain's highly competitive tabloids.

Brian Paddick, a former senior police commander, told the BBC that journalists used to make clandestine cash payoffs to police in envelopes handed over at a drive-thru fast food restaurant near the News International headquarters in London.

Sometimes the reporters sought information about celebrities in trouble -- Paddick cited a 2010 car crash in north London involving singer George Michael, who was using marijuana and alcohol at the time -- and sometimes they were making deals regarding ongoing police investigations.

Paddick said sometimes payoffs were "jeopardizing serious criminal investigations by giving out confidential information that could be useful to criminals."

Police officials have said only a handful of police are suspected of receiving payments, but declined to say how many.

Paddick, a former London mayoral candidate who may run again in 2012, said one journalist said he had paid 30,000 pounds ($50,000) for police information.

"All of this is done in a very clandestine way," said Paddick, who added he had never personally seen money being exchanged.

Barclays bank leads consortium to finance STX housing project

Accra, Jul, 5, GNA- Water Resources, Works and Housing Minister Mr Alban Sumana Bagbin on Tuesday said Barclays bank was the syndicating financial institution leading a consortium of banks to finance the Ghana's STX housing project. The project which sod cutting ceremony was performed in January 27, 2011 would commence fully at the end of July 2011, according to the minister.

Mr Bagbin was responding to strings of questions during questions' time in Parliament on the famous STX Housing project. Ms Cecilia Abena Dapaah, NPP member for Bantama, had asked the minister to brief the House on the status of the execution of the STX agreement.

The Ghana Government and Management of Korean Construction Firm STX, signed two agreements for the construction of 30,000 housing units for the first phase of a proposed 200,000 units for the next five years. The agreements are Suppliers' Credit and Engineering, Procurement and Construction (EPC).

The Minority members who have dismissed the housing agreement as a bad deal, crowded the minister with many supplementary questions especially on the source of funding, the amount spent so far, the amount in the dedicated account and the issue of sovereign guarantee. He said there were three companies involved in the project 96 the STX Engineering and Construction GH Limited as the parent company holding a share of 10 per cent and STX Korea 90 per cent share holder and that Ghana Airports that hold no share.

On the local content, the Minister said the 10 per cent local provision and the 90 per cent labour would be strictly adhered to. Asked why the project delayed, Mr Bagbin said many administrative bottlenecks cropped up and delayed the project especially seeking permission from the Environmental Protection Agency. When asked what were the legal difficulties that arose and how they were resolved, he said there were no legal difficulties apart from the Attorney General requesting for the agreement to make inputs as the legal officer of the government.

He said the NPP Affordable Housing project which was still on its knees also delayed so many months after sod cutting before it finally took off. He said the NPP Affordable Housing project was funded by the HIPC fund of GH C40,000.00 but was not completed adding, they also came to Parliament for another GH C30,000.00 but the project was only 60 per cent complete. The Minister announced to the House that the rivalry between the Chief Executive Officer and the Koreans was over as the legal tussle was dropped and attempts by Ghanaian counterparts to convene a board meeting to prevent the Koreans from sacking him were all resolved.

When asked who the sovereign guarantee was handed to and what was the value, the minister said, it was handed to STX. "The Ministry of Finance and Economic Planning has on behalf of the government of Ghana issued the Sovereign Guarantee and made the necessary arrangements for the transfers of the money," he said. He noted that: 93A dedicated account has also been opened at the Bank of Ghana for the necessary transactions." He stated that the project would start in Accra at Burma Camp, Air Force Base, Tesano and some other places adding, 4720 houses would be completed first as directed by the President John Atta Mills. "STX Engineering and Construction GH Limited per their programme of implementation will start land preparation this July and are currently mobilizing to send equipment to the sites," he said.

Mr Bagbin told the House that after the approval by Parliament of the various agreements on the National Housing project, the Ministries of Finance and Economic Planning, Justice and Attorney General and Water Resources Works and Housing in collaboration with the Parliamentary Service duly executed the programme.

City of jobs fails to employ its own youth

GURGAON: A village of Gurgaon would generally present a rosy picture to an outsider – BMWs parked next to cowsheds, independent houses that are a luxury for many and so on. While it's no secret that many of these villagers sold off their agricultural lands to the government and corporates and became millionaires, a sneak peek into their lives shows the dark reality.

A survey conducted in seven villages by a civil society organization, Gurgaon Citizen Council, shows that 5,179 youths out of a total population of about 15,000 are unemployed.

According to the survey, more than 45% of youths below 26 years of age is unemployed. The study also reveals that despite being cash-rich, most of the parents in these villages didn't send their children for higher education. Only 33% youths from these villages have gone for graduation studies with about 50% youths dropping out after class X.

The survey was conducted in seven villages falling in Gurgaon Vidhan Sabha constituency, namely Gurgaon village, Bhimkheri, Chakkarpur, Sukhrali, Kanhai, Wazirabad and Silokhra. The fact that one-third of the youth from Gurgaon villages are unemployed goes to show that the government and the multinationals, which had brought lands with the promise of a better future for villagers, have neglected them. According to social analysts, unemployment among rural youth is also a reason behind rising crime rates in Gurgaon.

Gurgaon Citizen Council has written to the Haryana chief minister of Haryana, local MP and MLAs to address the problem. "The crime rate near the villages is increasing at a fast rate and that is only because of the increasing number of unemployed people. These villages are denied basic facilities like schools, parks and infrastructure after the lands were acquired by several government and private agencies," said the president of Gurgaon Citizen Council.

The council pointed out that HUDA had promised in year 2006 the uplift and improvement in the condition of the abandoned villages of the city but was not followed. Alka Dalal, an advocate by profession and a member of the council, says, "The city has a lot of villages but they are being neglected after their lands were acquired. Surprisingly, the youths in the villages are being caught for getting involved in crime because the only reason is lack of education."