Category: Finance

Singapore sovereign wealth fund Temasek-owned Fullerton India Credit Company Ltd (FICCL) has raised Rs 500 crore through masala bonds to support business growth.
This offering makes Fullerton the first foreign-owned company in India to issue rupee-denominated bonds overseas. Masala bonds are the financial instrument issued outside India but denominated in the rupee.
Fullerton India will issue masala bonds of Rs 500 with a fixed annual coupon of 8.125 per cent and a tenor of 3 years and 1 month. Credit Suisse was the banker to the offering.
Shantanu Mitra, CEO, and MD of Fullerton India, said this issuance enabled Fullerton India to tap and develop a new source of funding. The money will finance Fullerton India’s growth plans. The notes will be listed on the Singapore Stock Exchange.
Masala bonds are attractive given the deep pool of liquidity available for Indian borrowers, said Rajiv Baruah, head of India fixed income and CEO of Credit Suisse AG, Mumbai.
Arun Natarajan, head of strategy and business execution, FICCL, said the tenure of the bonds matched the maturity profile of asset portfolio. The finance company plans to raise more funds through masala bonds. Fullerton also plans to raise up to Rs 1,000 crore through debentures and subordinated debt from the domestic market. ICRA has assigned an “AA+” rating, with a stable outlook, to the NCDs and subordinated debt of FICCL.
The rating assigned takes into account FICCL’s strong profitability indicators, supported by moderation in its cost of funds and improved operating efficiencies.
The growth in loan book has been healthy at Rs 11,980 crore at end of June 2016, from Rs 8,669 crore as on March 2015. There is an expectation of sustained improvement in asset quality given FICCL’s increasing thrust towards secured lending.
The ratings continue to take into account the comfortable capitalization levels, stable asset quality indicators and the company’s strong management team with vast experience in retail finance.
The ratings draw comfort from the company’s strong parentage. FICCL is a step-down subsidiary of Temasek Holdings. It benefits from the parent’s strong brand franchise, managerial support and expected funding and capitalization support, should the need arise.
The credit strengths are partly offset by the moderate, though improving, the scale of operations and increasing competition in the secured lending space that could potentially pose challenges.
There is a higher share of unsecured lending businesses in the overall profitability of FICCL. But this portfolio has performed reasonably well through difficult macro conditions.
FICCL has shifted its focus towards secured lending in retail mortgages, rural lending and small and medium-sized enterprises (SME) while moving away from low-income segment, a segment perceived to be more vulnerable to economic shocks Page Design Pro.
The share of secured loans increased with the higher proportion of disbursements towards the retail mortgage, SME and mortgage lending. Their share in total asset portfolio rose to about 49 per cent as on March 2016, from 31 per cent as on March 2012.
During the first quarter ended June 2016 (Q1FY2017), the company reported a net profit of Rs 74 crore on a total income base of Rs 635 crore.
Its capital adequacy stood at 21.9 per cent (Tier I at 16.1 per cent) as on March 31, 201

 

READ ALSO  :

Read Full Article

DHFL, LIC Housing, Manappuram Finance, L&T Finance hit record highsDewan Housing Finance Limited (DHFL), LIC Housing Finance, Manappuram Finance, L&T Finance Holdings, GIC Housing Finance and Indian Hume Pipe were among 37 stocks from the S&P BSE BSE500 and S&P BSE Smallcap index who hit their respective lifetime highs after the benchmark Sensex closed nearly 2% higher on Tuesday.
Aarti Industries, Essel Propack, GHCL, Force Motors, Film Industries, Jubilant Life Sciences, Kajaria Ceramics, Lumax Industries, Motilal Oswal Financial Services and TVS Motor Company were among others that hit new highs today.
The S&P BSE Sensex and the NIfty50 index gained 2% each, and closed at 28,051 and 8,678 levels, respectively.
Financial shares including banks, non-banking financial companies (NBFC) and housing finance companies (HFC) were in focus, ended higher by up to 6% on the bourses.

Nifty Financial Services (up 2.8%), Nifty Private Bank (2.3%), Nifty Bank (2.2%) and Nifty PSU Bank (2%) gained in a range of 2% to 3%, as compared to 1.9% rise in the benchmark Nifty50 index

Global rating agency Moody’s on Tuesday said that the draft bill to establish a new regime for resolution of troubled banks in India is credit positive as it will help to enhance overall stability of the financial system.
It is an important step to having a comprehensive framework in place for the resolution of financial firms. “Currently, the resolution of financial firms in India is based on minor parts of legislation enacted for other purposes,” said Srikanth Vadlamani, a Moody’s Vice-President and Senior Credit Officer. CLICK HERE TO READ FULL REPORT
“The beginning of three-day GST council meet to finalize the tax rate triggered positivity, which in turn resulted in short covering across the board. Also, the recent Essar deal has raised hope among the bankers as a majority are struggling with non-performing assets (NPA) issue,” said Jayant Manglik, President, Retail Distribution, Religare Securities.

“Banking and financial stocks lifted the mood post the Essar Oil deal which eases some NPA worries. The low inflation and expectations of further easing by RBI have also changed the sentiment in the market,” said Vaibhav Agrawal (VP & Head of Research), Angel Broking.
“The market earlier saw nervousness over the geopolitical worries after the surgical strikes happened however there is no escalation so this is also a rebound from the earlier decline. Overall we see a strong market going forward as festive demand remains solid,” he added.
Indian Hume Pipe zoomed 20% to Rs 804 after the company said the board will meet on October 26, to consider the issue of bonus shares to existing shareholders.
Meanwhile, as many as 342 stocks were locked in upper circuit filter on BSE, the exchange data shows.
Zuari Agro Chemicals, Zuari Global, Hindustan Organic Chemicals, Nath Bio-Genes (India) and Mangalam Seeds were at 20% upper circuit on the BSE.

 

READ ALSO : 

Read Full Article

You must have heard about some investors who are able to earn high returns on their investments. One common trait among them is that such investors have learned the skill of balancing risk and returns.

You know that investing in equities is risky but when done right such investments may deliver huge returns. Acquiring the skills to balance risk and returns is not difficult; however, it does take a long time. Here are ways in which you may manage the investment risks:

Image result for Investment

  • Thoroughly know your investments
  • If you do not have an in-depth knowledge, diversify your portfolio and include diversified mutual funds, Exchange-Traded Funds (ETFs), and non-related instruments

Therefore, to earn a higher return on investment, it is important to start learning more about these instruments. Another important factor is to invest for the long-term.

Invest for the long-term

If you buy risky instruments, it is prudent to hold these for a longer period. When you stay invested for a longer period (exceeding five years), the associated risks are significantly reduced.

The markets are more volatile in the short-term and may not deliver higher returns. Historically, stocks have performed well when you invest for a longer time. This is because strong fundamentals of the companies take time to deliver results, which is reflected in its stock prices. Therefore, when you remain invested for a long time, you are able to gain through the effects of strong fundamentals.

Understanding higher returns

You hear about investments with high returns. However, what does high return mean? To know more, you must understand the following terms:

  1. Risk-free rate: You earn this return from your investments even without in-depth knowledge. Some examples include fixed deposits (FDs) and government bonds.
  2. Risk premium: The returns earned over the risk-free returns are known as the risk premium. A higher premium delivers greater returns and vice versa.

High returns = Risk-free rate + Risk premium

Some points on the risk premium

  • Some investment options like liquid funds and savings accounts have a negative risk premium
  • Instruments such as gold, debt funds, and FDs have a risk premium close to zero
  • Equity mutual funds, stocks, and real estate have a positive risk premium

You may handle high-risk high-return investments through the following:

  • Holding the investments for a longer period
  • Buying these at below fair price
  • Investing in only high-quality instruments

The higher returns must be broken into two parts, which include risk-free rate and risk premium. The risk-free rate is available online and generally is the yield on a 10-year government bond or 10-year fixed deposit. You must add your expected risk premium to determine the potentially higher returns.

Tips to earn higher returns

  1. Invest for the long-term

It is recommended you invest in a good performing mutual fund and remain invested for about seven years or longer. You must always be aware of the risk premium and use the aforementioned formula to determine expected returns.

  1. Diversify your portfolio

The risk of losing all your capital investment is huge when you choose to invest in high return instruments. To reduce the possibility of large losses, using portfolio diversification is very important. Diversification is nothing but including multiple investment products within your portfolio. In case one product is facing a loss, it may be negated or mitigated through the other financial instruments included in your portfolio.

  1. Avoid being greedy

Earning higher returns is common; however, it entails greater risk. You need to make and follow a prudent investment plan to earn higher returns. You need to think out of the box and include non-common financial products to earn potentially higher returns.

High returns investment products

  1. Overseas company stocks

The Reserve Bank of India (RBI) allows you to invest in international company stocks for up to INR 1 crore. As per the 2004 Liberalized Remittance Scheme, you may invest in international companies without needing an RBI approval. You may open an account in a foreign bank and remit up to USD 75,000 per year, which may be used to buy overseas stocks.

  1. Company FDs

Compared to bank FDs, company-issued FDs deliver 2%-3% higher returns. However, you must buy FDs issued by reliable and fundamentally strong companies. You must check the credit ratings of these FDs to make an informed decision.

  1. Pre-launch real estate properties

Developers offer competitive rates for properties before their launch. If you invest at this time, you may be able to double your investments by the time the property is ready for occupation. However, there is a risk of delays or stoppage in case the builder does not have permission to construct.

  1. Small and mid-cap mutual funds

During the last five years, the stock market has seen significant volatility. Most investors do not invest in lesser-known companies. However, such companies offer excellent returns and one way to invest in these is through small and mid-cap funds. It is recommended you invest through a Systematic Investment Plan (SIP) and stay invested for a longer period to earn higher returns.

  1. Index funds

Such funds track the performance of indices like SENSEX and Nifty. Index funds are an excellent diversified investment product. These include blue-chip companies offering risk diversification. In the long-term, index funds provide higher returns at medium risk.

To find the best investment plan with high returns, you need to take time to research the various options. This may easily be done online where you may compare different products in a single page making it convenient and timesaving.

 

Read Full Article

There are two main concerns in our everyday life. One is savings and the other is an investment. Investment is any money spent today s to reap benefits in the future. Even if you are living paycheck to paycheck, these two concerns will always dominate your thoughts. If you have already begun saving and have no idea where to invest your money, we have a solution for you. There are numerous investment products in the market but choosing the right one is the key to generating wealth. Investing your money in financial products will ensure that your money grows instead of being idle in the bank account.

Image result for Money

Different types of investment plans in the market

Here are some of the traditional investment plans available in the market.

Fixed deposit

Fixed deposit is an ideal investment option for those who want to bear no risk and expect a regular income. Fixed deposits have been prevalent for many years and they are a safe investment option. If you want to invest for a specific goal, you can for fixed deposits. It carries a lock-in period and a specific interest rate. You will receive the amount back at the end of the maturity period. You can opt for a quarterly, monthly, or annual receipt of interest on the same. Compare the interest rates offered by the banks before you make a decision to invest in a fixed deposit.

Stocks

Investing in stocks is basically investing in the shares of a company. Stocks are one of the most popular investment avenues in the country and have shown significant results over a period of time. However, the returns on these stocks are subjected to market volatility. If you can bear the risk of market movement, stocks are a good option. They can generate huge returns if you have invested in the right companies. The market movement will have an impact on your investment but it pays to remain invested for a long period to earn higher returns.

Mutual funds

Mutual funds are investment instruments that are managed by professionals on your behalf. They are classified according to the type of securities the fund is invested in. These include balanced funds, open-ended funds, close-ended funds, and stock funds, among others. Based on your risk appetite, you need to choose a fund that meets your needs in the best manner. If you have a high-risk appetite, you can opt for stock funds. The stock or equity finds will purely invest in the equity market while a debt fund invests in the debt market and carries low risk. Mutual funds are a diversified investment option since the asset allocation varies in each fund. These funds are professionally managed and have become a prominent investment product in India.

Life insurance

If you are wondering where to invest money, you might not be aware of the benefits of a life insurance policy. There are multiple insurance products available in the market but the most important one is a life insurance. It is important for you to invest in a life insurance policy to ensure the financial security of your family in case of unforeseen circumstances. Investing in life insurance could be the best financial decision you have ever made. If you are not around for your family, the life insurance will provide for the financial security of your loved ones. If you have a debt to pay, the life insurance cover will ensure that your family does not suffer under a pile of debt. Another benefit is the tax exemption on the investment. The premium amount is exempted from taxation under Section 80C of The Income Tax Act. Consider insurance as the most important investment option before you look for alternatives. It is much more than a cover for your life. It will provide for your family and will help them maintain their lifestyle in your absence.

Unit-Linked Insurance Plan (ULIP)

ULIP is an insurance product, which divides the premium amount into two segments, one is for your insurance plan and the other is invested into funds. This investment will give you returns at the end of the lock-in period. Investment in ULIPs is exempted from tax and has a minimum lock-in period of five years. The investment will depend on the type of funds you choose. If you have a high-risk appetite, you may opt for growth funds. However, if you do not want to take much risk, you could choose balanced funds.

Choosing the best investment plan is not easy. You need to consider your long-term financial goals and your risk appetite before you make a decision to invest. While life insurance is one of the most important investment products for you, there are various alternatives that will help grow your wealth. Consider the tenure of your investment and make the right choice of product. It is important to remain invested for a long period in order to generate higher returns.

You no longer need to worry about how to invest money. It has now become easier to make an investment from the comfort of the home. You only need to choose the investment product and you can make an investment online. You can also set up a systematic investment plan in order to make small but consistent investments in your chosen products. Making the right investment decisions today will reap you significant benefits in the future.

 

Read Full Article

CHENNAI: Ujjivan Financial Services, which is one of the 10 entities to get small finance bank (SFB) from the RBI, on Thursday said it plans to use biometric enabled ATMs to serve unbanked and under-banked customers.
Financial Software and Systems (FSS) will be providing its end-to-end “payments in a box” solution for Ujjivan. Apart from providing biometric authentication for the customer through fingerprint recognition from the Aadhaar database, the new ATMs will also be able to read EMV cards.
“We will also support and assist customers who are first time users, by running financial literacy, LIVE demonstration and communication program demystifying ATM machines,” said the release.

Read Full Article

Union Finance Minister Arun Jaitley.Domestic reforms to cushion India from global shocks

Addressing the BRICS investment seminar here ahead of the 5-nation Summit beginning in Goa tomorrow, he said the government has put FDI on automatic route in almost 90 per cent of the areas that are eligible for foreign direct capital.
“Over the last two-and-a-half years most of the sectors have been reviewed and we now have probably the most open FDI policy in the world with 90 per cent of FDI coming in through the automatic route,” he said.
Stating that the ease of doing business has improved massively since the Modi government came to power, Jaitley said many sectors have been brought into the automatic route and now we don’t have any instance of cases pending indefinitely before the Foreign Investment Promotion Board.
“We have learned that notwithstanding the fact that there is a contraction as far as global growth is concerned, at least by domestic reforms we can neutralize the impact of the ongoing global slowdown,” he said.
On India’s global competitiveness ranking, which has improved to 39 this year, he said many policy changes in the recent past have added to the ease of doing business.
Jaitley said various policy measures and “every significant decision of the government are aimed in one direction — that is to promote economic activities and make India more investment friendly”.
“Our ranking both in the ease of doing business and also in global competitiveness index has moved up significantly in the last few years. And this has been aided by a large number of policy initiatives which have been taken by the government,” Jaitley said.
Lauding the states for their competitive spirit in making themselves business-friendly, he said: “the other silver lining is the states have also become extremely competitive and more investment-friendly”.
On the need for more cooperation between the BRICS nations (Brazil, Russia, India, China and South Africa), he noted that even though it has improved in the past there is still room for more periodic meetings to expand the areas of cooperation within the five-nation bloc.
“We now have a BRICS institution in the form of the New Development Bank and in a remarkably short period of time it has initiated its own projects which it is funding. A contingency reserves arrangement is in place now and there is going to be increased cooperation in the area of customs and taxation,” Jaitley said.
He also said the grouping has on its agenda many more proposals such as a rating agency and a research institution. The BRICS nations also are facing many challenges, he said, adding that together they represent over 40 per cent of the global population, a large portion of global GDP and a significant part of FDI flows from each other.

 

READ ALSO : 

Read Full Article

MUMBAI: Employers across the globe are facing the acutest talent shortage since the recession, says a survey by HR consulting firm, ManpowerGroup. Of the over 42,000 employers surveyed globally, 40% are experiencing difficulties filling roles; the highest level since 2007, according to the Talent Shortage Survey. 48% of India employers report difficulties filling job vacancies due to talent shortages.
As skills need change rapidly, employers are looking inside their organizations for solutions, with 36% of Indian employers choosing to develop and train their own people. In the IT sector, businesses are reporting the most marked talent shortage in a number of years. Lack of soft skills (36%) and looking for more pay that what is offered (34%), are the top reasons that employers in India are not able to fill the positions, says a statement from ManpowerGroup.
AG Rao, group managing director of ManPowerGroup India said: “The demand index for IT and accounting professionals have been on a continuous rise. Focus on technology up-gradation and better financial access will drive the sectors growth in the coming months. Further, in an attempt to provide financial services into rural areas as an initiative by the government, and Reserve Bank, the demand is projected to grow across core and support functions. While banks struggle to keep up with increasing demand and traditional non-banking finance companies (NBFCs) are still in the process to learn the ways of the online business, in tech startups are one of the major breakouts today, and this could potentially define the shape of the financial services industry”.

 

READ ALSO  :

Read Full Article

NEW DELHI: Questioning the methodology adopted by Moody’s, Finance Ministry on Thursday said the global agency has ignored reforms initiated by the government and it should not wait “till infinity” for them to take root before upgrading the country’s sovereign rating.
“Our concern was mainly about the methodology of the whole process… Of course, the rating agencies are free to arrive at their own conclusion…,” economic affairs secretary Shaktikanta Das said.
“I thought the due process has to be followed and you cannot jump the gun,” he said alluding to Moody’s making certain comments in public a day before having met the Finance Ministry.
Calling the reform process slow and gradual with muted private investment and bad loans posing a challenge, Moody’s said on Tuesday it could upgrade India’s rating in 1-2 years if it is convinced that reforms are “tangible”.
India’s sovereign rating by Moody’s stands at ‘Baa3’, the lowest investment grade — just a notch above ‘junk’ status.
Das added: “We found the methodology to be deficient. That is something we pointed out. So we expressed our serious concerns about the methodology that they are following. Then, there were other issues. We explained to them about the reforms gathering roots and developing sufficient depth.”
During the meeting with the Finance Ministry on Wednesday, representatives from Moody’s are learned to have said that a rating upgrade could be a reality when the benefits of reforms could be felt on the ground and the country’s banking sector stabilizes.
Das said: “The depth of the reforms in India cannot be doubted. It is a unidirectional process for the last several years, especially in the last two years. The pace of reforms and the pace at which reforms are undertaken by the government due weight has to be given to that.
“You cannot say that I will give zero weight and I will wait till infinity to see that these reforms take roots…I don’t think…it should not be a kind of bottomless pit.”
In April last year, Moody’s had changed India’s rating outlook to ‘positive’ from ‘stable’ citing reform momentum and had said that it could consider India for an upgrade in next 12-18 months.
During the meeting, the ministry also impressed upon the global rating agency about the government’s resolve to contain fiscal deficit at 3.5 per cent of GDP in the current fiscal.

 

READ ALSO  :

Read Full Article

Ask Harsh Roongta anything on Personal Finance

I was an Indian resident till 15th May of this year. Till the last year, I was filing my income tax returns in India. I have been working in the UAE from 16th May 2016 in a construction company and earning salary income. My wife and mother are in India and I transfer them money for their living expenses through by my NRE a/c or through saving a/c of my wife and mother. My query is, am I liable to pay any tax in India for the salary income I earn in the UAE or for the money that I transfer money to my wife and mother? Also, am I liable to file income tax returns in India from the fiscal year 2017 onwards? Kindly note that I do not earn another other income in India.
– Ryan Shetty
Assuming that you will spend less than 182 days in India during the financial year ended March 31, 2017, you will be treated as a non-resident for the financial year 2016-17 and your salary earned overseas will not be taxable in India. Just take care that you receive the salary from your employer in the UAE itself, either in cash or in a bank account in the UAE. You can then remit it to your own NRE account in India or directly to your wife’s or your mother’s accounts in India. You should never ask your employer to remit the money directly to your NRE account in India as that may render the salary taxable in India because it is “received in India”. You will not need to file tax returns in India for the financial year ending March 31, 2017, unless the income earned in India (including the income earned from April 1, 2016, until May 15, 2016) exceeds Rs 2.50 lakh.

 

READ ALSO : 

Read Full Article

A council of finance ministers from India’s union and state governments on Wednesday failed to finalize the main rate of the goods and services tax and will again meet next month, raising concerns that the new sales tax might miss April’s deadline.
Union and state finance officials met for two days in New Delhi to resolve their differences over the rates as well as the administration of the tax. They will again meet on Nov. 3-4.
While the meetings could not break the deadlock, the contours of the discussions suggested India might end up with a tax structure with multiple rates.
Experts say that the best taxes have to be low, flat rates and few exemptions and warn that the proposed GST for India may – due to its relative complexity – deter compliance in a country where many businesses are skilled at minimizing their taxes.
“Having more rates will complicate the situation,” said M.S. Mani, senior director at Deloitte Haskins & Sells LLP, adding uniform rate in states would simplify current tax structure.
The new tax is a signature reform of Prime Minister Narendra Modi that is aimed at making India an investor friendly destination. The measure would harmonize a slew of federal and state levies.
Supporters say the rollout of the new tax would boost the country’s economic growth by as much as 70 basis points. But a compromise-ridden tax threatens to rob any potential gains.
At the meeting, some states sought to impose a surcharge of tax on luxury products such as sparkling water and tobacco products to keep lower rates on essential food items, Kerala Finance Minister Thomas Issac told reporters.
But the union government did not support the proposal, saying it would have a cascading impact, a senior Finance Ministry official told reporters after the meeting.
The ministry has proposed four tax rates, with the highest at 26 percent for about 20-25 percent of taxable items. Other slabs included 12 percent for food and fast-moving consumer goods (FMCG), and 4 percent for precious metals like gold.
Finance Minister Arun Jaitley, however, remained optimistic that the November meeting would resolve the differences, paving the way for the tax’s implementation from April 1.
To hit that timeline, union and state lawmakers need to pass key bills in this calendar year, and even then there will be a race against time to set up IT systems and ensure millions of businesses are ready to file returns online.

 

READ ALSO : 

Read Full Article