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

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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.

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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.

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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.

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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”.

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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.

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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.

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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.

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US Trade Representative Michael Froman believes that India needs to do more on the foreign direct investment front. Froman, who is in India for the Trade Policy Forum (TPF), also stressed on addressing the intellectual property rights (IPR) issues. In an interview to BusinessLine, Froman, shared his thoughts on the bilaterals between the two countries and whether the potential has been realised. Excerpts:

What is the US agenda for the 10th round of TPF?
The Trade Policy Forum provides an opportunity to discuss core areas within the relationship, including agriculture, services, manufacturing and intellectual property rights (IPR). I think we have made important progress in each of these areas, but there is still more to be done, and this is a good opportunity to focus on that.
In which areas do you think full potential has not been realized?
The US and India are two large economies, currently trading just over $100 billion, which speaks to the fact that there is more that can be done. The relationship may benefit from more regulatory reforms, transparent rules and regulations, and address impediments to investment. There is a lot of innovation in India, in manufacturing and services, and we are interested in talking about further steps to implement strong intellectual property rights laws to support that environment.
India has recently opened up a number of sectors by easing foreign investment rules. Where do you see the impediments?
There have been some important steps in opening up certain sectors, but there continue to be impediments in certain retail, financial, and professional services sectors, among others.
On the WTO solar panels dispute concerning domestic content requirements (DCR), India has said it will be implementing the ruling in the next phase and not immediately. Does that concern you?
We strongly support efforts by India and other countries to develop renewable energy and deploy solar panels and other sources of renewable energy. This case was important because it underscored that local content rules lead to more expensive and less efficient solar panels, which is not in the interest of expanding the supply of renewable energy. We will continue to work with India, which has been an important partner in the Paris climate change negotiations and in broader areas of energy cooperation, to help expand our cooperation in renewable energies as well.
While the US filed a case against India on DCR in its solar programs, several US States were found doing the same. Isn’t that double standard?
We are confident that our programs are WTO-consistent. There are ways of promoting renewable energy that is WTO-consistent, and we think it is important to uphold our international obligations.
In the poultry dispute, India said it has made the required changes in import rules as per WTO ruling. Why is the US still not satisfied?
The US and India’s technical teams are talking to assess whether the actions that India has taken will bring it into compliance with the WTO ruling. We have expressed concern with the measures put in place in July, and we are now focused on reviewing an amendment that the Indian government recently put out to determine how it affects its compliance with its WTO obligations.
During the recently concluded India-US Strategic and Commercial Dialogue (S&CD), it seemed the Bilateral Investment Treaty (BIT) talks have been put on hold. What is your reaction?
Prime Minister Modi has made clear that he would like to improve India’s business environment for investment. We think that the negotiation of a high-standard Bilateral Investment Treaty could be consistent with his objectives of promoting Make in India and attracting investment. The US and India have their own model BIT, and we have had good, ongoing dialogue about the differences within our models and whether they may be bridgeable.
In the Nairobi Ministerial, US and India had a difference of opinion on whether the Doha Round should be continued. What are the new issues you are planning to introduce?
India has been an active participant in helping to rejuvenate the WTO, both in understanding the need to take new approaches to outstanding issues, and exploring new issues as well. Over the last year, there have been a number of good discussions in Geneva about what new issues might make sense to pursue. Whether it’s around e-commerce, small- and medium-sized enterprises, or others, these are issues WTO Member representatives in Geneva will continue to discuss to determine the best way forward.
India’s IPR regime has been a major bone of contention between both countries. The Indian government has also rolled out a National IPR Policy, yet why is the US still concerned?
We are now focused on how the policy will be implemented and will continue the dialogue with India on IPR issues, both under the National Policy and more broadly. There’s a lot to be done to address these IPR issues. But the sign of a good, strong, mature trade and investment relationship is one in which we can engage frankly with each other over our differences, even as we cooperate in areas of common interest.

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Indian rupee currency notesIndia’s PNB Housing Finance Ltd and Varun Beverages are looking to raise as much as $630 million combined from initial public offerings (IPOs) next week, underpinning a surge in first-time share sales in Asia’s third-largest economy.

Indian companies have raised $2.9 billion through IPOs in the first nine months of this year, a 171 percent jump from a year earlier and the best run since 2010, according to data compiled by Thomson Reuters.

PNB Housing Finance Ltd, the fifth-largest mortgage lender by assets in India, is selling new shares to raise up to 30 billion rupees ($450.5 million) in the second largest IPO this year. The sale will open on Oct. 25 and close on Oct. 27, according to an announcement on Tuesday.

The lender has set a price range of 750 rupees to 775 rupees a share. Indian state-run Punjab National Bank, which owns 51 percent of the lender, will see its holding diluted to about 38 percent, while Carlyle Group’s holding will drop to about 37 per cent from 49 per cent. Neither Punjab National Bank nor Carlyle will be selling shares in the IPO.

PNB’s share sale will be the second largest this year after private sector life insurer ICICI Prudential Life Insurance Co Ltd raised 60.57 billion rupees last month in the biggest local IPO in six years.

Varun Beverages, one of the largest bottlers for PepsiCo Inc, is looking to open an IPO to raise 11.5 billion rupees to 12 billion rupees on Oct. 26, two banking sources with direct knowledge said. Varun filed for the IPO in June.

Kotak Investment Banking, Bank of America Merrill Lynch, JM Financial, JPMorgan and Morgan Stanley are managing the IPO for PNB Housing.

Kotak, Axis Capital, Citic CLSA and Yes Securities are managing the IPO for Varun Beverages.

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