FIPB approves 9 FDI proposals worth Rs 659 crore

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Inter-ministerial body FIPB has approved nine investment proposals, including those of Netmagic Solutions and Vodafone, totaling a foreign investment of Rs 659 crore.

Inter-ministerial body FIPB has approved nine investment proposals, including those of Netmagic Solutions and Vodafone, totaling a foreign investment of Rs 659 crore. “Based on the recommendations of the Foreign Investment Promotion Board (FIPB) at its meeting held on February 21, the government has approved nine proposals involving FDI of Rs 659 crore and recommended three proposals for the Cabinet Committee on Economic Affairs (CCEA),” an official statement said. The FIPB, headed by Economic Affairs Secretary Shaktikanta Das, cleared proposals of Netmagic Solutions entailing an investment of Rs 534 crore and Vodafone India Rs 55 crore. It recommended proposals of Rs 750 crore of Apollo Hospitals Enterprise, Rs 900 crore of Star Technologies and Rs 789 crore of Flag Telecom Singapore Pte to the CCEA, it said.

The panel has deferred six proposals, including those of Gland Pharma, Crown Cement Manufacturing India Private and Powervision Export and Import India Private. It also said proposals of Hindustan Aeronautics, Spectrumlabs India Private and PMI Engineering Exports Private did not come to the FIPB as these were on the automatic route. The government has already announced winding up of the FIPB by putting in place a new mechanism, a move which will further improve ease of doing business.

Finance Minister Arun Jaitley, in his Budget 2017-18, announced the decision to abolish the FIPB, saying 90 per cent of foreign investment approvals are via the automatic route and only 10 per cent go to the board. The FIPB offers single-window clearance for applications on FDI in India that are under the approval route. The sectors under the automatic route do not require any prior approval and are subject to only sectoral laws.

India allows FDI in most sectors through the automatic channel, but in certain segments that are considered sensitive for the economy and security, the proposals have to be first cleared by the FIPB. With growth in FDI in important sectors like services and manufacturing, overall foreign inflows in the country rose by 30 per cent to USD 21.62 billion during the first half of 2016-17. FDI in the country rose 29 per cent to USD 40 billion in 2015-16 as against USD 30.94 billion in the previous financial year.

Source: http://www.financialexpress.com/economy/fipb-approves-9-fdi-proposals-worth-rs-659-crore/601389/

Forex reserves up $2.67 bn to $366.78 bn

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India’s foreign exchange reserves surged by whopping $2.671 billion to $366.781 billion for the week ended March 2017 on account of increase in foreign currency assets, the Reserve Bank said today.

In the previous week, the reserves had risen by $98.6 million to $364.109 billion.

Foreign currency assets (FCAs), a major component of the overall reserves, rose by $2.645 billion to $343.101 billion in the reporting week, the RBI said.

Expressed in US dollar terms, FCAs include the effects of appreciation/depreciation of non—US currencies, such as the euro, pound and the yen held in the reserves.

Gold reserves remained unchanged at $19.914 billion.

The special drawing rights with the International Monetary Fund was up by $10 million to $1.444 billion; India’s reserve position with the Fund, too, increased by $15.9 million to $2.320 billion, RBI said.

Source: http://www.thehindubusinessline.com/economy/forex-reserves-up-267-bn-to-36678-bn/article9600591.ece

NBFCs will show up better asset quality: Moody’s

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Non-banking finance companies could well outpace commercial banks, struggling to grow amid muted loan expansion and bad loan burden, said global rating company Moody’s.

But, NBFCs too are exposed to certain risks emanating from their fast-faced growth in loan against properties, which they are in a position to mitigate with larger share in mortgaged loans.

Non-bank financial companies (NBFCs) in India (Baa3 positive) will demonstrate broadly stable asset quality, but  delinquencies will likely rise over the next 1-2 quarters, as demonetisation adversely affects collections across asset classes, said Moody’s Investors Service in a note.

“While the 90+days delinquency rate in the commercial vehicle (CV) loan segment largely stabilized in the first half of the fiscal year ending 31 March 2017, such delinquencies should build up in the near term due to the adverse impact of demonetisation and tighter recognition norms for non-performing  assets (NPAs),” said Alka Anbarasu, a Moody’s Vice President and Senior Analyst.

Moody’s also notes that the growth in loans against property (LAP) has outpaced overall retail credit growth in recent years, but relatively loose underwriting practices–combined with intensifying competition – will translate into higher asset quality risk for this segment.

Furthermore, over the past 3 years, NBFCs have gained some market share in the origination of retail lending, on the back of the faster growth exhibited by such entities when compared to the banks.

This is particularly the case when compared to public sector banks, which face significant challenges on their asset quality and overall solvency profiles.

“Nevertheless, we expect that competitive pressures from the banking sector will remain intense as banks are increasing targeting of the retail segment to offset weakness in their corporate lending. In addition, retail lending, particularly housing loans, is more capital efficient for the banks,” said Anbarasu.

And, while the NBFCs’ capitalization levels are adequate, with average Tier 1 ratios in excess of 14%, capital generation will lag credit growth. Access to external capital will therefore be key in sustaining the NBFCs’ growth momentum.

On funding, Moody’s expects that the NBFCs’ funding profiles will broadly remain stable, and funding costs should moderate gradually, given the reduction in systemic rates.

In addition, the NBFCs’ profitability and capital, as well as funding and liquidity levels, will stay broadly stable.

The NBFCs are growing at a fast pace, and have gained market share in the origination of retail credit. And, their share of LAP pose a potential source of risk, with such loans growing at a rapid compound annual growth rate of about 25% over the last four years compared to 17% for overall retail credit.

Moody’s says that the NBFCs’ exposure to potential risks from LAP is broadly offset by their share of stable mortgage loans, because favorable demographics and economics, tax incentives for home loans and an increasingly affordable housing segment support asset quality.

Moody’s expects that the loss given default for both home loans and LAP will be limited, in light of the underlying collateral.

Source: http://economictimes.indiatimes.com/articleshow/57749011.cms

India Inc more analytics savvy than global peers

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There are a few aspects that are common to Indian organisations that have a successful analytics strategy in place.

Non-banking finance companies could well outpace commercial banks, struggling to grow amid muted loan expansion and bad loan burden, said global rating company Moody’s.

But, NBFCs too are exposed to certain risks emanating from their fast-faced growth in loan against properties, which they are in a position to mitigate with larger share in mortgaged loans.

Non-bank financial companies (NBFCs) in India (Baa3 positive) will demonstrate broadly stable asset quality, but  delinquencies will likely rise over the next 1-2 quarters, as demonetisation adversely affects collections across asset classes, said Moody’s Investors Service in a note.

“While the 90+days delinquency rate in the commercial vehicle (CV) loan segment largely stabilized in the first half of the fiscal year ending 31 March 2017, such delinquencies should build up in the near term due to the adverse impact of demonetisation and tighter recognition norms for non-performing  assets (NPAs),” said Alka Anbarasu, a Moody’s Vice President and Senior Analyst.

Moody’s also notes that the growth in loans against property (LAP) has outpaced overall retail credit growth in recent years, but relatively loose underwriting practices–combined with intensifying competition – will translate into higher asset quality risk for this segment.

Furthermore, over the past 3 years, NBFCs have gained some market share in the origination of retail lending, on the back of the faster growth exhibited by such entities when compared to the banks.

This is particularly the case when compared to public sector banks, which face significant challenges on their asset quality and overall solvency profiles.

“Nevertheless, we expect that competitive pressures from the banking sector will remain intense as banks are increasing targeting of the retail segment to offset weakness in their corporate lending. In addition, retail lending, particularly housing loans, is more capital efficient for the banks,” said Anbarasu.

And, while the NBFCs’ capitalization levels are adequate, with average Tier 1 ratios in excess of 14%, capital generation will lag credit growth. Access to external capital will therefore be key in sustaining the NBFCs’ growth momentum.

On funding, Moody’s expects that the NBFCs’ funding profiles will broadly remain stable, and funding costs should moderate gradually, given the reduction in systemic rates.

In addition, the NBFCs’ profitability and capital, as well as funding and liquidity levels, will stay broadly stable.

The NBFCs are growing at a fast pace, and have gained market share in the origination of retail credit. And, their share of LAP pose a potential source of risk, with such loans growing at a rapid compound annual growth rate of about 25% over the last four years compared to 17% for overall retail credit.

Moody’s says that the NBFCs’ exposure to potential risks from LAP is broadly offset by their share of stable mortgage loans, because favorable demographics and economics, tax incentives for home loans and an increasingly affordable housing segment support asset quality.

Moody’s expects that the loss given default for both home loans and LAP will be limited, in light of the underlying collateral.

Source: http://economictimes.indiatimes.com/articleshow/57749011.cms

 

India, Russia to set up $1 bn fund to promote business:Nirmala Sitharaman

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Both the countries would contribute USD 500 million to the fund, Sitharaman said while addressing India-Russia Business Forum at the ongoing International Engineering Sourcing Show (IESS).

India and Russia are setting up a USD 1 billion fund to promote mutual investments in infrastructure and technology projects, Commerce and Industry Minister Nirmala Sitharaman has said.

Both the countries would contribute USD 500 million to the fund, Sitharaman said while addressing India-Russia Business Forum at the ongoing International Engineering Sourcing Show (IESS) here yesterday.

While the Russian funds would be channeled through Russian Direct Investment Fund (RDIF), Indian contribution will be accrued from National Investment and Infrastructure Fund.

Sitharaman elaborated upon other measures being taken by Russia and India to scale up their economic engagement and to boost bilateral trade and investment.

As part of these initiatives, the India Russia CEO Forum will hold its meeting this year at a mutually convenient date. The forum was constituted in St Petersburg in June 2016.

Foreign Direct Investment (FDI) from Russia is estimated at USD 1.2 billion till date while Indian investment in Russia is around USD 4.9 billion.

“There is tremendous potential for enhancing such investments,” the minister said, adding that initiatives like Make-in-India would catalyse Russian investment in several Indian sectors including Defence production.

“The Make-in-India initiative was launched by the government in order to encourage businesses to manufacture products in the country, creating additional jobs for local population. This is a major drive to foster innovation, enhance skill development, protect intellectual property and build best-in-class manufacturing infrastructure,” she said.

India and Russia are engaged in robust cooperation in the energy sector, including collaborations in civil nuclear energy, hydrocarbons and renewable energy.

Source: http://indiatoday.intoday.in/story/india-russia-to-set-up-$1-bn-fund-to-promote-businessnirmala/1/906310.html

Indian economy to pick up once impact of note ban fades: IMF

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IMF in its note titled ‘Global Prospects and Policy Challenges’ said, “Further subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST), are necessary to attain medium-term fiscal consolidation plans.”

India’s economic growth is expected to pick up once the effects of cash shortages linked to the currency exchange initiative fade, the International Monetary Fund (IMF) has said. Prime Minister Narendra Modi on November 8 had announced scrapping of old Rs 500 and Rs 1000 notes, pulling out 86 per cent of the total currency in circulation.

 

Noting that India’s fiscal deficit is expected to continue narrowing in the near-term, the IMF in its note titled ‘Global Prospects and Policy Challenges’ said, “Further subsidy reduction and tax reforms, including a robust design and full implementation of the Goods and Services Tax (GST), are necessary to attain medium-term fiscal consolidation plans.”

 

It further observed that in some emerging economies like China and India reducing excessive corporate leverage and improving bank’s balance sheets or adopting more prudent risk-management practices, including to reduce currency and maturity balance sheet mismatches, will help reduce vulnerabilities to global financial conditions, possible capital outflows, and sharp currency movements.

 

The government last month pegged GDP growth at 7.1 per cent for 2016-17 despite the note ban. The Central Statistics Office (CSO) had put the figure for October-December at 7 per cent, compared to 7.4 per cent in the second quarter and 7.2 per cent in the first.

 

India’s growth was higher than China’s 6.8 per cent for October-December of 2016. The growth numbers were better than those projected by RBI (6.9 per cent) and international agencies like IMF (6.6 per cent) and OECD (7 per cent) in view of the cash recall. The Organisation for Economic Cooperation and Development (OECD) in February last year had projected the country’s growth at 7.4 per cent for 2016-17. Buoyed by higher-than-expected growth, Finance Minister Arun Jaitley has also said a 7 per cent expansion in the third quarter belies the exaggerated claims of note ban impact on the rural economy.

 

Source: http://www.financialexpress.com/economy/indian-economy-to-pick-up-once-impact-of-note-ban-fades-imf/589248/