RBI proposes to regulate peer-to-peer lending sector

RBI proposes to regulate peer-to-peer lending sector
29/04/2016 07:52
The Reserve Bank of India has released a consultation paper on peer-to-peer (P2P) lending, in order to bring the sector under its purview, by proposing a minimum capital requirement of Rs 2 crore for the players and barring them from promising extraordinary returns.
P2P lending is a form of crowd-funding that can be defined as the use of an online platform, which matches lenders with borrowers in order to provide unsecured loans. Crowd funding generally refers to a method of funding a project or venture through small amounts of money raised from a large number of people.
Considering the present stage of development, the platform could be registered only as an intermediary, meaning it would be limited to bringing the borrower and lender together without the lending or borrowing getting reflected on its balance sheet, the paper said.
Also, P2P lending platforms may be prohibited from "promising or suggesting a promise of extraordinary returns, which implies some form of guarantee of returns to lenders".
RBI, which for the first time has proposed to regulate this growing sector, has sought comments till May 31.
"The prudential requirements will include a minimum capital of Rs 2 crore," the paper added.
With a view to ensure there is "enough skin in the game" at a later date, the RBI document said leverage ratio may be prescribed so that the platforms do not expand with indiscriminate leverage.
The current regulations applicable to other NBFCs will be made applicable to the P2P platforms in regard to recovery practice.
While RBI has powers to regulate companies or cooperative societies, the P2P platforms run by individuals, proprietorship, partnership or Limited Liability Partnerships, do not fall under the purview of RBI.
Hence, it is essential that P2P platforms adopt company structure, RBI said, adding no entity other than a company can undertake such activity.

Power shortage at lowest level in last fiscal: Min

Power shortage at lowest level in last fiscal: Min
29/04/2016 08:57

The Indian Government has said that power shortage was at 2.1 per cent, the lowest level in a single year in last financial year.
Commenting on the issue, Power Minister Piyush Goel told the media, "During 2015-16, the energy shortage was 2.1 per cent, which is the lowest ever in a single year."
The minister further stated that India was importing power only from Bhutan at present.
“The imported power is mainly Bhutan's surplus power from hydro stations commissioned in Bhutan with the assistance from the Government of India. During 2015-16, energy imported from Bhutan was about 5 billion units (BU),” the minister added.
As per reports, during 2014-15, electricity shortage, when total demand outstrip supply during peak hours, was 3.6 per cent whereas it was slightly higher at 4.2 per cent in 2013-14 and 8.7 per cent in 2012-13.

New civil aviation policy to be unveiled soon: Reports

New civil aviation policy to be unveiled soon: Reports
25/04/2016 00:03

The Civil Aviation Ministry has said that it is planning to come out with the new civil aviation policy next month. As per reports, the inter-ministerial consultations on the revised draft policy are progressing and once these are completed, the ministry hopes to give the final touches and move the Cabinet for a nod. Commenting on the issue, Minister of State for Civil Aviation Mahesh Sharma told the media, "I hope the new civil aviation policy will be in place by May."
“Efforts are underway to ensure that the policy is ready at the earliest, possibly before Prime Minister Narendra Modi's government completes its second anniversary on May 20,”he added.
As per reports, more than five months after coming out with the revised draft of aviation policy, the ministry had earlier this month sent it for inter-ministerial consultations.
The draft policy, unveiled in October 2015, seeks to boost the country's aviation sector which has high growth potential.

DoT considering auction of 15 Mhz 3G spectrum in July

DoT considering auction of 15 Mhz 3G spectrum in July
22/04/2016 01:24

The Department of Telecom is considering sale of 15 Mhz of 3G spectrum, currently held by the Defence, along with other frequencies in the auction to be held in July this year, said the media report. "The DoT is working with Defence to get 15 Mhz of spectrum in 2100 Mhz band (3G) under swap agreement. These airwaves may be put for auction in July if freed from Defence," as per the PTI. Telecom ministry had proposed to exchange 15 Mhz spectrum it holds in 1900 Mhz band with same quantum of airwaves held by Defence in 2100 Mhz. The 2100 Mhz band is currently used for 3G services. The Cabinet had approved swapping of spectrum between Ministries of Telecom and Defence in January 2015 and process was to be completed in a year as part of harmonisation of all radiowaves among all ministries. All ministries and departments like Aviation, Space, Prasar Bharti, Defence, Telecom etc that are holding spectrum were asked to harmonise radiowaves among themselves, identify timeline by when will they be able to vacate spectrum not marked for them in 4-5 years. For 3G spectrum in 2100 band, Trai suggested pan-India base price of Rs 3,746 crore, said the media report. The Defence Ministry and the DoT had signed a pact in 2009-10 under which the former had agreed to vacate 25 megahertz (MHz) of 3G spectrum and 20 MHz of 2G in phases. In return, DoT had committed to set up an exclusive defence network for its communication services. The Defence Ministry had vacated 15 MHz of 3G spectrum which was auctioned in 2010. It had also vacated 15 MHz of 2G spectrum, which was allocated to new operators in 2008. Under the pact, the remaining spectrum - 10 MHz in 3G and 5MHz in 2G - was to be vacated only after alternative communication network is completed. Though alternative communication network for Defence is yet to be completed, it provided 5 Mhz of 3G spectrum which was auctioned across 17 circles in 2015 fetching bids worth Rs 10,115 crore against estimate of Rs 17,555 crore. The inter-ministerial panel Telecom Commission is expected to meet on April 30 to discuss spectrum auction modalities. It is expected suggest final base price for spectrum to be auctioned which will need cabinet approval. The auction is scheduled for July and has potential to fetch Rs 5.36 lakh crore to the government exchequer. Government has set target of about Rs 99,000 crore from telecom sector this fiscal.

Airlines carried over 78 lakh people in Mar: Media Report

Airlines carried over 78 lakh people in Mar: Media Report
22/04/2016 01:20
With the aviation sector continuing to see a spurt in traffic, many domestic airlines posted good growth as they ferried 78.72 lakh passengers in March with no-frills carrier IndiGo carrying most passengers during the same period, reported PTI. While the overall passenger growth stood at around 5.3 per cent, the market share of IndiGo jumped to 38.4 per cent in March, followed by Jet Airways at 17.6 per cent and Air India (14.7 per cent). Latest data from aviation regulator DGCA released today showed that local airlines carried 78.72 lakh passengers last month compared to 74.76 lakh in February. Over the past several months, more number of people have been travelling by air. In terms of Passenger Load Factor (PLF) -- an indicator of filled seats -- SpiceJet was on top with 91.1 per cent, followed by GoAir (86.3 per cent), IndiGo (85.1 per cent), AirAsia (82.7 per cent) and Air Costa (82.1 per cent). Among other airlines, the PLF of Jet Airways was at 79.1 per cent while that of JetLite and Air India stood at 77 per cent and 75.7 per cent respectively. According to the Directorate General of Civil Aviation (DGCA), PLF of airlines slightly decreased last month, primarily due to the end of tourist season. Except for IndiGo, GoAir and Trujet, rest of the carriers saw their market share either decline or remain flat in March. IndiGo's market share rose to 38.4 per cent compared to 36.8 per cent in February while that of GoAir rose to 8.3 per cent from 8 per cent during the same period. Market share of Jet Airways fell to 17.6 per cent from 18.4 per cent. Air India saw its share drop to 14.7 per cent last month from 15.4 per cent seen in February. In the case of SpiceJet, the market share slipped to 12.8 per cent in March from 13.1 per cent in the previous month. Start-up carriers AirAsia and Vistara's market share remained unchanged at 2.2 per cent and 2 per cent, respectively in March. "Passengers carried by domestic airlines during January-March 2016 were 230.03 lakh as against 185.46 lakh during the corresponding period of previous year thereby registering a growth of 24.03 per cent," DGCA said. The figures are based on passengers carried by 11 airlines -- Air India, Jet Airways, IndiGo, JetLite, SpiceJet, GoAir, Air Asia, Vistara, Air Costa, Air Pegasus, and Trujet. Meanwhile, the overall cancellation rate of scheduled domestic airlines stood at 1.29 per cent in March. "During March 2016, a total of 737 passenger-related complaints had been received by the scheduled domestic airlines. The number of complaints per 10,000 passengers carried for the month of March 2016 has been 0.9," DGCA said.

Set up subsidiary for investment advisory biz: RBI to banks

Set up subsidiary for investment advisory biz: RBI to banks
22/04/2016 01:18
The Reserve Bank asked banks offering investment advisory services (IAS) through a separate subsidiary to avoid any conflict of interest, said the PTI report. "IAS is defined and regulated by SEBI under the SEBI (Investment Advisors) Regulations, 2013, and entities offering these activities need to be registered with SEBI. In view of the same it is advised that henceforth, banks cannot undertake IAS departmentally," RBI said in a notification. "Accordingly banks desirous of offering these services may do so either through a separate subsidiary set up for the purpose or one of the existing subsidiaries after ensuring that there is an arm's length relationship between the bank and the subsidiary," it added. The notification said that the sponsor bank should obtain specific prior approval of Department of Banking Regulation before offering IAS through an existing subsidiary or for setting up a subsidiary for this purpose, he said. These subsidiaries offering IAS will be registered and regulated by Sebi. It further said that IAS provided by the bank sponsored subsidiaries should only be for the products and services in which banks are permitted to deal in as per Banking Regulation Act. Banks which are presently offering these services may reorganise their operations in accordance with these guidelines within a period of three years from the date of issue of this circular, it added.

Over 1 crore LPG users let go of subsidies: Media Report

Over 1 crore LPG users let go of subsidies: Media Report
22/04/2016 00:11
More than 1 crore LPG consumers have given up their cooking gas subsidies in one year since Prime Minister Narendra Modi made a call to the well-heeled to give up the same, said the PTI report. Since Modi made the appeal in March last year, 1,00,06,303 LPG consumers have stopped using subsidised cooking gas, helping the exchequer save a few thousand crores of rupees in doles, oil ministry officials said. Consumers are currently entitled to 12 cylinders of 14.2 kg each or 34 bottles of 5 kg each in a year at subsidised rates. A subsidised 14.2-kg cylinder is currently available at Rs 419.13 per bottle in Delhi while the 5-kg pack costs Rs 155. Market-priced LPG is available at Rs 509.50 per 14.2-kg cylinder. Giving up subsidised LPG will help cut the government's subsidy bill, which was at Rs 30,000 crore on the fuel last fiscal. Those who have decided to give up their subsidies have to buy the product at the market price. The surrendered subsidy is used by the government to provide cooking gas connection to the poor in rural households free of cost, the official said. On March 27, Modi had officially launched the 'Give-it-Up' campaign, urging the well-off to surrender their LPG subsidy so that it can be targeted for the needy. The aim is also to bring down the country's dependence on energy imports by 10 per cent by 2022. The country has 15.34 crore LPG connections, of which 1 crore have now given up subsidies. LPG subsidy is transfered to beneficiaries directly in their bank accounts in advance. "Gas cylinders surrendered by them would be transferred to the poor who use wood for cooking. If one crore people give up their LPG subsidy, one crore poor people will benefit as they will be given new LPG cylinders instead," he had said. Consumers can opt out of the subsidy by submitting written request to the distributor or electronically at mylpg.in.

RBI permits IDFs to issue less than 5-year tenure bonds

RBI permits IDFs to issue less than 5-year tenure bonds
22/04/2016 00:09
The Reserve Bank allowed Infrastructure Debt Fund (IDF) to raise resources through bonds and commercial papers of less than five-year maturity, reported PTI. Presently, IDF-NBFCs are allowed to raise resources through issue of bonds of minimum five years maturity. "On a review, with a view to facilitate better asset liability management, it has been decided in consultation with the Government of India, to allow IDF-NBFCs to raise funds through shorter tenor bonds and commercial papers (CPs) from the domestic market to the extent of up to 10 per cent of their total outstanding borrowings," RBI said in a notification. IDF-NBFC was created to raise funds to primarily fund infrastructure projects. RBI has capped the average exposure limit for IDF-NBFC at 50 per cent and maximum at 75 per cent of its total capital fund, apart from limiting such issuance to only PPPs which have been successfully operational at least for a year.

Govt agrees to four-laning of highway projects

Govt agrees to four-laning of highway projects
21/04/2016 17:41

The Centre has agreed to sanction the four-laning of Itanagar to Banderdewa highway project and three fly-overs in Itanagar as proposed by the Chief Minister Kalikho Pul, a union government official said, as per the media reports. V K Rajawat, Chief Engineer associated with the Union Ministry of Road Transport & Highways, made this statement during his meeting with the chief minister yesterday, an official release said, quoted PTI. Rajawat was on a one-day visit to the state capital to inspect the ongoing repairing and maintenance work of Itanagar to Banderdewa road and nearby areas. The project would be sanctioned within one month time as and when the DPR would be received from the state government and work could start from September next, he said. He also said that considering the strategic locations and sensitiveness of the border state, the Centre had handed over two important border roads from Joram to Koloriang and Dimwe to Hawai to Border Road Organizations (BRO) at the request of the chief minister.

BBB to meet tomorrow; NPAs, funds infusion on the table

BBB to meet tomorrow; NPAs, funds infusion on the table
21/04/2016 16:26
Bank Board Bureau's (BBB) second meeting is coming up tomorrow to deliberate on a host of issues, including consolidation, stressed assets and capital infusion, reported PTI. "The Bureau, among other things, will discuss capital requirements of public sector banks, apart from budgeted provision. Capital is very important to kickstart lending," a senior finance ministry official said as per the PTI report. BBB will also decide on filling board-level vacancies in various banks, the official added. Besides, it is looking at bringing the NPA level down in public lenders. The first meeting was held on April 8, which was attended by Minister of State for Finance Jayant Sinha and RBI Governor Raghuram Rajan. The Bureau members -- ICICI Bank's former joint MD H N Sinor, Bank of Baroda's former CMD Anil K Khandelwal and rating agency Crisil's ex-chief Rupa Kudwa - were present. Its ex-officio members - Ameising Luikham, Secretary Department of Public Enterprises, and R Gandhi, Deputy Governor, Reserve Bank -- also took part in the deliberations. The Bureau has three ex-officio members and an equal number of expert members, in addition to the chairman. The Bureau has been constituted earlier this year to help the government select heads of PSBs and financial institutions and assist banks in developing strategies and capital-raising plans. It will also constantly engage with the board of directors of all the PSBs for their growth and development. There are 22 state-owned banks in the country, including SBI, IDBI Bank and Bharatiya Mahila Bank.

Some firms failing does not impact India's solar plans: Goyal

Some firms failing does not impact India's solar plans: Goyal
21/04/2016 13:58
Brushing aside worries over any spillover effect of SunEdison's debt woes on India's solar power plans, Renewable Energy Minister Piyush Goyal set the record straight, saying some firms not doing well will not impact the programme's success, reported PTI. "There are always certain cases of firms failing all over the world in every industry. There was a point of time where very large airline companies failed in different parts of the world. You have a failed steel sector in the UK. It doesn't mean that the whole sector collapses," he said when asked about the debt problems being faced by SunEdison. Speaking to reporters on the sidelines of an event organised by industry body CII here late yesterday, Goyal said there are one or two instances of companies which don't do well or may have some problems. "But it's not as if only these one or two firms brought the tariffs down. We have 50 companies who brought tariffs down even below what Sun Edison or Sky Power quoted. So, I don't think it deters us or deflects the success of the solar programme at all," the minister said. India has very large corporations, both domestic and international, which have won contacts in the solar energy field at even more competitive prices than (Sun Edison and Sky Power), added Goyal, who also holds the portfolio of power and coal. "And should there be a problem with one or two companies, others will take over those projects... Investors need not be worried about it, bankers are not worried about it. There is enough interest in the market for much larger volumes than what they have taken up in India." Earlier this month, reports had surfaced that the Adani group is in talks with the US-based renewable energy major SunEdison to acquire the latter's Indian assets. The group led by billionaire Gautam Adani has asked bankers to sound it out on whether SunEdison is also putting on the block its solar power projects in India. On the use of coal to generate electricity, Goyal said the dry fuel will continue to be important. "It's the base load of power in India. We will continue to have coal and newer coal plants coming in. But India is a very responsible global citizen and we working on clean coal technologies," he added. "We have research going on with Australia on clean coal. I will shortly be tying up with MIT in Cambridge for developing clean coal technologies... Coal will remain mainstay of our energy, but we are open to looking at cleaner coal technologies so that we don't do what the West has done to the environment over the last 150 years.

Public sector energy cos to launch Masala Bonds for UK investors

Public sector energy cos to launch Masala Bonds for UK investors
21/04/2016 13:01
As India gears up to meet its ambitious renewable energy targets of 175 GW of installed capacity by 2022, the country is exploring international mechanisms of funding and is evaluating new and innovative tools to finance the renewables sector, says a CII report. As a step in this direction, Indian public sector giants are likely to examine rupee denominated debt instruments like Masala Bonds to create and develop a new market and identify benchmark prices for these new instruments, said the report. The issuances which would be offered by blue chip government companies is expected to help evolve new vistas of funding for the renewable energy space, it said. “Companies including NTPC, Neyveli Lignite Corporation, Power Finance Corporation, Power Trading Corporation and Rural Electrification Corporation are likely to launch these Masala Bonds totaling USD 1 billion in the next three or four months in the UK to gauge the investor appetite. The tenor of these bonds is likely to be limited to a band of five to seven years and these are going to be in smaller denominations ranging from USD 150-250 million. These will be subject to decisions made by the Boards of the PSU energy companies. In addition, Energy Efficiency Services Limited could explore issuance of Green Masala Bond subject to credit rating. ,” said Piyush Goyal, Minister of State for Power, Coal and New and Renewable Energy, Government of India. He was speaking at a Round table, “Financing Renewables and Energy Efficiency” organized by the City of London in London on Wednesday. In 2015, IFC issued the first Masala bond listed on the London Stock Exchange. The bonds worth over Rs 1000 crore were issued in a range of tenors, including a ten-year, 10 billion rupee-denominated bond to raise funds for infrastructure projects. Masala bonds are primarily rupee denominated bonds issued to overseas buyers.

Debt driven inventory may hurt realty sector in FY17: Ind-Ra

Debt driven inventory may hurt realty sector in FY17: Ind-Ra
21/04/2016 12:52

The real estate sector continues to build-up stock and is sitting on inventory of close to three years of revenue, largely supported by high cost funding as banks have turned off the tap, believes India Ratings and Research (Ind-Ra). Inventory in the sector has risen to 2.9 years in 1HFY16 compared to 2.6 years in FY15 and 2.2 years in FY12, which is a concern especially in the current scenario when sales are falling, said the Ind-Ra in a report. According to rating agency, the implementation of Real Estate (Regulation and Development) Act, 2016 is likely to improve confidence of buyers in the sector, as it improves transparency, provides for various buyer-friendly measures and encourages timely completion of projects. However, the Act is unlikely to lead to a significant improvement in sales volume during FY17, as it does not impact the two key variables impacting sales – prices and economic growth. Sale of residential units has been weak due to persistent high property prices, making units unaffordable to end-customers and leading to deferral of purchase decisions. Revival of property demand would depend on a meaningful reduction in prices or a drastic improvement in economic growth resulting in positive customer sentiments. This is unlikely until FYE17, as property prices will remain high due to the refinancing of sector companies’ debt through higher-cost funding from non-banking finance companies/ private investors. Ind-Ra revised its rating Outlook on the real estate sector to negative for FY17 from stable in our report “Demand Not Expected to Improve for Real Estate Sector in FY17”, on the back of rising debt and falling profits and cash flows. Growth in bank credit to the Real estate sector has slowed down to single digits in 2015 from the earlier double digits growth seen in 2014. The interest of investors in the sector remains high. However, investments are increasingly through debt or debt-like hybrid instruments and bulk apartment purchases, instead of equity investments. The use of debt/hybrid instruments is a concern, as it only shifts the funding gap to the redemption date with high funding costs.

RBI revokes registration certificate of 3 NBFCs

RBI revokes registration certificate of 3 NBFCs
21/04/2016 10:30

The Reserve Bank of India said that it has cancelled the registration certificate of three non-banking financial companies (NBFCs) following which these firms would not be able to carry on their business activities. The three NBFCs, whose license has been canceled are Chandigarh-based Shubh Leasing Pvt Ltd, Global Securities of Ahmedabad and Amitosa Leasing and Finance based out of Thane, Maharashtra. "Following the cancellation of registration certificate, these companies cannot transact the business of a non-banking financial institution", RBI said in a notification. Besides, RBI said that 10 NBFCs have surrendered their registration certificate. Among those surrendering their licences include IGL Finance (Udhamsingh Nagar, Uttarakhand); Gee Bee Assam Private Ltd (Guwahati); Rupa Equities Private; Shekhar Holdings and others.

Equity-linked saving schemes outperform benchmark indices

Equity-linked saving schemes outperform benchmark indices
21/04/2016

Providing better returns to investors, majority of equity-linked saving schemes as well as mid- and small-cap funds outperformed their respective benchmark stock indices over a five-year period ended December 2015, according to a report. The S&P Indices Versus Active Funds (SPIVA) scorecard, which tracks performance of actively managed mutual funds against their benchmarks, showed that majority of large-cap equity funds lagged BSE 100 Index over the same period, reported PTI. "RBI's accommodative stance coupled with the interplay of global and domestic macroeconomic factors led to a mixed sentiment in the capital market," Asia Index Global Research and Design Associate Director Utkarsh Agrawal said. "Debt funds generated fewer equal and asset-weighted returns than their respective benchmark indices, across all time horizons," he added. As per the report, majority of equity-linked Savings Scheme (ELSS) and mid- and small-cap funds outperformed the S&P BSE 200 and S&P BSE mid-cap, respectively. The report said that 21.62 per cent of ELSS funds have outperformed S&P BSE 200 for one-year, 2.86 per cent for three years and 11.43 per cent for five years. Besides, ELSS funds have delivered a return of 3.27 per cent for one year, 18.10 per cent for three years and 10.53 per cent for five years. In comparison, S&P BSE 200 gave a return of 0.18 per cent for one year period, 13.32 per cent for three years and 7.49 per cent for five-year period. The report said that 58.14 per cent of mid-cap and small-cap equity funds have outperformed S&P BSE Mid Cap over a one-year period, 17.78 per cent for three and 37.93 per cent for five year periods. Mid-cap and small-cap equity funds, offered a return of 8.61 per cent, 25.44 per cent and 15.08 per cent for one, three and five year periods, respectively. S&P BSE Mid-Cap offered a return of 8.72 per cent for one year period, 17.86 per cent for three years and 8.98 per cent for five-year period. "Over one, three, and five-year periods ended December 2015, 36 per cent, 47 per cent and 57 per cent of large-cap equity funds in India underperformed the S&P BSE 100, respectively," the report noted. Besides, majority of debt funds have underperformed their respective indices over five-year period ended December 2015. In 2015, net investment by domestic mutual funds in the equity market stood at over Rs 72,000 crore, while foreign investors pumped in Rs 17,800 crore into equities.

Won't be euphoric if India is fastest growing large eco: Rajan

Won't be euphoric if India is fastest growing large eco: Rajan
20/04/2016 18:15
The RBI Governor Raghuram Rajan on Wednesday said that India should find ways to support higher economic growth on a sustainable basis and not fritter away gains as it did in the past, said the Reuters report. Prime Minister Narendra Modi's 2-year old government is seeking to bolster an economy which grew 7.3 per cent, among the fastest growth rates in large economies, but below the 8 per cent growth needed to generate jobs for millions of Indians joining the workforce every year. Rajan said the government had created a platform for strong sustainable growth, but said it would need to ensure it stays on that path. The Reserve Bank of India governor has cut interest rates by 150 basis points since the start of 2015 to a more than five-year low, but is under pressure to ease further. "As a central banker who has to be pragmatic, I cannot get euphoric if India is the fastest-growing large economy," Rajan said in a speech to banking and finance students in Pune. "Our current growth certainly reflects the hard work of the government and the people of the country, but we have to repeat this performance for the next 20 years." Without citing specific instances, Rajan said previous governments had become too complacent by periods of high growth, saying India still remained a relatively poor country. “We cannot get carried away by our current superiority in growth, for as soon as we believe in our own superiority and start distributing future wealth as if we already have it, we stop doing all that is required to continue growing,” he added.

Sebi registered AIF count hits 200-mark

Sebi registered AIF count hits 200-mark
20/04/2016 15:51

Markets regulator Sebi has allowed as many as 209 entities to set AIFs, pooled-in investment vehicles for real estate, private equity and hedge funds, over a period of 42 months, reported PTI. The 209 Alternative Investment Funds (AIFs) have been registered with Sebi since August 12. Among the newly registered AIFs are Kotak India Real Estate Fund, Ideaspring Capital Fund, IDFC Private Equity Fund and Canara Bank Venture Development Trust. AIFs are funds established or incorporated in India for the purpose of pooling in capital from Indian and foreign investors for investing as per a pre-decided policy. Under Sebi guidelines, AIFs can operate broadly in three categories. The Securities and Exchange Board of India (Sebi) rules apply to all AIFs, including those operating as private equity funds, real estate funds and hedge funds among others. The regulator had notified in May 2012, the guidelines or this class of market intermediaries. The Category-I AIFs are those funds that get incentives from the government, Sebi or other regulators and include social venture funds, infrastructure funds, venture capital funds and SME funds. The Category-III AIFs are those trading with a view to making short-term returns and includes hedge funds among others. The Category-II AIFs can invest anywhere in any combination but are prohibited from raising debt, except for meeting their day-to-day operational requirements. These AIFs include private equity funds, debt funds or fund of funds, as also all others falling outside the ambit of above two other categories.

Land titling law to ease land acquisition process, says Ind-Ra

Land titling law to ease land acquisition process, says Ind-Ra
20/04/2016 14:48
The Rajasthan Urban Land (Certification of Titles) Act, 2016, passed by the Rajasthan Legislative Assembly this month, will significantly smoothen the land acquisition process in urban areas, says India Ratings and Research (Ind-Ra). Rajasthan is the first state in India to enact a law on property titles, where the state will stand as a guarantor for land titles and provide compensation in case of issues of defective title. Ind-Ra believes that the adoption of similar laws by other states can meaningfully shorten the time taken for acquisition of urban land for infrastructure creation by public bodies or for real estate development by private players and bring down overall project cost. The Act provides for the State Government to stand as a guarantor for the permanent certificate of title issued for urban land by the Certification Authority after perusal of documents. The Act also provides for compensation to any person who enters in to a transaction on the basis of a permanent certificate of title, in case the title later turns out to be defective. These provisions will lead to clarity in land titles and will reduce legal challenges, thus reducing the effective cost of land and shortening execution timelines. The Act is a marked improvement over the current situation where the land title is authenticated based on a series of documents of successive transfers, without any guarantee of the actual title and the buyer’s investment is exposed to the risk of complete loss, in case the title later turns out to be defective. Given the uncertainty as to land title, buyers go through a long process to authenticate the titles, but often end up facing legal challenges, thus delaying the execution of projects and locking up capital. This titling reform by Rajasthan comes at a time when the government has embarked on a mission to push for urbanisation with various schemes namely, development of smart cities, the Atal Mission for Rejuvenation and Urban Transformation and housing for all. Under the Act, the state government will set up an Urban Land Title Certification Authority, which will seek all the documents from the landowners, and will verify it against the records held by the state. The authority will then issue a provisional certificate of title for a period of two years without guarantee and follow it up with a permanent certificate of title to which the government shall stand guarantor.

Order book likely to improve in construction sector in FY17

Order book likely to improve in construction sector in FY17
20/04/2016 14:46

Construction companies continued to witness negative cash flows from operations (CFO) in FY16, which is likely to improve gradually to near zero levels in FY17, as more orders procured during the last two years are executed, says India Ratings and Research (Ind-Ra). Competitive intensity had reduced for new orders over the last two years and hence margins on such orders are expected to be higher, said the rating agency. According to Ind-Ra report, order inflow in the construction sector is likely to grow, as the government has increased outlay for highways and railways in the Union Budget 2016-17. The government increased allocation for highways by 28 per cent and has targets to award 10,000 kms of highways in FY17. The government has also laid out ambitious targets for spending on other infrastructure sectors and irrigation, drinking water supply, housing and power supply, which would entail significant opportunities for the sector over the medium term. Ind-Ra believes that prudent accumulation of orders with close correlation between capacity to execute and order book size will be crucial to improvement in the cash flows and credit metrics of individual companies. Hence, Ind-Ra expects companies to focus on margins and funding while bidding for new projects and to limit their order books near the current level as a multiple of revenue, which will provide for a moderate growth in revenue along with improvement in cash flow margins. Ind-Ra believes that the negative CFOs are a legacy of the aggressive bidding seen during FY10-FY12, when companies focussed on building their order books. In such orders, EBITDA margins were very close or even lower than retention money margins in some cases, leading to negative operational cash flows.

Govt assures support to pharma cos to develop and innovate in India

Govt assures support to pharma cos to develop and innovate in India
20/04/2016 14:06
The minister of state for department of pharmaceuticals, Hansraj Ahir, has assured all support to the pharmaceuticals and life sciences industry to grow and reach global scales for catering to the burgeoning domestic and global markets. While addressing the CII’s 13th National Pharmaceuticals Conclave today in New Delhi, the minister said that the industry should come forward to address the huge prospects and challenges ahead in segments like manufacture of bulk drugs, medical equipment and in on research and development. The government would lend all possible support in the endeavour to make India a quality and cost effective pharma hub. The programs launched recently, such as Make in India, Skill India, Start up India etc. would give a critical push to the entire chain of life sciences, he added. Exhorting industry to look beyond their balance sheet, the minister observed that they should make quality drugs at affordable prices to the common man. In his regard, he mentioned about various initiatives taken by the present government to reduce the prices of the lifesaving drugs to make them affordable to the common man. Diseases like diabetes, cardio vascular problems etc. are afflicting a large number of people particularly from the poorer strata of the society. “We have to find newer approaches for diagnosis and treatment of patients since such diseases go unnoticed, particularly among the poorer sections of the society,” he said.

Railway to launch online grievance redressal system

Railway to launch online grievance redressal system
20/04/2016 11:44

An online grievance redressal system is being developed by the Railways for both its serving as well as retired employees.
The system 'Nivaran' will become operational by June 24, said an official statement.
The main focus areas of the grievance redressal will be reimbursement of medical claims, pension claim, compassionate appointment and improvement in staff quarters.
It will have provision for tracking progress on grievances and appeals. Railway Minister Suresh Prabhu would personally be able to review and monitor the functioning of this system.
Currently, serving staff have a few forums available to them that allows them to interact with administration on resolution of their issues.
However, availability of such facilities for retired staff is very limited.
'Nivaran' will benefit around 13.26 lakh serving railway employees and around 13.79 lakh retired railway personnel, the official said.

India Inc M&A spree sees 8-fold jump in March: Report

India Inc M&A spree sees 8-fold jump in March: Report
20/04/2016

Corporate India's merger and acquisition spree witnessed a significant uptrend in March as deals worth $5.4 billion were announced, an eight fold jump over the same period a year ago, a Grant Thornton report says. According to the tax, assurance and advisory firm, there were 48 M&A deals in March this year, while in the same month last year, the figure stood at USD 677 million by way of 43 transactions. The surge in M&A deal value was primarily due to two deals valued over a billion dollars. The first being acquisition of Tass-Yuryakh oilfield for USD 1.3 billion by Indian Oil Corp, Oil India and a unit of Bharat Petroleum. The other was Tokyo-based Yokohama Rubber Co's acquisition of off-highway-tyre manufacturer Alliance Tire Group for USD 1,200 million. Due to the significant uptrend in M&A transaction value in March, the deal tally for the first three months of the year stood at USD 8,925 million, a 31 per cent jump over January-March 2015. "Primary drivers for M&A growth were the strong outbound interest contributing to over 20 per cent of total deal values and consolidation in the domestic market with deal values growing by 66 per cent," Prashant Mehra, partner at Grant Thornton India LLP, said. Mehra noted that inbound transactions continued to be the highest contributor, with deals valued around USD 3.5 billion contributing to about 30 per cent of the total deals. On the M&A front, core sectors such as telecom, energy and automotive have attracted big ticket transactions, which together contributed 50 per cent of the total M&A deal values.

Basic infra in villages to be in place in next 5 yrs: Minister

Basic infra in villages to be in place in next 5 yrs: Minister
20/04/2016

Village panchayats across the country will have basic infrastructure in place in the next five years as each will get about Rs 1.60 crore in form of grants from the Centre, Union Minister Chaudhary Birender Singh said.
Addressing a press conference after inaugurating a day-long national meeting of tribal women gram panchayat presidents, the Minister of Rural Development, Panchayati Raj, Sanitation and Drinking Water said over Rs 2 lakh crore would flow to the village panchayats as 14th Finance Commission grants in the next five years.
An equal amount would be available under the Mahatma Gandhi National Rural Employment Guarantee Programme, he said.
"So each panchayat, even a minor one, will get Rs 1.60 crore in total and in the next five years the gram panchayats will be in a position wherein at least 80 per cent, if not 100 per cent, of basic infrastructure will be in place," Singh said.
The panchayats would be at liberty to decide on the projects to be taken up. Funds from the Centre would henceforth be released directly into the gram panchayat's account and not through the state government, he added.
Under the Rurban Mission, launched by the Prime Minister Narendra Modi in February, 300 clusters would be developed in the country in the next three years.
Referring to the Panchayats (Extension to the Scheduled Areas) Act, 1996, the minister wanted the state governments to implement it "in letter and in spirit".
Andhra Pradesh Chief Minister N Chandrababu Naidu, Tribal Welfare Minister Jual Oram, Union Ministers of State Nihal Chand and Ramkripal Yadav were also present.

Payments banks do not have a viable biz model: SBI chief

Payments banks do not have a viable biz model: SBI chief
20/04/2016

State-owned lender State Bank of India (SBI) Chairperson Arundhati Bhattacharya has said that small and payments banks have not yet devised a business model which can be termed viable, as per the media reports. “Neither the payments banks nor small finance banks seem to have as yet devised a business model that can be said as viable,” said Bhattacharya, quoted PTI. SBI has tied up with Reliance Industries for a payments bank venture. Addressing a banking seminar organised by industry lobby IMC in Mumbai, she added that, “...a mobile banking customer, who is also a customer for payment services, will be less free to migrate to a competition for mobile services. Hence, it is hard to see payment banks taking away customers or income from commercial banks in a big way. Similar arguments hold for small finance banks.” Admitting that the entry of other non-banking companies, through their investments in small finance and payments banks, has changed the dynamics of competition in the sector, she said, “There are some legitimate concerns whether banks, particularly public sector banks, will survive this onslaught.” This is the third time the SBI chief has cast doubts over the payments banks model. At one public event, she went to the extent of saying that with deep-pocket corporates entering payments banking, it would be a “dog eat dog” scenario in the sector. Bhattacharya's comments came within a fortnight of RBI saying it will allow differentiated lenders like custodian and wholesale banks. The RBI has already issued in-principle licences to 10 payments banks and 11 small finance banks. Soon after Reliance Industries secured a licence to operate a payments bank, SBI tied up with the company and picked up 30 per cent stake worth Rs 30 crore in the venture, which is yet to begin operations. Noting that technology will play a bigger role in banking, she said the potential of technology, mainly mobile phones, to deliver banking services was recognised way back in 2010. She said mobiles offer the cheapest mode of banking. "A mobile banking transaction costs about 2 per cent of the bank branching cost, 10 per cent of ATM-based transaction and 50 per cent of the Internet banking cost," she said.

Nirmala critical of RBI Governor Rajan's one-eyed king phrase

Nirmala critical of RBI Governor Rajan's one-eyed king phrase
20/04/2016 00:06

Commerce and industry minister Nirmala Sitharaman was critical of Reserve Bank of India (RBI) Governor Raghuram Rajan's description of the Indian economy as the ‘one-eyed king in the land of the blind’, saying better words should have been used, as per the media reports. “I may not be happy with his choice of words. I think whatever action is being taken by this government is showing results. FDI (foreign direct investment) is improving. There are clear signs that the manufacturing sector is reviving. Inflation and current account deficit are under control,” she told in a press conference, quoted PTI. The minister noted that, earlier Rajan had said that India was on the cusp of a revolution. “If better words were used to say whatever he wanted to say, it would have gone down better,” she said. With India being often described as 'the bright spot in the global economy', Rajan had said in an interview that this was a case of ‘the one-eyed man being king in the land of the blind’.

Industry pitches for more rate cuts on negative WPI 20/04/2016

Industry pitches for more rate cuts on negative WPI
20/04/2016

India Inc pitched for further easing of policy rates during the current year by Reserve Bank of India as inflation continues to be in the negative zone, as per the media reports. Industry chamber CII said going forward, the prospects of normal monsoon along with subdued global commodity prices and favorable government policies should restrain upside pressures on inflation, said the PTI report. “This should provide the space to the RBI to retain the dovish stance towards monetary policy and open up the door for further easing of policy rates during the current year,” CII said in a statement. Ficci said the pressure which was seen arising from the food segment seems to be moderating, with prices of vegetables and fruits reporting a decline. Further, recent meteorological prediction indicates expectation of normal rainfall this year which is a huge positive. “Current inflation trajectory combined with positive monsoon forecast provides enough room for further accommodation in the policy rates which is critical for reviving the capex cycle in the economy,” it said. Continuing the deflationary trend for 17th month, WPI inflation was minus 0.85 per cent in March, but may inch up gradually in the coming months on growing pressure on food and vegetable prices.

Exports fall for 16th straight month in March 20/04/2016

Exports fall for 16th straight month in March 20/04/2016

Exports declined continuously for the 16th month in March, contracted by 5.47 per cent to USD 22.71 billion weighed down by sharp fall in shipments of petroleum & engineering products amid tepid global demand, as per the media reports. For the full FY 2015-16 ended March 31, exports shrunk by 15.8 per cent to 5-year low of USD 261.13 billion mainly on account of fragile global demand and low commodity prices, said the PTI report. Imports fell by 15.28 per cent to USD 379.6 billion in 2015-16, leaving a trade deficit of USD 118.45 billion. The trade gap was USD 137.69 billion in 2014-15. The levels of exports and imports are the lowest since 2010-11. Exports and imports were at USD 245.86 billion and USD 350.69 billion, respectively, in 2010-11, added the media reports. Also, trade deficit in the last month of 2015-16 fiscal fell to 5-year low of USD 5.07 billion as imports dropped 21.56 per cent to USD 27.7 billion in the month. Trade deficit was at USD 2.63 billion in December 2010. The Commerce Ministry, however, said the trend of falling exports is in tandem with other major world economies. But industry experts termed trade figures as alarming and demanded immediate steps to boost exports. “The figures are alarming. Immediate steps like creating of a fund to enhance marketing activities need to be announced,” Rafeeq Ahmed, former FIEO President and Chairman of Council for Leather Exports, said. In March, overseas shipments of petroleum products shrank 21.43 per cent to USD 2.07 billion, while that of engineering goods declined by 11.29 per cent to USD 5.34 billion.