HDFC Life in discussions to take over Max Life

Jun 17, 2016 0

Mumbai/Chennai– In one of the biggest consolidations to happen in the Indian life insurance sector, Max Life Insurance and Max Financial Services have signed agreements to evaluate a potential merger with HDFC Standard Life Insurance Company Ltd, officials said on Friday.

Analjit Singh

Analjit Singh

Explaining the proposed deal to the media in Mumbai, Analjit Singh, founder of the Max Group said: “First Max Life Insurance will merge with Max Financial Services-a listed entity. Then Max Financial Services will be merged with HDFC Standard Life which ultimately will become a listed company.”

“We expect to finalise the swap ratio in 60 days. The whole merger process is expected to be completed in 12 months time,” Deepak Parekh, Chairman, Housing Development Finance Corporation Ltd (HDFC) added.

Agreeing that the shareholding is a bit complex, Parekh also said the foreign partners in the two life insurance companies — Standard Life, UK in HDFC Life and Sumitomo Mitsui, Japan in Max Life- are part of proposed deal as they are on the boards of respective companies.

The officials said there will be no cash involved in the proposed merger deal as the consideration will be settled by share swap ratio.

Singh and Parekh said the product portfolio of the merged entity will be well diversified.

According to Singh, Max Life has a strong individual agents force whereas HDFC Life has a strong bancassurance channel.

With HDFC Bank and other banks as bancassurance partners for HDFC Life and Axis Bank as a major distribution partner for Max Life, the proposed combined entity will have a strong bancassurance channel, added Parekh.

Parekh hoped the agents of Max Life would continue and bring in business for the merged entity.

When asked about the impact of the merger on the policyholders, employees of both the companies, Parekh said those issues would be looked into latter and are yet to be decided.

Queried about the 4.9 per cent stakes held by Axis Bank in Max Life Singh said they would continue to be as shareholder and would get their share once the swap ratio is decided.

Earlier in the day in a regulatory filing in the BSE HDFC said the Board of Directors of HDFC Standard Life Insurance at a meeting on June 17, 2016, has approved entering into a confidentiality, exclusivity and standstill agreement to evaluate a proposal for a potential combination through a merger of Max Life and Max Financial Services with HDFC Life by way of a scheme of arrangement.

The proposed arrangements would be subject to due diligence, definitive documentation and applicable board, shareholder, regulatory, respective High Courts and other approvals.

HDFC Standard Life is a joint venture between HDFC with 61.63 per cent stake, Standard Life (Mauritius Holdings) 2006 Ltd with 35 per cent stake and the rest by others.

Earlier this month, HDFC had announced that its general insurance company HDFC ERGO General Insurance’s board had approved the acquisition of L&T General Insurance Company for Rs 551 crore.

The non-life merger is not complicated like the life insurance companies, said Parekh.

Meanwhile, the Max Financial Services scrip on BSE gained Rs 44.10 on Friday to close at Rs 427.80. (IANS)

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Indian firms’ direct investment abroad in May up over 48 percent

Jun 15, 2016 0

indian flagMumbai–Indian companies’ direct investments overseas increased to $2.69 billion in May, which marked a rise of 48.2 percent over the same month last fiscal, Reserve Bank of India data showed on Wednesday, even as official statistics showed India’s trade deficit last month widened to its highest in three months.

As per the RBI, Indian firms had invested $1.82 billion in their overseas ventures in May 2015.

The overseas direct investment in May this year, “both under the Automatic Route and the Approval Route”, was much lower than $4.11 billion in the preceding month of April.

The investments by the Indian companies were made up of loans ($365.93 million), guarantees issued ($1.95 billion) and equity ($383.71 million), the statement added.

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Salient features of India’s draft Goods and Services Tax (GST) Bill

Jun 14, 2016 0

Following are the salient points of the draft Goods and Services Tax (GST) bill:

* GST rate not specified in the constitutional amendment bill, as desired by the Congress. Finance Minister Arun Jaitley said there was complete consensus at the empowered committee meeting that there should be no constitutional cap on the GST rate.

* All forms of “supply” of goods and services such as sale, transfer, barter, exchange, license, rental, lease and import of services of goods and services made for a consideration will attract CGST (central levy) and SGST (state levy).

* As GST will apply on “supply”, the erstwhile taxable heads such as “manufacture”, “sale” and “provision of services”, among others, will lose relevance.

* The liability to pay CGST or SGST will arise at the time of supply.

* With GST to be applicable according to whether a transaction is “intra-state” or “inter-state”, separate provisions are there to help an assessee determine the place of supply for goods and services.

* States will draft their own State GST based on the draft model law with minor variations.

* GST would be payable on “transaction value”, being the price actually paid or payable, and said to include all expenses in relation to sale, such as packing and commission.

* As the threshold limit, the draft GST Bill proposes Rs 10 lakh, and for Northeast states and Sikkim, an amount of Rs 5 lakh.

 

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Banker Naina Lal Kidwai: Stress in Indian banking will be short-lived

Jun 8, 2016 0

By Meghna Mittal

Naina Lal Kidwai

Naina Lal Kidwai

New Delhi– The stress in the Indian banking system is short-lived and this key industry will only emerge stronger, says veteran banker Naina Lal Kidwai.

With more than 35 years of banking experience behind her, Kidwai spoke to IANS here on a host of issues — from the stressed banking scenario in India, consolidation, fears over bad loans, the bad exposures to Kingfisher and HSBC India’s own strategy shift.

She said the decision by HSBC Bank’s India unit, which she chaired till last December, to close 24 branches was not linked to the overall stress factor.

Excerpts from the interview:

Q. Was HSBC’s recent announcement to shut 24 retail branches in India an outcome of its stressed state?

A. It is a strategic move on the part of HSBC India. In fact globally, the trend in banking is to move away from multiple branches and to reach more people online, and invest in internet banking propositions. Cutting costs is only one of the factors. In the full scheme of things, it is not material. The strategy varies from bank to bank. We should not relate it to cutting costs or foreign banks feeling apprehensive, due to the stressed assets in the banking sector.

Foreign banks have always done well in India even with limited branches, as RBI (Reserve Bank of India) licenses for retail branches were hardly given. So foreign banks will in future too have limited retail branches in India, focusing on wholesale banking as they have traditionally done.

Q. But are foreign banks untouched by non-performing assets (NPAs) and bad loans in India?

A. Standard Chartered Bank has reported high NPAs. It is not that foreign banks are untouched by stressed assets — but the problem is far more manageable for them as most have not funded large projects in power and steel sectors, where a large part of the problem lies.

Q. Given the state of bad loans, should the bank chiefs be brought under a code of conduct for their lending decisions?

Naina Lal Kidwai

Naina Lal Kidwai

A. They should not be held responsible — loans can go bad any time because of various reasons. One person can’t be held responsible. If they are, then once a person becomes chief executive, loans will be held back fearing that five years down too he/she will be held reaponsible for a bad loan.

But, before giving out any loan, banks should evaluate the sector and the risks involved. The decision is taken by an entire team in a bank. The system needs to be robust with checks and evaluations. But if there is malfeasance or corruption, it must be duly dealt with. In certain cases like Kingfisher Airlines, the banks should have evaluated the sector. When did a company last make money in the airline business?

Q. How will consolidation of banks help?

A. It will not help in reducing bad loans. But yes, that’s the way forward. Then, only the strong banks will remain. Weaker ones will be merged into strong banks and it can, therefore, help with capitalisation of banks and bring down overhead costs.

Q. Do you think the bankruptcy law will be enough to check NPAs?

A: We need mechanisms on bad loans to be put into place. The new bankruptcy law is a huge step in the right direction. Implementation of the tribunals envisaged by this law will take time. It is critical that we implement this bill with urgency.

Banks also need to be more cautious as over exposure to sectors that depend on commodities or regulatory interface, was responsible for NPAs in this last downturn. It was bad luck as well that the global downturn and China slowing coincided with our domestic problems in power and commodities. But now the situation is improving.

When the Bankruptcy Bill comes into effect, it will be very helpful for the banks. We are also seeing many specialist organisations, ARCs (asset reconstruction companies) etc. who will help to work out the bad loans.

Q. By March 2017, banks have to fully disclose their NPAs. What scenario do you see emerging?

A. It’s difficult to say as to by when banks will be able to fully erase their NPAs. But yes, NPAs will be at their highest in March 2017, and post that, the NPAs will start tapering in every quarter.

Q. While still at HSBC, could you sense the NPA scenario getting worse?

A. The issue was emerging 3-5 years ago and it is only now that banks are fully providing for bad loans. But the banks will come out it. It is good that the transparency of our banks has improved and this is reflected in share prices of our public sector banks. It is beginning to move up as investors believe there are no hidden surprises. Also the finance ministry and RBI are looking to improve the governance standards of these banks.

Q. What’s keeping you busy post-HSBC?

A. I retired from HSBC India on December 31, 2015 after a 13-year stint with the bank. But I do not miss banking and divide my time between various things. I am non-executive chairman of Max Financial Services and also an independent director on the boards of Cipla, Larsen and Toubro, Altico Capital and Nestle global.

I also spend half my time in areas to do with water and the environment and women empowerment. I founded and chair ‘The India Sanitation Coalition’ — a platform where all players in sanitation convene to learn, share and collaborate with a view to enhance the overall impact and support the government’s Swaach Bharat Mission. The objective is to ensure the entire cycle in sanitation is covered — build, use, maintain and treat.  (IANS)

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Setting up of data centers should not be mandatory: Amitabh Kant

May 24, 2016 0

New Delhi–A decision to set up data centres in the country cannot be mandatory and it will be not be conducive for the eco-system, Niti Aayog CEO Amitabh Kant said on Tuesday.

“Decision to set up data centre in the country cannot be mandatory and it will be not be conducive for the eco-system. I will initiate a dialogue with departments like IT, Telecom and Energy to create the best possible infrastructure for data centres,” Kant said.

Niti Aayog Chief Executive Amitabh Kant

Niti Aayog Chief Executive Amitabh Kant

He was speaking at the launch here of a report “Make in India – Conducive Policy & Regulatory Environment to Incentivise Data Centre Infrastructure” by Internet and Mobile Association of India (IAMAI).

According to the report, India’s data centre infrastructure market will be around $7 billion by 2020.

The Indian data centre infrastructure market is valued at $2.2 billion and is poised to be the second largest market for data centre infrastructure within the Asia Pacific region by 2020.

The IAMAI report highlights the opportunities for India to become a leading player in the global data centre market if conducive policy and regulatory frameworks are adopted.

The paper highlights key measures to increase innovation and stimulate innovation in what is widely considered to be one of the fastest growing technology segments at present.

The paper urged the government to facilitate data centre operations in India through clear policies to facilitate trans-border flow of data and tax incentives to woo foreign players.

At the same time, the paper warns against the dangers of forced localisation of data, adding that the same would reduce competitiveness, affect gross domestic product and harm India’s fledgling reputation as an emerging data centre hub.

“India has the potential to capture a big share in the Global Data Centre market,” said IAMAI president Subho Ray.

To fully realise this potential, India needs to “address some of the risks and barriers to data centre operations in the country today and create the right incentives for businesses to build effective data centre infrastructure,” said Ray.

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Modi calls for India to move towards cashless society

May 22, 2016 0

New Delhi–Renewing calls for India to move towards a “cashless society”, Prime Minister Narendra Modi on Sunday said this was essential to curb black money in the country.

Exhorting citizens to begin using the “electronic technological” payments systems put in place, Modi in his ‘Mann ki Baat’ address over All India Radio said: “I urge fellow citizens to begin using the electronic modes of cashless transaction and illegal businesses will close down, black money will disappear.”

Indian Prime Minister Modi

Indian Prime Minister Modi

“Through electronic-technological means we can now both pay and receive money. The world is moving towards a cashless society,” he said.

The prime minister also said the move towards such a society was being enabled by the government’s JAM initiative — Jan Dhan Yojana, Aadhar and Mobile — to implement direct transfer of benefits.

“Through the JAM trinity, we can move towards a cashless society,” Modi said.

“RuPAY cards have been given with Jan Dhan accounts and in the coming days these will have credit and debit card facilities, to disincentivise cash transactions,” he added.

RuPAY cards were launched by the National Payments Corporation of India to address the needs of Indian consumers, merchants and banks.

The benefits of RuPay debit card are flexibility of the product platform and high levels of acceptance.(IANS)

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Next telecom spectrum auction in 2-3 months: Prasad

May 20, 2016 0

New Delhi–The next round of telecom spectrum auction, which is expected to mop up a whopping Rs.560,000 crore ($83 billion) will take place in another two-three months, Communications Minister Ravi Shankar Prasad said here on Friday.

Ravi Shankar Prasad

Ravi Shankar Prasad

“We have cleared spectrum trading and sharing. Therefore, issues regarding spectrum have been addressed. In the coming two-three months, 2,000 MHz of spectrum will be auctioned,” Prasad said in his address at the 9th Telecom India Summit organised by Assocham.

Earlier, industry stakeholders were expecting the auction – entailing bidding for bands 700 MHz, 800 MHz, 900 MHz, 1,800 MHz, 2,100 MHz, 2,300 MHz and 2,500 MHz – to take place in June.

The minister reiterated that telecom service providers (TSP) need to improve the quality of its services and the customers should be happy.

“The telecom operators should provide good service and quality service to the people. I only want people to be satisfied,” he said.

On Bharti Airtel, a day after the apex court waived call drop penalties from the service providers on May 11, announcing a 25 percent more stringent voluntary call drop benchmark, Prasad said: “Customers should be happy… I don’t understand self regulation!”

“It is in your interest to give quality services to the customers. Quest for quality services will always rise,” he told the telecom firms. (IANS)

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Apple is in India for next thousand years: Tim Cook

May 20, 2016 0

New Delhi– “I am looking at India holistically and we are here for the next thousand years,” Apple CEO Tim Cook asserted on Friday as the 55-year-old chief of Cupertino-based tech giant entered the final leg of his highly “encrypted” four-day India tour and was slated to meet Prime Minister Narendra Modi on Saturday.

Tim Cook

Tim Cook

In an interview given to the news channel NDTV, Cook said: “India is much more strategic. We are thinking about a really long innings in the country. We are here for next thousand years. We are not making the most but the best. We will never make a product that we are not proud of.”

“Apple has a bright future for retail in India. We will sell pre-owned phones with new warranty. We want India to have best Apple products,” he stressed, adding that he instantly feels like he belongs here in India.

Asked about China, Cook said: “India is different than China,” adding that the announcements about Apps development facility in Bengaluru and Maps Development Centre in Hyderabad were just the beginning.

At an event in the capital, Communications Minister Ravi Shankar Prasad said: “I complement Apple chief executive for a public commitment of one thousand years in India. We are ready to work together.”

Apple CEO Tim Cook at an Apple store in Gurgaon on May 20, 2016. (Photo: IANS)

Apple CEO Tim Cook at an Apple store in Gurgaon on May 20, 2016. (Photo: IANS)

Cook later met Sunil Mittal, chairman of Bharti Airtel, one of India’s leading telecommunication companies which was the first to launch 4G in India and is set to offer it countrywide.

It is learnt from sources that almost their meeting at Airtel’s office lasted an hour and top officials of Airtel including Gopal Vittal, managing director and CEO (India & South Asia) were also present.

Kavin Mittal, founder and CEO of hike messenger, also made a presentation to Cook.

“You will see a reliable signal quality after 4G which is critical for India’s progress,” Cook had earlier told NDTV.

According to a recent report by global investment advisory CLSA, India’s 3G and 4G subscribers have tripled to 120 million in 24 months but as affordability increases, the market will expand to 300 million by March 2018.

These 300 million subscribers will account for 60 percent of sector revenues. Bharti Airtel and Reliance Jio, the only operators with pan-India 4G spectrum in 2,300 MHz, will lead this opportunity.

“We are also planning to bring Apple Pay to India,” Cook also told NDTV. Apple Pay is a mobile payment and digital wallet service that lets users make payments through Apple devices.

“There is nothing like having customers telling neighbours you should buy Apple products. Word of mouth is the best marketing,” he observed.

Cook arrived in New Delhi after watching an Indian Premier League (IPL) match in Kanpur on Thursday and fell in love with the game. “Found cricket unbelievably exciting. I’m totally hooked on it,” he said.

Cook began the Delhi leg of his visit with a call at his corporate office where he was greeted by Apple India employees.

Apple CEO Tim Cook at an Apple store in Gurgaon on May 20, 2016. (Photo: IANS)

Apple CEO Tim Cook at an Apple store in Gurgaon on May 20, 2016. (Photo: IANS)

Defying the scorching heat, Cook visited an Apple store situated at DLF Galleria, Gurgaon. “I went to one store in the morning and I was very happy what I had seen there,” he told the TV channel.

On the second day of his India visit, he inaugurated the tech giant’s map development centre in Hyderabad and visited a women’s college.

For the map development centre, Apple has partnered with Noida-based RMSI, a leading IT services player that offers GIS, analytics and software services.

Cook also revealed plans for an iOS app design and development facility in Bengaluru a day earlier.

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Green chillies of Uttar Pradesh hot sellers worldwide

May 19, 2016 0

Lucknow– They are ‘hot’ by all standards and they are much in demand. Green chillies from Uttar Pradesh are reportedly flying off the shelves in European supermarkets.

It’s not just the succulent mangoes of the state, its green chillies too are now wowing people abroad and exporters here are smiling all the way to the bank.

chilliesTime was when green chillies from Uttar Pradesh were sent on a “trial basis” to some European and Arab nations. But now exporters are receiving orders from other regions too.

With orders for the chillies pouring in thick and fast, exporters are busy packaging consignments for markets in Germany, the Netherlands, Italy and England.

“We buy these chillies straight from the farmers and then clean, grade and package them for export,” Ramanand Barai, managing director of Khushi International, a Mumbai-based export house, told IANS.

Chillies of various varieties — soldier, Gomti, 917 and divya jyoti — are purchased from places like Kursi Road, Dewa and Malihabad, and then packed at Rehman Kheda here before being sent to Amausi airport for shipment. “The daily pick is of about two tonnes,” a market-watcher said.

With international, especially European, standards on food quality and safety increasingly becoming stricter, adequate care has been taken to ensure that all parameters, including bio-safety and use of pesticide, are within the prescribed limits.

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Mamata, Jaya likely to help NDA in economic reforms: India Inc

May 19, 2016 0
Mamta Banerjee

Mamta Banerjee

New Delhi–Welcoming the assembly election results, industry chambers said here on Thursday said the results in Tamil Nadu, West Bengal, Assam and Kerala will help the Narendra Modi government to speed up economic reforms.

“Prime Minister Modi who will now be able to speed up economic reforms with the help of non-Congress friendly parties like AIADMK and even Trinamool Congress,” the Associated Chambers of Commerce and Industry of India (Assocham) President Sunil Kanoria said in a statement.

“The NDA government will certainly find it easier to deal with Trinamool Congress and AIADMK in the Rajya Sabha for passage of crucial bills, mainly the long-pending and the most important, GST (Goods and Services Tax),” Kanoria added.

The decisive leadership of the two women chief ministers have played a key role in the victories of their parties, he said.

The Federation of Indian Chambers of Commerce and Industry (Ficci) said the strong voter turnout and clear majority in each of these states points towards a highly positive trend.

“We hope that this mandate will help further the development agenda in these states, with good governance and policy reforms taking centrestage. This will restore investor confidence and help attract greater investments and create more employment opportunities,” Ficci president Harshavardhan Neotia said in a statement.

The Confederation of Indian Industry (CII) said that the election victory of TMC sets the tone for faster economic reforms in West Bengal.

“West Bengal can play a key role in introducing GST, a game-changer for the Indian economy,” T.V. Narendran, Chairman, CII Eastern Region said in a statement.

“This landmark victory of AIADMK in Tamil Nadu strongly demonstrates the popular support for her proactive and inclusive governance in the last 5 years,” Ramesh Datla, Chairman, CII Southern Region, said in a statement.

Assocham also congratulated the BJP President Amit Shah for a decisive victory in Assam.

“BJP’s victory in Assam opens a new political chapter in the north-eastern states, which are expected to be asking for more of development to meet rising aspirations of their people,” Kanoria said.

“The Assam mandate reflec’s people’s aspirations for better governance and faster development. It also reaffirms faith in the Prime Minister’s development agenda and economic growth plans,” Sandipan Chakravortty, Chairman, CII North East Council, said in a statement.

In Kerala, the message is clearly anti-incumbency, marked by allegations of various scams in the Congress-led UDF, Kanoria added.

Congratulating the LDF for its victory in Kerala, Ramesh Datla, Chairman, CII Southern Region, said, “CII looks forward in forging a strong partnership with the government towards achieving a robust socio-economic growth, which is sustainable and inclusive.”

CII also congratulated the Indian National Congress (INC) and Dravida Munnetra Kazhagam (DMK) alliance for a resounding victory in Puducherry. (IANS)

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