Indian private bank new loans outpace state-owned rivals for first time

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India’s privately owned banks are extending new loans faster than their state-run rivals for the first time ever, as government lenders struggle to bring surging bad loans under control.

New credit from private lenders amounted to Rs.3,50,000 crore ($52.4 billion) in the year to 31 March, taking their outstanding advances to Rs.17,90,000 crore, while state banks’ loans grew Rs.2,00,000 crore to Rs.51,20,000 crore, according to a finance ministry document, a copy of which was reviewed by Bloomberg News. Finance ministry spokesman D.S. Malik didn’t respond to two calls to his mobile phone on Tuesday seeking comment.

The stressed-loan ratio for state banks climbed to a 16-year high of 14.34% in the year through March, according to the document. Surging delinquent loans and inadequate risk buffers at India’s government-controlled lenders, which account for more than 70% of loans in the nation’s banking system, have been hindering Prime Minister Narendra Modi’s attempts to revive credit growth in Asia’s third-largest economy.

“Private sector banks will continue to take away market share from state-run banks in coming years,” Siddharth Purohit, a Mumbai-based analyst at Angel Broking Ltd., said by phone. “With limited capital and high bad loans, most state-run banks are not in a position to focus on loan growth.”

The private-sector banks’ faster loan growth is in line with a May 2014 estimate from a central bank-appointed committee, which predicted that the lenders’ share of total Indian banking assets will rise to 32% by 2025, from 12.3% in 2000.

Capital constraints.

Modi needs to revive bank lending as he strives to maintain the fastest growth rate among the world’s major economies. Indian credit grew 9.8% in the 12 months through 13 May, compared with an average of about 14% over the last five years, fortnightly central bank data compiled by Bloomberg show.

Timely capital infusions into constrained public sector banks will aid credit flow, the Reserve Bank of India (RBI) said in its monetary policy statement on Tuesday. Rules requiring government stakes of at least 51% have curtailed state banks’ ability to sell shares, while an audit of loan books by the RBI uncovered more soured debt, making them less capitalized than privately-owned lenders.

While some investors had anticipated the six-month-long central-bank audit, which ended on 31 March, to result in higher non-performing-asset (NPA) disclosures, the scale of losses and statements from bank executives highlighting the uncertain outlook for bad debt have surprised analysts. Thirteen state-owned lenders reported combined losses of Rs.18,000 crore for the year to March, finance ministry data shows.

Government lenders are the worst performers this year on the S&P BSE India Bankex Index, led by Punjab National Bank’s 32% slump and State Bank of India’s 6.4% drop. The gauge has gained 6.1% this year. Bloomberg

Source:  http://www.livemint.com/Industry/a9wEXC7uUXU0HpWgGYJEJM/Indian-private-bank-new-loans-outpace-stateowned-rivals-for.html

SEBI to make it easier for fund managers to move to India

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To make it easier for the foreign fund managers keen to relocate to India, markets regulator SEBI is considering allowing them to function as ‘Portfolio Managers’ under an easier regulatory regime.

The move assumes significance in the wake of the government already having announced taxation incentives for the offshore fund managers willing to relocate to India.

A new section in the Income Tax Act provides that the fund management activity carried out through an Eligible Fund Manager (EFM) located in India and acting on behalf of an Eligible Investment Fund (EIF) would not constitute business connection in India of such a fund.

Following the issuance of notification by the tax department in this regard, SEBI held meetings with various stakeholders to discuss the registration framework for EFMs, during which several impediments were pointed out in the existing regulations for Investment Advisers and Portfolio Managers.

Subsequently, SEBI has decided to initiate a consultation process for changes to its norms for Portfolio Managers while putting in place a framework for allowing EFMs to act as Portfolio Managers to their EIFs.

A proposal in this regard would be put up for approval of SEBI’s board next week, a senior official said.

Among the proposed measures, an existing SEBI-registered Portfolio Manager will also be allowed to act as EFM with prior intimation from SEBI and subject to certain conditions.

SEBI also plans to put in place a procedure for registration of an existing foreign-based fund manager desirous of relocating to India, or as a fresh applicant.

Such applicants will be granted registration as Portfolio Managers to act as an EFM, provided they meet existing eligibility norms of being a body corporate, having net worth of Rs 2 crore, appointment of a Principal Officer and minimum two employees with requisite credentials.

The EFMs would be required to segregate the funds and securities of the EIFs from that of other clients, provide information to Sebi on a half-yearly basis, ensure compliance to the Prevention of Money Laundering Act and other regulations.

However, EFMs would be exempted from several provisions of the PMS Regulations with respect to the EIF, and would have to comply with the applicable regulatory and disclosure requirements of the jurisdiction of the EIF.

Source: http://economictimes.indiatimes.com/articleshow/52640330.cms

India ranks second on GRD index on ease of doing business : study

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India has jumped 13 positions from last year to rank second among 30 developing countries this year on ease of doing business, according to a study topped by China.

According to 2016 Global Retail Development Index (GRDI), which ranks top 30 developing countries for retail investment worldwide, a pick-up in GDP growth and better clarity regarding FDI regulations have helped India achieve a second ranking.

Debashish Mukherjee, a partner with A T Kearney and co-head of the Consumer Industries & Retail Products Practice for India and Southeast Asia, said,

India’s strong ranking reflects foreigner retailers increased optimism in its retail market and its vast growth potential. India has relaxed several key Foreign Direct Investment (FDI) regulations in single-brand retail and this has paved the way for multinational firms to enter the market, Mukherjee said.

India’s retail sector has expanded at a compound annual growth rate of 8.8 percent between 2013 and 2015, with annual sales crossing the $1 trillion mark, according to A T Kearney, a London-based business consultancy.
India has also become the world’s fastest growing economy. That, coupled with a large population base and the easing of FDI regulations in the sector, has made it an even more attractive market, it said in the ranking.

We expect to see e-commerce to propel India’s growth and make it a more attractive proposition. However, there are some challenges as well. India remains a challenging and complex market for foreign retailers, where understanding dynamics at the state level is important. Infrastructure bottlenecks including labour laws, complex regulations, high labour attrition rates, and limited high-quality retail space remain areas of concerns for retailers, Mukherjee said.

The country’s retail sector has also benefited from the rapid growth in e-commerce. India is the world’s second largest Internet market and the increasing Internet and smartphone penetration is contributing to the expansion of e-commerce.

As Indian consumers become more comfortable with shopping online, venture capital and private equity firms have boosted investment in the sector, providing further momentum, the report said.

Source: http://yourstory.com/2016/06/india-ranks-2nd-on-ease-of-doing-business/

E-filing of tax returns via ATM

by | posted in: Corporate Updates, Economy, Business Updates, Corporate Affairs, Income Tax,e-Filing- Individuals, Firms, Companies | 0

The Income Tax department has launched an ATM-based validation system for filing e-ITRs by taxpayers as part of its measure to enhance the paperless regime of filing the annual IT returns.

“Now, Electronic Verification Code (EVC) can be generated by pre-validating your Automated Teller Machine (ATM) provided by the bank where a taxpayer has an account. While SBI has activated the facility beginning yesterday, other banks will follow soon,” a senior IT official said.

Last month, the department had launched the bank account based validation facility in this regard for those who have not availed internet banking facility. The new facility is available on the official e-filing portal of the department – http://incometaxindiaefiling.gov.in/ and will work by using the One Time Password verification system as activated by the department last year by using the Aadhaar number.

Source: http://www.thehindubusinessline.com/economy/policy/efiling-of-tax-returns-via-atm/article8693669.ece

Listed company’s documentation may get simpler

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The Securities and Exchange Board of India (Sebi) is learnt to be finalising a new mechanism to simplify the documentation process for listed companies wishing to issue new securities. Sources told FE that the concept of an ‘annual information memorandum’ will be introduced by the regulator, replacing the traditional offer document, if a company plans subsequent public issues via an offer for sale (OFS) or a follow-on public offering (FPO).

This memorandum is expected to provide exhaustive information about a company including financials, pending litigations and risk factors. Companies will have to file the document once a year. To incorporate the new mechanism, Sebi will amend Listing Obligations and Disclosure Requirement (LODR) regulations.

As per the current LODR regulations, a company needs to file an offer document whenever it comes up with a public offering. However, offer documents are not mandatory in the cases of private placement like preferential issue, qualified institutional placements (QIPs), etc. The documentation is also not mandatory in case of rights issue where the company plans to tap existing shareholders.

Offer documents are usually drafted by merchant bankers in coordination with legal advisers. Post introduction of annual information memorandum, a company will be able to cut on the fees paid to merchant bankers and lawyers for the issue.

“Currently, we have the concept of annual reports. The new mechanism is a step forward. Annual information memorandums would provide additional details like pending litigations, etc. The regulator would come up with a format for the memorandum soon. This will also help investors get all the information about a company at a single place,” said an investment banker who is part of the primary markets advisory committee (PMAC) of Sebi.

As per the current LODR regulations, a company needs to upload an annual report which should contain audited financial statements, cash flow statements,directors report and management discussion and analysis report. The top 500 listed entities in terms of market capitalisation should also disclose business responsibility report describing initiatives taken by them from an environmental, social and governance perspectives.

In October 2015, Sebi had introduced the concept of abridged prospectus that companies need to file for public offers. Under this mechanism, any company going for an IPO needs to file an abridged prospectus along with the regular draft red herring prospectus (DRHP). The abridged prospects would be a 10-page document which would provide all the key information to the investor about the company. The decision was taken in the interest of investors as the full DRHP of a company runs into 400-500 pages.

Source: http://www.financialexpress.com/article/industry/companies/listed-companys-documentation-may-get-simpler/273624/

Company Law Tribunal benches ‘will be fully functional’ in next few days

by | posted in: Company Incorporations, e-filing of MCA Returns, Corporate Updates, Economy, Business Updates, Corporate Affairs | 0

All the 11 benches of the newly constituted National Company Law Tribunal (NCLT) will be fully functional in the next “couple of days”, a top Corporate Affairs Ministry (MCA) official said.

Infrastructure is ready in all the 10 cities where the NCLT benches are being set up. The human resources aspect has also been taken care of and adequate steps are being taken to start work immediately.

To begin with, NCLT will handle all pending cases before the Company Law Board and other matters not assigned to any other Court, the official said.

“There will be no transition problem for existing CLB cases,” the official added.

As on date, as many as eight members have joined NCLT, out of approved 25 members. “The remaining members are expected to join in the next few days. They will be posted in various benches,” the official said.

The MCA has also planned a 10-day colloquium in July for the NCLT members, the official added. Asked about the status of cases before High Courts (company cases), the MCA official said the High Court will be the second stage of transfer.

“We will let the CLB cases transition to stabilise for some time and then, in discussion with NCLT Chairman, decide on the High Courts related matter,” the official said.

The creation of NCLT from June 1 is expected to speed up delivery of justice in corporate cases. Sai Venkateshwaran, Partner and Head, Accounting Advisory Services, KPMG in India, hailed the MCA move to set up NCLT and NCLAT.

“We can expect to see the new Companies Act become a reality in its entirety in the coming months,” Venkateshwaran said. The time required for setting up of the NCLT and NCLAT was one of the key reasons for the Companies Act 2013 not being fully operationalised, he said.

However, with the setting up of these tribunals, the way has been paved for operationalising most of the remaining parts of the Companies Act 2013, he added. .

Meanwhile, the Company Law Board hearing in the Financial Technologies’ Board removal case did not take place on Thursday as the CLB stood dissolved on May 31 by virtue of the government move to set up NCLT from June 1.

Indications are that an NCLT bench will hear this matter in the coming days, sources said.

Source: http://www.thehindubusinessline.com/todays-paper/tp-news/company-law-tribunal-benches-will-be-fully-functional-in-next-few-days/article8688161.ece

Government issues licence guidelines for virtual telecom operators

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The entry of VNOs is expected to push down cost of providing telecom services for companies and even give them room for cutting down tariffs.

The Telecom Department on Friday released licence guidelines for virtual network operators, opening the door for new class of players which will act like retailers for telecom service providers.

 

“After considering the recommendations of Trai on VNO, the government has decided to grant Unified Licence VNO (UL VNO),” DoT said in the licence guidelines.

 

The Virtual Network Operators will be entities providing telecom services like mobile landline and internet but only as retailer for full-fledged telecom operators such as BSNL, MTNL and Airtel etc.

 

The entry of VNOs is expected to push down cost of providing telecom services for companies and even give them room for cutting down tariffs.

 

“VNO shall use underutilized telecom infrastructure of national telecom operators. This will reduced cost of ownership on telecom companies to provide telecom services at more affordable rates,” internet firm Bluetown’s Country Managing Director Satya N Gupta said.

 

For obtaining UL VNO, interested companies will need to pay a one-time non-refundable entry fee for authorisation of each service they want to provide and for each service area where they wish to operate.

 

“The total amount of entry fee shall be subject to a maximum of Rs 7.5 crore,” the guidelines said.