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Cabinet Approvals on November 25, 2020

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Cabinet-Approvals-on-November-25,-2020The Union Cabinet chaired by Prime Minister (PM) Narendra Modi has approved the following approvals on November 25, 2020, which were detailed by Union Minister Prakash Keshav Javadekar during a press conference.

Cabinet approves Scheme of Amalgamation of Lakshmi Vilas Bank with DBS Bank India Limited

The Central government has approved the draft scheme of Reserve Bank of India (RBI) for amalgamation of the capital starved Lakshmi Vilas Bank Ltd. (LVB) with DBS Bank India Ltd. (DBIL).  This decision has been taken on RBI’s application under section 45 of the Banking Regulation Act, 1949 to protect the interest of 20 lakh depositors and protect the services of 4,000 employees by maintaining financial and banking stability.

  • In this regard, there will be no further restrictions on the depositors regarding withdrawal of their deposits which were temporarily capped at Rs 25,000.
  • Notably, LVB is the second private sector bank after Yes Bank which ran out of capital and was place under moratorium. It was rescued by the Government through Rs 7,250 crore fund infusion by State Bank of India (SBI). Click Here to Read about Yes Bank

Background:

On November 17, 2020, RBI proposed a draft scheme of amalgamation of above mentioned banks after the Central Government has imposed a one-month moratorium on LVB. Read RBI placed LVB under 1-month moratorium & announced Draft Scheme to amalgamate LVB with DBIL

  • The Reserve Bank also superseded the board of the LVB Thothala Narayanaswamy (T.N.) Manoharan, a former Non Executive Chairman of Canara Bank, as Administrator of the bank for 30 days.

About DBS Bank India Ltd. (DBIL):

DBIL is a wholly owned subsidiary of DBS Bank Ltd, Singapore (“DBS”), which in turn is a subsidiary of Asia’s leading financial services group, DBS Group Holdings Limited.

  • DBIL has been issued a banking license to operate as a banking company under Section 22 (1) of the Banking Regulation (BR) Act, 1949, on October 4, 2018.
  • It is incorporated in India under Companies Act, 2013.

Managing Director (MD) & Chief Executive Officer (CEO)– Surojit Shome
Head Quarter– Mumbai, Maharashtra.

Cabinet approves Capital infusion into NIIF Infrastructure Debt Financing Platform

As a part of the Aatmanirbhar Bharat 3.0 package, the Union Cabinet has approved the infusion of Rs 6,000 crore equity in National Investment and Infrastructure Fund’s (NIIF’s) Debt Financing platform in the next two years i.e., 2020-21 and 2021-22.  This financial aid will help the entity to raise Rs 1.10 lakh crore by 2025 for financing infrastructure development projects in the country.

  • It should be noted that NIIF Debt Platform is sponsored by NIIF, set up by NIIF Strategic Opportunities Fund (NIIF SOF) and is comprised of Aseem Infrastructure Finance Limited (AIFL) and NIIF Infrastructure Finance Limited (NIIF IFL).
  • NIIF SOF owns a majority position in both the companies and has already invested Rs.1,899 crore across the Platform. This SOF facilitates NIIF investments.

The infusion of above mentioned is subject to the following conditions:

  • Out of the proposed amount, only Rs 2,000 crore will be infused in the current financial year i.e. FY2020-2021.
  • NIIF to take all necessary steps to promptly use the equity investments from domestic and global pension funds and sovereign wealth funds.

Key Points:

–The debt platform is expected to raise enough resources to extend debt support of Rs.1,10,000 crore to projects by 2025. This will be done through fresh infusion of equity by the government, besides the equity already infused by NIIF SOF and potential equity participation from the private sector.

Targets of Infrastructure Debt Financing Platform:

–To enable faster deployment of funds, the platform will set up its own in-house appraisal system.

–Over the next 5 years (NIP Plan Period) i.e. by 2025, the debt platform is expected to raise enough resources to support the construction of infrastructure projects worth Rs.100,000 crore.

  • This will act as a catalyst in attracting more investments as envisaged in the National Infrastructure Pipeline (NIP) plan period.

–The Platform will also need to raise external long-term equity capital as well as debt from both domestic and international markets over the next few years which could result in a multiplier of 14 -18 times of the proposed capital infusion of up to Rs. 6,000 crore from GOI.

About National Investment and Infrastructure Fund Limited (NIIFL):

It is a collaborative investment platform for international and Indian investors set u p by Indian Government. It manages over USD 4.3 billion of equity capital commitments across its three funds – Master Fund, Fund of Funds and Strategic Opportunities Fund, each with its distinct investment strategy.

Managing Director (MD) and Chief Executive Officer (CEO)– Sujoy Bose
Headquarter– Mumbai, Maharashtra

About Aseem Infrastructure Finance Limited (AIFL):

It is a Non-Banking Financial Company (NBFC) – IFC (Infrastructure Finance Company).

Headquartered– Mumbai, Maharashtra
Chief Executive Officer (CEO)– Mr. Virender Pankaj

Cabinet approved FDI of Rs. 2480.92 cr in ATC Telecom Infrastructure Pvt Limited by ATC Asia Pacific Pte. Ltd.

The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Shri Narendra Modi has approved the 2,480.92 crore foreign direct investment (FDI) in ATC Telecom Infrastructure Pvt Ltd. (ATC India) by M/s. ATC Asia Pacific Pte. Ltd (ATC Singapore).

  • This has been approved for acquisition of 12.32% of the equity share capital (on a fully diluted basis) of ATC Telecom Infrastructure Private Limited by ATC Asia Pacific PTE Limited.
  • Now the cumulative FDI of ATC Asia Pacific PTE Limited (ATC Singapore) into ATC Telecom Infrastructure Private Limited (ATC India) will be Rs. 5417.2 crore in financial years 2018-19 to 2020-21.
  • This approval is a result of exercise of the put option by Tata Tele Services Limited (TTSL) and Tata Sons Private Limited (TSPL).

About ATC Telecom Infrastructure Private Limited:

ATC Telecom Infrastructure Private Limited is engaged in the business of providing telecom infrastructure services to telecom operators. The company has existing FDI approval up to 86.36 % and with this approval it will rise to 98.68% (on a fully diluted basis).

About ATC Asia Pacific Pte Ltd:

Founded in 2006, ATC Asia Pacific Pte Ltd’s business includes holding or owning securities of companies other than banks.

Points to be noted:

–FDI up to 100% is allowed in Telecom Services Sector wherein 49% under automatic route and beyond 49% through government route.

–FDI would be Rs. 2480.92 crore in M/s ATC Telecom Infrastructure Private Limited by M/s ATC Asia Pacific PTE Limited during FY 2020-2021 and cumulatively will be Rs. 5417.2 crore considering the approval granted in FDI proposal no. 4854 and 4860 in FY 2018-19.

–The inflow of foreign investment to India spurs economic growth as well as foster innovation.

Recent Related News:

i.The Cabinet Committee on Economic Affairs (CCEA) has approved Rs 10,211 crore Dam Rehabilitation and Improvement Project (DRIP) Phase II & Phase III with the external financial assistance Rs 7,000 crore from the World Bank (WB), and Asian Infrastructure Investment Bank (AIIB).