Regional ...Big airlines, however, aren’t happy withthis move. “I don’t find it viable. Thispolicy will push the fare on those routesfrom which they earn a chunk of theirrevenue hence hurting margins,” saidan executive of a private airline.

“The states are interested in connec-tivity… Their feedback will also be takeninto account. The central governmentcannot bypass the states. We will takethem into confidence and work along withthem to make this happen,” Raju said.

The draft scheme identifies 406 air-ports and airstrips for which the airlineswill have to participate in a reverse bid-ding process which means the one whichbids for lowest funding will be awardedthe route. Airlines which win routesthrough bids would enjoy exclusivityrights for first three years.

“We have identified about 30unserved airports where flight servicescan be provided without any major costtowards revival. These are like low-hang-ing fruits,” said Civil Aviation SecretaryRajiv Nayan Choubey.

The airlines would have to submit abank guarantee of Rs 50 lakh per route.“We want an easy entry and exit policyfor the airlines. However, only seriousoperators will be encouraged so that theVGF is not misused,” said Choubey.

Subsidy will only be provided for upto 40 seats. Beyond that, the airlinewould be allowed to charge market price.“This will encourage operators withsmaller aircraft towards the scheme,”Choubey said.

Most big airlines don’t have smalleraircraft suitable to fly on regional routes.Among them, SpiceJet has 14 Q400Bombardier aircraft while Jet Airwayshas 18 smaller aircraft — a mix of ATR-72model. While SpiceJet said it needs moretime to study the policy, Jet Airwaysrefused to comment. Regional airlineslike TrueJet and Air Pegasus will be theimmediate beneficiaries of the scheme.“We are already operating inside AndhraPradesh through a VGF model. This willdefinitely help us to increase our busi-ness, we are evaluating the scheme andthe kind of competition we will face,”said V Umesh, co-promoter and manag-ing director at TrueJet.

Experts welcomed the policy sayingit was market-driven and will simulatedemand. “It has a right mix of fiscal andmonetary incentive and also gives flexi-bility to the operator,” said Amber Dubey,partner and India head of aerospace anddefence at KPMG.

In another major move, the govern-ment said it plans to construct a second

airport in the National Capital Region(NCR) as the existing Indira GandhiInternational Airport is likely to see anincreased load. Civil Aviation Ministryhas at present two proposals — one forJewar in Uttar Pradesh and other forBhiwadi (Rajasthan) — under its consid-eration in this regard. “Delhi airportalong with other metro airports will seean increased load due to the (enhanced)regional connectivity. So, we will haveto construct a new airport in NCR at theearliest,” Sharma said.

Govt cancels...But a final decision was delayed asJayanthi Natarajan was replaced as envi-ronment minister by Veerappa Moilyand eventually by Prakash Javadekar ofthe National Democratic Alliance.

Ministry records between 2012 and2016 accessed through the Right toInformation Act by Kanchi Kohli of theCentre for Policy Research-NamatiProgram show some newly appointedsenior officials in the ministry reversedthe opinion on Adani Ports & SEZ. In thecourse of this reversal, Javadekar alsoquestioned how blame for damage to themangroves had been ascertained and ifall the points raised by Adani in theirrepresentation had been addressed ade-quately. Officials reconfirmed the dam-age to the mangroves near the projectsite was proven by satellite data but theynow said there was no proof that projectwas to blame. This finding was approvedby Javadekar and the Rs 200 crore penal-ty was dropped.

In its reply to the show-cause notice,on the imposition of the penalty, AdaniPorts & SEZ argued “any substantiallyreduced amount voluntarily keeping inmind our CSR contributions as well aschallenges faced by the infrastructuresector in the current economic scenario”be imposed.

The Narain committee had recom-mended cancellation of clearance to thenorth port. Instead, while extendingclearance to the rest ofthe project, the ministrydecided Adani Ports &SEZ could reapply at alater stage for clearanceto the north port.

The ministry hadalso earlier concludedenvironmental clear-ance for phase II of thethermal power plant inthe project be cancelledfor violating norms.This decision wasreversed.

While the idea of thepenalty had beendropped before, otherchanges in the min-

istry’s views came with joint secretaryBishwanath Sinha assuming charge ofthe section dealing with the Adani Ports& SEZ file. Sinha in a note on March 2015wrote, “It is prudent that the environ-mental clearance granted should not becancelled for any infrastructure activity,including that of the north port.” He rec-ommended further studies to assess thedamage and how it could be fixed.

The then environment secretaryAshok Lavasa said the minister shoulddecide if he would like to hear the projectdeveloper personally before deciding onthe matter.

Javadekar’s personal secretary wrotethe minister wanted to know “if all thepoints raised in the proponents’ repre-sentations have been addressed ade-quately”. He also asked “on what basisthe comparative geo-mapping of 2005-2011 has been carried out”.

The ministry has now proposed ret-rospective clearance and condoninggreen violations, which could come tothe Adani project’s rescue in case viola-tions are determined in future inde-pendent investigations proposed by theministry.

Self-driving Tesla...They are expected to be released laterthis month.

At a recent technology conference inNovi, Michigan, the agency’s leader,Mark Rosekind, said self-driving carsshould at least be twice as safe as humandrivers to result in a significant reductionin roadway deaths. “We need to start withtwo times better,” Rosekind said. “Weneed to set a higher bar if we expect safe-ty to actually be a benefit here.”

Karl Brauer, an analyst with the autoresearch firm Kelley Blue Book, said theaccident served as a signal that the tech-nology might not be as advanced andready for the market as some proponentshave suggested.

“This is a bit of a wake-up call,” Brauersaid. “People who were maybe too

aggressive in taking the position thatwe’re almost there, this technology isgoing to be in the market very soon,maybe need to reassess that.”

Tesla said in its news release that ithad informed the traffic safety agencyabout the accident “immediately after itoccurred.” But the company reported itpublicly only on Thursday, after learningthat the agency had begun to investigate.

In the past, Elon Musk, the Tesla chiefexecutive, has praised the company’sself-driving feature, introduced in theModel S last fall, as “probably better thana person right now.”

But in its statement on Thursday, thecompany cautioned that it was still onlya test feature and noted that its use“requires explicit acknowledgment thatthe system is new technology.”

It noted that when a driver activatedthe system, an acknowledgment boxpopped up, explaining that the autopilotmode “is an assist feature that requiresyou to keep your hands on the steeringwheel at all times.”©2016 The New York Times News Service

More on business-standard.com

BENGALURU | 2 JULY 2016 ECONOMY & FINANCE 3. <

PRESS TRUST OF INDIANew Delhi, 1 July

The State Bank of India(SBI) has sold five percent stake in the the

National Stock Exchange(NSE), to Mauritius-basedVeracity Investments for ~911crore, valuing the exchangeat over ~18,200 crore.

The bank sold 22,50,000equity shares of NSE, priced at~4,050 per unit, SBI said in aregulatory filing. The transac-

tion comes at a time when NSEis discussing a possible publicoffer and listing. Recently, itsaid draft paper for domesticlisting will be filed with theSecurities and Exchange Boardof India (Sebi) by January 2017.

“Post this transaction, SBIholds 5.19 per cent stake inNSE while our subsidiary SBICapital Markets Limitedholds another 4.33 per centin the NSE,” it said.

Earlier this year, IDBI Bankhad sold two per cent stake in

NSE to country’s largest insur-er Life Insurance Corporationof India (LIC). NSE’s majorshareholders include LIC(12.51 per cent), Stock HoldingCorporation of India (five percent), IDFC (3.90 per cent),among others.

SBI sells 5% of NSEstake to Veracityfor ~911 crore

The State Bank of India (SBI)on Friday said it will mergecorporate finance branchesof associate banks withparent branch and preparedetailed plan to rationaliseretail banking network.

R Sriram, managingdirector (corporatebanking), said thecorporate finance branchesof associates banks will bemerged into parent branchas 60 to 70 per centaccounts are common andcan have one relationshipmanager. ABHIJIT LELE

SBI to mergeassociate banks’branches

The State Bank of India sold 22,50,000 equity shares of NSE,priced at ~4,050 per unit PHOTO: REUTERS

T E NARASIMHAN Chennai, 1 July

Chennai-based EquitasHoldings has got a licencefrom the Reserve Bank ofIndia to start a Small FinanceBank (SFB). It is expected tostart operations bySeptember or October.

The final licence (the ear-lier one was in-principleclearance, subject to variousconditions to be met) was giv-en to the company onThursday evening. It hasbeen providing microfinance, used commercialvehicle finance and smallenterprise loans, and hous-ing finance services.

Some more approvals stillhave to be obtained from var-ious departments of RBI andother agencies, said Equitas.It will be the first bank to beset up after 1947 from thestate and the first privatebank from this city.

P N Vasudevan, manag-ing director, said theyexpected the SFB to be prof-itable from the first yearonwards, despite an estimat-ed Rs 100 crore a year rise incosts. "Our major strengthwould be our ability to serv-ice the informal economythrough our (existing)processes and systems," hesaid. The increase in expen-diture would mainly be dueto relocation of branches andadditional staff cost. Overtime, the cost of funds wouldcome down. "Every one percent reduction in cost offunds means around Rs 50crore saving every year," saidVasudevan.

The benefit would be vis-ible after two years, he said.

As the new SFB need tofocus on liabilities, it needsto add another 3,000 peopleto the existing 9,000. Thiswould cost Rs 80-90 crore ayear. The second major costwould be an increase in rent,as Equitas need to relocatearound 400 branches. Of theexiting 580-odd, around 410will be converted into fullSFB branches. The rest willbe specalised branches,focusing on lending.

Equitas getsfinal licencefor smallfinance bank

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CAG seeks...The emerging international trend of oversightof the regulators, in order to provide a higher lev-el of assurance, is an interesting developmentthat must be watched to inform our own systemof oversight and assurance, said Sharma.

Industry reacted cautiously to the idea.Devamalya Dey, group president - audit & man-agement governance, Yes Bank, said, “It is athought-provoking idea. It will be debated anddiscussed over a period of time, how we shouldgo about it.” The 12th CAG of the countryexplained how advanced financial systemssuch as the US and the UK are moving towardscloser scrutiny of non-monetary policy func-tions of their central banks. “In the US the GAO

(Government Accountability Office) (counter-part of CAG in India) didn’t audit the Fed till1978; post-78 it was allowed to review the Fed’sregulatory duties in the payment system, butwas still prohibited from reviewing the delib-erations, decisions and actions on monetarypolicy. But soon after 2009, the year of thefinancial crisis, the US Congress allowed theGAO to audit loans made by the fed to individ-ual companies,” the CAG said. After 2012, itwas further allowed to review Fed’s internalcontrols, policy on collateral, use of contractorsand other activities, whilst still keeping themonetary policy outside its ambit. Presently, hesaid, there was an ongoing debate of allowingthe GAO to conduct a full-scale audit of theFed’s activities and regulatory structure.

In the UK, the Bank of England has histori-cally been outside the ambit of the auditing insti-tution, the NAO (National Audit Office).

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