Editorial
Season’s greetings,
In this edition we have Mr. Ananthakrishna – Non Executive Chairman of Karnataka
Bank, discussing landscape of banking in the next 2-3 years with respect to ownership,
structure and business model especially the mid-sized banks. He believes that times
ahead are interesting with technology replacing conventional methods of banking. We
thank Mr. Ananthakrishna for his contribution to the newsletter.
For this month, APAS column discusses the drivers for consolidation, to suggest a
strong case for consolidation, the required preparation and various aspects which are
key ingredients for consolidation. Inefficiency in the system and over dependence on
banking are important drivers to consolidation.
The economic indicators showed mixed performance. The manufacturing PMI fell from
51.2% in September to 50.7% in October. Growth in core sectors remain unchanged.
India's Index of Industrial Production (IIP) growth moderated to 3.6% in September
2015 as compared with the revised growth of 6.3% in August 2015. PMI services and
composite PMI were respectively at 53.2% and 52.6% both rising from 51.3% and 51.5%
in the previous month. Inflation rose from 4.4% in September to 5% in October.
WPI inflation stood at -3.81% for the month of October, 2015 as compared to -4.54%
for the previous month.
RBI announced fifth Bi-monthly Monetary Policy Statement, 2015-16 keeping the rates
unchanged. RBI also announced the revised ECB Framework as a means to attract flow
of funds from abroad.
IRDA has released draft reinsurance regulations enabling Llyod’s UK to set up a branch
in India. Accordingly, Lloyds India would be subject to the same regulations as
applicable to Indian insurer and reinsurer. Draft amendment to the final regulations
issued for setting up of foreign reinsurance branches in India (other than Lloyd’s India)
is released.
On the infrastructure front we have, the news on report submitted by the Kelkar panel,
which was appointed by the government. The Kelkar committee was mainly set up to
look into the issues confronting the PPP sector.
We hope that this newsletter is insightful and we welcome your inputs and thoughts
and encourage you to share them with us.
Ashvin Parekh
Table of Contents
Guest Column
Mr. Ananthakrishna – Non-Executive
Chairman of Karnataka Bank Ltd.
APAS Team
Indian banking : Let’s prepare for
consolidation
Economy
IIP update – September
Inflation update - October
PMI update – October
Core Sector update – October
Banking Sector
Fifth Bi-monthly Monetary Policy
Statement, 2015-16
The revised ECB framework
Cybercrime Survey – KPMG Report
,2015
Insurance
Insurance Regulatory and
Development Authority of India
(Lloyd’s India) Regulations, 2015
Draft amendment to the final
regulations issued for setting up of
foreign reinsurance branches in
India (other than Lloyd’s India)
Infrastructure
Government appointed Kelkar
panel to review PPP framework,
submits report to FM Arun Jaitley
Capital Market Snapshot
Economic Data Snapshot
Draft regulations for Foreign Re-Insurers
Ashvin Parekh – Managing Partner, APAS
Indian Banks did well to survive the global crisis with
minimum shocks and continued to grow post 2008
until the cyclical downturn hit them in 2011. From
then on, banks have been rediscovering themselves
and trying to create a niche in an otherwise crowded
domain.
In this context an attempt has been made to give you
a flavour of what banking would be in the next 2-3
years with particular reference to mid-sized Bank and
the changes that will come about in the ownership,
structure and business models of banks, mainly driven
by an overwhelming technological advancement that
is seen around us.
In a nutshell, it will be an exciting period, where
conventional methods of banking will be replaced by
technology.
Ownership:
Today the government holds stakes ranging from 56
per cent to 84 per cent in 24 state run banks that
account for 70 per cent of the total outstanding loans.
A new school of thought is emerging on reducing the
Government ownership in these banks.
In line with the recommendations of Dr. P J Nayak
Committee that the Center should distance itself from
the governance of bank, the government has recently
announced the setting up of a 'Bank Board Bureau'
that will give way to a holding company to which the
Center will transfer its ownership of all these Banks.
This is expected to make raising of funds by the Banks
from the market easier and simultaneously trim the
Government stake in PSBs.
Banks will be needing more capital in the coming
years to meet Basel III requirements and will now
have to woo the investors on their own strengths.
They will have to undertake capital conservation by
re-balancing their asset portfolios to check growth in
risky assets and align their growth numbers with their
capacity to attract capital. We may see Balance Sheets
being trimmed in the case of not so efficient banks.
Mr. Ananthakrishna – Non-Executive Chairman of Karnataka Bank Ltd.
New Entrants:
We are today debating on the complexity of financial
systems. The universal banking model is getting
replaced by leaner models. New players like payment
banks and small finance banks have been licensed to
commence business. The 'bottom of the pyramid' has
lots of opportunities. The national strategy of
financial inclusion (PMJDY) implemented by the GOI
in coordination with banks followed by the social
security measures have helped opening around 170
million accounts. But with many of these accounts
presently having zero balance, there will be an
opportunity to convert such accounts into active ones
and bring them into the mainstream in terms of
usage. There are lots of opportunities here with
enough space to grow for the existing as well as new
players. Banks will be queuing up for strategic
alliances with these new entrants for both sourcing
and dispensing of funds.
Asset quality & recovery:
Performance statistics of banks for FY16 continues to
highlight the fact that there is a continued
deterioration in asset quality. Even though the
exposure of midsized banks to highly leveraged and
stressed corporates is capped (prudently) a rippling
effect on the smaller companies will slow down their
growth prospects and can impact the portfolio of the
midsized banks as well. A delinquent portfolio
requires higher capital and the midsized banks may
have to introduce a higher level of sophistication into
their credit appraisal, monitoring and recovery
systems with the sole aim of keeping the defaults at
bay, even as the Indian economy prepares to take off
in the next couple of quarters.
Liquidity constraints:
Along with the existing preempting ratios namely CRR
& SLR, two more ratios, the LCR and the NSFR will
promote short term resilience to potential liquidity
disruptions, ensuring that banks have sufficient HQLA
to survive a stress scenario lasting for 30 days.
Consequently, banks will have lesser lendable funds
and the impact on NIM is worth debating. Around 30
per cent of the NDTL in banks will yield a lower NIM
(may even turn negative) putting pressure on the
lending strategies. There are limited options of
HQLAs' as well.
Technology as an enabler:
Technology will continue to be a game changer. After
ATM, internet banking and mobile banking,
technology is evolving. 'Disruptive innovations' is the
latest buzzword. FinTech industry is growing offering
solutions in payment processing, mobile payments,
remittances, data analytics automation of process
etc. Paytm, Bill desk, Fino Pay Tech, Bank Bazar,
Lending Kart, M-swipe etc have emerged and as their
number grows, they will challenge the ancient
business models of banking. At this point of time,
studies show that the adoption curve for digital
banking is trailing the curve of on-line shopping. It will
be interesting to watch the face of banking as these
curves meet.
The demography of India is unique. With more than
65 per cent of the population below the age of 35
years, it is expected that by 2020, the average age of
an Indian will be only 29. Further, complexity is lent
by a great variation that occurs across this population
on social parameters such as income and education.
In the coming years, Banks will be spending most of
their time and money in attracting this young, vibrant
and less patient population.
Consolidation in the Indian Banking sector is being
considered as one of the reforms awaiting to be
taken by the government and the industry. Here is an
attempt to evaluate the impact of banking
consolidation on the long-term growth path. One
could think that M&A’s are likely to strengthen the
soundness and the financial stability of the sector for
three reasons.
Firstly, a tendency of migration towards efficiency
calls for consolidation through the rationalization of
the banking supply structure thereby strengthening
the profitability and competitiveness and therefore
the soundness of the banking sector. Analyzing the
performance of banking sector in the past, we can
observe that the banking activity has slowed down
over the past 3-5 years and the growth potential is
now questioned. Pace of deposit gathering and
credit growth has slowed down and the banks are
today focusing more on cleaning up of the balance
sheets and working on NPAs rather than expanding
the book. The immediate need for capital is adding
to the woes of the banking system which is struggling
with the bad loans. This is building the pressure in
the system and inefficient banks may have to be
coerced to merge with more efficient banks to better
face the completion and maintain profitability. The
need for migration towards efficiency will ultimately
drive the need for consolidation.
Secondly, the heavy dependence on banking system
for financial intermediation is adding to the
pressure of performance. The large size of projects
that India is talking of needs larger size banks to
finance it. The need for two or three world sized
banks in an economy that is poised to become one
among the five largest in the world is rather obvious
and clearly the only way Indian banks can expand
rapidly and reach global size is through
consolidation. There can be no two opinions about
the fact that no Indian bank is of a global size. State
Bank of India (SBI), the country’s largest lender, is
nowhere close to the world’s largest lenders. Bank
of America is almost six times its size. Another
problem of the Indian banking system is that after
SBI there is a huge drop in size. ICICI Bank, the
second-largest lender, is one-third the size of SBI in
terms of total assets.
Also, in a highly competitive environment, where
there is a constant battle to maintain the margins
and profitability levels to make up for the
inefficiencies, market driven consolidation could
constitute a response to counter the fragility of the
system resulting from competitive pressures. Further,
mergers were needed not just for achieving economies
of scale but also for survival of small banks, which would
find it increasingly difficult to operate with the entry of
new private sector banks, who being nimble footed have
a clear advantage over public sector banks in growing
their business inorganically. Among the public sector
banks, State Bank of India has been merging smaller
banks into itself. But there is still enough room for public
sector players to consolidate themselves.
The recent merger of Kotak Mahindra Bank and ING
Vysya Bank has brought back the focus on consolidation
in the Indian Banking Sector. The new private sector
banks could also examine old private sector banks
struggling to sustain the competition and market
pressure as possible targets. While consolidation in the
private sector are mainly driven by market forces and
decisions taken independently by the board of each
bank, the need for consolidation in public sector should
be envisaged by the government, regulators or the bank
boards.
Given the shareholding pattern of the public sector
banks and the recent performance of these banks,
forced mergers by the government cannot be ruled
out. Currently the lower M&A activity could be
attributed to the valuations being on the lower side
owing to the non-performing assets of banks. While
little transactional activity is seen in the first three
quarters of this year, we can expect some activity
towards end of this year and the coming quarters of
2016. Three to five years down the line, the
performance of the new entrants, i.e, the small
finance banks and payments banks could play a role
in adding pressure leading to some more
consolidation.
While consolidation is expected to bring in
efficiencies and improve performance on various
parameters including ROCE, CAR and EPS, due care
has to be given to cultural fit, geographical
alignment and business synergies, technology
integration and many other aspects.
- APAS TEAM
IIP (Index of Industrial Production) – September
India's Index of Industrial Production (IIP) growth
moderated to 3.6% in September 2015 over a year
ago compared with the revised growth of 6.3% in
August 2015.
Growth in manufacturing and mining output slowed
to 2.6% and 3%, respectively, while electricity
generation increased 11.4% in September compared
with the previous month.
As per Use-based classification, the growth rates in
September 2015 over September 2014 are 4.0% in
Basic goods, 10.5% in Capital goods and 2.1% in
Intermediate goods. The Consumer durables and
Consumer non-durables have recorded growth of
8.4% and (-) 4.6% respectively, with the overall
growth in Consumer goods being 0.6%.
Some of the important items showing high positive
growth during the current month include Gems and
Jewellery, Single Super Phosphate (SSP), Sugar
Machinery, H R Sheets, Polypropylene (incl. co-
polymer), Cable, Rubber Insulated, Generator/
Alternator, Propylene, Ethylene, Aluminium wires &
extrusions, Antibiotics & its Preparations and
Cigarettes.
Some of the other important items showing high
negative growth are: Polythene Bags including HDPE
& LDPE Bags, Woollen Carpets, Instant Food Mixes
(Ready to eat), Heat Exchangers, Ship Building &
Repairs, Leather Garments, Furnace Oil and Tractors
(complete).
2.7
3.84.2
6.4
3.6
May-15 Jun-15 Jul-15 Aug-15 Sep-15
IIP (%YoY)
Consumer Price Index – October
The all-India general CPI inflation increased to four-
months high of 5% in October 2015, compared with
4.4% reading in September 2015.
The corresponding provisional inflation rate for rural
area was 5.5% and urban area 4.3% in October 2015
as against 5% and 3.6% in September 2015. The
cumulative CPI inflation eased to 4.6% in April-
October 2015 compared with 6.9% in April-October
2014.
Among the CPI components, inflation of food and
beverages increased to 5.3% in October 2015 from
4.3% in September 2015 mainly contributing to the
rise in CPI inflation.
The inflation of the pan, tobacco & intoxicants group
rose to 9.5%. The inflation for housing increased to
4.9%, while that for miscellaneous items increased to
3.5% in October 2015. Within the miscellaneous
items, the inflation for transport & communication
rose to (-) 0.4%, and personal care to 4% in October
2015.
However, the inflation for clothing and footwear
eased to 5.6% in October 2015, while the CPI inflation
of fuel and light was flat at 5.3% in October 2015.
0
1
2
3
4
5
6
Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
CPI (%, YoY)
Wholesale Price Index - October
The annual rate of inflation, based on monthly WPI,
stood at -3.81% for the month of October, 2015 as
compared to -4.54% for the previous month.
An increase in WPI inflation was mainly driven by
higher inflation for food articles and products, and
mineral oils in October 2015. However, the WPI
inflation continued to be in the negative zone for the
twelfth straight month in October 2015.
Inflation of primary articles increased to (-) 0.4% from
(-) 2.1%, while that for fuel items rose to (-) 16.3% in
October 2015 from (-) 17.7% in September 2015. The
inflation for manufactured products was flat at (-)
1.7% in October 2015.
As per major commodity group-wise, inflation of food
grains, vegetables, fruits, spices, raw cotton, oilseeds,
crude petroleum, mineral oils, grain mill products,
sugar, edible oils, oil cakes, leather products and
chemical products rose in October 2015.
On the other hand, inflation of milk, fish, meat,
poultry chicken, coffee, flowers, iron ore, copper ore,
tea, plastic products, pencil ingot, long steel, flat steel,
and motor cycle declined in October 2015.
PMI update
Service PMI - October
Rising from 51.5 in September to 52.6 in October, the
seasonally adjusted Nikkei India Composite PMI
Output Index pointed to a stronger expansion in
private sector activity across the country that was the
joint-fastest since March. The latest improvement
was driven by services, as goods producers saw
growth of production wane.
Posting an eight-month high of 53.2 in October
(September: 51.3), the seasonally adjusted Nikkei
Services Business Activity Index indicated that output
across the sector rose at a faster rate. Activity growth
was noted in three of the six surveyed categories, led
by Post & Telecommunication.
Underpinning growth of services activity was a
quicker increase in new business inflows. Incoming
new work expanded at a solid pace that was the most
pronounced since February. October data indicated
that service sector employment was unchanged.
Approximately 98% of survey members reported no
change in payroll numbers since the preceding
month.
Manufacturers posted a third consecutive monthly
reduction in backlogs, signalling ongoing spare
capacity in the sector.
-6.00
-4.00
-2.00
0.00
Jun-15 Jul-15 Aug-15 Sep-15 Oct-15
WPI (%YOY,2014-15)
Manufacturing PMI - October
Posting a 22-month low of 50.7 in October
(September: 51.2), the seasonally adjusted Nikkei
India Manufacturing Purchasing Managers’ Index
(PMI)– a composite single-figure indicator of
manufacturing performance – was indicative of a
weaker improvement in business conditions across
the sector. Nonetheless, the PMI has recorded above
the crucial 50.0 threshold in each month since
November 2013.
Output growth eased in October on the back of a
slower increase in new orders. Rates of expansion in
both production and order books were the weakest
in their current 24-month sequences of growth, with
panellists reporting challenging economic conditions
and a reluctance among clients to commit to new
projects.
SSector data indicated that consumer goods was the
best performing category in October, while
improving operating conditions were also seen in the
intermediate goods sub-sector. Conversely, capital
goods firms saw business conditions deteriorate in
the latest month as output and new orders declined
for the first time since September 2014 and August
2014 respectively.
New business from abroad placed with Indian
manufacturers rose for the twenty-fifth straight
month in October. However, growth was little
changed from the marginal pace seen in September.
Core Sector Growth – October
The growth rate of eight core sectors industries
remained unchanged at 3.2 percent on account of a
sharp drop in crude oil and steel production.
The growth rate in September too was 3.2 percent.
The Eight Core Industries comprise nearly 38 % of the
weight of items included in the Index of Industrial
Production (IIP).
According to data released by the Ministry of
Commerce and Industry crude oil, natural gas,
refinery products and steel recorded negative growth
in October. Crude oil and steel production fell by 2.1
percent and 1.2 percent, respectively. Similarly,
output of natural gas and refinery products declined
1.8 percent and 4.4 percent, respectively.
In contrast, coal, fertilizer, cement and electricity
notched up a positive growth rate during the month
under review. Coal, fertilizer, cement and electricity
generation grew 6.3 percent, 16.2 percent, 11.7
percent and 8.8 percent, respectively.
Fifth Bi-monthly Monetary Policy Statement, 2015-16
The Reserve Bank of India announced Fifth Bi-
Monthly Monetary Policy Statement, 2015-16 on
1st December 2015.
On the basis of an assessment of the current and
evolving macroeconomic situation, it has decided
to:
Keep the policy repo rate under the liquidity
adjustment facility (LAF) unchanged at 6.75 per
cent
Keep the cash reserve ratio (CRR) of scheduled
banks unchanged at 4.0 per cent of net demand
and time liability (NDTL)
Continue to provide liquidity under overnight
repos at 0.25 per cent of bank-wise NDTL at the
LAF repo rate and liquidity under 14-day term
repos as well as longer term repos of up to 0.75
per cent of NDTL of the banking system through
auctions; and
Continue with daily variable rate repos and
reverse repos to smooth liquidity.
Consequently, the reverse repo rate under the LAF
is unchanged at 5.75 per cent, and the marginal
standing facility (MSF) rate and the Bank Rate at
7.75 per cent.
RBI indicated that since fourth bi-monthly statement
of September 2015, global growth continues to be
weak and global trade has slowed further with waning
demand and oversupply in several primary
commodities and industrial materials.
It added that on the domestic front, provisional
estimates of gross value added (GVA) at basic prices
for Q2 of 2015-16 rose on the back of acceleration in
industrial activity and other indicators suggest the
economy is in the early stages of a recovery, though
with some areas of continued weakness.
RBI said that value added in agriculture and allied
activities picked up on the modest increase in kharif
output and timely policy interventions to stem the
effects of the deficient south-west monsoon.
Further, RBI indicated that Net foreign direct
investment (FDI), external commercial borrowings and
accretions to nonresident deposits have risen in
relation to last year; however, portfolio outflows from
both debt and equity segments rose in November.
The sixth bi-monthly monetary policy statement will
be announced on Tuesday, February 2, 2016.
RBI widens pool of international investors eligible to lend to Indian companies
The Reserve Bank of India (RBI) widened the pool of
international investors eligible to lend to Indian
companies, setting the stage for lower cost of funds
and making more companies eligible to borrow in US
dollars. It eased repayment options too, paving way
for more funds flow into infrastructure building.
A draft of the proposed ECB framework was placed in
the public domain on September 23, 2015 for wider
consultation. Based on the responses received and, in
consultation with the Government of India, a revised
ECB framework based on the following overarching
principles has been finalized. Accordingly, a circular
containing the revised ECB Framework has been
released.
It liberalized foreign currency borrowing norms for
Indian companies. RBI allowed pension funds,
insurance funds and sovereign wealth funds to
become potential lenders to Indian companies. It also
said companies will have fewer restrictions on end use
and extended term for loans. The new framework,
which will be reviewed in one year, is likely to enhance
the capacity of Indian borrowers to raise dollar funds.
Companies have been allowed to raise rupee funds
from abroad.
"The framework for ECB, as a means to attract flow of
funds from abroad will continue to be a major tool to
calibrate our policy towards capital account
management in response to evolving macroeconomic
situation," RBI said in a notification.
The Reserve Bank of India has issued the operational
guidelines for the revised framework which will come
into force with effect from the date of publication of
the relative Regulation framed under FEMA, 1999 in
the official gazette. These Regulations are being issued
separately.
A transitional period up to March 31, 2016 has been
allowed to ECBs contracted till commencement of the
revised framework and in respect of special schemes
which are to end by March 31, 2016.
Financial services and Insurance firms are most vulnerable to cyber attacks
The financial services and insurance firms are most
vulnerable to cybercrime, followed by
pharmaceuticals, oil and gas, and the IT and ITES
sectors, according to the KPMG’s Cybercrime Survey
Report 2015.
The survey had over 250 participants, including chief
information officers, chief information security
officers, chief audit executives, chief risk officers and
chief operating officers from the aforesaid industries
such as oil and gas, IT, manufacturing, telecom,
infrastructure and government, pharmaceutical and
chemicals, among others.
According to media reports, key findings of the
survey include –
72% of the respondents said their firm had faced
some sort of a cyber- attack in the past year
63% said cybercrime had caused their firms
financial losses
64% said directors and managers are the most
vulnerable to cybercrime
74% said their firm had no detailed cybercrime
risk assessment
78% said their firm had no response plan for
cyber incidents
61% said their companies lacked tools to prevent
data leaks
62% said their firms did not monitor and log
critical systems
58% said expenditure on cyber defense
comprises less than 5% of their firms total IT
spend
According to the report, “cyber criminals have
understood the potential for illicit financial gain and
have begun executing highly sophisticated
technology-driven frauds”.
The report recommends, “Organizations need to
improve their detection and strengthen their
defences against cyber incidents. Cyber forensics is
becoming a critical component of fraud
investigations.”
Insurance Regulatory and Development Authority of India (Lloyd’s India) Regulations, 2015.
Following the passage of the Insurance Laws
(Amendment) Act, 2015 where a provision for Lloyds
to enter India as a branch has been made,
IRDAI notified a fresh set of draft regulations for this
category of insurers called the “Insurance Regulatory
and Development Authority of India (Lloyd’s India)
Regulations, 2015”. Final regulations that would be
subsequently released would enable Lloyd’s UK to
make an application for entering India as a
reinsurance branch.
IRDAI said Lloyds India should ensure the Lloyd’s
branch and the constituents are to be housed in one
location for the conduct of reinsurance business.
It said the syndicates of Lloyds India would be subject
to the same reinsurance regulations as applicable to
Indian insurer and reinsurer.
“In case Lloyds India is granted certificate of
registration, then i) each syndicate shall maintain a
minimum retention of 50 per cent of the Indian
reinsurance business; ii) a syndicate who fails to keep
the minimum retention limit of 50 percent shall
obtain prior approval of the Authority (IRDAI) to
transact business,” said the draft. The constituents of
Lloyds India include members of Lloyds, UK; service
companies of Lloyds India; and syndicates of Lloyds
India.
The regulator said the appointment, re-appointment,
removal and managerial remuneration of the chief
executive officer of Lloyds India would need IRDAI’s
approval. According to the exposure draft, it also has
to retain the core activities such as underwriting,
claims settlement and regulatory compliances.
However, it can outsource functions such as back-
office servicing, investment, information technology,
accounts, marketing, human resources,
administration and publicity.
Draft amendment to the final regulations issued for setting up of foreign reinsurance branches in India (other than Lloyd’s India)
IRDAI has released an Exposure draft amending the
Regulation 28(9) of IRDAI’s (Registration and
Operations of Branch offices of Foreign Reinsurers
other than Lloyd’s) Regulations, 2015.
The final regulations on Registration and Operations
of Branch offices of Foreign Reinsurers other than
Lloyd’s) Regulations, 2015 were released on 19th Oct,
2015 after two drafts on which comments were
received.
However, on 24th November, 2015, based on the
meeting at the authority which included a nominee
of the government, the authority has issued a draft
amendment to the final regulations with a view that
– (a) Indian Insurers should not be kept on par with
the Indian Reinsurers and Branch Offices of Foreign
Reinsurers as they undertake direct insurance
business and do very little re-insurance business
and(b) GIC being an Indian reinsurer should enjoy
preference in the order of cessions by Indian insurers.
In light of the above, IRDAI proposed that the Right of
First Refusal (ROFR) clause in the final regulations to
be amended to reflect the following:
Order of preference for cessions by Indian Insurers –
Every Indian Insurer, in order of preference, shall
offer for participation in its facultative and treaty
surpluses;
(a) To the Indian re-insurer and then to those
granted certificate of registration as per regulation 4
(a) of these Regulations.
(b) To those granted certificate of registration as per
regulation 4 (b) of these regulations,
(c) To the offices of foreign reinsurers set up in
special economic zone, only after having offered to
all entities in (a) and (b) above
(d) The balance, if any, may then be offered to Indian
Insurers and foreign reinsurers.
All the stake holders are requested to offer their
comments on this amendment by 15th December,
2015.
Government-appointed Kelkar panel to review PPP framework, submits report to FM Arun Jaitley
The government appointed Kelkar panel to review
the public-private-partnership (PPP) framework has
submitted its “Report on Revisiting & Revitalizing the
PPP Model of Infrastructure Development”
to finance minister Arun Jaitley, setting the stage for
a major revamp of policy to attract private
investment in infrastructure.
As per the media reports, economic Affairs Secretary
Shaktikanta Das said the government will consider
the committee’s recommendations soon.
The Kelkar committee was set up to look into the
issues confronting the PPP sector. As per the media
reports, over the last few years, PPP sector, PPP
projects which were doing well for quite some time
have run into various kinds of problems. The PPP
projects faced a host of problems relating to
contractual issues, financing and implementation
which the committee was expected to address. The
committee was requested to look into all these
aspects. The committee has held detailed
deliberation with various stakeholders and other
experts. We will go through the report and the
government will take decisions on the
recommendations as early as possible.
Mr. Jaitley in his last budget speech had said that PPP
infrastructure development model has to be revisited
and revitalized.
Following the announcement, a committee of 10
members under the chairmanship of Kelkar, currently
chairman of Institute of Public Finance & Policy, was
set up.
The terms of reference of the committee included
measures to improve capacity building in
government for effective implementation of PPP
projects, review of experience of PPP policy, analysis
of risks involved in such projects in different sectors
and existing framework of sharing of such risks
between project developer and the government.
Also, the committee was to propose design
modifications to the contractual arrangements of the
PPP projects based on the above and as per best
practices and institutional context. The Government
will examine the Report and take appropriate action.
Sources: National Stock Exchange
Sources: Bombay Stock Exchange Sources: APAS Business Research Team
Sources: APAS Business Research Team
Sources: APAS Business Research Team
In November, the Indian rupee dipped to its lowest
level against the US dollar in over two years at
66.88.
The data with stock exchanges showed that the FPIs
sold stocks worth Rs.1,492.84 crore in the period
under review ended November 27.
The FPIs have taken out Rs.23,352 crore during the
period August-September. Till date in November,
the foreign investors have off-loaded stocks worth
Rs.5,809 crore.
8061
7955 77837838 7832
7935
2-N
ov-
15
4-N
ov-
15
6-N
ov-
15
8-N
ov-
15
10
-No
v-1
5
12
-No
v-1
5
14
-No
v-1
5
16
-No
v-1
5
18
-No
v-1
5
20
-No
v-1
5
22
-No
v-1
5
24
-No
v-1
5
26
-No
v-1
5
28
-No
v-1
5
30
-No
v-1
5
CNX Nifty (Nov-2015)
26591
26265
25867
25483
25868 25959
2-N
ov-
15
4-N
ov-
15
6-N
ov-
15
8-N
ov-
15
10
-No
v-1
5
12
-No
v-1
5
14
-No
v-1
5
16
-No
v-1
5
18
-No
v-1
5
20
-No
v-1
5
22
-No
v-1
5
24
-No
v-1
5
26
-No
v-1
5
28
-No
v-1
5
30
-No
v-1
5
BSE Sensex (Nov-2015)
19.56
19.4717.88
16.25 16.43
0.00
5.00
10.00
15.00
20.00
25.00
Indian VIX (Nov-2015)
65.57
66.14 66.06 66.03 66.06
66.5766.91
66.46
64.50
65.00
65.50
66.00
66.50
67.00
67.50
$/₹ (Nov-2015)
7.65
7.687.73
7.65
7.65
7.67
7.77
7.79
7.55
7.60
7.65
7.70
7.75
7.80
7.85
GIND10Y (Nov-2015)
* The Economist poll or Economist Intelligence Unit estimate/forecast; ^ 5 year yield
Countries GDP CPI Current Account
Balance Budget Balance
Interest Rates
Latest 2015* 2016* Latest 2015* % of GDP, 2015* % of GDP,
2015* (10YGov), Latest
Brazil -2.6 Q2 -2.8 -1.2 9.9 Oct 8.9 -3.8 -6.0 15.5
Russia -4.1 Q3 -3.9 -0.4 15.6 Oct 15.0 5.5 -2.8 9.66
India 7.0 Q2 7.3 7.6 5.0 Oct 5.0 -1.1 -3.8 7.70
China 6.9 Q3 6.9 6.4 1.3 Oct 1.6 3.1 -2.7 2.99^
S Africa 1.0 Q3 1.5 1.8 4.7 Oct 4.7 -4.3 -3.8 8.46
USA 2.2 Q3 2.4 2.5 0.2 Oct 0.3 -2.5 -2.6 2.23
Canada 1.0 Q2 1.2 1.9 1.0 Oct 1.3 -3.1 -1.8 1.59
Mexico 2.6 Q3 2.3 2.9 2.5 Oct 2.9 -2.7 -3.4 6.00
Euro Area 1.6 Q3 1.5 1.7 0.1 Oct 0.1 2.8 -2.1 0.47
Germany 1.7 Q3 1.6 1.8 0.3 Oct 0.2 7.8 0.7 0.47
Britain 2.3 Q3 2.5 2.3 -0.1 Oct 0.1 -4.6 -4.4 1.93
Australia 2.0 Q2 2.3 2.5 1.5 Q3 1.7 -3.8 -2.4 2.88
Indonesia 4.7 Q3 4.7 5.0 6.2 Oct 6.4 -2.5 -2.0 8.63
Malaysia 4.7 Q3 5.4 6.1 2.5 Oct 2.5 2.5 -4.0 4.18
Singapore 1.9 Q3 2.9 3.0 -0.8 Oct 0.2 21.2 -0.7 2.51
S Korea 2.7 Q3 2.4 2.7 0.9 Oct 0.8 8.0 0.3 2.25
We are growing our client base and service activities. We invite applications from candidates with business
and transaction advisory services experience as well as from risk management and research and learning
backgrounds. Candidates with banking, insurance and capital markets companies may also apply.
Ideally candidates with 6 – 10 years of relevant experience, in the age group of 29 – 34 years will meet the
requirement. Only candidates with Post Graduate qualifications in Finance and / or Chartered Accountants
may apply. We do prefer management students with engineering background.
Kindly email us your application on [email protected].
Disclaimer – This informative newsletter has been sent only for reader’s reference. Contents have
been prepared on the basis of publicly available information which has not been independently
verified by APAS. Neither APAS, nor any person associated with it, makes any expressed or implied
representation or warranty with respect to the sufficiency, accuracy, completeness or
reasonableness of the information set forth in this note, nor do they owe any duty of care to any
recipient of this note in relation to this newsletter.
Contact Us: 022-6789 1000
www.ap-as.com
Top Related