The government had planned to conclude the ONGC share sale by the third quarter this fiscal, but had to postpone it because of weak stock markets and failure to meet the norms on the required independent directors
New Delhi: The finance ministry will decide on the date of the follow-on offer of Oil and Natural Gas Corporation (ONGC) after the government appoints independent directors for the state-owned company, reports PTI.
“We will file draft papers again once the requisite number of independent directors are appointed on ONGC board,” a finance ministry official told PTI.
The government had planned to conclude the ONGC share sale by the third quarter this fiscal, but had to postpone it because of weak stock markets and failure to meet the norms on the required independent directors.
As per clause 49 of the Securities and Exchange Board of India (SEBI) regulations, half of the company’s board should comprise independent directors.
Three of ONGC’s independent directors—S Balachandran, SS Rajsekar and Santosh Nautiyal—retired on 10th November after the three-year term.
The official said the Department of Disinvestment (DoD) is awaiting approval of the Cabinet Committee on Appointments (ACC) for the new independent directors on the ONGC board.
The DoD is understood to have asked the ministries concerned to fast-track appointment of independent directors, so that they can move ahead with the stake sale programme.
Last month, ONGC withdrew the draft prospectus filed with market regulator SEBI shortly before the 90-day deadline. ONGC had filed the FPO prospectus in September.
The government plans to sell 5% stake, or 427.77 million shares, in the company. The government’s holding is expected to come down to 69.14% from the current 74.14% after the sale.
The post of independent directors is also lying vacant in other disinvestment bound PSUs—BHEL, RINL, Hindustan Copper and NBCC.
BHEL, which has already filed draft papers with SEBI on 30th September for a Rs4,000 crore follow-on public offer (FPO), needs two more independent directors on board.
Besides, Rashtriya Ispat Nigam (RINL) needs three more independent directors, while HCL needs five to meet the listing norms to meet the SEBI requirement.
As against the disinvestment target of Rs40,000 crore in the current fiscal, the government has so far raised only Rs1,145 crore.
Bankers and analysts believe the RBI intervention may come anytime during the week as the payment of advance tax by companies will be due on 15th December. Such a move to lower CRR will result in release of about Rs15,000 crore into the system
New Delhi: With the last date for payment of advance tax drawing closer, pressure is mounting on the Reserve Bank of India to cut cash reserve ratio (CRR) by at least 0.25 percentage points to improve liquidity in the system, reports PTI.
Bankers and analysts believe the RBI intervention may come anytime during the week as the payment of advance tax by companies will be due on 15th December. This will result in substantial amount of money being sucked out from the market.
Such a move to lower CRR, which is the portion of deposit that banks are compulsorily required to keep with the central bank, will result in release of about Rs15,000 crore into the system.
“We expect 25-50 basis point cut in the CRR at any time.
It could happen during this week,” head of a leading public sector bank said.
The CRR has been left unchanged at 6% since May 2010.
However, the policy rates have been raised 11 times during the same period. In October, the central bank raised the repo rate by 25 basis points to 8.50% and the reverse repo rate moved up by a similar percentage to 7.50%.
Repo is the short-term rate at which the RBI lends to banks, while reverse repo is the rate at which it gets funds from banks.
According to senior official of another public sector bank, the liquidity infusion from the RBI looks very likely.
He said CRR cut may happen either during the week or on 16th December when the RBI will release its mid-quarterly review of the monetary policy.
Analysts also feel there would be liquidity easing from the central bank in a gradual manner.
“We expect the Reserve Bank of India to continue to ease liquidity, first through open market operations, and then by cutting the reserve requirements of banks,” Goldman Sachs said in a report.
“Given this backdrop of growth slowing and inflation peaking off, we are relieved that the RBI has finally begun Open Market Operations to cut the money market liquidity deficit and reduce undue pressure on interest rates,” said Bank of America-Merrill Lynch India economist Indranil Sen Gupta said.
While Moody’s has hinted as revising India’s growth forecast downwards, even its existing 7% economic growth projection for the current fiscal is less than that of many other global institutions and ratings agencies
New Delhi: Global ratings major Moody’s has said that tough times are ahead for the Indian economy and it may revise downwards the country’s growth forecast for 2011-12 to 6.5%, reports PTI.
“We may need to revise our 2012 growth outlook from the current rate of 7% and towards something like 6.5%... It looks like tough times are ahead,” Moody’s Analytics said in a report.
The country’s gross domestic product (GDP) growth slipped to 6.9% in the second quarter, the lowest in over two years. For the first half (April-September) of the fiscal, the average growth rate stood at 7.3%.
The economic growth in 2010-11 stood at 8.5%.
Growth in eight core infrastructure industries dipped to 0.1% in October, the lowest in five years.
The Reserve Bank of India (RBI) has already revised its growth projection for the Indian economy to 7.6%, from 8% earlier.
On Friday, finance minister Pranab Mukherjee said that GDP growth in the current fiscal is likely to be around 7.5%, far below the 9% projection made by the government in its pre-Budget survey.
Moody’s said that the economy is struggling under the weight of higher interest rates but this had failed to achieve the objective of cooling inflation, which have been above the 9% mark since December last year.
RBI has already hiked its key policy rates 13 times, totalling 350 basis points, since March 2010 to tame demand and curb inflation.
India Inc has blamed the repeated rate hikes, which have led to increased cost of borrowings, for hindering fresh investments and slowing down industrial growth.
“It is difficult to see this (economy) turning around any time soon, especially as the troubles in Europe appear to have some way still to play out,” Moody’s said.
While Moody’s has hinted as revising India’s growth forecast downwards, even its existing 7% economic growth projection for the current fiscal is less than that of many other global institutions and ratings agencies.
It is also less than the projections made by the Organisation for Economic Cooperation and Development (OECD), Centre for Monitoring of India Economy (CMIE), Crisil and ICRA, who have all put growth to be between 7.3% and 7.6%.
Finance major Citigroup last week revised downwards its growth forecast for the Indian economy to 7.1%, from the earlier estimate of 7.6%, for 2011-12 on account of global slowdown and domestic factors like impact of tight monetary policy.