FM says no rolling back of reforms, more coming soon
BS REPORTER
New Delhi, 17 September
After it announced a slew of FDI measures, the UPA government is set
to announce further reforms in capital markets, taxation,
disinvestment and infrastructure in a couple of weeks. This was
indicated by Finance Minister PChidambaram today.
"There are issues with Sebi, Department of Revenue, Department of
Disinvestment... Hoping that we will have Cabinet and Cabinet
Committee on Economic Affairs meetings this Thursday and next Thursday
and hope a decision can be taken," Chidambaram said here.
He ruled out a rollback of recent decisions on fuel prices and FDI
reforms and did not see any threat to the government. He said the much
awaited Kelkar committee report on fiscal consolidation would be put
in the public domain by the weekend. He said slipping on the fiscal
front would not be allowed.
On manufacturing, Chidambaram said once confidence returned that the
goods produced would be sold, manufacturing and industrial production
would pick up. He said if an agreement was reached with state
governments on a new goods and services tax regime, other reforms
would follow quickly. On the new direct taxes code, he said it needed
to be studied carefully.
Chidambaram expressed keenness to accommodate the views of
Parliament's standing committee on the banking, insurance and pension
Bills to get them passed.
BACKPAGE, P14
FM hints atrate cutin October
TSI, 1
COMPASS: Tail risks to economy ease ON THE FM'S MIND
FISCALDEFICIT: There'll be some slippage, lucky if we can achieve
Budget estimate of 5.1%
BORROWING: Like to borrow less but immediate concern is that we don't
borrow more
DISINVESTMENT: Hope the market is favourable and govt can divest by year-end
CAG: The govt is not in the business of coal or spectrum trading
COAL: If there are irregularities, we'll deallocate
VODAFONE, RETRO AMENDMENTS: Reversing decisions should not be done in haste
FM hints at rate cut in Oct
BS REPORTER
New Delhi, 17 September
Finance Minister P Chidambaram today exuded confidence that the
Reserve Bank would announce far bigger steps to boost growth in its
next policy review on October 30. He termed the cash reserve ratio
(CRR) cut as a small but welcome measure.
Chidambaram said the government would announce more policy steps in
the next 45 days to revive growth, after the Cabinet last week decided
to roll out major foreign direct investment (FDI) reforms. "It (the
CRR cut) is a small step," he told reporters after the RBI cut the
requirement for banks to hold mandatory cash with the central bank by
0.25 percentage points.
However, the finance minister said the measure was welcome and he was
not disappointed with RBI policy. "The response of RBI on October 30
will be far more supportive of growth," he added.
As the government took a slew of steps to liberalise foreign direct
investment in single and multi-brand retail and clarified on FDI in
power trading exchanges, the minister said more measures were likely
in the next month and a half.
"I am very confident that between now and October 30, the government
is expected to take a number of additional policy measures and also
lay out a plan of fiscal consolidation," Chidambaram said. At the full
Planning Commission meeting on Saturday, Chidambaram had mooted the
idea of a national investment board headed by the Prime Minister to
fast-track infrastructure projects costing more than ~1,000 crore.
"Once a decision is taken by the board, no ministry or department or
authority should be able to interfere," he had said.
Welcomes CRR cut as good small stepforward FM'S FORMULA
|More steps by the RBIto support growth in the October 30 review
|Additional policy steps by the govt by October 30 |Anational
investment board to fast-track large infrastructure projects
Sebi for making Asba mandatory in phased manner
SAMIE MODAK
Mumbai, 17 September
Capital market regulator Securities and Exchange Board of India (Sebi)
has proposed to make application supported by blocked amount (Asba)
compulsory for retail investors.
In order to bring down the time taken between closure of an initial
public offering (IPO) and listing of a security, Sebi wants to make
Asba complusory for retail investors in a "phased manner" and wants to
shift from the current IPO distribution model of "syndicate Asba" to
"bank Asba".
The regulator has set an objective of bringing down the IPO timeline
from the current 12 days to five days.
Introduced by Sebi in 2008, the Asba facility allows investors to
apply for public offerings, with the money moving out of the bank
account only after allocation of shares. In 2011, Sebi made Asba
complusory for non-retail investors—quailifed institutional buyers and
high net worth individuals. Meanwhile, retail investors, at present,
can apply either by way of Asba or through the traditional method of
cheque payment.
A shift to bank Asba distribution model would be significant for the
markets as it will render brokers redundant in the IPO ecosystem.
"In the near term, a shift from the present syndicate ASBA to a bank
Asba, together with making Asba mandatory for all primary issue
payments, would bring significant efficiencies in the time taken to
close issues, and extend the geographical and retail reach of the
market," states a Sebi board meeting agenda paper.
Under syndicate Asba, investor applications are collected by a
syndicate of brokers and banks. Brokers collect applications and send
these to specified bank branches with payment authorisations. Bank
Asba is a process wherein investors give their applications directly
to banks.
Currently, all public offerings are largely distributed through a
syndicate network comprising various brokers and sub-brokers with
payments done through either cheques or Asba mechanism.
Sebi's decision to move to bank Asba is likely to miff brokers as the
commissions they get could take a hit.
"It's the broker who draws investors to IPOs. If the system moves
towards bank Asba, brokers won't provide services like filling up the
IPO forms and marketing public issue to investors. Banks are not
geared up to market equity products like IPOs," said a broker in
charge of IPO distribution with an investment bank.
Sebi believes the bank Asba model would make the IPO process less
complex and, therefore, less fraught with operational risk.
The regulator, however, acknowledges that moving away from syndicate
Asba could be tricky. "The problems of risk management and of
distributor incentives would need handling, and are more complex than
in secondary markets," said the agenda paper.
Sebi also plans to enhance the reach of Asba by mandating all Asba
banks to provide the facility in all their branches. This, too, will
be implemented in a phased manner so that banks get time to upgrade
their infrastructure.
The regulator mulls shifting from the current IPO distribution model
of syndicate ASBA to bankASBA
CREDIT MONITORING
Know your report before applying for a loan
NEHAPANDEYDEORAS
In last one year, Harshala Chandorkar, senior VP (consumer relations)
at Credit Information Bureau (Cibil), says the organisation has
received thousands of requests for credit reports from individuals.
Earlier, Cibil used to provide credit reports only to financial
institutions like banks, housing finance companies (HFCs) and
non-banking finance companies (NBFCs). Since last year Cibil has
started providing these to individuals as well.
A credit report is an accumulation of all your loan accounts, mix of
secured and unsecured loan accounts, loan repayment history,
delinquencies, if any and so on.
Chandorkar says most requests Cibil gets are from those who want to
apply for some kind of loan. Credit reports have data for the last 36
months. Even one wrong information can spoil your creditworthiness and
lenders are not the only one looking at your credit history. Others
like telecommunication companies, insurers, brokerages and potential
employers also seek your credit report.
No, it isnt compulsory to get a credit report before taking a loan.
But, it always helps. "A credit report and score is an important tool
used by lenders to evaluate your loan application. It is, therefore,
important for individuals to check their credit report before applying
for a loan, so that it is viewed favourably by lenders. If your credit
score is low or if the credit report shows defaults and delayed
payments you can take corrective actions to improve it before applying
for a loan," she says. It is advised you review your report at least
quarterly.
Here's some more:
Correcting errors: Credit reports are updated monthly. Still, there
can be errors. Therefore, check your copy meticulously and do not
assume the report is correct. "The biggest advantage of getting your
credit report is that discrepancies, if any, can be rectified," says
Adhil Shetty of BankBazaar.com. Say, you were issued a credit card,
which you did not use but the bank has been billing you on it. Such
bills will show as delinquencies on your credit report. Or, the banks
has not updated the payment settlement.
If you find any incorrect information, Chandorkar says you can report
it to Cibil, who in turn will take it up with the bank and update the
correct data. However, bankers say you will need to inform the same to
them yourself. You need to return the unused card/loan documents and
give the bank in writing that you don't need it. This can take 15-20
days, say bankers. Do keep a copy of the application, as many times
banks lose it and can come bank asking for the dues.
Monitoring credit: Apart from finding out whether or not you will get
a loan for a car or house, credit reports helps keep a track of your
unpaid debt(s), if any. Many a times, there are outstanding dues that
you have forgotten about and these show on your report.
For instance, a loan from a cooperative bank that you could not repay.
Or, you refused to pay additional charges on a credit card bill for
any reason. These show as defaults on the credit report. A credit
report will give such information beforehand.
Adding missing account(s):
Says a public sector banker, "Credit worthiness is not always about
what shows on your credit report. The report may not show all your
loan accounts. The borrower should take the initiative of informing
the credit bureau about missing accounts. That way, banks will know
your actual monthly outgo towards loan repayment and help you with as
much credit as your pocket can take. If the lender finds out that your
report is incomplete it can deny you a loan for non-disclosure of
vital information."
Preventing identity thefts:
Reviewing your credit report regularly also helps you avert identity
theft. That is, when somebody uses your personal information (name,
credit card number) to commit a fraud. Identity thieves may use your
details to open a new credit account and if the account turns
delinquent, your creditworthiness is spoilt. These mainly occur due to
computer thefts, loss of data backups and compromised information
systems.
A lower score does not mean you wont get a loan at all. At the same
time, a high score does not mean you can negotiate with the bank.
A credit report is an accumulation of all yourloan accounts, loan
repayment history, and delinquencies, if any
PHOTO: THINKSTOCK
Reforms push change in rupee fortunes
BS REPORTER
Mumbai, 17 September
Following the recent reforms announced by the government and
expectations of calming risks globally, the market is expecting the
Indian currency to strengthen from current levels against the dollar.
HSBC on Monday revised the forecast of the rupee against the dollar to
~52 from its earlier forecast of ~57 by December. In fact, HSBC has
also revised the forecast of the rupee to ~49 by September 2013 from
its previous forecast of ~57.
"The time has now come to be more constructive on the currency,
especially in light of the Fed's latest QE (quantitative easing) and
calming tail risks in the Euro zone. Additional reforms may be
forthcoming, which in turn could quell concerns over a possible
downgrade for the sovereign. If so, we would likely see additional
room for the rupee to strengthen," said Paul Mackel, Leif Eskesen,
Perry Kojodjojo and Prithviraj Srinivas of HSBC Global Research in a
report today.
The rupee opened at ~53.75 per dollar today and strengthened to ~53.66
on bullish equity markets. Market sentiments got aboost on
expectations that the Reserve Bank of India (RBI) may cut key policy
rates in the midquarter monetary policy review. However, hopes were
dashed as RBI kept the repo rate and reverse repo rate unchanged due
to which the rupee closed at ~54.01 against the greenback.
But overall bearish sentiments for the rupee has been diluted
significantly due to the recent government measures, said J Moses
Harding, head, asset liability committee and economy and research,
IndusInd Bank.
--
.
-
CS A RENGARAJAN,, B.Com ,FCS, LLB, PGDBM
Company Secretary, Chennai
email csarengarajan@gmail.com
http://www.csarengarajan.blogspot.com
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mobile 093810 11200
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