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IndiGo can’t fly high with feud in the cockpit | Opinion

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The co-founders of India’s No. 1 airline are engaged in a bitter feud. Their quarrel couldn’t have come at a worse time for minority shareholders of Inter Globe Aviation Ltd., the company that owns IndiGo.

Investors were just starting to enjoy the fruits of a frenetic expansion that saw the no-frills carrier, Asia’s largest, double its capacity in the three years through March. Full-cost rival Jet Airways India Ltd. tried to keep up, until it was forced to ground its last plane in April under a truckload of debt. Meanwhile, InterGlobe has put together a cash war chest — net of debt — of nearly $2 billion.

This is the time for IndiGo to be rewarding shareholders by consolidating its leadership position and filling the gap left by Jet, especially on overseas routes. Instead, the founders are busy picking fights.

Rakesh Gangwal, a former CEO of U.S. Airways Group Inc., has dashed off a letter to the Indian stock-market regulator alleging corporate-governance lapses. He says partner Rahul Bhatia, who owns 1 percentage point more than U.S.-based Gangwal’s 37% stake, is dragging IndiGo into transactions with his other businesses, which are mostly housed under Inter Globe Enterprises Ltd.(IGE Group), without adequate auditing.The airline pays rent to IGE’sreal-estate unit; the crew stays at hotels operated by Bhatia’s joint venture with Accor SA;pilots are trained at IGE’sflight simulator, a collaboration with Canada’s CAE Inc.; a Bhatia firm has also acted as a sales agent for IndiGo.

What amounted to$22 million of related-party transactions, for a carrier that took in $4 billion in annual revenue, doesn’t exactly smack of a governance scandal. Not at an airline that thrives on keeping its costs under control. Bhatia, for his part, wants to know why Gangwal is questioning the arrangement snow when he “did not raise for 13 years a whisper.” The India-based partner say she took most of the economic risk when setting up the airline.Besides, Gangwal isn’t denying entering into a shareholders’ agreement that gives Bhatia control,including the power to nominate half of the six-member board and most of the top managers.

Gangwal’s letter mentions whistle blowers.Unless those charges are serious and material, the battle looks more about monetizing a business that he never wanted any part of until a persistent Bhatia talked him into it.

Today, the co-founders can be legitimately proud of IndiGo, a rare success story in global aviation,achieved in a brutally price-competitive and fast-growing market.The problem seems to be about dividing up that success fairly.

It probably rankles billionaire Gangwal, the strategy whiz, that his37% stake is perhaps worth less than the market value of roughly $3 billion, while his money-man (former) friend’s38% stake is worth much more.(1) After all, any airline or a buyout firm willing to write that big a check would want a measure of influence over the airline’s future: That’s something only Bhatia can give.If that’s the real reason Gangwal is seeking to enlist the regulator’s help “to make necessary changes to the unusual controlling rights available to the IGE Group,”then it’s a failure of mediation.

From the shareholders’ perspective, it’s a dangerous lapse. Indians’ trust in business and business tycoons, finance and financiers, accounts and auditors has probably never been lower. Any suggestion of impropriety now can spiral out of control. No wonder the infighting dragged Inter Globe shares down nearly 11%on Wednesday, as investors braced themselves for a protracted and unpleasant legal and public-relations skirmish – much like the one that flared up at the Tata Group in 2016, after it fired then-Chairman Cyrus Mistry, who also happened to be a large shareholder.

IndiGo became No. 1 by making flights take off and land on time more often than most other large global airlines. To investors’ horror,the messiness the carrier so studiously avoided in its operations –by relying on a single type of aircraft (the narrow-bodied Airbus), deploying its fleet efficiently and growing it strategically – has finally come back to haunt it. Not at the tarmac, but in the boardroom.

(1) The total market capitalization is about $8 billion.

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Libra crypto won’t launch until regulatory concerns are addressed, says Facebook

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Facebook Inc said on Monday it would not proceed with the launch of its Libra cryptocurrency until regulatory concerns are addressed, as the US Treasury secretary took the unusual step of saying he had serious concerns it could be used for illicit activity.

David Marcus, who oversees Facebook’s blockchain efforts, planned to tell Congress that Libra is not being built to compete with traditional currencies or interfere with monetary policy.

“The Libra Association, which will manage the (Libra) Reserve, has no intention of competing with any sovereign currencies or entering the monetary policy arena,” Marcus was due to say on Tuesday, according to prepared testimony released by the Senate Banking Committee. “Monetary policy is properly the province of central banks.”

“Facebook will not offer the Libra digital currency until we have fully addressed regulatory concerns and received appropriate approvals,” he said.

Speaking with reporters, Mnuchin said he was not comfortable with Libra currently, particularly in guarding against money laundering and other illicit use. “They’re going to have to convince us of very high standards before they have access to the US financial system,” he said.

Mnuchin is the latest senior US regulator to air concerns with the product, days after Federal Reserve Chairman Jay Powell expressed similar worries about the digital currency could be misused.

“These cryptocurrencies have been dominated by illicit activity and speculation,” said Mnuchin.

In his prepared testimony, Marcus said the Libra Association, the companies behind the Facebook-led cryptocurrency, planned to register as a money services business with the Treasury Department’s Financial Crimes Enforcement Network (FinCEN) and fully expected to comply with anti-money laundering and Bank Secrecy Act rules.

Since announcing the Libra project last month, Facebook has faced a torrent of criticism and skepticism from policymakers across the world who cite concerns over data security, money laundering and consumer protections.

Marcus was scheduled to testify on Tuesday and Wednesday before congressional committees overseeing financial issues and several members have suggested the product be barred.

Addressing some of those concerns, Marcus said in his prepared testimony that partners providing financial services with Libra will be required to comply with anti-money laundering rules. The Libra Association will not hold personal data of users beyond basic transaction information, and personal information provided to Calibra, the digital wallet Facebook is developing to hold Libra, will not be shared with the social media company and cannot be used for targeting ads.

Marcus added that he expected the Swiss Federal Data Protection and Information commissioner to be Libra’s privacy regulator because the Libra Association is headquartered in Geneva. The association is also in preliminary talks with the Swiss Financial Markets Supervisory Authority on “an appropriate regulatory framework.”

While promising Libra will adhere to relevant laws and regulations, Marcus aimed to sell lawmakers on the product’s merits as well, arguing the United States should not stifle such innovation.

“I am proud that Facebook has initiated this effort here in the United States,” his testimony said. “I believe that if America does not lead innovation in the digital currency and payments area, others will. If we fail to act, we could soon see a digital currency controlled by others whose values are dramatically different.”

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RBI to come out with mobile app for currency notes identification

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The Reserve Bank of India will come out with a mobile application to help visually challenged people in identifying currency notes as cash still remains a dominant mode of transaction.

At present, banknotes in the denominations of Rs 10, 20, 50, 100, 200, 500 and 2,000 are in circulation, besides Re 1 notes issued by the Centre.

The RBI said that identification of banknote denomination is key to successful completion of cash-based transactions by visually impaired persons.

Intaglio printing based identification marks for helping the visually challenged in identification of banknotes denomination are present in the notes of Rs 100 and above.

After demonetisation of old Rs 500/1,000 notes in November 2016, new banknotes in design and sizes have been put in circulation.

“The Reserve Bank of India has been sensitive to the challenges faced by the visually challenged in conducting their day to day business with Indian banknotes,” said the central bank while scouting for a vendor to develop the mobile application.

The proposed mobile app would be able to identify the denomination of notes of Mahatma Gandhi Series and Mahatma Gandhi (New) series by capturing the image of the notes placed in front of mobile camera, the RBI said while inviting bids from tech firms to develop the app.

The RBI had come out with a similar ‘request for proposal’ from vendors but later cancelled it.

The app will also generate “audio notification” intimating the currency note denomination to the user if image is captured correctly, else intimating the user to try again in case of image is not readable.

There are about 80 lakh blind or visually impaired people in the country, who are likely to benefit from the initiative of the central bank.

In June, 2018 the central bank had declared that it would explore the feasibility of developing a suitable device or mechanism for aiding the visually impaired in the identification of Indian banknotes.

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Amazon India offers Prime at half price to 18-24 year old customers: Here’s how to get it

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Ahead of Prime Day sale, Amazon has announced a new ‘Youth Offer’ for its Prime membership. Customers aged between 18-24 years can avail Amazon Prime yearly subscription at Rs 499. Amazon Prime is available at Rs 999 for a year and Rs 129 per month.

Amazon is offering 50% discount through a cashback of Rs 500. This cashback will be credited to the user’s Amazon Pay account. Amazon’s Youth Offer can be availed through the Prime site on mobile and desktop as well. To verify the user’s age, Amazon will need PAN card, a proof of mailing address and a photo of the customer.

Amazon says it will transfer the Rs 500 amount within 10 days of the account being verified. Customers can then use the Amazon Pay balance on the e-commerce platform or across other online and offline platforms. Amazon’s Prime membership comes bundled with Prime Music and Prime Video subscriptions. Amazon Prime also gives users exclusive access to pre-sale deals, discounts and more.

Amazon’s Prime membership offer comes just days ahead of the annual Prime Day sale. This year, Amazon is hosting its Prime Day sale for two days from July 15 to 16. Amazon has previewed some Prime Day deals like up to 50% off for Alexa devices, Jabra headphones. There will be an Amazon exclusive version of Jabra Elite 85h headphones launching on Prime Day. Amazon will also offer phones like Samsung Galaxy M40 and Oppo F11 Pro with discounts and offers.

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