New Delhi: Finance Minister Arun Jaitley on Monday said the government was open to accommodating minor modifications to the Insurance Laws (Amendment) Bill, 2008, so that it could be passed in the current session of Parliament. He also said calling a joint session of Parliament was a real option if the Bill was defeated in one of the Houses. After an all-party meeting failed to break the deadlock on the issue between the government and Opposition, Jaitley on Monday reached out to the Congress. But the Congress continued to insist the Bill be sent to a select committee of Parliament, as it now was much changed from the one the United Progressive Alliance (UPA) government had tabled in the Rajya Sabha. The party added it would be willing to support the legislation in the winter session of Parliament. But the Finance Minister said the government was “extremely anxious that the insurance Bill, which has been pending since 2008, was finally cleared. In case they (Congress) want to make any minor modification, they should suggest that.” At the brief all-party meeting in the morning, Jaitley told Opposition leaders, particularly the Congress ones, that the language and contents of the Bill were the same as that tabled by UPA; no major new amendments had been proposed. He said the changes suggested by Parliament’s standing committee on finance related to altering dates and numerals and were “inconsequential”. He added the government was ready to consider changes suggested by the Congress right away. The finance minister also said only three possibilities existed if the intent of the Opposition was to move forward. First, the Congress approved the Bill in its present form, since it was UPA that had proposed increasing the foreign investment cap to 49 per cent. http://www.business-standard.com/article/economy-policy/insurance-bill-govt-hopeful-of-evolving-broad-consensus-114080401163_1.html
RBI MAY NOT CUT REPO, BUT BANKS DROP RATES
Mumbai: Even without the Reserve Bank of India (RBI) lowering the repo rate, the lack of lending opportunities in a sluggish economy is forcing banks to resort to heavy undercutting with the result that even AA-rated corporates are able to borrow at base rates. RK Goyal, executive director, Central Bank of India, confirmed to FE the competition had resulted in his bank lowering rates. “Since there is no credit offtake, we’re lending to AAA- and even AA-rated companies at the base rate. That way we are at least sure of the credit quality,” he said. BB Joshi, ED at Bank of Baroda, said that while it wasn’t the norm to lend to AA companies at the base rate, the bank had been doing so on a “case-to-case basis”. The other reason banks have dropped rates is that the commercial paper (CP) market has turned somewhat illiquid after the government changed the tax treatment for income schemes of mutual funds. Banks are now hesitant to buy CPs since they are unsure of an exit with mutual funds now participating to a smaller extent in the market. Mohan Shenoi, president, group treasury and global markets, Kotak Mahindra Bank, said that with MFs having reduced their activity in the CP market, both liquidity and rates had turned volatile, making it difficult to price CPs. http://www.financialexpress.com/news/rbi-may-not-cut-repo-but-banks-drop-rates/1276412
RBI POLICY, Q1 EARNINGS AND GLOBAL CUES TO DRIVE STOCK MARKETS
New Delhi: The RBI’s monetary policy review on Tuesday and a bunch of earnings from blue-chips including SBI, Mahindra & Mahindra and Hero MotoCorp, will dictate the near-term trend on bourses, market experts said. Besides, trend in investment by overseas investors, global cues, movement of rupee against the dollar, oil prices and progress of monsoon will also hold key for the markets. Market participants said the RBI is expected to maintain status-quo in its Tuesday’s policy but any surprise may trigger volatility in the broader markets. The Sensex ended at 25,480.84 and the Nifty settled at 7,602.60 last Friday. “The unstable geo-political situation (between Russia and the West), the US markets showing signs of topping out, the weakening rupee…Are likely to lead to a correction in markets that is in any case overdue since valuations are looking a bit stretched. Most stocks have already rallied ahead of fundamentals,” said Aman Chowdhury, CEO, Cians Analytics. With no short-term triggers in sight, the markets are likely to pause before resuming the uptrend. http://www.dailypioneer.com/business/rbi-policy-q1-earnings-and-global-cues-to-drive-stock-markets.html
RBI LIKELY TO KEEP INTEREST RATE UNCHANGED IN TUESDAY REVIEW
New Delhi: Amid fears of poor Monsoon impacting food inflation, the Reserve Bank may opt for status quo on interest rate in its bi-monthly monetary policy review to be unveiled on Tuesday. The food inflation remaining over 8 per cent mark will weigh heavily on the Reserve Bank, which has been maintaining that containing inflation is its top priority. Prices of some of the food articles like tomato, onion, potatoes are still quite above normal. With monsoon being below normal, there is a fear that price situation, especially food inflation, may further deteriorate in the coming days. Monsoon deficiency stood at 23 per cent in at the end of July. The Reserve Bank of India (RBI) is scheduled to announce its third bi-monthly monetary policy on August 5. State Bank of India (SBI) Chairperson Arundhati Bhattacharya said the RBI is likely to keep interest rate intact in the monetary policy review. “I think status quo (in policy rate) is more likely,” she said. HDFC Bank Deputy Managing Director Paresh Sukthankar said: “Our view is that policy rates are likely to remain roughly stable.” He further said: At least, the assumption that we are built in to for the GDP growth in this year, we are counting on major tail winds from interest rate reduction. The pick-up in the economy that we are anticipating is really going to be driven more by the policy environment and the investments picking up but not necessarily on the back of lower interest rates.” According to Indian Overseas Bank, interest rates will remain same in this policy, but going forward there would be a downward bias. http://www.dailypioneer.com/business/rbi-likely-to-keep-interest-rate-unchanged-in-tuesday-review.html
KOTAK MAHINDRA BANK TO RAISE RS 300 CR VIA INFRA BONDS
Mumbai: Kotak Mahindra Bank plans to raise up to Rs 300 crore through infrastructure bonds, rated ‘AAA/stable’ by CRISIL. The rating agency said given the exemption from statutory reserve requirements and priority sector obligations, these bonds would be cost-effective. The bonds will improve the bank’s asset-liability profile. CRISIL also upgraded the bank’s tier-II bonds from ‘AA+/stable’ to ‘AAA/stable’, reflecting the successful scale-up of the group’s lending business and strong asset quality. A sharp improvement in the bank’s retail liability franchise enhanced stability in its resource profile, CRISIL said. To arrive at the ratings, CRISIL consolidated the financial and business risk profiles of the bank and all its subsidiaries. There were high business and operational linkages among group entities, a common senior management team and a shared brand, it said. The rating reflects the group’s strong financial risk profile, good capital adequacy and strong earnings, though contribution from capital markets businesses has been subdued in recent years. At 2.1 per cent, the group’s return on assets for 2013-14 was among the highest in the sector. http://www.business-standard.com/article/finance/kotak-mahindra-bank-to-raise-rs-300-cr-via-infra-bonds-114080500036_1.html
ORIENTAL BANK OF COMMERCE Q1 PROFIT UP 3% AT RS 365 CR
New Delhi: Oriental Bank of Commerce (OBC) on Monday reported a marginal 3.16% rise in net profit to R364.54 crore in the first quarter ended June 30 as provisioning against bad loans increased. The public sector bank had posted a net profit of R353.38 crore in the first quarter a year earlier. Total income increased 6.09% to R5,576.03 crore from R5,255.70 crore in the year-ago period, OBC CMD SL Bansal said. “Net profit has been flat because of increase in provisions compared to the same period of the last fiscal,” he said. Total provisions rose to R774 crore against R734.89 crore in the same period of the previous fiscal. Provision for bad loans increased sharply to R478 crore against R345 crore. Gross non-performing assets (NPAs) as a percentage of total advances rose to 4.33% from 3.36%. Net NPAs went up to 3.11% from 2.34%. The net interest income also declined 5% to R1,243 crore, compared with R1,307 crore in the same period a year ago. The bank’s net interest margin declined to 2.56% at the end of the first quarter from 2.9% in June 2013. Bansal said the bank has requested the government for a R500-crore capital infusion. The government infused R150 crore into the bank last fiscal to enhance capital base. http://www.financialexpress.com/news/oriental-bank-of-commerce-q1-profit-up-3-at-rs-365-cr/1276451
BANK OF MAHARASHTRA PROFIT DECLINES 56%
Pune: Bank of Maharashtra reported a 56% drop in net profit at R117.82 crore in the quarter ended June 30, 2014, owing to a threefold increase in NPAs. Profit after tax stood at R266.33 crore in the corresponding quarter last year. Asset quality deteriorated with gross NPAs rising to 4.23% from 1.8%, while net NPAs increased to 2.94% from 0.8%, the bank said. The NPA provision coverage ratio stood at 49.73 %. In absolute terms, gross NPAs stood at R3,761.29 crore as on June 30. Net NPAs stood at R2,563.19 crore. The NPA provision coverage ratio stood at 49.73%. The net interest margins was 2.7% in the reporting quarter. Net interest income, which is the difference between interests paid on deposits and the interest earned from lending, was up 1% at R914.54 crore from R908.02 crore in the year-ago quarter. The capital adequacy ratio under Basel-III norms was at 10.75% against the regulatory required level of 9%. Total deposits were up 10.35% at R1,16,364.77 crore. Total business of the bank rose 8.88% to R2,05,200 crore as on June 30, 2014, from R1,88,457.09 crore. http://www.financialexpress.com/news/bank-of-maharashtra-profit-declines-56-/1276450
ING VYSYA BANK MAY RAISE RS 700 CR
Bangalore: ING Vysya Bank has proposed to raise up to Rs 700 crore on private placement basis by way of issue of securities including but not limited to bonds and non-convertible debentures. The funds raised will enable the bank to augment its capital under Basel-III requirements and meet its growth plans. The capital could be raised either or both in Indian rupees or equivalent of foreign currency, the bank had said in a filing to the BSE recently. The bank has also proposed to increase the borrowing limit to Rs 20,000 crore including the already borrowed funds. The bank has sought approval from its shareholders through the postal ballot. ING Vysya Bank, for the first quarter ended June 30, 2014, reported 18.1 per cent decline in net profit at Rs 143.4 crore compared to Rs 175.1 crore in the corresponding quarter last year. The total income for the quarter marginally went up by 3.1 per cent to Rs 690.7 crore from Rs 669.9 crore in the same quarter last year. Capital adequacy ratio improved to 15.19 per cent (according to Basel-III) from 12.59 per cent a year ago. The bank’s stock closed 0.60 per cent higher at Rs 614.80 per share on the close of trading on the BSE on Monday. http://www.business-standard.com/article/finance/class-msonormal-ing-vysya-bank-to-raise-up-to-rs-700-crore-114080401244_1.html
SYNDICATE BANK FIASCO: ANOTHER SHADOW ON PRAKASH INDUSTRIES
New Delhi: When S K Jain, chairman of Syndicate Bank, was held in a bribery case over the weekend, it was not the first time the CBI took the name of Prakash Industries in a scandal. The company came under investigation in the coal block allotment scam less than a year before. CBI, late on Saturday evening, arrested Ved Prakash Agarwal, chairman and managing director of Prakash Industries, and Vipul Agarwal, a director, on the charge of offering bribes to get a credit facility from the public sector bank. CBI had on March 27 last year, registered a First Information Report against his company for alleged irregularities in allocation of coal blocks between 2006-09. Established in 1980, Prakash Industries runs an integrated steel plant at Champa in Chhattisgarh. It was allotted three coal blocks in the state, at Chotia, Madanpur & Fatehpur. The Chotia mines are already operational. Besides, it owns iron ore mines in Chhattisgarh and Odisha, and a 100-Mw captive power generation plant. http://www.business-standard.com/article/companies/another-shadow-on-prakash-industries-114080401191_1.html
SYNDICATE BANK FIASCO: BHUSHAN STEEL’S CHEQUERED PAST
Kolkata: Till he hit the headlines as co-accused in the alleged Syndicate Bank bribery scam, Neeraj Singal, Bhushan Steel’s vice-chairman and managing director, was raring to drive the company from strength to strength. In 1989, the company was started as a value-added steel manufacturer, with a unit at Sahibabad in Uttar Pradesh. By FY10, it had commissioned two million tonnes (mt) of capacity. According to analyst reports, the company was expected to commission the third phase of expansion at its Odisha unit in FY14. This would have raised its steelmaking capacity to 5.2 mt. Neeraj Singal couldn’t be reached for comment. Neeraj Singal had planned to set up a number of greenfield projects. In 2007, undeterred by the violence over land acquisition in Nandigram (West Bengal), he signed an agreement with the state government for a two-mt plant. Japan’s Sumitomo was to partner Bhushan in the project. However, following the new state government’s hands-off policy in acquiring land for industrial projects, the company was pushed to review its plans. http://www.business-standard.com/article/companies/bhushan-steels-chequered-past-114080401278_1.html
TREASURY, FEE INCOME DEPRESS BANKS’ PROFIT
Mumbai: A fall in treasury income and slower than expected growth in fee income, which together constitute non-interest income, have dragged down the profitability of banks in the first quarter. Banks had booked profit on their government bond portfolio during the April-June period of last year. However, bond yields have hardened since July last year, following a tight monetary policy which resulted in lower profit from sale of investments. Fee income’s growth was muted, mainly due to sluggish loan demand that provided fewer opportunities for lenders to earn commission from activities like loan syndication. Lower earnings from fees and commission, dividends from subsidiaries, trading profit and foreign exchange have impacted banks across the board, except for a few. In the private sector banking space, apart from ICICI Bank and IndusInd Bank, all the large and mid-sized ones have recorded a fall in non-interest income in the quarter ended June of this financial year, as compared to the corresponding period of last year. For instance, HDFC Bank’s non-interest revenue for the quarter was Rs 1,851 crore, compared with Rs 1,926 crore a year before. A decline of about Rs 90 crore in foreign exchange and derivatives revenue at Rs 224 crore and sale of investments (a fall of Rs 174.5 crore) at Rs 25 crore more than offset the rise in income from fees, commissions and miscellaneous income. http://www.business-standard.com/article/finance/treasury-fee-income-depress-banks-profit-114080401123_1.html
SLOWEST START FOR CORP BONDS IN 5 YEARS
Mumbai: Corporate bond issuance through the private placement route hit a five-year low in the first quarter of the current financial year, as the cost of borrowing continues to be high amid a slowing economy and loan demand remains sluggish. The Reserve Bank of India (RBI) is not expected to cut interest rates anytime soon. A rate cut would boost such issuances but experts think this might not happen till 2015. Data from the Securities and Exchange Board of India show corporate bond issuances through private placement were Rs 50,971 crore in the first quarter of the current financial year, compared with Rs 1,10,785 crore during the corresponding period of last year. The lowest was after the financial crisis of late 2008, when it touched Rs 46,287 crore in the first quarter of 2009-10. “In three to six months from now, interest rates might start moderately inching south, due to which borrowing costs might be lower,” said Ajay Manglunia, senior vice-president (fixed income), Edelweiss Securities. http://www.business-standard.com/article/companies/corporate-bond-issuance-slowest-in-5-years-114080401023_1.html
HDFC BANK OPENS FOUR BRANCHES IN CHHATTISGARH
HDFC Bank Ltd. inaugurated four new branches in Chhattisgarh to take its number of branches in the state to 55. Of the new branches, two had come up in Raipur and one each in Bilaspur and Korba, a press statement issued by the bank here said. All the branches are urban and will offer the full range of world-class banking solutions to meet the needs of the local population. The branches will remain open six days a week, offering residents the flexibility to carry out their banking transactions at the time most convenient for them, the statement added. With the launch of four new branches in Chhattisgarh, HDFC Bank now had now established a network of 55 branches across Chhattisgarh. As of June 30, 2014, the Bank had a distribution network with 3,488 branches and 11,426 ATMs in 2,231 cities and towns. http://www.business-standard.com/article/companies/hdfc-bank-opens-four-branches-in-chhattisgarh-114080401520_1.html
MORE CLARITY NEEDED ON FDI HIKE OVER MANAGEMENT CONTROL: SANDEEP GHOSH
Mumbai: Private life insurer Bharti AXA Life Insurance is on track to book statutory profits in the next couple of years and has also enabled sales through tablets. In an interview, Sandeep Ghosh, managing director and CEO of Bharti AXA Life Insurance, tells M Saraswathy how foreign direct investigation (FDI) will impact the sector. Edited excerpts: The 26 per cent cap on FDI in insurance is likely to be raised to 49 per cent. Will foreign partners rush to increase their stake, once the Insurance Bill is passed? With respect to FDI, the Insurance Bill looks more likely to be passed now than ever before. However, we have to see what form and shape it would be in. The exact implications of the comments made by the finance minister in the Budget has to be seen. One is about the FIPB route, which is a departure from the present automatic route. Another grey area is around management control. Generally speaking, neither the regulator nor the government gets into control discussions of individual companies. Control is something for shareholders to work between themselves since in all these joint ventures, the foreign partner brings domain experience and the Indian partner brings knowledge of the Indian market and relationships with government and regulator. http://www.business-standard.com/article/pf/more-clarity-is-needed-on-what-management-control-post-fdi-hike-would-mean-114080201019_1.html
REMITTANCE AGENCIES SEE UNTAPPED DOMESTIC MKT BUT BLAME RBI’S NONCHALANCE
New Delhi: Global money remittance agencies have decried RBI’s biased policy of allowing only domestic NBFCs and financial agencies to float domestic money transfer gateways despite a large market which is lying almost untapped. Agencies like Xoom which has a tieup with PNB and Xpress Money which has recently entered India as online remittances agencies hold that the traditional high remittances receiving states like Kerala, Tamil Nadu, Punjab, Andhra Pradesh as well as others like Uttar Pradesh, Bihar, Rajasthan, and Karnataka have a vast potential of domestic inter-state remittances due to large migration of labour and wage earners. This has particularly come about in recent years as the economic activity has spread beyond States’ borders in in sectors like real estate, infrastructure, financial institutions, hospitality and healthcare. These States together make up for almost 80-85 per cent of the total remittances. “Remittances to India is expected to grow by 7-8 per cent in 2014. India has been the largest recipient in the world with an 8 per cent year-on-year growth in remittance in the last five years, “ Xpress Money’s Vice President Sudhesh Giriyan told The Pioneer. But besides handling the cross border cash and non-cash remittances Giriyan holds that it is capable of handling onshore or domestic remittances as it already has the expertise and infrastructure. http://www.dailypioneer.com/business/remittance-agencies-see-untapped-domestic-mkt-but-blame-rbis-nonchalance.html
SEBI TALKS TOUGH ON OCT 1 DEADLINE FOR NEW CORPORATE GOVERNANCE NORMS
Mumbai: With less than two months to go for implementation of the new corporate governance norms, Securities and Exchange Board of India (Sebi) has warned India Inc to comply or face the music. The capital markets regulator has ruled out extension of the October 1 deadline. Nearly 1,000 companies are yet to comply with some or the other provision of the corporate governance norms. U K Sinha, the chairman of Sebi, hinted on Monday that it would act against non-compliant companies as briskly as it did last year against those which’d failed to meet the 25 per cent minimum public shareholding requirement. “We passed an order against non-compliant companies a day after the deadline for meeting the minimum public shareholding norms got over. That should indicate our seriousness over compliance issues,” he said. Adding: “I’d suggest (companies) come to us if facing any issues while complying with the regulations. We will make reasonable accommodation,” he said on the sidelines of an event organised by the Institute of Companies Secretaries of India (ICSI). Under these norms, issued by Sebi in February, companies need to have at least one woman on the board of directors. http://www.business-standard.com/article/markets/sebi-talks-tough-as-deadline-for-governance-norms-nears-114080401010_1.html
SEBI MAY GIVE FTIL GRACE PERIOD TO EXIT MCX-SX AS AUGUST 6 DEADLINE NEARS
Mumbai: The Securities and Exchange Board of India (Sebi) is likely to extend the time by which Financial Technologies India (FTIL) can exit its holdings in the MCX Stock Exchange (MCX-SX), as the August 6 deadline approaches, reports fe Bureau in Mumbai. Senior Sebi officials confirmed to FE that FTIL would be given a grace period. In a written response, FTIL said it had appointed a merchant banker for the sale; so far, FTIL has managed to make R1,990 crore from the sale of various ventures but investor response for the loss-making MCX-SX, the country’s third stock exchange, is understood to be tepid. In the first week of July, the Securities and Appellate Tribunal had rejected FTIL’s plea against Sebi’s order, which said it was unfit to hold a stake in any bourse or clearing corporation. Effectively, the order required the Jignesh Shah-promoted FTIL and its unit Multi Commodity Exchange (MCX) to exit MCX-SX by liquidating their holding, both in equity shares and convertible warrants. FTIL and MCX own 5% each in the equity share capital of MCX-SX in addition to convertible warrants of MCX-SX which, if converted, could increase their combined holdings to 72%.
SEBI CRACKS DOWN ON FIRMS RAISING PUBLIC FUNDS ILLEGALLY
Mumbai: Market regulator Sebi is coming down hard on entities raising public money illegally through issue of ‘redeemable preference shares’ and similar instruments, as also through sister concerns after being barred from markets. Action has been initiated in a number of such cases in the past one month, wherein close to R5,000 crore had been raised through issuance of such securities. These cases are other than those involving illicit collective investment schemes (CIS). Sebi has initiated action in many CIS cases and companies that raised close to R4,000 crore have been told to wind down their schemes. In connection with violation of capital markets norms in issuance of RPS and other securities, at least seven companies, as also their promoters and directors, faced strict action by the market regulator in July itself. These firms were found to have issued debentures and preference shares without complying with the necessary regulatory laws. Another eight companies faced Sebi crackdown last month for violation of CIS regulations and these include some companies based in Kolkata. http://www.financialexpress.com/news/sebi-cracks-down-on-firms-raising-public-funds-illegally/1276452
UTI MF PLANS TO RAISE R500 CR FROM NEW EQUITY SCHEME
New Delhi: UTI Mutual Fund aims to mop up R500 crore from its new closed-ended Focussed Equity Fund that will remain open for subscription on August 13-27. Though the scheme will not guarantee any returns, the 1,100-day equity scheme will invest in shares of companies that have a steady operation cash flow (OCF) and records good profit growth as UTI fund managers see a robust earnings growth following low inflation, softening interest rates and rising profit margins. It will benchmark the S&P BSE 200 index. “We are targeting R500 crore from the issue,” said Suraj Kaeley, UTI MF group president for sales and marketing. Asked why UTI AMC is launching a equity scheme at a time when the market seems to be stretched, the funds head of equity Anoop Bhaskar listed out a number of parameters that suggest some stocks can still offer handsome gains in coming years going by a positive operating cash flows and net profits of over R50 crore. With moderation in inflation and interest rates, UTI MF expects the Ebitda margins to improve significantly in the coming years as the present margin at a little over 16% was lower than the long-term average of 18%, Bhaskar said. Even the price-earning ratio (P/E) was near the long term average, he added. http://www.financialexpress.com/news/uti-mf-plans-to-raise-r500-cr-from-new-equity-scheme/1276458
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