Day: November 9, 2024

Air India Group announced a slew of senior management changes due to the merger of Air India and Vistara, which is scheduled to be effective from November 12.

Vinod Kannan, Chief Executive Officer of Vistara who was also holding the role of Chief Integration Officer for the full-service airlines’ merger, will continue in the latter role post-merger, according to a press release.

Deepak Rajawat, currently the Chief Commercial Officer of Vistara, will take up the Chief Financial Officer role at the newly-enlarged Air India Express, and will report to CEO Aloke Singh. Along with this, he will also support Group CFO Sanjay Sharma in strategic initiatives and projects.

Consequently, Air India Express’ current CFO Vikas Agarwal will move to a new role in Air India, the statement added.

Full-service carriers — Air India and Vistara, a joint venture between Tatas and Singapore Airlines — are set to be merged on November 11.

Among the other changes, Hamish Maxwell, SVP Flight Operations of Vistara, has assumed an advisory role to Air India Express CEO Aloke Singh.

Pushpinder Singh, Chief Operations Officer of Air India Express, will return to flying, and his successor will be announced in due course.

Deepa Chadha and Vinod Bhatt, SVP HR & Corporate Affairs and Chief Information Officer of Vistara, respectively, will take on senior roles at other Tata group companies.

“Vistara CFO Mr Niyant Maru, who had graciously continued beyond his superannuation date to see through completion of the merger, will retire at the end of his current term,” the release added.

“Over the past two years the four Tata airlines have worked hard to prepare for and execute one of the most complex mergers in aviation history, consolidating from four airlines to two in the context of dramatic growth and wholesale transformation. As we now approach the end of that process, we are delighted to formalise a Group leadership comprising colleagues from all four antecedent airlines to drive the next phase of our journey,” said Air India’s CEO & MD Campbell Wilson.

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There is no reason to anticipate any systemic risk in the Indian banking sector, with banks appearing healthier than ever, said KV Kamath, independent director and non-executive chairman of Jio Financial Services, on Friday at the Business Standard BFSI Insight Summit in Mumbai. 

In his fireside chat with Tamal Bandyopadhyay, Kamath nonetheless emphasised that the systemic caution shown by the Reserve Bank of India (RBI) is “entirely warranted”. 

Highlighting the strong health of Indian banks, Kamath pointed to the top-four banks reporting returns on equity of 16-20 per cent in the last quarter—levels previously unheard of. He maintained that the Indian banking system is currently better positioned than it has been in the past 50 years. 

Explaining that lending activity goes through cycles and that pain is inevitable at some point, Kamath noted that no such pain is reflected in the current quarter’s numbers. He added that he did not see any change in the banking sector’s cycle at present. 

Kamath made these comments in response to a question from Bandyopadhyay about whether the stress related to unsecured lending was confined to the non-banking financial company (NBFC) sector or had also impacted the broader banking sector. 

Addressing the health of the NBFC sector, Kamath observed signs of a “pyramid” forming, with many borrowers taking multiple loans—often to repay earlier borrowings—while still seeking additional credit. 

Acknowledging the situation, Kamath said the RBI had raised risk weights for unsecured loans and signalled concern, adding, “They were right on time.”

Kamath noted that financial technology (fintech) firms are lending even to borrowers with a credit score of 550, while traditional bankers typically lend to those with scores of 700 to 750. 

He underscored that recent regulatory measures for the NBFC sector were “absolutely warranted,” praising the regulator’s proactive stance. 

When asked about a potential structural change in India’s financial landscape, Kamath agreed that it was underway, describing it as a “slow shift”. 

He explained that increased access to financial products, driven by technology and systematic investment plans (SIPs), is leading to the financialisation of savings—a trend that was not seen earlier. 

However, Kamath expressed concern about the flow of funds raised through personal and unsecured loans entering the markets. 

Agreeing with Bandyopadhyay that money is leaving the banking system and entering the markets, Kamath cited RBI Governor Shaktikanta Das’s warning about the risks of retail participation in the Futures and Options (F&O) market. He estimated that between Rs 1.5 trillion to 1.7 trillion has been lost in the markets due to such activities, with unsecured lending accounting for nearly the entire amount. 

Kamath stated that this is why the RBI was correct in raising concerns about unsecured lending. 

“The RBI was absolutely right in raising a red flag on unsecured lending, increasing risk weights, and advising lenders to scrutinise the borrower’s end-use of funds,” Kamath said, commending the RBI for acting at the right time.

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In a significant policy shift, the Indian government has opted to allocate spectrum for satellite broadband services instead of auctioning it. This decision aligns with international standards and benefits global players like Elon Musk’s Starlink.

The Indian government has announced its decision to allocate spectrum for satellite broadband services, marking a significant win for Elon Musk’s Starlink and similar global satellite companies. Communications Minister Jyotiraditya Scindia revealed that India would adopt an assignment-based approach for satellite spectrum, aligning with international standards set by the International Telecommunications Union (ITU). This goes against demands put forward by Indian telecom giants. 

Starlink has been advocating for an administrative allocation of spectrum, where the government sets the price instead of competitive bidding. This approach, common in many countries for satellite broadband spectrum, allows companies like Starlink to enter and expand in the Indian market without the high costs associated with traditional telecom spectrum auctions.

Starlink, which has applied for a licence to operate in India, stands to benefit from the lower cost of entry. The fixed-price approach could enable Starlink to roll out services more affordably, making it easier to establish itself in one of the world’s fastest-growing internet markets.

Communications Minister Scindia emphasised that “every country has to follow the ITU, which is very clear that spectrum in space should be assigned and not auctioned,” ensuring that India’s policy aligns with global standards.

However, this decision has raised concerns among India’s telecom giants, Reliance Jio and Bharti Airtel, led by Mukesh Ambani and Sunil Mittal respectively. They argue that satellite spectrum should be auctioned to ensure fair competition, as they currently pay substantial fees for terrestrial telecom spectrum acquired through competitive bidding.

Ambani and Mittal, who are also eyeing entry into the satellite broadband sector, claim that administrative allocation might favour global companies that bypass auction costs, creating an uneven playing field.

The government’s decision is backed by India’s new Telecom Act, which classifies satellite communication spectrum under “Schedule 1,” mandating allocation rather than auction. This classification is intended to align with international norms and simplify satellite operations.

For Starlink, this decision facilitates their entry into the Indian market. With a government-determined pricing model, Starlink and other global providers can expect a more predictable cost structure, aiding their rollout plans.

India’s decision is expected to boost competition in the satellite broadband sector, with foreign players like Starlink and Amazon’s Project Kuiper seeing a clear path to market entry. This could lead to expanded internet access in underserved areas, intensifying the competition between local and foreign players in India’s digital landscape.

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