As NBFCs face a credit crunch, real esta...

Property developers could default on their repayments following the liuidity squeeze faced by non banking finance companies (NBFC), who have been major lenders of real estate in the absence of bank lending. Alongwith housing finance companies, NBFCs accounted for 61 per cent of overall commercial real estate borrowings as of March 2018, said a recent report by CLSA. The real estate loans given by top NBFCs have grown between 24-70 per cent between FY16-FY18, it said. ALSO READ: Crisis-hit NBFC sector sees private equity investments growing 88% in 2018 Many developers were borrowing from one NBFC to repay another one. The NBFC liquidity issue has put a break to this, experts said. “With limited incremental funding to the sector from banks, which grew at just two per cent in fiscal 2018, NBFCs and HFCs came to the developers’ rescue. However, given the current pressure on liquidity for NBFCs, a potential cascading effect on select projects and developers, could make access to funding more difficult for them,” said a report released by rating firm Criisl on Tuesday.

07-12-2018 TO 31-12-2018

NBFCs raise interest rate between 50 and...

Non-banking financial companies (NBFCs) have raised interest rates ranging between 50 basis points (bps) and 200 bps across sectors, as their cost of funds rises amidst liquidity squeeze. This includes NBFCs in housing finance, gold loans, microfinance, small and medium-sized enterprises, and farm finance, among other segments. For one of the worst-hit segments by the Infrastructure Leasing & Financial Services crisis in the NBFC space - housing finance companies - the liquidity situation has not eased yet. “The liquidity situation has not eased in the housing finance segment, and we have raised interest rates between 100-150 bps,” said C V Rao, managing director (MD) and chief executive officer (CEO), Nivara Home Finance, a recent entrant in the micro home loan market. ALSO READ: Govt plans to set up NBFC with Rs 20 billion to fund food processing firms “Liquidity conditions have not improved much for sectors like housing finance, despite the Reserve Bank of India (RBI) measures,” said a CEO of a housing finance company. ADVERTISING Several gold loan companies, too, have increased their interest rates. “There is a certain degree of liquidity pressure, which has led to some impact on interest rates. We have done some revision in gold loans, which is in sync with what has been done by competition. The interest rates have risen by almost 200 bps, and this has been passed to customers,” said Vasu Ramaswami, chief operating officer, Muthoot Fincorp. ALSO READ: NBFCs' asset growth to halve to 10% in H2FY19 on liquidity woes: Crisil Magma Fincorp, a Kolkata-based NBFC dealing mostly with vehicle finance, the interest rates on average have risen by 50 bps, and on a higher side by 75 bps. “In general, the liquidity situation has eased. We have increased interest rates; on average by 50 bps, and on a higher side by 75 bps,” said Sanjay Chamria, vice-chairman and MD, Magma Fincorp. Another NBFC, Srei Infrastructure Finance, raised its lending rates by almost 200 bps in both equipment and infrastructure finance, according to the company’s website. For the microfinance industry too, the increase in lending rates has been roughly between 50-100 bps, depending upon the size of the firm, said Manoj Nambiar, MD, Arohan Financial Services.

07-12-2018 TO 31-12-2018

Jet Airways climbs 3% on reports Etihad ...

Shares of Jet Airways rose as much as 3.59 per cent in the early trade on BSE, after news reports suggested Etihad Airways of Abu Dhabi has offered to guarantee loans worth $150 million that Jet Airways needs to keep the airline operational. “As an immediate measure, Etihad has agreed to stand as a guarantor for any fresh loans to be raised by Jet Airways and has engaged at least two foreign banks, one of them headquartered in UK, to syndicate the new loans,” Livemint reported citing sources. In addition, the struggling airline told its pilot union on Thursday it will clear all salary dues by April and has given them a schedule outlining when the payments will be made, according to a source familiar of the matter. Jet Airways told the union it will pay a quarter of the salary for October and 50 per cent during December. The remainder will be paid in January, along with 75 per cent of the salary for November, the source said. The remaining dues for November, salary for December and 25 per cent for January will be paid in February. In March, Jet will clear the remainder for January and February and thereafter all dues will be paid on time, the person added. In October, rating firm ICRA had downgraded Jet Airways’ debt to “B-“, saying the rating downgrade was due to delays in the implementation of the proposed liquidity initiatives by the management, which further aggravated its liquidity strain. ADVERTISING At 9:45 am, shares of Jet Airways were trading 1.82 per cent higher at 282.25 a piece on BSE, as compared to a 0.4 per cent rise in S&P BSE Sensex.

07-12-2018 TO 31-12-2018

Coal India, SAIL, Oil India, BHEL, Relia...

Shares of Coal India, Steel Authority of India (SAIL), Bharat Heavy Electricals (BHEL), Oil India, Tata Motors and Reliance Capital were among 20 stocks from the S&P BSE 500 index hitting their respective 52-week lows on the BSE in intra-day trade on Friday. Balkrishna Industries, Deepak Fertilisers & Chemicals, Asahi India Glass, HSIL, Jindal Stainless, Orient Cement, Navkar Corporation, Quess Corp, Sun Pharma Advanced Research (SPARC) and Sundaram Clayton too touched their respective 52-week lows today. Coal India hit a fresh 52-week low of Rs 238, falling 6% in three days after the government offloaded more than two percentage point stake in the company to an asset management company (AMC). The President of India, acting through the ministry of Coal, Government of India has sold 137.11 million equity shares representing 2.21% stake of Coal India to Reliance Nippon Life Asset Management, as the AMC of the CPSE ETF mutual fund scheme. Post transaction, the Government of India’s holding in Coal India declined to 72.92%. Reliance Capital was trading 2% lower at Rs 207, falling 11% in past three trading days on the BSE. Anil Ambani Group Company has interests in asset management and mutual funds; life, general and health insurance, commercial and home finance, equities and commodities broking, wealth management services, distribution of financial products, asset reconstruction and proprietary investments. SAIL has dipped 4% to Rs 50.80, falling 25% in past one month amid fears of demand slowdown. The steel prices witnessed temporary weakness due to demand disruption on account of Assembly Elections in four major states i.e. Chhattisgarh, Madhya Pradesh, Telangana, and Rajasthan. A slowdown in China's domestic steel demand also impacted the prices.

07-12-2018 TO 31-12-2018

India to import Iranian crude oil using ...

India has signed an agreement with Iran to pay for crude oil it imports from the Persian Gulf nation in rupees, sources in know of the development said. The memorandum of understanding (MoU) was signed following the US letting India and seven other nations to keep buying Iranian oil despite sanctions were reimposed on the Islamic state on November 5. Sources said Indian refiners will make rupee payments in a UCO Bank account of the National Iranian Oil Co (NIOC). ALSO READ: Opec seeks 'sufficient cut' to prop up plunging crude oil prices: Saudi Half of these funds would be earmarked for settling payments for exports of Indian goods to Iran, they said. Under US sanctions, India can export foodgrains, medicines and medical devices to Iran. ADVERTISING India had won the exemption after it agreed to cut imports and escrow payments. Under the 180-day exemption, India is allowed to import a maximum of 300,000 barrels a day of crude oil. This compares to an average daily import of about 560,000 barrels this year. India, which is the second biggest purchaser of Iranian oil after China, has since then restricted its monthly purchase to 1.25 million tonne or 15 million tonne in a year (300,000 barrels per day), down from 22.6 million tonne (452,000 barrels per day) bought in 2017-18 financial year, sources said. Two of its refiners -- Indian Oil Corp (IOC) and Mangalore Refinery and Petrochemicals Ltd (MRPL) -- bought 1.25 million tonnes of oil from Iran in November and December. ALSO READ: OPEC waiting for Russia before deciding how much oil production to cut India, the world's third biggest oil consumer, meets more than 80 per cent of its oil needs through imports. Iran is its third largest supplier after Iraq and Saudi Arabia and meets about 10 per cent of total needs. US President Donald Trump in May withdrew from the 2015 nuclear accord with Iran, re-imposing economic sanctions on the Persian Gulf nation. Some sanctions took effect from August 6, while those affecting the oil and banking sectors will start from November 5. Prior to this, India paid its third largest oil supplier in euros using European banking channels. These channels got blocked from November. During the first round of sanctions when EU joined the US in imposing financial restrictions, India initially used a Turkish bank to pay Iran for the oil it bought. Beginning February 2013, India paid 45 per cent of the oil import bill in rupees while keeping the remainder pending till the opening of payment routes. It began clearing the dues in 2015 when the restrictions were eased. Sources said New Delhi may export goods, including wheat, soybean meal and consumer products, to Iran during the exemption period. ALSO READ: Amid volatile oil prices, drilling companies look to just breaking even Iran was the India's second biggest supplier of crude oil after Saudi Arabia till 2010-11 but Western sanctions over the Persian Gulf nation's suspected nuclear programme relegated it to the seventh spot in the subsequent years. In 2013-14 and 2014-15, India bought 11 million tonne and 10.95 million tonne crude, respectively from Iran. Sourcing from Iran increased to 12.7 million tonne in 2015-16, giving it the sixth spot. In the following year, the Iranian supplies jumped to 27.2 million tonne to catapult it to the third spot. Iranian oil is a lucrative buy for refiners as the Persian Gulf nation provides 60 days of credit for purchases, terms not available from suppliers of substitute crudes -- Saudi Arabia, Kuwait, Iraq, Nigeria and the US.

07-12-2018 TO 31-12-2018

India's media consumption growth 9 times...

India’s media consumption has been growing at a compound annual rate (CAGR) of 9 per cent over the past six years. This is almost twice that of China and nine times that of the US, a study said. The report, from the Boston Consulting Group (BCG) and the Confederation of Indian Industries (CII), highlights significant changes in the media and entertainment (M&E) sector. "This is an unparalleled situation, even for an industry that has always been at the forefront of disruption. The industry will now need new answers, and will need these fast, even on the most fundamental things like talent pool to run our companies and methodology for measuring the impact we are delivering to advertisers on our platforms," said Sudhanshu Vats, chairman of CII's committee on M&E. Vats is also group chief executive at Viacom18 Media. The report points to multimodal growth across all major media, unlike any of the other key markets. At 4.6 hours of consumption per capita per day, India is behind China (6.4 hours) and US (11.8 hours), suggesting room for growth. Unlike in developed countries, this growth in India has been additive, not by cannibalising traditional media. Hence, traditional and new-age platforms of content distribution can co-exist, according to the report. “We have significant under-penetration of non-digital media. More than 95 per cent of TV households in India are single-screen. Hence, TV consumption happens in a family viewing setting. Literacy levels constrain print penetration and screen density is much lower than in China and the US. At the same time, there is a digital explosion. The number of broadband users has become two-fold (480 million across mobile and fixed) and the data consumption has become 10-fold (10 GB per user per month) over the past two to three years,” the report said.

07-12-2018 TO 31-12-2018

RBI delays discussing easing PCA rules d...

A crucial Reserve Bank of India (RBI) sub-committee did not discuss easing lending curbs facing 11 state-run banks on Thursday despite intense pressure from the nation's government to take a softer stance towards them, a source close to the discussions said. The source said that the central bank's board for financial supervision (BFS) only discussed the banks' September quarter results and did not address the so-called prompt corrective action (PCA) plan that they currently have to operate under. That plan which restricts their lending has been imposed in recent years after the 11 suffered from a surge in bad loans, capital depletion and mounting losses. The BFS is waiting for a detailed plan from RBI officials before it can submit recommendations to the central bank's board, which will decide on steps to ease any of the curbs facing individual banks, the source said. "The RBI did not indicate any date so far to complete and submit the detailed plan," this person added. The plan will include measures that the 11 banks, the government and the RBI will need to take to revive them, the source said. The lack of momentum is only likely to add to tensions between the government of Prime Minister Narendra Modi and the RBI at the next board meeting on Dec. 14. The BFS only meets once a month.

07-12-2018 TO 31-12-2018

Exporters still waiting to receive Rs 60...

Technical difficulties and unwilling state tax departments have led to exporters nationwide still waiting to receive an estimated Rs 60 billion worth of input tax credit refunds. While difficulties in the filing process continue to persist, many small and medium scale exporters are being denied tax refunds by state governments who say they are cash starved, according to apex exporters body, the Federation of Indian Exports Organisations (FIEO). Unpaid input tax credit constitutes the majority of refunds under the Integrated Goods and Services Tax part of the new tax regime. “Almost 40 per cent of all refund seeking exporters have not been able to submit their applications. This totals about 1,16,000 people across the country,” FIEO Director General Ajay Sahai said. Getting states to pay up their share of the levy has also been difficult. States such as Andhra Pradesh, Uttar Pradesh, Bihar and Chhattisgarh have said they are out of funds to pay exporters, FIEO said. “West Bengal and Uttar Pradesh are among the worst performers. the rate of acceptance of applications is a paltry 5 per cent in Maharashtra and only 10 per cent in Delhi,” an industry insider said. FIEO had asked the government to remove the requirement for physical verification of documents that it says add to the transaction time & cost of exporters. ADVERTISING Roundabout Process The industry’s pet peeve has been that the slow pace of government disbursal and procedural glitches in the GSTN portal make the process of claiming the refunds a strenuous one. However, commerce ministry officials claim that one of the main reasons behind the stuck refunds is that many traders have not been able to file in the correct manner. an exporter has to first file an application online after which his cash ledger is debited. he then has to take a physical printout of the transaction and file with the tax authorities. but the overburdened tax authorities are generally not willing to accept the same quickly. "this is because current rules stipulate that from the day of acceptance of the physical copy, within the next 7 days, at least 90 per cent of the tax refunds have to be released," Sahai added. Since many tax departments across the country have claimed they are running low on funds to pay back exporters, lower level officials have on many cases turned down legitimate claims, exporters allege. "We have received a demand for putting the ITC claims on a fully automatic route and are assessing it. we will incorporate all such suggestions before going for a further streamlining of the export refund mechanism in the GST," a commerce ministry official said.

07-12-2018 TO 31-12-2018

Total individual wealth held by Indians ...

The total wealth held by individuals in the country is expected to touch Rs 517.88 trillion by FY23, growing at an annual rate of 16.99 per cent, according to a report. Direct equity and mutual funds are expected to be the growth drivers of this northward trend, growing at a CAGR of 24.41 per cent and 21.04 per cent, respectively, over the next five years, the report named 'India Wealth Report 2018' by Karvy Private Wealth said. Karvy Private Wealth chief executive officer Abhijit Bhave said the coming five to seven years are expected to be the time for equity as an asset class and investors can possibly treble their wealth in equities. Individual wealth in the country grew by 14.02 per cent year-on-year to touch Rs 392 lakh crore in FY18, according to the report. This was achieved by a 17.42 per cent wealth growth in financial assets and a sober 9.24 per cent wealth growth in physical assets. ADVERTISING Direct equity captured the top spot where Indian individuals have their wealth overtaking fixed deposits. "Owing to the positive performance in equities, the traditional bank deposits grew at much lesser single digit growth rates," it said. Other notable assets which saw good growth include mutual funds and alternative investments. Astute investors realised the power of alternate investments and the wealth held by individuals in alternative investments grew by 33.46 per cent, the report said. The recent emerging market currency depreciation also saw a renewed interest in the international investments, which saw a jump of 25.83 per cent for FY18, it added. Among physical assets, real estate was the best performing asset class, growing at 10.35 per cent over the previous year.

07-12-2018 TO 31-12-2018

Cabinet okays Power Finance Corp's takeo...

The Cabinet Committee on Economic Affairs (CCEA) on Thursday gave an in-principle approval to the strategic sale of the Centre’s 52.63 per cent holding in Rural Electrification (REC) to the Power Finance Corporation (PFC), along with transfer of management control. The government has a total 58.3 per cent stake in REC, remainder of which is part of Bharat 22 ETF and CPSE ETF. The move will help the Centre meet its disinvestment target of Rs 800 billion for FY19. The government said the acquisition intends to achieve “integration across the power chain, obtain better synergies, create economies of scale, and have enhanced capability to support energy access and efficiency to finance the power sector. It may allow for cheaper fundraising, with an increase in bargaining power for the combined entity.”

07-12-2018 TO 31-12-2018