Business Brief

Raghuram Rajan

  • Former RBI Governor and current faculty member of the prestigious Chicago Booth School of Business – Raghuram Rajan, is one of the esteemed attendees at the annual World Economic Forum in the upscale ski resort of Davos Switzerland. Addressing a session on Strategic Outlook for South Asia, Rajan stated that India will eventually surpass China in economic size and will be in a better position to create infrastructure that is promised by the Chinese in the region, and further went on say that Indian economy will continue to grow, while growth rate in China is slowing down. Ever since he left RBI in September of 2016, Rajan has always maintained a good public profile and has not shied away from criticizing the BJP government on various fronts, most notably the failed demonetisation exercise, and has even gone on to write a book since. The fact that he has given frequent interviews and made himself available to the media at will, may have suggested that he has political ambitions if the BJP is overthrown and a UPA alliance comes to power. However, on being interviewed on the sidelines of the World Economic Forum, he flatly denied that he has any such aspirations and stated he is a technocrat and an academic and that he is simply trying to put ideas into the system. He also went to say that his strengths do not lie in politics thereby dispelling all rumours.

  • Kotak Mahindra Bank – the bellwether of the Indian banking sector seemed to be in a spot of bother when the RBI was going hammer and tongs behind it to reduce its promoter shareholding below 20%. The bank in a rather innovative way reduced its voting rights by the issue of an instrument known as perpetual non-convertible preference shares, which the RBI flatly rejected. The bank in an unprecedented move took the RBI, its regulator, to court in the first instance of its kind in history. Finally, many negotiations and few court dates later, the Bombay High Court adjourned the hearing to 12th of March this year. But, what is surprising is that RBI and Kotak Bank are said to be in talks with each other for an “out of court settlement”. If this is the case, Uday Kotak seems to have gotten the better of his regulator, in a case that could almost be made out to be like an over smart student getting his way with the principal. Let us recall that Bandhan Bank was penalised for the same action as Kotak Bank and finally had to give in to the demands of the RBI. So why this special treatment for Kotak Mahindra Bank?

  • From the bellwether of the banking sector to that of the pharmaceutical sector; Dilip Shanghvi led Sun Pharma is in the eye of the storm as it has been accused of a host of wrongdoings such as non-reporting of related party transactions, negligence of corporate governance standards, stock market manipulations and more. 2 whistleblower letters directed to SEBI had listed out in detail the wrongdoings of the pharma major. The effect of these allegations was felt by investors and Sun Pharma has lost roughly 30% or 42,700 crore Rs of its market value since September. Just recently, to allay the concerns of investors and arrest the fall in value of its shares, Sun Pharma gave details and clarified the status of its related party transactions, and on Tuesday gave further details and chalked out a road map to iron out the controversy, which included squaring up a loan of 2238 crore Rs to a Dubai based company suspected to be a related party, transfer the distribution of its domestic formulations business to a subsidiary, replace the auditors of another of its subsidiaries and has also firmly denied that it has given loans or stood guarantee to a firm promoted by Dilip Shanghvi’s brother in law, Sudhir Valia. This clarification seemed to have a soothing effect on the nervous investors as the stock surged 4.95% in Tuesday’s trade and is up a further 3% in today’s market.

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