New Delhi: Finance minister Arun Jaitley will address the board of the Reserve Bank on August 9 amid expectations that the central bank will complement government actions by reducing rates to boost growth. “The meeting has been scheduled for August 9 where he would be addressing the board members and talk about announcements made in the Budget to perk up growth,” a source said. Jaitley is likely to inform the RBI board about the steps taken to contain the fiscal deficit and may underline the need to reduce interest rates to promote growth. It has been a custom that the finance minister addresses RBI board, consisting of RBI governor and existing three deputy governors, after the Budget. The meeting comes in the backdrop of the persistent high food inflation and deficient rain. Food inflation is still hovering around 8%. For the month ended June, it stood at 8.14% against 9.5% in the previous month. http://www.financialexpress.com/news/fm-may-brief-rbi-board-on-steps-taken-to-cut-deficit-need-to-lower-rates-on-august-9/1274449

 

 

FINMIN TO BAT FOR RATING UPGRADES

 

Armed with the Budget proposals to cut the fiscal deficit, the finance ministry will pitch for a ratings upgrade at a series of meetings with the global agencies in the next 2-3 months. “Representatives from Standard & Poor’s (S&P) and Japan Credit Rating Agency (JCRA) are scheduled to meet the finance ministry officials on August 12 and August 28. “Representatives of rating agencies Fitch and Moody will come probably in September-October. We will pitch for a rating upgrade,” a senior finance ministry official said. The official said the finance ministry will impress upon the rating agencies the resolve of the government to contain fiscal deficit at 4.1% this year and lower it to 3% by 2016-17. To promote growth and investment, finance minister Arun Jaitley in his Budget speech had included measures to support faster economic growth, such as allowing greater foreign direct investment in insurance and defence, increasing spending on infrastructure, and introducing tax incentives for savings and investment. S&P currently rates India as ‘BBB-’, the lowest in the investment grade, with a negative outlook. Any further downgrade will push India’s rating to the junk status, making it difficult and costlier for Indian entities to borrow funds overseas. http://www.financialexpress.com/news/finmin-to-bat-for-rating-upgrades/1274444

 

RBI ORDER ON ‘SMALL BANK’ NOT IDEAL FOR PRESENT NEEDS: SAMIT GHOSH

 

Bangalore: Samit Ghosh, the widely-respected founder and Managing Director of Ujjivan Financial Services, a microfinance institution, has said that RBI’s new recommendations on a ‘Small Bank’ will not help in financial inclusion. “The solution lies in promoting specialised banks for financial inclusion which can provide directly – savings, loans and remittances, and as third party service provider (insurance and pension). (It is) similar to the ‘Small Bank’ recommended by the RBI recently but without any geographical restrictions. The restriction should be on occupations such as workers, micro-entrepreneurs and marginal farmers,” Ghosh told Business Standard in an exclusive interaction. According to him, these banks need to ensure that 90 per cent of their customers are the working poor and specialised banking institutions like these successfully exist around the world including in Bangladesh, Pakistan and Sri Lanka. “We pride ourselves in having one of the world’s (most) advanced banking system(s). It is high time we promote specialised banks for financial inclusion and close this vital gap in the organised financial service sector,” he said. http://www.business-standard.com/article/company/rbi-order-on-small-bank-not-ideal-for-present-needs-samit-ghosh-114072700726_1.html

 

RUPEE MIGHT WEAKEN AS DOLLAR DEMAND INTENSIFIES

 

Mumbai: The rupee is expected to weaken further this week due to higher month-end dollar demand from importers. The head of treasury of a large bank said, “This week, the rupee might trade in the range of 60 to 60.30 a dollar.” The rupee had ended stable on Friday, at 60.11 a dollar. The yield on the 10-year benchmark bond is expected to rise this week. The Reserve Bank of India auctioned a new 10-year bond on Friday to eventually replace the old one. According to bond market traders, buying in the new 10-year bond might continue, but in the secondary market. The yield on the 10-year benchmark bond ended at 8.67 per cent, compared with the previous close of 8.65 per cent. According to bond dealers, this week, the yield might trade in the range of 8.65 to 8.80 per cent. The coupon rate on the new 10-year bond was 8.40 per cent in Friday’s auction. The lower coupon indicates interest rates shall soon start falling. http://www.business-standard.com/article/finance/rupee-might-weaken-as-dollar-demand-intensifies-114072800057_1.html

 

 

CENTRAL BANK OF INDIA PROFIT SURGES TO Rs. 192 CR

 

Mumbai: Central Bank of India has reported a nine-fold rise in net profit at Rs. 192 crore in the April-June quarter compared with Rs. 22 crore in the year-ago period. Profitability of the public sector bank was aided by an 18 per cent rise in net interest income at Rs. 1,821.47 crore ( Rs. 1,538.02 crore) and improvement in net interest margins to 2.87 per cent from 2.68 per cent in the same quarter last year. “Our net profit has moved up continuously for the past three quarters based on profitability parameters of higher NIMs, yield on advances and lower cost of deposits,” said Rajeev Rishi, Chairman and Managing Director. During the quarter, total provisions declined 34 per cent to Rs. 645 crore ( Rs. 983 crore), including provisions of Rs. 8 crore towards unhedged foreign currency exposure. The provision for unhedged foreign currency exposure is expected at Rs. 32 crore for the full-year. Year-on-year the public sector bank saw a 9 per cent increase in its gross non-performing assets (NPA) to Rs. 11,449 crore ( Rs. 10,529 crore). While the Gross NPA ratio rose to 6.15 per cent (6.03 per cent), the net NPA ratio improved to 3.62 per cent (3.85 per cent). http://www.thehindubusinessline.com/todays-paper/tp-others/tp-international/central-bank-of-india-profit-surges-to-rs-192-cr/article6255463.ece

 

 

 

EXIM BANK WANTS 15-FOLD HIKE IN LEVERAGE RATIO

 

Mumbai: Citing the urgent need for turning the country into an export powerhouse, the Exim Bank has requested the RBI to increase its leverage ratio so that it can lend more to the exporters. Currently, RBI allows the Exim Bank to leverage only 10 times its net-owned funds, which it wants to be hiked to at least 15 times. “We are classified at par with a commercial bank under the RBI guidelines and can lend only 10 times our net owned funds, which restricts our capacity to help exporters,” said newly-appointed chairman and managing director Yaduvendra Mathur. He said his counterpart in China has a leverage of 77.5 times, in Korea it is 30 times, while for Canada, it is 15 times. “We have been requesting RBI to recognise us as a special case of a development finance institution which helps the country’s interests,” he said, adding it has been requesting for the leverage to be increased to 15 times of the NOF. At present, the bank has to depend on the government infusions to increase its capacity to lend, he said, adding it is expecting an infusion of R1,300 crore this fiscal from the government. “Last year, we got an infusion of R700 crore and there is a headroom of at least R5,000 crore more on the paid-up capital, after the changes in the relevant Act in 2011 which increased our paid capital to R10,000 crore in phases,” he said. http://www.financialexpress.com/news/exim-bank-wants-15fold-hike-in-leverage-ratio/1274441

 

NBFCs OFFER POCKETS OF OPPORTUNITY

 

Short-term interest rates have been revised downwards by quite a few banks in the past few weeks. For example, Karur Vysya Bank and Lakshmi Vilas Bank, which were earlier offering 9.5 per cent on 1-2 year deposits − the highest rate among all banks − now only give 9.25 per cent and 9.3 per cent, respectively. Similarly, Catholic Syrian Bank and City Union Bank have also lowered the rate they offer from 9.5 per cent previously. With banks comfortable about liquidity, the room for short-term rates going up from here is limited. Besides, the changed tax treatment for one-to-three year investments in short-term debt funds and fixed maturity plans announced in the Budget also works in favour of banks. It gives the banks more freedom to keep the rates for fixed deposit of this tenure a bit lower without having to compete with the mutual fund industry to attract investor interest. Other institutions, such as National Housing Bank, also revised their fixed deposit rates downwards last week. In this light, investors looking to park their surplus for a short period of one year or a bit more have a window of opportunity in two NBFC deposits − PNB Housing Finance and HDFC Platinum Deposit Scheme. PNB Housing Finance offers 9.5 per cent interest on 1-year deposits. HDFC Platinum offers the same 9.5 per cent rate for a slightly longer tenure of 15 months. The FDs of both these companies come with the highest FAAA/MAAA rating from CRISIL/ ICRA. An ‘AAA’ rating implies the highest degree of safety regarding timely payment of interest and principal and the lowest risk. http://www.thehindubusinessline.com/todays-paper/tp-investmentworld/nbfcs-offer-pockets-of-opportunity/article6255380.ece

 

 

 

SEBI MULLS CHANGE IN TAKEOVER NORMS; CONTROL, PRICING ON RADAR

 

New Delhi: Capital markets watchdog Sebi may soon consider some changes in its takeover norms for listed companies, including in the provisions governing price offered to minority investors and those defining change in control. These changes would be part of efforts to further safeguard the interest of smaller investors in case of merger and acquisition transactions involving listed companies, while also making the compliance easier for the concerned entities. The proposals are so far in the initial stages and any final decision would be taken after detailed discussions among all the stakeholders, sources said. The changes would also take into account the related provisions of the new Companies Act, which began coming into force at the stat of the current fiscal on April 1, 2014, as also the subsequent notification of related rules, clarification circulars and amendments made by the Government. Besides, Sebi plans to incorporate certain provisions to remove those ambiguities that have come to light in the existing regulations including on issues like definition of control after cases like Jet-Etihad deal. Sebi revamped its regulations governing M&A deals and substantial acquisition of shares of listed companies in a big way in 2011, when it put in place a new and detailed Takeover Code. Under the new Code, an entity buying 25 per cent stake in a listed firm needs to mandatorily make an offer to buy additional 26 per cent from public shareholders. The open offer also gets triggered even if a company gets ‘control’ of the listed firm with a stake lower than 25 per cent, but in some cases there have been difference of opinion on the definition of ‘control’. The new norms increased the open offer size for public shareholders from 20 per cent previously, while the trigger threshold was also raised from 15 per cent earlier. Since notifying the new takeover regulations in 2011, Sebi has further tightened these norms on a few occasions including by bringing entities acquiring more than five per cent stake under its insider trading regulations. http://www.dailypioneer.com/business/sebi-mulls-change-in-takeover-norms-control-pricing-on-radar.html

 

SEBI TO HELP SMALL FIRMS GET LISTED ON BOURSES

 

Coimbatore: If India is to grow at a pace matching the aspirations of the people, the dependence on bank finance should come down and the task of the Securities and Exchange Board of India is to educate the industries as to how they could tap alternative funding sources, according to UK Sinha, Chairman, SEBI. While SEBI is not for forcing SMEs to get listed, it is keen to assist those entrepreneurs who want to go for listing and raise capital. Speaking at a meeting on ‘SME funding: role of capital markets’, organised by SEBI and the Small Industries Development Bank of India (SIDBI) in Coimbatore on Friday, Sinha said CRISIL at the instance of SEBI a year ago did a study in Bihar about the financing needs of SMEs. It showed that in a three-year period the compounded annual growth rate (CAGR) of fixed assets (plant and machinery) by 100 companies was 30 per cent. However, bank finance to these companies grew only by 17 per cent year-on-year while the promoters’ own contribution was growing annually by 26 per cent. But the sales grew only marginally. Sinha said if only these companies had received adequate finance, their sales would have grown substantially. The shortfall in institutional capital for the growth of SMEs all over the country may be similar at least in percentage terms. The study stressed the need for the availability of better and timely capital to the SMEs. He said the observations made earlier by the participants in a technical session here would be considered by SEBI and interested parties were welcome to share their views with SEBI, SIDBI, BSE and the NSE. While stating that 68 SMEs have been listed on the SME platform of the stock exchanges, Sinha said this number ‘is not good enough’. While the venture capital industry shows interest in SMEs, the dilemma it faces is how to exit from the investment. http://www.thehindubusinessline.com/todays-paper/tp-others/tp-states/sebi-to-help-small-firms-get-listed-on-bourses/article6255472.ece

 

SEBI OPEN TO CONSIDERING CHANGES IN TRADING NORMS ON SME PLATFORM: UK SINHA

 

Coimbatore: The issue of publication of consolidated or stand alone results by listed companies is not for SEBI alone to look at but the views of several others such as the RBI and the Institute of Chartered Accountants of India will have to be sought, according to UK Sinha, Chairman, the Securities and Exchange Board of India. He said the tax relief for mutual fund linked retirement plans, announced by the Finance Minister Arun Jaitley in the Union Budget, would be within the overall Section 80C limit of Rs. 1.50 lakh and no additional tax relief window will be available for such an investment. Responding to queries from newspersons in Coimbatore, after a meeting on the role of capital markets in SME funding, on companies with subsidiaries giving prominence to consolidated results rather than standalone results on the basis of which EPS, PE ratio, dividend payout, etc, were decided, he said the ‘requirement for consolidated statement is in the interest of the investor’, it was in the interest of the shareholder. That is why it has been prescribed. Referring to the issue of calculating EPS, share PE ratio based on stand alone results, Sinha said, “the whole question has to be studied not alone by SEBI” but by the ICAI, by the RBI, as “we have to go into an area where everybody is comfortable that this is something which is doable.” He pointed out that in the Budget the Government had announced that International Financial Reporting Standards will come into force from 2016. On matters of financial reporting he said “what we have in India is quite reasonable.” http://www.thehindubusinessline.com/todays-paper/tp-others/tp-states/sebi-open-to-considering-changes-in-trading-norms-on-sme-platform-uk-sinha/article6255433.ece

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