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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).

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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.

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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.

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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.

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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 info@ap-as.com.

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.

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