series news RBI RBI May Look for Price Cuts by Cos Before Lowering Rates * At one of the customary premonetary policy meetings with industry, former RBI governor Duvvuri Subbarao wanted to know how many of those present would benefit from an interest rate cut. Almost all hands went up. The next question was how many would pass on the lower cost to customers. Almost no one raised their hands. Subbarao kept interest rates unchanged. The voice of industry, which is always seeking a cut in the cost of funds, is getting louder again, thanks to both consumer and wholesale price readings dropping to record lows in September. Its natural that Governor Raghuram Rajan, who has made it his mission to bring inflation as measured by the consumer price index permanently under 6%, will be under greater pressure to cut rates.But will he budge at the next monetary policy announcement, scheduled to be made on December 2? It seems unlikely. (ET-18) RBI, Kenyas central bank ink MoU to exchange info * The Reserve Bank has signed a pact with Central Bank of Kenya for exchange of information and supervisory cooperation. The RBI signed the Memorandum of Understanding (MoU) on Supervisory Cooperation and Exchange of Supervisory Information with the Central Bank of Kenya on October 16, 2014, RBI said in a release. With this, RBI has signed 22 such MoUs and one Letter for Supervisory Co-operation, it added. The MoU was signed by RBI Governor Raghuram Rajan and Central Bank of Kenya Governor Njuguna Ndungu. The RBI has been signing the MoUs and Letter for Supervisory Co-operation with supervisors of other countries to promote greater co-operation and share supervisory information among the authorities. (FE-18) ` fall may spark firms forex loss * The RBIs repeated warnings to companies on hedging foreign exchange loans became relevant again on Wednesday when the rupee corrected to 61.85 against the dollar. The RBI has set the hedge ratio for external commercial borrowings and foreign currency convertible bonds (ECBs and FCCBs) at 15 per cent in July- August, down from 34 per cent in 2013- 14. RBI Governor Raghuram Rajan has warned companies the central bank will not bail them out if the rupee falls sharply. Companies reluctance to hedge can be also attributed to a drop in global crude oil prices. Benchmark Brent crude dropped to $ 83.12 a barrel on Wednesday from $ 115 on June 19. Falling crude prices mean the current account deficit and the governments fuel subsidies will shrink. These could stabilise the rupee. But the RBI feels relying on crude prices alone may be a costly mistake. (BS-19) Early days still for taxi rental in-app wallets * Cab service providers are using various payment methods to attract and retain customers. Some time back, Uber Technologies Inc., a San Francisco-based luxury service provider, was allowing its passengers to pay their taxi bills through cards, but was pulled up by the RBI for not having two-factor authentication as part of the payment process. Recently, Meru Cabs run by Meru Cab Co. Pvt. Ltd and V-link Automotive Services Pvt. Ltd and Olacabs owned by ANI Technologies Pvt. Ltd launched in-app wallets, where consumers can preload money and use it to pay for the service as and when they travel. Heres a look at how a wallet works and what you should know about it. (MINT-20) ECONOMY STATSGURU: Examining the numbers behind the fall in inflation * Of late, inflation has softened noticeably. As Table 1 shows, Wholesale Price Index (WPI) - based inflation has crashed to its lowest level in considerable time, and the trend is all downward. And, as Table 2 reveals, even Consumer Price Index (CPI) - based inflation has gone below 6.5 per cent and exhibits a downward trend. Meanwhile, although manufacturing WPI seemed to have an upward trend, that has been reversed in the last set of numbers, according to Table 3. Perhaps that is because a nascent recovery in the manufacturing sector in the middle of the year seems to have lost force, as Table 4 demonstrates. What lies behind this inflation reduction? As Table 5 shows, the decline in international crude oil prices has been particularly sharp. But even the main driver of inflation, food prices, have seen as light dip in their rate of increase, as Table 6 shows. For some major foods, like rice and sugar, the decrease in prices over the past three months has been noticeable, as shown in Table 7. (BS-20) Gold Import Curbs May be Back to Check Trade Deficit * Barely months after gold import rules were eased, the government is looking to re-impose curbs as the countrys insatiable appetite has led to a surge in the yellow metal coming into India, threatening to undermine the improvement in external balances. The finance ministrys revenue department has flagged the issue and asked the department of economic affairs (DEA) and the RBI to review the May 21 relaxation in the import rules issued by the latter. The so-called 80:20 rule was relaxed in May by RBI at the behest of the finance ministry after jewellers, bullion dealers, authorised dealer banks and trade bodies sought easier rules. Under the 80:20 scheme, nominated agencies were allowed to import gold on the condition that 20% of the import would be exported. The easing of rules meant more entities were allowed to import gold. (ET-20) DIPP Prepares Composite Limit Draft for Foreign Investments * The department of industrial policy and promotion (DIPP) has finalised proposed foreign investment policy reforms related to composite limits as part of efforts aimed at greater clarity and the plugging of loopholes. DIPP, the nodal agency for overseas investment policy, has readied a cabinet note incorporating suggestions from various government departments that had raised concerns over the stringent guidelines recommended for portfolio investment, especially in pharmaceutical companies. The government will prescribe one limit that will include all kinds of overseas investment -foreign direct investment (FDI), foreign portfolio investment, NRI investment, depository receipts, foreign currency convertible bonds and fully and mandatorily convertible preference shares or debentures. (ET-20) India set to become $2t economy this year: IMF * India is poised to become a $2 trillion economy this year, while its GDP size would cross another milestone of $3 trillion after five years in 2019, according to IMFs latest world economic outlook. Indias ranking would also improve to seventh largest economy in the world, while measured on current prices basis in US dollar, in 2019 from its tenth position currently. Latest data from the International Monetary Fund (IMF) show that Indian economy is set to be worth $2.05 trillion this year, increasing its size from $1.88 trillion in 2013. Last year too, India was among the ten largest economies in the world. Going by the IMF, United States would remain the worlds largest economy with a size of $17.42 trillion, followed by China at $10.35 trillion. (FC-20) Operating environment for cos likely to improve: Icra * Thanks to the recent stability on the macroeconomic front, the operating environment for the corporate sector is likely to be less challenging in the current fiscal, says a report. The operating environment for the domestic corporate sector is likely to be less challenging during FY15 than it had been in the previous year, considering the emerging signs of stability in the macro-economic indicators and the likelihood of some improvement on the growth front, rating agency Icra BSE -0.80 % said in a report. Retail inflation or CPI too has come down from the peak of 11.2 per cent in November 2013 to 6.46 per cent in September, although it still remains outside the comfort zone of the Reserve Bank to mull bringing down interest rates. Moreover, several policy initiatives including efforts to revive stalled projects, tariff revision by state utilities, re-scheduling of premium payout for road projects alleviate some sector-specific concerns, the report said. (FE-20) FDI cap hike in insurance to bring in $5 b in next 5 years: Sandhu * The proposed foreign direct investment (FDI) limit hike in insurance sector is expected to result in inflow of $5 billion over the next 5 years, said GS Sandhu, Secretary, Financial Services. The Government will take steps in the Winter Session to get the pending insurance Bill passed in Parliament, he said at the TIEcon Delhi 2014 event in the Capital on Friday. We are already working on building consensus for this Bill so that the FDI limit can be hiked to 49 per cent, Sandhu told Business Line on the sidelines of the event. He clarified that the estimate of $5 billion pertained only to insurance sector and did not include the likely foreign investment into the pension sector. India plans to hike FDI limit in insurance sector from the 26 per cent to 49 per cent. A Bill to amend the existing insurance law for this purpose is currently awaiting Parliament approval. (HBL-18) India looking at trade in local currency with SAARC * India is examining the possibility of trading in local currency with South Asian Association for Regional Cooperation (SAARC) countries a move that could reduce the regions dependence on the dollar and also cut down conversion losses. SAARC nations comprise Bhutan, Bangladesh, Sri Lanka, India, Pakistan, Maldives, Nepal and Afghanistan. We have already flagged the issue with the Finance Ministry and the RBI. They will have to decide how to work it out, said a Commerce Ministry official. The Ministry has suggested that the system could be on the lines of Asian Clearing Union, a payment mechanism for the SAARC countries, Iran and Myanmar, which was working smoothly till economic sanctions were imposed on Iran by the US and the EU in 2011 for its alleged nuclear activities. The system is simple wherein countries trade in their own currencies and then swap it through their banking mechanisms. The surplus that one country has over the other can then be settled later in a hard currency, the official said. (HBL-18) NDA govt toes UPA line on black money information * In what is perceived to be a digression from BJPs pre-poll stance and seemingly in sync with UPAs line on the issue of bringing back black money stashed abroad by Indian citizens, the Narendra Modi-led government on Friday requested the Supreme Court to modify its earlier orders that sought disclosure of names received by it from foreign governments. Such disclosure of names and other information received from foreign governments with which India has any treaty, including the double taxation avoidance agreement, will not only lead to the government facing problems with regard to diplomatic ties with other nations, but would seriously affect the countrys economy, the government told the bench headed by Chief Justice HL Dattu, which posted the matter for hearing on October 28. (FE-18) Forex reserves up $.1.31 bn * Foreign exchange reserves rose by $.1.31 billion in the week ended October 10 to $312.74 billion, the RBI data showed. Forex reserves rose by $33.5 billion y-o-y on account of healthy dollar inflows into local bond and equity markets through foreign portfolio investors and also strategic dollar purchases by the RBI from the forex market intermittently. RBI bought dollars at regular levels to curb volatility in the rupee amid strong dollar inflows. Foreign investors have poured in $21.33 billion since January into Indian bonds and another $13.2 billion into equity. However, the rupee has strengthened just 0.6%, indicating the RBI prefers to thwart not just a sharp fall but also a strong appreciation of the currency. RBI has bought $10.6 billion from the domestic foreign exchange market in July through both spot and forward transactions. In August, RBI sold a small $511 million in the spot market. (FE-18) India to pay Iran $900 m in oil dues * India will pay Iran $ 900 million in two tranches beginning next week to clear part of the past dues for crude oil it buys from the Persian Gulf nation. This payment will be on top of $ 1.65 billion it had paid in June/July to clear more than one-third of over $ 4 billion in dues that had accumulated. Indian refiners - Mangalore Refinery and Petrochemcials Ltd (MRPL), Essar Oil, Indian Oil Corp (IOC) and Hindustan Petroleum Corp Ltd (HPCL), will make payment of first installment of $ 400 million on Monday or Tuesday, sources with direct knowledge of the development said. (FE-18) Saurabh Chandra, P K Sinha in race for Cabinet secy post * The choice for the topmost civil servants post in the country might have narrowed to two, though about five names are still on the shortlist for Cabinet secretary, according to sources. In the current season of massive bureaucratic reshuffles, this one appointment is being keenly watched.Saurabh Chandra, a 1978batch IAS from the Uttar Pradesh cadre, whos currently the petroleum secretary, is one of the two with good chances for elevation, as current Cabinet Secretary Ajit Seths term ends on December 12, sources said. Seth got a six- month extension on June 13. Chandra has done three successful stints in Varanasi, from where Prime Minister Narendra Modi contested the general elections. He has worked in chemicals and fertilisers, finance and commerce and industry ministries at the Centre, besides petroleum. (BS-18) FINANCE Loans above `. 20 lakh: Housing finance companies allowed to lend up to 90% of value * Call this a Diwali gift from National Housing Bank, the housing finance regulator, to all future home loan borrowers. Retail home loan borrowers can now bring in lower amounts towards their initial contribution for getting loans from housing finance companies (HFCs). This facility of lower upfront contribution (towards home equity) will be available in cases where home loans taken from HFCs is above `. 20 lakh. Also, such loans should be supported by a mortgage guarantee cover issued by a registered mortgage guarantee company. In India, the total HFCs portfolio of retail housing loans stood at about `. 3 lakh crore. About 55 per cent of this is loans above `. 20 lakh. Under the latest regulatory relaxation, NHB has allowed HFCs to provide loans above `. 20 lakh with a loan-to-value (LTV) ratio of up to 90 per cent if such loans are supported by a mortgage guarantee. (HBL-18) RBI nod for 49% FII buy in Repco Home finance * Foreign institutional investors and registered foreign portfolio investors can now invest up to 49 per cent of the paid-up capital of Repco Home Finance under the portfolio investment scheme, the RBI said in a release on Friday. The Companys shareholders passed a special resolution to enhance the limit for purchase of its equity shares and convertible debentures by FIIs, RBI said. Restrictions placed on the purchase of share of the company by foreign shareholders were withdrawn with immediate effects as shareholding by FIIs and FPIs in the Company fell below the threshold limit. (HBL-18) BANKING IIFCL chief heads banks panel on power * Bankers have formed a committee under IIFCL Chairman Santosh Nayyar to suggest ways to sort out financing issues in the power projects which are held up on account of fuel supply constraints. The committee will submit its report on November 7. We have discussed about gas based, coal based power projects and projects which are held up because of last mile financing...We have constituted a small group headed by the CMD, IIFCL, Santosh Nayyar to examine all these issues, Financial Services Secretary G S Sandhu told reporters after a meeting between bankers and private sector power producers. (FE-18) Credit growth may pick up by end of third quarter * Bank of India is planning to set up a subsidiary dedicated to social work, a first among its domestic peers. Amid increasing competition, the public sector lender is trying to consolidate the credit portfolio, cut expenses and focus on fee and treasury income to stay profitable. The bank is focusing on bringing down stressed assets by strict monitoring and faster resolution of cases. Vijayalakshmi Iyer, chairperson & managing director, tells Manju AB how she is steering the bank out of its bad debt problem by personally attending to large accounts. (DNA-20) For Diwali presents, relatives of migrants bank on a machine * Sometime this week, Sunil Yadav, a driver in Mumbai, will go to Punjab National Bank and deposit a few thousand rupees for Diwali presents a new pressure cooker for his mother, and a sari for his wife. He will then call his father in Benipatti, Bihar, who will cycle ten kilometers to the nearest Automated Teller Machine (ATM) and withdraw the money. Its great because he can go any time of day or night. He doesnt have to restrict himself to banking hours, and he doesnt lose a days work, says Yadav, 30, who cannot read or write but is ATM-savvy. On his last trip home, he taught his father how to slip in the ATM card and punch in the numbers. Over the last couple of years, all his village brethren working in the city as drivers, watchmen, sweepers and office boys, have started using this method to send money home. Not surprisingly, electronic transfer amounts spike during Diwali season, according to RBI figures. (TOI-19) Bank asked to pay ` .50, 000 for inaction against ATM Fraud * The Thane district consumer forum has held a nationalised bank liable for failing to block a customers ATM card even after she lodged a complaint about a fraudulent transaction. The consumer forum has directed Canara Bank to reimburse `. 55,200 fraudulently withdrawn from the account of Badlapur resident Purva Jog, along with interest at 9% per annum from August 2010. The forum also directed the bank to pay compensation of `. 50,000 to the woman. Jog has an account with the Badlapur branch of Canara Bank. According to her complaint, she visited the bank in July 2010 to update her passbook. She noticed that somebody had fraudulently withdrawn `. 200 from her account using her ATM card. Jog immediately submitted a written complaint to the bank about the unauthorised use of her ATM card and requested bank officials to take necessary steps. (HT-18) INTERNATIONAL Yellen greatly concerned by widening inequality in US * US Federal Reserve Chair Janet Yellen said shes greatly concerned by the most sustained rise in US wealth and income inequality since the 19th century, while declining to offer any policy prescriptions. The lower half of US households by wealth held 1 percent of the total last year, according to 2013 data from the Fed Survey of Consumer Finances, while the wealthiest 5 percent held 63 percent, Yellen said today in the text of a speech prepared for delivery at a Boston Fed conference on economic inequality. The past few decades of widening inequality can be summed up as significant income and wealth gains for those at the very top and stagnant living standards for the majority, Yellen said. It is appropriate to ask whether this trend is compatible with values rooted in our nations history. (FE-18) Janet Yellen warns of inequality threat(BS-19) At least 113 staffers at US Fed earn more than Yellen * The top 113 earners among staff at the Federal Reserves Washington headquarters make an average of $246,506 per year, excluding bonuses and other benefits - more than Fed Chair Janet Yellen and nearly double the normal top government rate. Yellen, whose salary is set by Congress, earns $201,700 a year. The details on Fed pay were provided to Reuters in response to a Freedom of Information Act request for data on all employees of the U.S. central banks board whose salaries outstrip $130,810, which is the top of the governments pay scale in most areas. However, the central bank only provided salaries for staff who make at least $225,000 a year, with some exceptions. It is the first time the list has been made public. (FE-18) Euro zone skips stagnation in 2nd quarter * The Euro zone economy slowed in the second quarter but is not stagnating yet, data showed on Friday, as the European Unions statistics office revised up its numbers after changing to anew accounting standard. Eurostat said the economy of the 18 countries that share the euro grew 0.3 per cent quarter- on- quarter in the first three months of 2014 rather than 0.2 per cent. It then expanded 0.1 per cent in the April- June period under the new accounting standard, called ESA 2010, the statistics office said. Under the previous accounting standard, the European system of national accounts ESA 95, Euro zone gross domestic product was flat in the second quarter. (BS-18) ARTICLES The Chinese flu Spreads Across global markets * The ill effects of Beijings borrowing and spending binge are rippling through the world economy. Says Ruchir Sharma, head of emerging markets at Morgan Stanley Investment Management (AWSJ-20) The euro zone is slipping again * The problem this time could be more serious as the unease is emanating from Germany. Says Rajesh Kumar (MINT-20) World Bank on upward mobility into Indias new middle class * A study shows there has been considerable upward mobility among both the poor and vulnerable sections of the population. Says Manas Chakravarty, looks at trends and issues in the financial markets. (MINT-20) Microfinance: To hell and back * In a nation where half the population isnt served by formal banking system, microfinance industry acquired a halo in the early part of last decade. And then, Andhra Pradesh crisis happened. Says Tamal Bandyopadhyay, consulting editor of Mint (MINT-20) Valuations, fundamentals favour fixed income * The RBI has held key rates, but macroeconomic developments make a case for investing in long duration funds. Says Rahul Goswami , CIO-Fixed Income, ICICI Prudential AMC (HBL-20) Lock into high rates * The interest on Kerala TDFC one- and two-year deposits is attractive. Says Parvatha Vardhini C (HBL-20) Rupees rally can halt at 61 * Widening deficit and outflow of foreign portfolio money can restrict the currency from moving up. Says Gurumurthy K, (HBL-20) West Asian conflict may aid agri trade * The Indo Iranian rupee payment accord and the conflict in West Asia can support Indias agri exports. Says Tejinder Narang, a grains-trade analyst (FE-20) Change monetary policy for better growth * The uncertainty of inflation-targeting impacts expectations of the industry and recovery. Says Charan Singh, RBI Chair Professor of Economics, IIM-Bangalore (FE-20) Becalmed by the global slowdown * Slow growth in China, Europe and the US means the correction in the market could continue unless some domestic factors come into play. Says Devangshu Datta (MINT-20) A five- year baseline scenario * The International Monetary Funds projections suggest macroeconomic stability but little upside to growth. Says Subir Gokarn, director of research, Brookings India, and former deputy governor, RBI. (BS-20) A chowkidar for state banks * Narendra Modis many passionate election speeches last year and earlier this year were punctuated by a very colourful expression. Says Debashis Basu , the editor of Money life (BS-20) Jan Dhan going against KYC norms to check money laundering * Do not get me wrong. I believe financial inclusion is a wonderful initiative and everybody should have access to a bank account. The concern I have is how this should be done. Says Raghu Palat, managing director of Cortlandt Rand and an author (DNA-20) Bad math makes Chinas GDP No. 1 * Since China has more than four times as many people as the US, it would take an astonishing catastrophe to stop it from becoming No.1.Says Noah smith, a Bloomberg View contributor (BS-19) How Rajan can help India bust inflation * A single instrument must be settled upon for achieving inflation goals. Says Dhiraj Nayyar a journalist in New Delhi. (FC-18) Conning customers * Transparency & reason should be the bedrock for levying bank charges. Says KA Badarinath (FC-18) get more details email us [email protected] visit our website:https://facebook/groups/sunshine123/
Posted on: Mon, 20 Oct 2014 08:41:15 +0000
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