India’s wholesale inflation eases to 3.15% in November

Dec 14, 2016 0

New Delhi– India’s annual rate of inflation based on wholesale prices eased to 3.15 per cent for November from 3.39 per cent in the previous month, official data showed on Wednesday.

According to data on the wholesale price index (WPI) released by the Commerce and Industry Ministry, the annual inflation rate was (-)2.04 per cent in November last year.

A day earlier, the Central Statistics Office (CSO) reported that India’s annual retail inflation eased last month to 3.63 per cent from 4.20 per cent in October.

The decline in WPI was mainly due to a drop in the food articles prices to 1.54 per cent in November from 4.34 per cent in October.

The annual wholesale inflation rate for onion on a year-on-year (YoY) basis was lower by (-)51.51 per cent. Overall, vegetable prices came down by (-)24.10 per cent.

In contrast, the inflation rate for potatoes on November-on-November basis stood at a 36.97 per cent, while that for pulses stood at 21.73 per cent.

Meanwhile, wheat became expensive by 10.71 per cent, and protein-based food items such as eggs, meat and fish became dearer by 5.82 per cent.

The expenses on primary articles, which constitute 20.12 per cent of the WPI’s total weight, rose by 1.25 per cent during November.

Prices of manufactured products, which comprise nearly 65 per cent of the index, continued to rise for the eighth straight month, rising by 3.20 per cent last month. The prices in this category had risen by 2.67 per cent in October.

The sub-category of manufactured food products, which includes sugar and edible oils, registered a rise of 10.73 per cent.

This was mainly caused by a spurt in sugar prices, which rose by 31.76 per cent as a result of production shortages. Edible oils rose by 3.98 per cent.

Similarly, fuel and power price inflation accelerated in November. It edged up by 7.07 per cent, as compared to a 6.18 per cent rise in October and 5.64 per cent in September.

Segment-wise, price of high-speed diesel rose by 19.26 per cent last month, while that for gasoline or petrol climbed by 5.54 per cent and LPG inched up by 1.80 per cent. (IANS)

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Apollo Health receives Rs 450 crore investment from IFC

Dec 1, 2016 0

Hyderabad– Apollo Health and Lifestyle Ltd (AHLL), a wholly-owned subsidiary of Apollo Hospitals, Thursday announced receiving investments of Rs 450 crore from International Finance Corporation (IFC) and IFC Asset Management Company.

This investment will fuel AHLL’s expansion plans and fulfill its vision of bringing healthcare of international standards within the reach of 20 million patients each year by 2020, the company said.

Sangita Reddy, Joint Managing Director, Apollo Hospitals said AHLL will use IFC’s equity investment to expand its network of clinics, cradle and diagnostics centres across India. The investment will create multiple job opportunities across India for healthcare professionals, including doctors, nurses, and technicians.

“Given the immense potential and the need for quality healthcare delivery at affordable prices, AHLL will continue to expand through both organic and in-organic means and is committed to enhancing the patient experience and medical care offered by the current network,” she said.

AHLL operates a range of formats that fill the space between home care and tertiary care hospitals. It currently operates multi-specialty clinics (Apollo Clinics), Diabetes Clinics (Apollo Sugar), Diagnostics (Apollo Diagnostics), Dental centres (Apollo White), Dialysis, Women & Children hospitals (Apollo Cradle), Fertility centres (Apollo Fertility) and Surgical Centres (Apollo Spectra) across India, with a presence in 17 states and having over 400 customer touch points.

“AHLL operates across 7 verticals and we have multiplied our network and revenues over the past 3 years. In the next five years, we are looking at growing our revenues significantly and expanding our network,” said CEO Neeraj Garg.

“This investment is probably the largest-ever private equity growth capital investment in the primary healthcare segment in India. It reflects the strength of the team that AHLL has built and the leadership position of its formats.

“We currently serve over 10,000 customers daily, and with this next round of expansion, we shall be able to extend the Apollo brand of clinical expertise and ‘tender loving care’ to many more people in the cities we serve and also extend to new cities,” he added. (IANS)

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Bad loans, not interest rates impeded lending to industries

Oct 26, 2016 0

Chennai–It is the non-performing loans built by government banks that has impeded lending to industries and not the high interest rates charged by the bankers, marketing research and analysis consultancy Frost & Sullivan said on Wednesday.

In a statement, Frost & Sullivan said the steady fall in non-food credit from 20.7 per cent in fiscal year (FY) 11 to 9.1 per cent in FY16 and a still-lower 8.3 per cent till July of FY17 is indicative of a disparity in lending to different sectors.

“The credit to agriculture bottomed out to 7.9 per cent in FY13 but recovered to 15.3 per cent in FY16, which is the same level as in FY11. Similarly, the non-food credit to services bottomed out in FY15 at 5.7 per cent and rebounded to 9.1 per cent in FY16 and has already touched 10.8 per cent for this fiscal,” the statement said.

“In contrast, non-food credit to industry, which started at an impressive 22.4 per cent in FY11, progressively declined to 2.7 per cent in FY16 and a negligible 0.6 per cent so far in FY17, dampening the overall credit growth score.

“A closer analysis of the non-food credit landscape reveals that high interest rates have often been wrongly blamed for the slowdown in bank lending, putting the real issue in the shade,” remarked Innovation and Knowledge Center Economic Research Manager Aparajita Basak.

“Frost & Sullivan’s analysis reveals that the accumulation of stressed assets within the banking sector, especially with the public sector banks, is a much more plausible explanation for the weakening credit growth in the country,” she added.

The interest rate theory is easily debunked by the rising lending to industry by the private sector banks, despite the borrowing rates of these banks being greater than their public sector counterparts.

Similarly, personal loans from the public sector are increasing even as those from the private sector banks are plateauing or falling.

Evidently, the public sector banks are limiting their exposure to industry due to the past performance of high credit exposure areas, Frost & Sullivan said.

A slew of measures rolled out by India’s central bank since 2014 aimed at revitalising stressed assets have finally begun to bear fruit. In FY16 alone, six companies with an aggregate debt of Rs 2,613 crore succeeded in exiting corporate debt restructurings, which rose to eight firms exiting with Rs 6,000 crore debt in June 2016, the statement said.

“There need to be more such initiatives with clear short-term and long-term objectives,” noted Basak.

“Additionally, engaging private equity firms and enabling distressed debt funds will help speed up the cleaning of the banking sector and aid credit growth in the country,” she added.

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Bankers voice concern about financing large infra projects

Aug 27, 2016 0

Kolkata–There could be some concern about financing large infrastructure projects as the Reserve Bank of India’s new framework related to ‘large exposures’ proposes to reduce bank exposure to large corporate entities.

“There could be some concern for financing large infrastructure projects particularly greenfield projects. New framework from RBI suggests that from April 2019, for any entities with borrowing of Rs 10, 000 crore from banking industry, banks can only finance 50 per cent of the additional financing requirements. The rest (of requirements) has to be raised from either equity or market borrowing,” said State Bank of India’s Managing Director (Compliance & Risk) P.K. Gupta.

In a discussion with RBI on Friday, bankers suggested that India’s apex bank should look at it, he said on the sidelines of a Banking Summit organised by Indian Chamber of Commerce and Industry.

“As per the new regulations, for large exposures of above Rs 25,000 crore, banks will only finance 50 per cent of the additional financing requirements in 2017-18,” Gupta said. The rest may be raised from the capital market or equity. The new regulations also suggest, to bring down the limit to Rs 15,000 crore in 2018-19.

The objective of the RBI is that banking sector’s exposure to large borrowers should come down and corporate entities should go to markets to raise more funds so that there will be better price discovery in the market, he added.

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Masala bonds can spice up banks’ access to capital

Aug 26, 2016 0

Chennai– The Reserve Bank of India’s (RBI) proposal to allow banks to raise additional tier-1 and -2 capital by issuing masala bonds would ease access to capital, global credit rating agencies Fitch Ratings and Moody’s Investor Service said on Friday.

Masala bonds are rupee-denominated bonds issued in offshore capital markets.

According to Fitch Ratings, the masala bonds would widen the investor pool as the domestic investor pool is limited in size given the scale of capital needed by the banks.

“Fitch estimates a capital shortfall of $90 billion over the next several years as Basel-III regulatory requirements build from the financial year 2017 (FY17) to FY19,” the rating agency said in a statement.

Moody’s said the rupee-denominated bonds overseas was a credit-positive measure for the Indian banks as it will help create an alternative funding source.

Moody’s expected only well-rated and well-managed banks will be able to tap the international market for such issuance while relatively weaker banks will have to depend on the Indian government for their capital needs.

The RBI’s proposal came as part of a series of measures pertaining to India’s fixed-income and currency markets announced on Thursday.

According to Fitch, Indian banks would find it challenging to raise sufficient additional tier-1 capital through the domestic markets.

This is the case even as most of the capital needed will be required to be denominated in rupee owing to the currency structure of most banks’ balance sheets, the rating agency said.

“As such, enabling banks to issue masala bonds opens a window to a much larger investment pool while simultaneously addressing the problem of currency mismatches which had existed with previous international bond issues,” Fitch said.

According to the rating agency, the masala bonds market remains in its infancy and corporates like HDFC and NTPC raised funds issuing such bonds this year.

“As such, the extent to which banks will be able to use the masala bonds channel to raise capital remains to be seen, and will depend to a large extent on the foreign investors’ risk appetite and pricing,” Fitch added.

According to Moody’s, the Indian central bank’s new guidelines on corporate bond issuance will enhance liquidity in the bond market though at present corporate bond market amounts to around 31 per cent of total corporate credit.

“Based on the financial performance of these banks for the year ended March 31, 2016, our analysis suggests that the external capital requirements for the 11 public sector banks that Moody’s rates totals about Rs 1.2 trillion — a figure which far exceeds the remaining Rs 450 billion included in the government’s budget for capital distribution to the banks until 2020,” Moody’s said.

Moody’s expected RBI to announce measures that would develop the bond market addressing issues like bank-dominated financial system — investment mandates of institutional investors do not permit large investments in corporate bonds — and the lack of functional trading systems for bonds. (IANS)

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Overseas borrowings by Indian companies down by 44 percent to $1.2 billion

Aug 26, 2016 0

Mumbai– Overseas borrowings by Indian companies in July this year fell by 44 per cent to $1.2 billion as against $2.14 billion in the same month last year, Reserve Bank of India (RBI) data here showed on Friday.

The central bank said that while $1.02 billion was raised through the automatic route, the remaining $183.7 million came through the approval route.

Among major Indian borrowers using the automatic route were Housing Development Finance Corporation ($446.38 million) for “on-lending/sub-lending”, Glenmark Pharmaceuticals ($200 million) for overseas acquisition and Adani Transmission ($74.40) million for refinancing of rupee loans.

Under the same automatic route category, Birla Corporation raised $40 million for refinancing of earlier external commercial borrowings, Siemens Financial Services raised $37.20 million for on-lending and Continental Warehousing Corp. in Nhava Sheva raised close to $35 million for refinancing of rupee loans.

Under the approval route, Tikona Digital Networks raised $171 million for import of capital goods, Vijayawada Tollway raised $11.07 million for road related works and Ionbond Coatings raised $1.63 million for “general corporate purpose”.

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Unchanged interest rates in India not surprising

Aug 9, 2016 0

Chennai– The Reserve Bank of India’s (RBI) decision to leave the policy interest rates untouched was in line with the predictable and transparent monetary policy, said global credit rating agency Moody’s Investors Service.

The central bank’s decision to leave policy interest rates unchanged on Tuesday was no surprise to market participants.

Marie Diron

Marie Diron

“In the next few months, we expect continuity in the RBI’s policymaking. In particular, the government’s notification of the inflation target at 4 per cent +/- 2 percent through to 2021 denotes ongoing commitment to keeping inflation at moderate levels,” Marie Diron, senior vice president, Sovereign Risk Group was quoted as saying in a statement issued by Moody’s.

“Meanwhile, the formation of a monetary policy committee is in line with common practice in many central banks around the world. We do not expect the RBI’s shift to such a structure to have any significant implications for the conduct of monetary policy,” Diron added.

According to Diron, the larger than average monsoon rainfall will help maintain moderate food price inflation to keep the headline inflation rate within or close to target this year. In the medium-term, the inflation will remain moderate.

“There are upside risks related to the implications of the rise in public sector wages with the implementation of some of the Pay Commission’s recommendations. Should higher wages boost consumption significantly, inflationary pressures could rise,” Diron said.

According to Diron, inflationary pressure could arise when the full recommendations are implemented due to increase in housing allowances.

“However, the less accommodative monetary policy stance at present than in 2009-13, when the RBI’s policy interest rates were well below inflation, mitigates these risks,” Diron said.

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Rajan to flag last independent monetary policy update by RBI governor Tuesday

Aug 7, 2016 0

Mumbai–Raghuram Rajan will on Tuesday conduct what will be his last monetary policy update for the Reserve Bank of India (RBI) and also, perhaps, the last that a central bank governor can henceforth undertake independently.

Raghuram Ranjan

Raghuram Ranjan

The policy update comes against the backdrop of the government fixing on Friday the inflation target for the next five years at plus or minus four per cent — a task which will be entrusted with the soon-to-be-constituted Monetary Policy Committee (MCP) to realise by mandating it to fix policy rates.

Finance Ministry officials said the committee — which will fashion the contours of the monetary policy once it is in place — would be finalised before the next bi-monthly policy review, due in October.

“The MPC would be entrusted with the task of fixing the benchmark policy rate (repurchase rate) required to contain inflation within the specified target level,” a Finance Ministry statement said after the inflation target was notified.

The Reserve Bank governor will be its chair with two more representatives fro the central bank, while the other three will be chosen by the government of the basis of the recommendations of a search-cum-selection committee.

“Under Sub-Section (1) of Section 45ZA of the RBI Act, the Central Government, in consultation with the RBI, determines the inflation target in terms of the Consumer Price Index (CPI), once in every five years. This target would be notified in the Official Gazette.”

Given this backdrop and the fact that India’s retail inflation in June stood at 5.77 per cent — and as high as 6.20 per cent in rural India — the possibility of a rate cut has been virtually ruled out, as the current priceline is precariously close to the upper tolerance level of six per cent.

“While we continue to factor in another 25 bps rate cut for the rest of 20116-17, we are cautious on the 2017-18 rate cycle. We would factor in further cuts only after clarity on the pace of disinflation in Q4 of 2016-17 and RBI’s new policy regime,” said a report by Kotak Institutional Equities.

“We expect the RBI to pause on August 9,” it said.

This is also because the amended law requires the Reserve Bank to also state the reasons if it fails to meet the inflation target, along with the remedial actions the estimate time-period by which it hoped to achieve the same.

“The government’s commitment to reform continues. The monetary policy framework will provide right environment for investment and growth,”said Economic Affairs Secretary Shaktikanta Das. “An announcement on MCP members will be made soon.”

Ahead of the policy update, Rajan met Finance Minister Arun Jaitley on Friday, as has been customary, but declined to comment. “We have a policy on Tuesday. So I have to wait till policy. On Tuesday, I’ll be able to talk.”

Since January 2015, when the central bank started seeing some improvement in the economy and external conditions, the repurchase rate, or the short-term lending rate for commercial banks on borrowings from the Reserve Bank, have been cut by 150 basis points — the last one on April 5 worth 25 basis points.

Thus far, since Rajan took the high office, the policy rate has been raised thrice and and cut five times.

Now as his three-year term ends on September 4, he intends to return to academia as professor at the University of Chicago — from where he is on a three-year leave.

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Andhra Bank net plunges 85 percent in Q1

Aug 7, 2016 0

Hyderabad– State-run Andhra Bank on Saturday reported net profit of Rs 31 crore for first quarter of 2016-17, registering a whopping 85 per cent decline from Rs 203 crore from like period year ago.

In a regulatory filing to the stock exchange BSE, the city-based bank said total income, however, increased 7 per cent to Rs 4,856 crore in the quarter under review from Rs.4,592 crore in same period year ago.

Sequentially too, net profit dipped 40 per cent from Rs 52 crore and income declined 5.2 per cent from Rs 5,124 crore posted in the previous quarter of last fiscal.

Operating profit for the quarter, however, increased 21 per cent over last year to Rs 1,000 crore from Rs 826 crore year ago, but dipped 14.7 per cent sequentially from Rs 1,173 crore.

Provisioning has shot up 88 per cent to Rs 944 crore for the quarter from Rs 503 crore year ago.

Gross non-performing assets (NPAs) shot up 95 per cent to Rs,14,137 crore in Q1 from Rs 7,238 crore year ago and net NPAs up 123 per cent to Rs 8,147 crore from Rs 3,650 crore year ago.

In terms of ratios, gross NPA nearly doubled to 10.3 per cent from 5.75 per cent and net NPA to 6.21 per cent from 2.99 per cent. (IANS)

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Nationalised banks reluctant to serve in rural areas:

Jul 30, 2016 0

Kolkata– Despite repeated appeals from the state government, continued reluctance of the nationalised banks in extending their services to remote areas has hampered rural development in West Bengal, a state minister said here on Saturday.

Speaking at a conference on self-help group (SHG)-bank credit linkage, Panchayat and Rural Development Minister Subrata Mukherjee also exuded confidence of the state achieving a credit deployment of Rs 4,000 crore to SHGs under the State Rural Livelihood Mission (SRLM) in 2016-17.

“The nationalised banks have been reluctant in extending services in rural areas. Because of this, in many of the cases, we are compelled to deliver the benefits in cash which compromises transparency.

“Despite repeated appeals including from the Chief Minister, the nationalised banks for some inexplicable reason have not extended the cooperation that is desired from them,” Mukherjee told mediapersons.

Chief Minister and Trinamool Congress supremo Mamata Banerjee has been repeatedly slamming the Centre for its financial non-cooperation, claiming that funds for many central schemes were either stopped or the state’s responsibilities increased.

Mukherjee, however, refused to comment on the reason for lack of cooperation on part of the nationalised banks.

“I can’t say the reason. I don’t know if that has something to do with the Centre. Bengal has been making rapid progress in rural development, but that has been hampered to certain extent because of the banks’ lack of cooperation,” said Mukherjee.

However, the minister praised the banks’ role under the rural livelihood mission.

“The scenario is better in case of NRLM, where the nationalised banks have extended cooperation. In 2015-16, credit linkage to the tune Rs 2,012 crore was extended to self-help groups (SHGs) elevating Bengal to being the fifth largest state in the country in terms of total credit linkage.

“This year, the target for credit linkage has been pegged at Rs 3262.88 crore. If the banks meticulously extend finance to around two lakh SHGs in accordance of the State Level Bankers’ Committee guidelines, credit deployment of Rs 4,000 crore is a distinct possibility,” added Mukherjee. (IANS)

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