100% FDI in telecom

Inter-ministerial body Telecom Commission approved hiking foreign direct investment limit in the sector from 74 percent to 100 percent.

The Commission has approved raising FDI limit to 100 percent, 49 percent investment can be made through automatic route but Foreign Investment Permission Board(FIPB) approval is required to increase the level.

At present, FDI limit in the sector is 74 percent where 49 percent is done through automatic route and rest requires nod from FIPB.

The idea behind increasing FDI limit in telecom sector is to help industry get fresh funds to lower financial burden.

According to a presentation by GSM industry body The Cellular Operators Association of India (COAI) to DoT, the debt of telecom sector stood at Rs 1,85,720 crore at end of 2011-12. This included debt of Rs 93,594 crore from domestic sources and Rs 92,126 crore from external sources.

The Commission also discussed creation of Telecom Finance Corporation (TFC) to address the sector’s funding challenges and “sought a detailed project report on it”.

The TFC is proposed to be set up on the lines of sectoral finance bodies such as Power Finance Corporation and Tourism Finance Corporation of India.

The proposed TFC is targeting financing Rs 38,000 crore in five-year period.

Guidelines for new banking licence

The new guidelines makes entities both from private and public sector eligible to set up a bank through a wholly-owned non-operative financial holding company (NOFHC).

RBI guidelines says,"The NOFHC shall be wholly owned by the promoter / promoter group. The NOFHC shall hold the bank as well as all the other financial services entities of the group. Entities / groups should have a past record of sound credentials and integrity, be financially sound with a successful track record of 10 years. For this purpose, RBI may seek feedback from other regulators and enforcement and investigative agencies".

The groups should have a minimum paid up equity capital of Rs 500 crore. At the start of banking operations, NOFHC should hold a minimum of 40 per cent of the equity capital of the bank with a lock-in period of five years. Later, it has to be brought down to 15 percent within 12 year from that onwards.

The NOFHC will be registered as a non-banking finance company with the RBI while the bank will be governed by the prudential regulations by RBI.

Another condition is that 25% of its branches should be in unbanked rural areas with population upto 9,999.

For the first five years FDI is capped at 49%.

What is SKEWPY?

Sher-e-Kashmir Employment and Welfare Programme for Youth (SKEWPY) is a initiative to address the unemployment problem in Jammu and Kashmir. A Collective, comprehensive and holistic endeavour is required to address this gigantic problem in a principled manner, Hence, the Government announces this State policy on Employment’ to simultaneously and comprehensively address all issues relating to the problem of unemployment in the State.