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

India, US to expand economic cooperation, break down trade barriers

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India and the US today vowed to expand economic relation between the two nations and explore new opportunities to break down barriers to facilitate movement of goods and services.

The leaders of the two countries resolved to pursue US- India Totalisation Agreement and enhance engagement on intellectual property rights with a view to promote innovation and creativity.

“In order to substantially increase bilateral trade, they (leaders) pledged to explore new opportunities to break down barriers to the movement of goods and services, and support deeper integration into global supply chains, thereby creating jobs and generating prosperity in both economies,” said the joint statement issued after a meeting between Indian Prime Minister Narendra Modi and US President Barack Obama.

They look forward to the second annual Strategic and Commercial Dialogue in India later this year to identify concrete steps in this regard, it added.

Highlighting the strong and expanding economic relations between the US and India, the leaders committed to support sustainable, inclusive, and robust economic growth, and common efforts to stimulate consumer demand, job creation, skill development and innovation.

It was decided to continue discussion later this year on the US-India Totalisation Agreement.

The ‘Totalisation Agreement’ seeks to do away with double taxation of income with respect to social security taxes.

Under this agreement, professionals of both the countries would be exempted from social security taxes when they go to work for a short period in the other country.

The two leaders also committed to make concrete progress on IPR issues by working to enhance bilateral cooperation among the drivers of innovation and creativity.

They also commended the increased engagement on trade and investment issues under the Trade Policy Forum (TPF) and encouraged substantive results for the next TPF later this year.

The leaders also welcomed the engagement of the US’ private sector companies in India’s Smart City programme.

The leaders resolved to facilitate greater movement of professionals, investors and business travellers, students, and exchange visitors between their countries to enhance people-to-people contact as well as their economic and technological partnership.

On the MoU for Development of an International Expedited Traveller Initiative (also known as Global Entry Programme) the statement said efforts will be made for entry of India into the said programme within three months.

 

Source: http://www.ptinews.com/news/7531712_India–US-to-expand-economic-cooperation–break-down-trade-barriers-.html

Rs 3,770-cr nod for Chennai Metro project

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The union cabinet chaired by Prime Minister Narendra Modi on Wednesday approved an investment of Rs 3,770 crore for development of the first phase of the Chennai Metro Rail project.

The 9.051 km corridor between Washermanpet and Wimconagar will be executed by Chennai Metro Rail Ltd (CMRL), the existing special purpose vehicle (SPV) of the centre and the state government with equal share of equity.

“The project is scheduled to be completed by March 2018. This extension will provide improved access to public transport for dense population comprising predominantly industrial workers to move towards the central business district of the city for work,” said an official statement.

The centre will have a share of Rs 713 crore in the total project cost while the state government’s share would stand at Rs 916 crore.The state’s share includes Rs 203 crore as cost of land acquisition and resettlement and rehabilitation (R&R).

The balance amount of Rs 2,141 crore for the project would be sourced as loan from domestic or multi-lateral funding agencies. The project is estimated to have a ridership of 160,000 passengers per day in the first year of operation.

Source: http://www.business-standard.com/article/economy-policy/rs-3-770-cr-nod-for-chennai-metro-project-116060101427_1.html

 

Danish companies keen to take part in Make in India

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Denmark-based companies such as Danfoss, Grunfdfoss, sRamboll, Novo Nordisk and Novozymes are eyeing the benefits of Narendra Modi’s Make-in-India programme to set up their base in the country.

 

Indian ambasssador to Copenhagen Rajeev Shahare said Denmark has embarked on a number of steps to be ahead of the curve in doing business with India. “The Danish Confederation of Industries (DI) has an office in Mumbai; the Danish Trade Council (part of its Ministry of Foreign Office) has a strong representative office in Bangalore; Asia House in Copenhagen has commissioned a study on how to effectively participate in the Smart Cities project in India,” the ambassador told FE.

 

While many big companies like Danfoss and Carlsberg already have their units, some others are in the process of doing so. “One company is setting up a unit in Hyderabad for manufacturing of ocean cleaning pumps and equipment; another consulting company is exploring Mumbai for its regional office,” he said.

 

The Scandinavian country is keen on setting up production facilities in India taking advantage of India’s low cost of production, availability of technical and English speaking manpower and a compatible working environment, he added.

 

India can also partner Denmark and learn from its best practices in areas like health services, food technology, dairy management, agro services, solid waste management and waste water management.

 

There are around 125 Danish companies in India and probably all top companies have a strong presence — the shipping giant Maersk (AP Moller) which also developed the Pipavav port and is now looking for investments in ports on the eastern coast; Danfoss, Grunfdfoss, Ramboll, leading pharma company Novo Nordisk etc. The Danish companies operating in India are directly or indirectly providing around two lakh jobs to locals here.

 

According to Statistics Denmark, the Danish FDI in India was $854 million in 2014, $731 million in 2013 compared to $931 million in 2012 (up from $877 million in 2011). Major Danish investments in India have been made in sectors such as manufacturing, trade and transport, financial and business services.

 

On the other hand, the Indian investment in Denmark were $71 million in 2014, $89 million in 2013 compared to $103 million in 2012 (up from $112 million in 2011) (Source: Statistics Denmark). Around 30 Indian companies have a presence in Denmark. Of them, 24 are IT companies, two belong to life sciences field and four are diversified mainly in the renewable space.

 

There are some major success stories of companies from Denmark that need to be highlighted. “The largest Danish bank- Danske Bank has all its back end operations in India; the entire Kommune (municipal) operations of KMD are handled by an Indian software company,” according to Shahare.

Source: http://www.financialexpress.com/article/industry/companies/danish-companies-keen-to-take-part-in-make-in-india/269514/

World’s largest IT storage company EMC in race to develop smart cities in India

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EMC is offering its services to the central and state governments, according to senior officials of the company.

The world’s largest IT storage company is in the race for developing smart cities in India, offering their services to the central and state governments, according to senior officials of the company.

“We have already completed a health project for a state government to make hospitals smart and to provide real time information to the government for taking appropriate decision,” Rajesh Janey, President, EMC India and Saarc, told visiting Indian journalists to the EMC world annual conference here.

The project was done for Telengana, the newest state in India. “We are talking to the central governments as well as state authorities to offer the hardware and software to make cities smart,” Janey said.

The Narendra Modi government had announced an initiative to develop 100 smart cities in India, with initial funds of Rs.7,000 crore being allocated for the project by the central government, though very little was actually spent. The project would be implemented by state governments or city councils.

EMC and Dell had announced a $67 billion merger in October, making it the largest tech marriage in history. The EMC World conference at the casino capital of the world was told by Michael Dell, Chairman and CEO of Dell, on Monday that the merged entity would be called Dell Technologies while the enterprise company would be named Dell-EMC.

The merger is awaiting some regulatory approvals and is likely to be completed between June and October, according to the team set up to work out the logistics of two tech giants coming together.

EMC has over 5,000 employees in India, largely in the engineering section, with offices in Bengaluru, Hyderbad, Delhi NCR and some tier-two towns. It provides storage hardware and software to companies and did about $350 million (Rs.2,400 crore) business last year. The $25 billion EMC employs around 70,000 employees globally.

EMC has set up a division on smart cities, whereby they are offering services for collating all data from health services, traffic, police, power infrastructure, municipalities, weather division, transport and government services collating all data from health services, traffic, police, power infrastructure, municipalities, weather division, transport and government services collating data and bringing forth significant information which needed decisions. Also, the interface with citizens and those who seek services would become much easier, officials say.

According to Rob Silverberg, Director and Chief Technology Officer, Enterprise Application Architecture for State, Local Government and Education at EMC California, the company is focusing on smart cities because it’s the world of future.

“We are talking to several cities and towns across the US to adopt what we have to offer,” said Silverberg, adding it would help city officials do their job more effectively and efficiently. He said the Indian section of EMC was following up on the smart cities in India. EMC is competing in smart cities business in the US and other countries with IBM.

Silverberg said that already a huge amount of data was being collected every day and every minute whether in crime tackling, traffic regulation or policing and other activities. “The data has to be stored and made intelligible for everyone so that right decisions are made fast.”

Silverberg said the EMC smart cities project could even help track crimes and prepare evidence for courts whether it’s through video monitoring data already been collected across the country or other methods. “Essential everything is data, and we are the experts who can help store and make sense of it,” he said.

According to Janey, the basic modules which the global company is now projecting to cities in various parts of the world, including Dubai, was made in Bengaluru by Indian software engineers. Janey said that EMC International had thrown up demand and the engineers in India came up with an effective solution which was adopted by the multinational.

Source:  http://economictimes.indiatimes.com/articleshow/52185960.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst

Foreign investment quality improves substantially with PM Narendra Modi’s Make in India push

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The quality of foreign investment coming into the country has improved substantially, according to Reserve Bank of India data.

Much of this is foreign direct investment (FDI) materialised in the September 2014-November 2015 period after Prime Minister Narendra Modi launched the Make in India campaign and bettered portfolio inflows during the period.

Gross FDI inflows amounted to $62.6 billion, 31% higher than $47.6 billion in the preceding 15 months.

This is more than triple the amount of net portfolio inflows of $14.3 billion in the same period. An analysis of the monthly trend in foreign investment inflows shows that in most months stable long-term FDI has been more than portfolio inflows, which have been more volatile in the period.

Economists say the surge in FDI is largely due to several initiatives by the government to attract investment in the manufacturing sector. “FDI and portfolio flows over the past year-and-a-half suggest that conscious efforts of the government to encourage more stable direct investments are yielding results,” said Saugata Bhattacharya, chief economist at Axis Bank. “At a time when global capital markets have become volatile, FDI flows reduce uncertainty about foreign capital outflows and, consequently, currency volatility.”

The surge in FDI in India is significant given that investment across the world has fallen by 16%, said Amitabh Kant, secretary at the Department of Industrial Policy and Promotion, at a recent event.

Though a sizeable amount is estimated to have gone to the manufacturing sector, including consumer goods and food processing, among others, a section of the market feels that a portion of the FDI inflows could have come through the private equity route.

This seldom finds its way into greenfield projects but at the same time provide an important source of finance for entrepreneurs.

“A significant part of the higher FDI has come in as PE and VC funding, which helps finance entrepreneurs,” said Bhattacharya.

Prime Minister Modi’s Make in India initiative is aimed at turning the country into a global manufacturing hub to generate jobs, raise incomes and drive growth.

The government has been seeking to drum up investment as part of this effort. India’s growth is being driven by public spending and consumption with private investment yet to kick in substantially.

Source:  http://economictimes.indiatimes.com/articleshow/50764021.cms

France will partner India to build three ‘smart’ cities

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France partners with IndiaFrance will help India develop Chandigarh, Nagpur and Puducherry as smart cities. Agence Française de Developpement (French Development Agency) signed memoranda of understanding with the government of Union territory of Chandigarh, and government of Union territory of Puducherry and the Maharashtra government here on Sunday in the presence of French President Francois Hollande and Prime Minister Narendra Modi.

Chandigarh, designed by the French architect Le Corbusier half a century ago as a model city, is spread across 114 sq km and the urban infrastructure and green belt of the city provide it a distinguished status among India’s planned cities.

On January 26, Modi is set to announce the official list of 20 smart cities to be developed in the first phase.

A delegation of 26 CEOs from France travelled to Chandigarh with Hollande and had discussions on CEO forums to explore partnerships in renewable energy, defence, information technology and aerospace.

Modi said French companies can exploit India’s trained and affordable manpower to expand their manufacturing operations in the country. The French president committed annual investment to the tune of €1 billion to strengthen business relations with India.

An agreement between Airbus and Mahindra was also inked under Indo-French cooperation to manufacture helicopters within the Make in India initiative.

French companies will also collaborate with public sector firm Engineering Projects India to provide integrated railways solutions. The railway stations of Ambala and Ludhiana will also be redeveloped with French partnership.

The French delegation evinced interest in the areas of renewable energy, infrastructure, transport, defence, and water treatment.

Source: http://www.business-standard.com/article/economy-policy/france-will-partner-india-to-build-three-smart-cities-116012500034_1.html