The assertion comes amid growing unease among global website and social media companies over the government asking the social websites to ensure that uploading of derogatory material is stopped
New Delhi: The government on Thursday said it has no plans to censor the Internet even as it sought to send a strong message to social websites like Google and Facebook that any company wishing to operate in the country will have to follow law of the land, reports PTI.
The assertion comes amid growing unease among global website and social media companies over the government asking the social websites to ensure that uploading of derogatory material is stopped.
“We do not believe in censorship of any kind. All over the world, every company has to operate in accordance with the law. Any company wishing to operate in a country has to follow the law of the land,” IT and telecom secretary R Chandrashekhar told reporters on the sidelines of an event.
He added that everyone is aware of technology and there is a need to develop some mechanism to abide by the law.
Recently, the Centre had filed a report in a court saying there was sufficient material to proceed against 21 websites, including Facebook, Google, Yahoo and Microsoft, for alleged offences of promoting enmity between classes and causing prejudice to national integration.
Advocate NK Kaul, appearing for Google India, had argued that “the issue relates to a constitutional issue of freedom of speech and expression and suppressing it was not possible as the right to freedom of speech in democratic India separates us from a totalitarian regime like China”.
However, the Delhi High Court judge Suresh Kait, hearing the case, had warned Google India and social networking site Facebook India that websites can be ‘blocked’ like in China if they fail to devise a mechanism to check and remove objectionable material from their web pages.
In the face of stringent Basel III guidelines, banks have to take effective steps to meet these challenges and a series of strategies are required to be planned and executed by all the stakeholders to reach the goalpost in good time without any hiccup
The draft guidelines on Basel III capital requirements released by Reserve Bank of India (RBI) last month are more stringent than those proposed by Basel Committee on Banking Supervision (BCBS), in terms of higher requirement of common equity capital, stricter leverage ratios, and shorter time span for implementation, and the banks may need to raise about Rs2.7 trillion equity capital by March 2017, according to a report issued by CRISIL on 3rd January 2011.
If we take the Crisil report at face value, the magnitude of the problem can be realized, when we compare the fresh capital required to be raised with the present net worth of all the commercial banks. The net worth of all the commercial banks covering capital and reserves as on 31st March, 2011 was Rs 5,09,891 crore and the additional capital required during the next five years is estimated by Crisil at Rs2,70,000 crore, which is more than 52% of the present net worth of all the banks put together. Though a part of it can be raised through Tier II capital and a part of it through plough back of profits, this will be the biggest challenge for the banking sector of our country for the next five years.
While it is not known what prompted the RBI to take a ‘holier than thou’ attitude in stipulating stricter norms a and shorter time-frame than those prescribed under the Basel III guidelines, more so when our country’s economy is in a state of flux, it will, no doubt, result in developing a strong and stable banking system in India, that can stand the test of times and the country can feel proud, if what is stipulated by RBI is achieved without any mid-term course correction. As nearly 70% of the banking business in our country is in the public sector, this requires concerted efforts on the part of the banks, RBI and the government to source this large capital requirement of the banks and the regulatory authorities should provide the necessary wherewithal for the banks to comply with these requirements in good time, without any hiccups.
Though the finance minister has been promising adequate injection of capital to the public sector banks during the current fiscal, banks are yet to get a clear picture of capital infusion, and this only shows how vulnerable is the position of a large number of public sector banks in our country. The largest public sector bank of our country had to recently face the ignominy of being downgraded by a credit rating agency for not being able to comply with the existing minimum regulatory capital requirements, but this had little impact on the government which is still grappling with the budget deficit to make any firm commitment to the bank concerned. Against this background, it is rather ironic that the RBI has proposed stringent norms than mandatorily required, though these norms are yet to be formalized for implementation.
Whether RBI will modify these norms or not on the basis of feedback to be received from the banks and other stakeholders, the fact remains that banks have a mammoth task before them to ensure that they prove equal to the challenge posed before them by the regulator.
It is, therefore, worthwhile to identify in advance the steps required to be taken by all the stakeholders in the interest of the smooth implementation of the Basel III norms as and when finalized. A series of steps required to be initiated by the banks; the govt. and the RBI can be summarized as under.
What the banks will have to do:
First and foremost, the profitability ratios of the banks need to be strengthened by improving income and reducing expenditure with a view to plough back as much profits as possible into reserves. The PSU banks have been feeling the pinch of low valuation of their shares in the bourses which makes their job of raising capital from the public difficult. While the price earning multiples (PE) of all public sector banks, barring SBI, are in the region of low single digits, the new generation banks still enjoy double digit PE multiples, which is indicative of the aversion of investors towards PSU banks. This is due to, among other things, the lower profitability of PSU banks and the high incidence of non-performing assets (NPAs) in their portfolio. Against this background, the following are the important tasks cut out for the banks to improve their profitability and bring down NPAs in their books without hurting their customers.
Banks today charge a fee for use of ATMs beyond a certain number of transactions per month. Banks should consider not only abolishing completely these charges, but also provide incentives for customers using the ATMs and also Internet banking at least for a couple of years till the customers develop a habit of dealing with the banks more through automated systems than through the physical visits to the branches. This can create a metamorphosis in the way in which customers deal with the banks, bringing down operating costs substantially in the long run. The banks should, however, ensure that their technology is robust and prevent any mishaps like hacking, etc and fully protect the interest of the customer.
What the regulator can do:
The RBI as a regulator, in its own enlightened self interest, must also play a role no less than any other stakeholder in supporting the banks to meet these challenges, and following are a few strategies for their consideration.
What the central government can do:
The central government as the majority shareholder of a number of banks has a great responsibility to support the banks’ efforts in meeting the obligations under the Basel III guidelines, and a few of the initiatives required are detailed below.
The need of the hour is no doubt, to make the banks of our country strong and robust to meet any eventuality of another meltdown in the wake of the impending European crisis and all the steps suggested above are in this direction of giving a strong foundation for an uncertain future.
(The author is a banking & financial consultant. He writes for Moneylife under the pen-name ‘Gurpur’)
Sales registrations down ‘only 9%’ y-o-y, PE investments coming back
Possibly leveraging on healthy transaction numbers in the secondary market, Mumbai’s real estate in December showed positive signs, with only 9% decrease on a year-on-year basis, said a report by broker firm Prabhudas Lilladher.
“In lieu of fewer launches this festive season, higher secondary market transactions may have caused the spurt in December 2011 sales,” the report says. “However, anecdotal evidence continues to suggest a continued tough time faced by the developers. We would wait for data in the coming months to ascertain if this is a reversal in trend or just a monthly blip,” it continued. In terms of lease transactions, December numbers stood at 8,444, exhibiting a flat growth of 1% year-on-year (down 2% month-on-month).
In the last quarter, some builders deflated prices, especially for new launches. The sky-high prices had repelled consumers, and since Diwali, some offers came with discounts and other add-ons to increase offtake. “When there is no money in the market, the builders have to bring prices down. With no funding, sale is their only way out,” commented a sector analyst.
However, some private equity funds are again investing in the sector, giving hope to the builders. LIC Housing Finance is planning to raise Rs500 crore for its urban development fund, which will mark its entry into the private equity domain.
The fund will be invested in companies developing affordable housing projects like IT parks, SEZ and other allied projects. Omkar Realtors, too, raised Rs250 crore from Red Fort Capital for its Malad slum rehabilitation project.
The other big investment is from IL&FS Private Equity, which invested Rs200 crore to buy 9.36% stake in Indiabulls Infraestate, to develop a project on 8.39 acres of land occupied earlier by Bharat Textile Mills in Lower Parel.
“The premium looks extremely high, given the oversupply in Central Mumbai micro market, coupled with the fact that parking FSI rules have also been modified post the auction, whereby a builder is now required to pay the BMC (40% of unearned revenue) to get additional parking FSI,” the broker report said about the IL&FS deal.
Pankaj Kapoor, MD, Liases Foras, said, “The prices are still very high in the primary market. And if PE funding is available, they will remain high. The new projects may again increase their prices. But if customers stay away from such high prices, nobody profits. And it is tough then to find suitable exit points.”