Finance Ministry cautions against bitcoin, says ‘virtual currencies are like ponzi schemes’

Ministry of finance cautioned against risks of bitcoin trading which lack government fiat, comparing them with ponzi schemes.

The Ministry of Finance has cautioned people against investing in virtual currencies and compared them to ponzi schemes.

“There has been a phenomenal increase in recent times in the price of Virtual ‘Currencies’ (VCs) including bitcoin, in India and globally. The VCs don’t have any intrinsic value and are not backed by any kind of assets. The price of bitcoin and other VCs, therefore, is entirely a matter of mere speculation resulting in spurt and volatility in their price.”

The announcement follows a string of warnings by both the Finance Ministry and the Reserve Bank of India against cryptocurrencies such as bitcoin.

Globally too, governments, regulators and experts have warned investors against jumping on the gravy train of cryptocurrencies, prices of many of which have multiplied several times this year.

The finance ministry also emphasised “the risk of the investment bubble in VCs of the type seen in ponzi schemes in which a sudden crash can mean that the investors lose all their hard-earned money.”

Since VCs are stored in a digital format, they are also vulnerable to malware and ransomware attacks, the ministry added. “The encryption in VCs like bitcoin ensures anonymity which might boost illegal activities like terror funding, smuggling being carried out online.”

The I-T department had turned on the heat on cryptocurrency exchanges earlier this month to check for tax evasion.

The RBI has already cautioned users of VCs three times in the past(December 2013, February 2017 and December 2017) about the hazards of trading in cryptocurrencies.

The statement issued by the ministry stated that “RBI has also clarified that it has not given any licence/ authorization to any entity/ company to operate such schemes or deal with bitcoin or any virtual currency. The Government also makes it clear that VCs are not legal tender and such VCs do not have any regulatory permission or protection in India. The investors and other participants, therefore, deal with these VCs entirely at their risk and should best avoid participating therein.”

Further, the Securities and Exchange Board of India (SEBI)  intends to crack down on schemes such as so-called initial coin offerings that take advantage of investors who have little understanding of the risks of investing in such cryptocurrency ventures and those who are running outright fraudulent operations.

Govt wants seaplanes to start plying on regional routes before 2019 elections

The idea is to start commercial seaplane operations before the 2019 general elections get underway. The government is also thinking of allowing single-engine planes for the purpose.

The government is speeding up the process of framing norms for seaplane travel and has decided to permit it under its regional connectivity scheme UDAN, according to a report by the Times of India.

The idea is to start commercial seaplane operations before the 2019 general elections get underway. The government is also thinking of allowing single-engine planes for the purpose.

While the norms for seaplanes will be framed by the civil aviation ministry, rules pertaining to the necessary infrastructure will be made by the shipping ministry. This will include building temporary or floating jetties for the seaplanes to dock, sources told the newspaper.

This development assumes importance as it comes a mere two weeks after Prime Minister Narendra Modi took a seaplane ride in Ahmedabad while campaigning for his party during the recently-concluded Gujarat assembly elections.

Transport minister Nitin Gadkari, aviation minister Ashok Gajapathi Raju, and the aviation regulator are scheduled to meet on Thursday to work out the broad framework of the policy.

Sources told the paper that considering the fact that seaplanes could not be deployed on viable routes for at least another year, the government wants solidify the policy as soon as possible.

They added that potential operators have already started conducting surveys to identify routes and are also looking into other issues like pilot training, which could become a point of debate when the rules are being made.

“Seaplanes will fit in the regional connectivity scheme of the government. All issues, including whether single-engine planes can be allowed and how to train pilots to fly these planes, will be addressed quickly,” an official told the paper.

Although there is no ban on single-engine planes at the moment, the lack of commercial seaplane operations in the country means the government would have to frame regulations for such planes. Single-engine planes are currently used for services such as air ambulances.

“We have got some model policies followed by other countries where seaplane service is popular,” the above-mentioned official said.

India ranks 5th in list of countries with highest NPA levels

The only countries ranked higher than India on the list are Greece, Italy, Portugal, and Ireland, all of who have been rattled by debt crises in recent years.

India has the highest level of non-performing assets (NPA) among BRICS countries and is ranked fifth on a list of countries with the highest levels of NPAs, a report by CARE Ratings revealed.

The only countries ranked higher than India on the list are Greece, Italy, Portugal, and Ireland. All these countries, along with Spain, are commonly referred to as PIIGS, and have been victims of sovereign debt crises in recent years.

Spain is the only PIIGS country ranked lower than India on the list, with an NPA ratio of 5.28 percent. At 9.85 percent, India’s NPA ratio is over 400 basis points higher.

In its report, CARE Ratings said that ‘the seriousness of the NPA problem can be gauged by the absolute level of impaired assets in the system. Ever since the RBI had spoken of asset quality recognition (AQR) in 2015, there was an increase in the pace of recognizing these assets’.

The rating agency also said that cleaning up bad loans from the system would be completed by March 2018 and any further rise in NPAs after that could be stemming from factors other than the ones identified by banks.

The report classified countries into four categories – those having very low levels of NPAs, those with low levels of NPAs, those with medium levels of NPAs and countries with high levels of NPAs.

Australia, Canada, Hong Kong, Republic of Korea and the United Kingdom were all found to have an NPA ratio of less than 1 percent and were classified in the first category.

The second category was largely made up of major economies from around the world like China, Germany, Japan, and the USA, all of who have NPA ratios of less than 2 percent.

The third category consisted of a few developed European countries but was largely constituted of fast-growing developing countries like Brazil, Indonesia, Thailand, South Africa and Turkey.

Govt may consider bringing back fixed term employment

Government may bring back the fixed-term employment amendment allowing employers to hire workers for short-term contracts, Business Standard reported following repeated demands from the industry.

Government may bring back the fixed-term employment amendment allowing employers to hire workers for short-term contracts, Business Standard reported.

Earlier this year, the government allowed fixed-term employment in the textile sector, following which the other industries particularly food processing units have been demanding to allow them to hire workers for a fixed contract period.

“We have received representations from various industries to allow flexibility in hiring workers in seasonal jobs. The latest demand has come from the food-processing industry. Instead of giving sector-wise relaxation, we may look at allowing fixed-term employment for all the industries,” a senior Labour and Employment Ministry official told the paper on condition of anonymity.

On December 15, the Union Cabinet had approved a Rs 2,600 crore special package for the leather and footwear sector, which included a provision to hire workers under fixed-term employment in these sectors. The government stated the move was taken “in order to attract large-scale investments at a global scale”.

Under fixed-term employment, industries can employ workers for short assignments and terminate their services once the projects are completed. Such a proposal is likely to allow industries to hire workers for seasonal or project-based works, for which companies refrain from hiring permanent workers due to the short-term projects and processes involved in their retrenchment.

In cases of termination of a permanent employee, companies are required to follow a process of retrenchment as per the Industrial Disputes Act, which includes giving notice, paying compensation, and intimating the government.

The proposal also entitles every employee to all the statutory benefits available to a permanent worker in the factory including a right to be a member of a trade union.

“It is a ‘win-win’ situation for both worker and employer as on one hand, it provides flexibility for employing workers as per the demands of the market and on the other hand, it ensures worker hired gets equal benefits and working condition at par with the permanent employee,” the Ministry of Labour and Employment had earlier said in a statement.

The Indian Council for Research on International Economic Relations (ICRIER) said in its working paper titled ‘Labour Regulations and Growth of Manufacturing and Employment in India: Balancing Protection and Flexibility’ that giving fixed-term workers a minimum employment contract for six months and the right to be members of the trade union are important safeguards for fixed-term workers.

In October last year, the Ministry of Labour and Employment had allowed the apparel manufacturing sector to hire workers on fixed-term contracts after it notified changes to the Industrial Employment (Standing Orders) Central Rules, 1946.

As per the amendment, employers are not required to give a notice to a fixed-term worker on non-renewal or expiry of his or her contract. It also allows industries to hire a worker for a fixed-term without mediation by a contractor.

The proposal guaranteeing fixed working hours, wages, and allowances to workers, however, has met with strong opposition from Central trade unions ever since it was introduced in 2003 by the previous NDA government.

“We are demanding an increase in permanent employment. Contractors terminate the employment of workers at a time when they get skilled while doing the job. So, instead of bringing fixed-term employment, the government should fix the issues related to dealing with contractors in hiring workers,” Bharatiya Mazdoor Sangh (BMS) General-Secretary Virjesh Upadhyay told the paper.

The amendment was scrapped in 2007 by the UPA government following the pressure from trade unions. In April 2015, the NDA government brought back the discussion on the same by issuing draft rules to amend the Industrial Employment (Standing Orders) Central (Amendment) Rules, 2015.

In 2016, the then Labour and Employment Minister Bandaru Dattatreya shelved this proposal due to strong opposition from trade unions.

Bitcoin enthusiasts should be wary of Digmine, a new malware that attacks via Facebook Messenger

Digmine malware is being used to mine Monero, an alternative cryptocurrency to the wildly valuable and volatile Bitcoin.

Bitcoin enthusiasts, beware! There is a new malware on the horizon, and its out to get your cryptocurrency.

This cryptocurrency-mining bot, ‘Digmine’ first surfaced in South Korea and is spreading fast throughout the world, according to Trend Micro, a Tokyo-headquarted cybersecurity firm.

The only way the malware can spread is via the desktop version of Facebook Messenger when used on Google Chrome which helps the perpetrators take over the Facebook account. The malware is disguised to look like a video file being shared over Messenger. After the hackers take over your account, they have access to your friend list which helps spread the malware.

What we know so far is that the malware only operates through Google Chrome and opening the infected video file on Messenger running on any other platform won’t result in an infection.

After South Korea, Digmine has since spread in Vietnam, Azerbaijan, Ukraine, the Philippines, Thailand, and Venezuela. It is likely to reach other countries soon, given the way it propagates.

Security researchers from Trend Micro say the perpetrators are trying to mine a cryptocurrency called Monero (which is a favourite in the dark web black market),  an alternative to the wildly valuable and volatile Bitcoin.

Cryptocurrency mining through malware has surged because of the recent rise in the value of the bitcoin. “The increasing popularity of cryptocurrency mining is drawing attackers back to the mining botnet business,” said Trend Micro.

TrendMicro disclosed its Digmine findings to Facebook which promptly removed Digmine-related links from its platform. Facebook’s official statement states that, “We maintain a number of automated systems to help stop harmful links and files from appearing on Facebook and in Messenger. If we suspect your computer is infected with malware, we will provide you with a free anti-virus scan from our trusted partners. We share tips on how to stay secure and links to these scanners on facebook.com/help.”

Huawei hands out pink slips to 30% of India workforce in 2017

Financial stress, slowdown and consolidation were the key reasons forcing the company to cut down its employees in India.

Fierce competition, consolidation and financial stress in the Indian telecom industry forced Chinese telecommunication equipment and services company Huawei Technologies to trim its workforce in India by a third, according to the report published in The Economic Times.

The report said the company laid off almost 30 percent of employees in 2017 due to decreasing telecom business, network shutdown and performance review.

While replying to the query by the financial daily on the job cut, the Chief Executive of Huawei India said, “Huawei is a dynamic organisation and dynamism comes from our working policy. We put all resources to motivate our good performers, at the same time, never stop to manage the low and poor performers.”

The decision to let these employees go was also influenced by the country’s second and third largest telecom players, Vodafone India and Idea Cellular, respectively, to merge. Huawei had bagged several contracts from these companies to roll out 4G services in several circles.

Smaller telecom players such as Telenor India and Tata Tele sold their business to market leader Bharti Airtel, while others like Reliance Communication closed its voice business and Aircel closing down services in six circles.

Huawei had approximately 180,000 employees worldwide as of 2016 and is the ninth largest information technology in the world, according to Fortune.

Mutual funds see more inflows, show signs of risks: RBI report

After banks, asset management companies managing mutual funds were the second largest players at around 15 percent of bilateral exposure in the financial system.

In a high liquidity market post demonetisation, both equity and debt mutual funds witnessed unprecedented inflows, showing signs of risks increasing from banks to mutual funds, according to a report by the Reserve Bank of India.

“Given the significant increase in the mutual funds’ (MFs) corpus and an excess monthly return of almost 250 bps (annualised) from a representative money market fund over the Clearing Corporation of India Ltd.(CCIL) liquid T-bill benchmark, there seems to be some risk migration from the banks to the mutual funds,” the financial stability report released on Thursday said.

Mutual funds as an asset class seem to be entering the maturity phase in India with broad- basing of investors and geographical spread. Assets under management (AUM) increased from Rs 17.55 trillion in March 2017 to Rs 20.40 trillion in September 2017, the report highlighted.

After banks, asset management companies managing mutual funds (AMC-MFs) were the second largest players at around 15 percent of bilateral exposure in the financial system.

The top-5 fund houses contributed approximately 50 percent of the aggregate corpus of liquid and money market mutual funds (MMMFs).

The report also added that diversity in terms of the investor base will provide resilience against redemption pressures in case the markets see corrections in their valuations.

“AUM of B-15 cities grew 230 percent in 2016-17 of what it was in 2012-13. Further, the share of individual holdings in mutual funds’ AUM has increased from 46 percent in April 2016 to 51 percent by September 2017, while the share of holdings by institutions (corporates and banks) went down from 54 percent to 49 percent during the same period.

Contributions to mutual funds through systematic investment plans (SIPs) has added further stability to this sector. While the number of outstanding SIPs has continuously increased from 6 million in 2013-14 to 16.5 million in July 2017, the number of premature terminations came down from 1.9 million to 0.6 million during the same period.

Another manifestation of the swelling MF corpus and consequent investment in corporate bonds is a gradual contraction in higher rated corporate bond spreads.

According to the report, the risk appetite in foreign portfolio investors for unhedged government and corporate bond exposure has increased. The recent upgrade in India’s sovereign rating by Moody’s implies that Indian corporates’ dollar borrowing cost is likely to remain benign, it said.

However, the offshore market could be pushing down risk towards the local markets, it observed.

“The significant build up in offshore index futures relative to onshore can have spillover effects to related onshore markets during times of stress,” the report added.

SEBI begins searches in the WhatsApp leak case

A large number of SEBI officials are involved in the searches and they are looking into book of trade accounts of the concerned trade deals

Markets regulator SEBI has begun searches on nearly 45 people in relation to the WhatsApp leak. The identified people include officials from companies, brokers and individuals, sources told.

Last month, the Securities and Exchange Board of India (SEBI) and exchanges started examining trade details of over two dozen stocks as part of a probe into the alleged leak of key financial details of these companies through WhatsApp.

A large number of SEBI officials are involved in the searches and they are looking into the accounts for the trades which came to light in the WhatsApp leak.

The markets regulator has been “seriously” looking into the complaints about some individuals allegedly circulating key financial details and other market moving information about listed companies on social media groups before they are made officially public.

Markets regulator SEBI has begun searches on nearly 45 people in relation to the WhatsApp leak. The identified people include officials from companies, brokers and individuals, sources told.

Last month, the Securities and Exchange Board of India (SEBI) and exchanges started examining trade details of over two dozen stocks as part of a probe into the alleged leak of key financial details of these companies through WhatsApp.

A large number of SEBI officials are involved in the searches and they are looking into the accounts for the trades which came to light in the WhatsApp leak.

The markets regulator has been “seriously” looking into the complaints about some individuals allegedly circulating key financial details and other market moving information about listed companies on social media groups before they are made officially public.

IBC is likely to be amended next Budget. Here are the likely changes expected

One of the major changes which have already been made to the IBC this year is that the defaulting company’s promoters from regaining control of the company by acquiring the assets in the resolution process.

The Insolvency and Bankruptcy Code (IBC) Act is expected to go through a set of changes next Budget. Since the Act was brought to force just last year, the IBC panel is looking into the suggestions which will help them join the missing links of the Act.

An Economic Times report, quoting sources, said there are chances that some of these changes can be a part of the finance bill.

The report says that the reason for some changes to be a part of the finance bill is that involving the assets’ tax-transfer under resolution process as there is a demand that stressed assets transfer should not be taxed.

One of the major changes which have already been made to the IBC  this year is that the defaulting company’s promoters from regaining control of the company by acquiring the assets in the resolution process.

The ordinance also bars guarantors to the debtors, those with loans classified as NPAs for at least a year, those convicted for more than two years, disqualified directors, the firms barred by SEBI, among others.

Along with these amendments, here’s what is expected in the future - 

Promoters of medium and small enterprises 

One of the changes that are expected is that the promoters of the small and medium enterprises will be allowed to bid in the resolution process.

Corporate guarantors

On one hand, where guarantors to the debtors were not allowed to bid, the ET report points out that this bar can be lifted if the guarantors have fulfilled their part or if it has not been invoked.

Eligibility criteria

Along with guarantors, eligibility criteria is in the works to be prescribed to prospective resolution applicants keeping in mind the complexity and scale of business operations. Adding to this, another section will be added clearly stating those ineligible to participate in the resolution process.

NITI Aayog proposes solution to save jobs from automation, AI

NITI Aayog Vice Chairman Rajiv Kumar said that the government should consider setting up a fund that would be used to train workers.

In order to address the growing redundancy of low-skilled labour in India due to the advent of automation, national think tank NITI Aayog has proposed that the government set up a labour utilization fund, according to a report .

The fund will be used to improve the skill set of the country’s workforce and increase its cost competitiveness, thereby encouraging companies to hire more at a time.

In an interview, NITI Aayog Vice Chairman Rajiv Kumar said that the government should consider setting up a fund that would be used to train workers.

Kumar said this would encourage businesses to hire manual labour even amid continuously-improving artificial intelligence technology, as well as provide them with social security. He added that the think tank has been working on a blueprint for the government to create jobs.

“The objective of our policy should be maximizing employment generation. If you do that, everything will fall in place,” said the NITI Aayog vice chairman.

While explaining the need for such a fund, Kumar said that the focus should be on creating jobs in labour-intensive sectors like housing, construction, exports, garments, tourism, education and health.

“Just like that, we should have a labour utilization fund. It doesn’t have to pay salaries but can be used for better training, for paying provident fund contribution and for covering the health costs. In advanced economies, all these things are provided by the public sector,” he said.

Kumar pointed out the need for a labour subsidy, apart from the capital subsidy that the government is already providing for businesses to upgrade their technologies.

Under the technology upgradation fund (TUF), which was announced in 1999 and modified in the 2012-17 period, the government provides a capital subsidy to the sector for adopting technology to be at par with large manufacturers in countries like China.