Current Banking and Financial News

Insolvency code to keep out wilful defaulters (BL, BS, FE 23.11.17)

The Cabinet approved the promulgation of an Ordinance to amend the Insolvency and Bankruptcy Code, which is expected to bar wilful defaulters from buying back their own stressed assets. Sources said the proposed Ordinance is expected to streamline the selection of buyers and stop wilful defaulters from buying back stressed assets they previously owned. Accordingly, a new section will be inserted to list persons ineligible to be ‘Resolution Applicants’. These would include wilful defaulters, undischarged insolvents, disqualified directors, persons who have indulged in preferential transactions or under-valued transactions or fraudulent transactions as determined by the adjudicating authority, and persons who are promoters or in the control of such persons whose account is classified as non-performing assets beyond a prescribed duration. The Ordinance would also prescribe basic eligibility criteria for resolution applications, depending on the size of the business. Additionally, it is understood to provide a robust due diligence framework to help the Committee of Creditors assess creditworthiness, credibility and other parameters. The Ordinance is expected to take effect from Thursday. “The amendments will be tabled in Parliament in the next session,” Jaitley said. The Code was passed by Parliament last year and became operational from December 2016. However, concerns had emerged that promoters could buy back the stressed assets.

Citi hit with $6.5 mn in US fines over student loans (BL 23.11.17)

The US Consumer Financial Protection Bureau (CFPB) said it had ordered Citibank to pay $6.5 million for allegedly harming borrowers with student loan servicing failures. The agency said it ordered Citibank to end illegal loan practices and pay $3.75 million in redress to consumers and a $2.75 million civil penalty. Mark Costiglio, a spokesman for Citi, said, “We are pleased to resolve this matter.” Student debt can carry tax benefits but Citi failed to guide customers through paperwork that could lead to tax savings, according to the agency. Some clients were also made to pay late fees and interest when they were eligible to defer such loan payments, said the agency. Citi shed $32 billion of its student loan investments in 2010, selling them to Discover Financial Services. Citibank has roughly $1.4 trillion in assets, according to the Federal Reserve.

UBI gets SEBI approval for Rs 1,000-cr equity issue via QIP (BS 23.11.17)

United Bank of India said it has received market regulator SEBI's approval for issue of equity shares worth Rs 1,000 Cr by way of institutional placement. The Kolkata-headquartered bank had in January informed the bourses it planned to raise up to Rs 1,500 Cr through qualified institutional placement (QIP), rights or public issue. The lender had raised Rs 127.49 Cr through sale of shares to qualified institutional investors in May. The bank approved allotting over 5.49 Cr shares to qualified institutional buyers at issue price of Rs 23.22 per share, it had said in a regulatory filing. UBI had earlier said it plans to raise up to Rs 500 Cr of Basel III-compliant listed additional tier-I debt instruments in the nature of bonds. The lender would seek approval for this amount from its board, which is scheduled to meet on December 6. At the same meeting, the bank also proposes to get the board's nod for the issue of 5 Cr equity shares in the form of ESOPs/ESPs in one or more tranches.

Housing finance market overcrowded: Arundhati Bhattacharya (BS 23.11.17)

The number of housing finance companies has not only grown to more than 70 from 55 in 2012-13, but there are 80 more who are in the middle of starting their operations, said Arundhati Bhattacharya, former chairman of SBI, while flagging this development as a concern. “The growth rate of existing housing finance companies’ businesses have already come down. So don’t know how many more the market can accommodate,” she said. According to data shared by her, major cities having got a record inventory — the highest being 65 months in Noida and the lowest being 29 months in Hyderabad — highlighting the slump in demand. But the sector cannot be ignored by the government as a recent study by the National Council of Applied Economic Research revealed every Rs 1-lakh investment in housing created 2.6 jobs. The government’s effort to create dedicated freight corridors and highways would increase employment opportunities and hence the demand for houses along these corridors would grow. “The real estate sector has several challenges but at the same it is critical to fuel growth in the country. High cost of land and inappropriate land parcels in cities are a major issue, besides high taxes and stamp duty,” she said, adding lack of rapid transport in cities as another major concern. There are several sectors that are related to real estate: Cement, steel, paints, tiles, wood panels, lightings, pipes, adhesives and construction chemicals. So the growth of real estate sector is critical to the overall economy.

Ordinance to tighten IBC may favour new investors to buy stressed assets (FE 23.11.17)

The ordinance for making changes to the Insolvency and Bankruptcy Code (IBC) is likely to give investors with a well-proven track record a better chance to buy the stressed assets, VG Kannan, CEO of Indian Banks’ Association, said. It is also likely to act as a deterrent to future promoters of businesses from defaulting wilfully, he added. “Under this amendment, the outside buyer will have a very good chance. New promoters will also know that this is the scenario, and down the line the cases of defaults will come down,” Kannan said. According to sources, the Union Cabinet has cleared the ordinance aimed at preventing promoters who are wilful defaulters or have a history of fraud from buying their companies. “I think that this is good step forward and some of the other changes that needs to be done will also happen,” Kannan said, adding that for bankers, the viability of the resolution proposals are top priority. He also said that it is clear that through this ordinance the authorities are trying to identify promoters who have committed a fraud or have been found to be willful defaulters. “If there is no evidence that such things have happened, the existing promoters can bid for their projects. The ordinance is providing for genuine defaulters to come back and bid,” he added. Seshagiri Rao, joint MD and group chief financial officer, JSW Steel said that in addition to this amendment, a uniform bidding and evaluation criterion is a must for the IBC process. “The objective of the IBC is to maximise the value for the creditors. If this is the objective, then there are certain amendments that need to be made to prevent the value from getting eroded, because of lack of amendment to other acts such as income tax or Sebi listing requirement, competition law, or stamp act. These require to be re-looked at to ensure that while the value to the creditors is maximised, there won’t be any additional cost for prospective bidders.”

Andhra Bank has launched a new scheme for self-help groups (SHGs) to encourage

 

April-October trade deficit soars 60%: DBS report (BL, BS 23.11.17)

The trade deficit has ballooned to $88 billion between April and October, up 60% from the comparable period a year ago due to weak exports and a sharp rise in imports, says a report. “The problem is two-fold; weak export growth of 9% year-on-year, coupled with a sharp 23% rise in imports during the April-October of this fiscal year, taking the overall trade deficit to $88 billion, which is up 60% year-on-year,” Singaporean brokerage DBS said in a report. But the report expects exports to pick up once the GST-driven distortions subsided, but it warned that the traditional product mix will hinder its ability to participate in the ongoing trade upturn. The composition of the export basket, even if well-diversified, has prevented the economy from benefiting from the upturn in the regional export cycle this year, it noted. The upturn is largely led by electronic shipments, including semi-conductors and consumer electronics, which makes up less than a tenth of exports. Instead, two-thirds of the basket comprises traditional product groups, including gems and jewellery, pharma, textiles, engineering goods, food, and fuel. Further, GST-related uncertainty and the effect of duty-drawback have added to the headwinds, the report noted. Imports, on the other hand, will be influenced by the rising crude prices, even as supply-chain disruptions ease in the second half, it added. Oil imports rose by 20% till date from last financial year’s 12%. Demand for other commodities also remained strong, the report noted. “Looking ahead, we expect the lift in imports from GST-related uncertainties to be ironed out by policy fine-tuning and relief measures,” the report said. But the report warns that lower exports and higher imports spells trouble for the current account deficit.

India's prosperity level lowest among peers: S&P (BS 23.11.17)

Standard & Poor’s (S&P) has noted that India has the lowest level of prosperity among all investment-grade economies, explaining why it has not upgraded its ratings. “Of all investment-grade sovereigns, India displays by far the lowest level of prosperity. At about $2,000 per capita, its income level is a third lower than Morocco’s and the Philippines’,” S&P stated. Last week, Moody’s Investors Service had upgraded India’s rating by a notch to two grades above junk, citing the many reforms undertaken by the Narendra Modi government. But the analysis by S&P has been in sharp contrast to that of Moody’s, which said that while India’s general government debt was higher than the median debt level of countries ranked similarly, “the impact of the high debt load is already mitigated somewhat by the large pool of private savings available to finance government debt.” S&P had assigned India the lowest investment grade with a stable outlook. However, it acknowledged that economic growth in India has been strong. “Fast economic growth has been the reason why economic support for this rating (lowest investment grade) has been as strong as it is. Without this economic growth story, we would have assessed economic support at a weaker level and the rating would probably not be investment grade.” The agency had last upgraded India by a notch in January 2007 to BBB- up from junk rating of BB+.

Cabinet nod to India's membership of European Development Bank (BS 23.11.17)

The Union Cabinet, chaired by Prime Minister Narendra Modi approved India's membership for the European Bank for Reconstruction and Development (EBRD), for which the required steps will be initiated by the Finance Ministry, an official statement said. "Necessary steps will be initiated by the Department of Economic Affairs, Ministry of Finance to acquire the membership of the EBRD," the ministry said in a statement. "Membership of EBRD would enhance India's international profile and promote its economic interests. India's investment opportunities would get a boost. It would increase the scope of cooperation between India and EBRD through co-financing opportunities in manufacturing, services, information technology and energy," it said. EBRD's core operations pertain to private sector development in their countries of operation. The membership would help India leverage the technical assistance and sectoral knowledge of the bank for the benefit of the development of private sector. "This would contribute to an improved investment climate in the country. The membership of EBRD would enhance the competitive strength of the Indian firms, and provide an enhanced access to international markets in terms of business opportunities, procurement activities, and consultancy assignments," the statement said.

Goldman Sachs bullish on India; says economic growth may bounce back this year itself (FE 23.11.17)

Global financial services major Goldman Sachs sees India’s GDP growth rate bouncing back to 7.6% in the current financial year itself, and to 8% in FY19, a significant jump from a three-year low GDP growth a quarter ago. Interestingly, Goldman Sachs also expects the 50-share Nifty to return up to 16% in the year. Andrew Tilton, chief Asia-Pacific economist for Goldman Sachs Group Inc says that India’s economy could prove to be stronger than expected as the shock from structural reforms such as demonetisation and introduction of GST begin to fade. “The good thing about next year is we don’t think we’re going to get those shocks again,” Andrew Tilton of Goldman Sachs said. Timothy Moe, chief Asia Pacific regional equity strategist at Goldman Sachs says that growth will be the chief driver for India. Goldman Sachs has retained its one-year Nifty target at 11,600. Nifty was trading at 10,329 points on Wednesday morning. In fact, Morgan Stanley, another global firm, says that India’s economy will grow by more than 10% annually in the coming decade, buoyed by demographics, reforms and globalization. According to Morgan Stanley, India, which was already on its way to growing at a brisk pace over the next decade, has found excellent growth triggers due to two major initiatives—digitizing its predominantly cash-based economy and reforming its archaic tax system— “which have the potential to amplify India’s expansion, making it one of the world’s fastest-growing large economies over the next 10 years,” says the report. CLSA too reiterated its bullish on India in a recent report.

Uday Kotak explains what India must do to match China’s GDP per capita (FE 23.11.17)

Even as India cheers Moody’s credit rating upgrade and the recent boost from the 30 places jump in ease of doing business, top banker Uday Kotak says the nation will soon repeat the similar success on another frontier, by matching a five times bigger China in terms of GDP per capita. “I think it is doable. In addition to the hard stuff, India needs to do a lot of the soft stuff,” Uday Kotak said. “If I look at China and India, in the last 20 years, India has grown at 5.5%, and our per capita GDP is at about $1,800. China is about 5 times our size. India needs to grow at about 8% per annum in per capita GDP for the next 20 years to reach China’s level. If you take a population growth of 1-1.2%, for the next 20 years we must grow at 9% to reach the current GDP of China,” Uday Kotak said, laying threadbare the hard work required to get there. The Vice Chairman and MD of Kotak Mahindra Bank says that India must focus on improving quality of its infrastructure. “I think India has come a long way, but the road ahead is even more interesting and challenging. For a country to be a truly developed country, it’s not that the poor have cars, it’s that the rich use public transport. That’s something we must do, how do bring the level of infrastructure and its quality, and the softer aspects have really got us there.” India is likely to be the world’s fastest-growing large economy in the next 10 years, driven by digitisation, favourable demographics, globalisation and reforms, predicts a recent Morgan Stanley report.

 

Cabinet approves setting up of 15^th finance panel (BL, BS, FE, ET 23.11.17)

The Cabinet has approved the setting up of the 15^th Finance Commission (FFC), which will recommend ways to distribute funds between the Centre and states. Finance Minister Arun Jaitley said the members of the commission and its terms of reference would be notified in due course. Recommendations would have to be in place before April 1, 2020, he said. “Normally, it takes two years for the finance panel to give its recommendations." The main terms of reference of the panel are mandated by Article 280 of the Constitution. The FFC might be tasked with suggesting ways to provide more fiscal space and resources for states to deal with agricultural and other economic crises. Former parliamentarian, revenue and expenditure secretary N K Singh might be chairman of the FFC. This time, the FFC would have to take into account the impact of the goods and services tax, which kicked in from July, on the resources of the Center and states. The FFC might also be tasked with recommending the debt-gross state domestic product (GSDP) levels of each state and the combined debt-gross domestic product (GDP) levels for all states.  Just like the Fiscal Responsibility and Budget Management panel had suggested a road map for the Centre to reduce its debt-GDP ratio to 40% by FY2023, the FFC might recommend a road map for states, sources said. The recommendations of the FFC would be applicable from FY20-25.

 

KKR looks to buy another NBFC to bolster lending business (BS 23.11.17)

KKR, one of the largest global investment firms, is looking to acquire a non-banking financial company (NBFC) in the country to bolster its lending business, said a source in the know. The investor, which has assets under management (AUM) of $149 billion globally, wants to disburse loan against properties, shares, structured loans and and lend across sectors, the source said. “It wants to buy a NBFC which has AUM of at least Rs 10,000 Cr. Though it has two NBFCs at present, KKR wants to buy another NBFC so that it can scale up faster,” said the source. KKR has already sent feelers to bankers, sources said. When contacted, KKR declined to comment on the matter. If its plans go through, this will be the fourth non-banking financial company it will own. KKR has sector-agnostic NBFC called KKR India Financial Services, set up in 1995,  and a real estate-focused NBFC called KKR India Asset Finance where Singapore’s sovereign wealth fund GIC is an investor. Its investee company Avendus Capital also has a NBFC. According to the source, KKR has lent over Rs 15,000 Cr through its NBFCs and debt funds. Its US counterpart Blackstone is also looking to start lending to corporates and other entities, reports said early this year. According to a senior executive with a Mumbai-based NBFC, KKR can acquire only PE-backed NBFC as other promoter-led NBFCs are not up for sale now. KKR follows multi-format strategy to build its loan book. In addition to NBFCs, it also has multiple alternative investment funds which provide loans.

 

With no negative surprises in Q2, experts heave a sigh of relief (BL 23.11.17)

After a lackadaisical period of three-four quarters, the performance of India Inc in the July-September 2017 quarter has enthused analysts and market experts as there have been no negative surprises in any of the key three parameters: sales, operating profit and net profit, though growth rates have been modest. According to Edelweiss Research, “Breadth was better as, barring banks, most sectors surprised on the positive side.” “2QFY18 results were generally good with modest improvement in underlying trends in the case of a few sectors. 2QFY18 results saw earnings upgrades for FY2018E and FY2019E, the first after several quarters of downgrades of earnings,” Kotak Institutional Equities added. Restocking after implementation of the Goods & Services Tax, early festive season, higher commodity prices and government spending (in rural areas) helped NSE 500 companies (excluding financial services, oil and gas) report a topline growth of 8.3% year-on-year in the September 2017 quarter, compared to 6.7% in the June 2017 quarter, according to data provided by Capitaline. Growth in operating profit and net profit also improved to 11.7% (double-digit after a long time) and 4.8% in the September 2017 quarter versus 2.3% and 0.2% in the June 2017 quarter, respectively. Financial services are excluded for the analysis as these are reported in a different format unlike manufacturing companies and also because of non-performing assets, which affect profit differently every quarter.

Tide is turning for corporate earnings: Morgan Stanley (BS 23.11.17)

Corporate earnings have failed to meet expectations quarter after quarter. And the latest one (September quarter) is no different. However, foreign brokerage Morgan Stanley believes the trend could reverse this quarter onwards. “Some market participants may be anchored to the decade gone by, remaining skeptical about the earnings growth recovery. We believe the cycle is turning as corporate India has come out of the balance sheet and earnings recession. We expect an earning CAGR (compounded annual growth rate) at 20% in the next two years,” said analysts Sheela Rathi and Ridham Desai. For the June-September quarter, the combined net profit of a broader sample of 1,852 companies was down 2.6% year-on-year (y-o-y), better than a 10.3% y-o-y decline in the first quarter, an analysis shows. In the September 2016 quarter, however, profit grew at 5.6%. The combined net sales for the entire universe were up 8.7% against an 8.3% growth in the June 2017 quarter and a 4.2% growth a year ago. Morgan Stanley says the revenue growth for energy companies was healthy in the September quarter, while telecom companies disappointed on most financial metrics.

Moody's ups outlook on India Inc (BS 23.11.17)

Rating agency Moody's sees an improvement in the credit profiles of India Inc next year, driven by better sales as it expects GST-related disruptions to wane, leading to an allover recovery in economic activities. It can be recalled that for the first time in almost 14 years, over the past weekend, Moody's had upgraded the country's sovereign ratings to Baa2 with a stable outlook. The last rating revision was in 2004. "We expect GDP growth of around 7.6% will result in higher sales volumes, which, along with new production capacities and benign commodity prices, will support pre-tax growth of 5-6% over the next 12-18 months," Kaustubh Chaubal, a vice-president and senior analyst at Moody's said in a report on the 2018 outlook for non-financial Indian corporates. He said refinancing needs in 2018 will be manageable for most companies, given their improving access to capital markets and their large cash balances. "Corporates' cross-border bond maturities will also be manageable for the next three years," Saranga Ranasinghe, an assistant vice-president and analyst at Moody's, said. The agency said a further simplification of GST and other structural reforms, or an improvement in commodity prices, resulting in higher operating profit could further improve companies' credit profiles. That apart an improvement in asset valuations, providing a means of deleveraging for some corporates will also result in improvement in their credit profiles, they said.

Fundraising abroad gets easier for firms (BS 23.11.17)

India’s rating upgrade by Moody’s has not infused too much enthusiasm in the domestic bond markets but it would make it easier for companies to raise funds abroad. In the domestic markets, foreign investors have exhausted their limits in government and corporate bonds. Moody’s said in a report on Indian companies that the cross-border bond maturities for the next three years for companies rated by it were manageable, even as cross-border issuance for such companies had exceeded the average of six years. Year-to-date, Moody’s-rated companies have raised $6.2 billion in bonds, while the average in the past six years was about $4.5 billion. According to market sources, year-to-date, Indian companies have raised a little more than $16 billion through bonds. Market watchers said another $2 billion would be raised by December, including Reliance Industries’ $800 million. Experts said in 2018, the fundraising could be more than $18 billion, as S&P and Fitch could also arrive at a positive decision about India. For all practical purposes, a rating upgrade by one global agency could increase the chances of other agencies not taking a negative decision. This is a perceived stability that a lot of foreign investors seek from a country. As a thumb rule, though, an investment decision is arrived at by considering the lowest of the ratings. Fitch and S&P still have near speculative grade ratings for the country. The perception about India’s top companies was hugely favourable in the overseas market, said bond dealers. And, the rule of thumb might not be always followed when investing in the papers of a top Indian company. “In the international market, a rating upgrade matters. Overseas investors are happy to take a lower return if investment is perceived as a lower risk,” said Harihar Krishnamurthy, treasurer at First Rand Bank. According to a banker with a foreign bank, the standing of Indian papers in Asia, particularly in Japan and Singapore, were on a par with bonds issued by reputed companies from higher-rated countries. But investors in Europe and the US are still largely driven by the ratings yardstick.

Current Banking Events

IOB net loss widens to Rs. 1,222 cr in Q2 (BL, FE 08.11.17)

Indian Overseas Bank has reported a significant increase in net loss at Rs 1,222 Cr for the quarter ended September 30, 2017, compared with a net loss of Rs. 765 Cr in the year-ago quarter. The bank had to provide Rs 2,238 Cr for provisions and contingencies in the second quarter of this fiscal when compared with Rs 1,698 Cr in the same period of the previous fiscal. “Net loss is due to increase in provisions by 77.3% over the June quarter and 23.6% over the September 2016 quarter, and the quantum of additional provision made was Rs 985 Cr during Q2 of this fiscal, according to a statement. IOB’s operating profit fell marginally to Rs 1,039 Cr from Rs 1,064 Cr. Gross NPA stood at Rs 34,709 Cr against Rs 34,724 Cr in the year-ago quarter and Rs 35,453 Cr in the June quarter of this fiscal. Net NPA was Rs 18,950 Cr against Rs 20,166 Cr in the preceding quarter and Rs. 20,765 Cr in the September quarter of the previous fiscal.

Post re-cap, banks may take sharp haircuts to end steel sector exposure (BL 08.11.17)

The Rs. 2.11-trillion ($32 billion) recapitalisation support to be provided by the government to State-run banks may prompt them to take bigger haircuts on their exposure to the steel sector, which, in turn, will lead to a rise in instances of liquidation. According to Atanu Mukherjee, President, MN Dastur & Co, on getting recapitalisation support, banks may prefer to go in for haircuts as steep as over 60% in a bid to exit from such exposures. “When you recapitalise banks, there will be a tendency by any bank to say: ‘Now that I have got this recapitalisation, I want to get this monkey off my back, even if I have to take a 60% haircut’,” Mukherjee said. The capital-intensive steel industry has been one of the major contributors to the non-performing assets (NPAs) of banks, which stood at close to Rs 8 lakh Cr as on March 31. The creation of excess capacity without a “solid underlying model” has been cited as one of the major reasons of stress in the sector. Nearly 90% of the investments have been debt-financed, exposing them to very high levels of risk to any amount of volatility in the market, he said. The Indian bankruptcy code is still at a “nascent stage”, he said. With the lack of required ecosystem and expertise (to deal with stressed assets of such magnitude), there is a likelihood that a majority of these assets may not fetch the kind of value they should, and may end up in liquidation. According to Mukherjee, the current system which expects business to be reorganised or restructured in a time span of 180 days or 270 days, may prompt companies to go under liquidation due to lack of expertise of insolvency resolution professionals (IRP) in restructuring such large assets. “If liquidation happens in large assets such as that of Bhushan Steel, the concomitant effect would be significant in terms of recoveries to banks, destruction of capital, people, employment and communities at large,” he pointed out. The country should, therefore, consider setting up an asset management company (AMC), which will take market risk in turning around stressed assets, he pointed out. “You need a mechanism where you give them more time so that the restructuring plan is more realistic and it doesn’t go out in a situation where these assets are auctioned and everybody tries to bid pennies to the dollar,” he suggested.

HDFC Bank to set up SmartUp zones in 30 cities (BL 08.11.17)

HDFC Bank announced its decision to launch SmartUp Zones in over 65 branches in 30 cities across the country where specially trained bank staff will offer tailor-made banking and advisory solutions to entrepreneurs. “The branches include those in tier-2 and tier-3 cities that are emerging as start-up hubs,” the country’s second-largest private-sector bank said in a release. A SmartUp Zone was inaugurated in one of the bank branches in Kolkata to act as an exclusive area inside the branch to cater to the needs of start-ups and encourage entrepreneurship in the state. “At HDFC Bank, we believe that start-ups need partners, who will be with them from the start of their entrepreneurial journey, creating solutions that evolve as the company grows,” HDFC Bank’s regional head, UP, Sanjeev Kumar said on the occasion.

Fintech sector gains currency as country goes on less-cash drive (BL 08.11.17)

Demonetisation gave the much needed impetus to the fintech sector, paving the way for a cashless economy. The resulting cash crunch not only helped boost digital transactions but also brought transparency and accountability into financial transactions. Banks too witnessed a surge in their CASA (current and saving accounts) and digital transactions. Chanda Kochhar, MD and CEO of ICICI Bank, said during a conference call that ICICI’s mobile banking witnessed 67% growth y-o-y and debit card usage grew 64%. Ritesh Pai, Chief Digital Officer, YES Bank said: “Post demonetisation, the digital journey of India has been fast-tracked by 3-4 years. YES Bank debit card spends grew 2.5x during demonetisation and now, after a year, stands at 2-2.15x. The growth in overall spends of credit cards in the industry has been 14.x faster compared with pre-demonetisation.” Navin Surya, Chairman, Payments Council of India, said the growth rate of the digital payments industry, which was earlier 20-50%, accelerated to 40-70% after demonetisation. According to industry players, the number of point-of-sale machines have doubled in just a year since November 2016, aided by initiatives such as UPI. However, they are also of the view that the government needs to continue with the initiatives and incentivise digital transactions. Dewang Neralla, MD and CEO of digital payments firm Atom Technologies, said the government has also played a key role in creating awareness among people about the benefits of a cashless society. He said the growth came from not only urban consumers and merchants, because of better chances of adopting to a technology, but rural consumers and merchants were also equally proactive. Given India’s varied demography, there is a requirement and demand for every possible payment method. The country has witnessed various players catering to different kinds of consumers with options ranging from UPI, Bharat QR, Audio QR and Scan &Pay to mPOS. Demonetisation has also intensified competition among several tech players, with Google, WhatsApp, Samsung and Apple charting out plans to tap the growing segment. Bhavik Vasa, Chief Growth Officer, EbixCash (earlier ItzCash), said: “Only round one has been completed... The cashless match has only just begun and it’s gonna be a long one.” The drive also led to the rise of several fintech players — from wallet players to online lenders — facilitating loans to individuals and small businesses. This has attracted lot of foreign venture capital investments. According to Inc42, a news and research portal, fintech deals have grown 23% in 2017. “Every player in the industry has made multi-fold investments in the last one year — in infrastructure, brand, marketing, creating awareness,” EbixCash’s Vasa said, adding that last year, his company received ₹800 Cr from US-based insurance exchange Ebix. Post-demonetisation, experts say the top categories to drive momentum are bill payments and travel bookings. Corporate disbursements has also been a critical segment as transactions are rapidly moving to prepaid cards and other digital modes.

PNB to close or relocate up to 300 branches (BS 08.11.17)

New Delhi-based public sector lender Punjab National Bank is planning to rationalise its branch network by shutting down or relocating up to 300 loss-making branches over the next 12 months. Sunil Mehta, MD and chief executive, said turning loss-making branches into profit-making units by tweaking the business strategy was priority. The bank has formed a group of senior officials to do a detailed study and flesh out strategies for branch network rationalisation.  The bank will reckon on business prospects, the surrounding competitive landscape, and the availability of the bank’s business correspondent (BC) network before deciding on the matter. The bank had 6,937 branches at the end of the last financial year. It added 178 branches to its network.  In the six months of FY18, it added three more, taking the tally to 6,940 branches by September. PNB officials said digital banking had gathered pace and a substantial expansion of the BC network was helping the bank to enhance its outreach. This has tempered the requirement of a large-scale expansion of the network. PNB, with a customer base of 100 million, has 9,753 ATMs and 8,224 BC outlets as of September. Mehta said the Reserve Bank of India’s (RBI’s) new policy on outlets gave flexibility in locating branches and outlets.

Axis Bank board to meet on Nov 10, decide on raising equity (BS, ET 08.11.17)

The board of Axis Bank will meet on November 10 to consider a proposal to raise equity capital by issuing securities. The board will meet in Mumbai to consider issuing equity or equity-linked securities through a permissible mode at an appropriate time, Axis Bank informed the BSE. Its stock closed 1.2% down at Rs 527 per share on the BSE. Its promoters – LIC, Suuti and a clutch of state-owned insurance companies – hold a 30.5% stake. Foreign portfolio investors have a 49.13% stake. Mutual funds held an 8.4% stake at the end of September.  The market is abuzz that Bain Capital and other investors are in talks with the private lender to pick up a 5% stake.  In a communication to the BSE the bank said it continues to explore various means to raise capital and funds through issuance of securities to a diverse set of investors to meet business and regulatory requirements. The bank has maintained that its capital position is healthy in spite of the higher provisions in the second quarter (Q2) ended September 2017. The capital adequacy ratio stood at 16.32%, with a Tier 1 of 12.36% and a Common Equity Tier-1 (CET-1) of 10.95% at end of September 2017.

One year of demonetisation: Banks see cost benefit from digital push (BS 08.11.17)

Digital initiatives by banks accelerated in the past year after demonetisation. This was driven by the cash crunch and a government push, resulting in more awareness and adoption of digital products. “Awareness levels have increased manifold. Now, if we offer the same products and services, acceptance by customers is much better,” said Anup Bagchi, executive director, ICICI Bank. Axis Bank says it’s seen a sharp decline in transactions at branches. Digital transactions are now two-thirds of their transaction mix. IndusInd Bank saw a 50% jump in the number of digitally active customers and significant rise in transactions per active customer. A little over 90% of monthly banking transaction value has migrated to digital modes. In the case of ICICI Bank, digital channels like the internet, mobile banking, points-of-sale and call centres accounted for 81% of savings account transactions in the first half of this year. “The movement away from cash to digital transactions has helped reduce the banking transaction cost on the consumer side. Introduction of new-age digital payment services on the merchant side like QR, UPI and Aadhaar Pay has helped bring more merchants on board. This opens a virtuous cycle of financial inclusion, fuelled by digitally enabled commerce,” said Ritesh Raj Saxena, ·head of savings, digital & payments business at IndusInd Bank. Bagchi says it is now easier to pull customers towards digital products, as the latter believe digitisation is backed by the government, itself a large player in the payments space. Demonetisation and implementation of the goods and services tax has also led to formalisation in the economy. This has brought additional funds into the banking sector.

ICICI Bank Board Okays Stake Sale in ICICI Securities (ET 08.11.17)



ICICI Bank is on course to monetise its third subsidiary in about two years as it prepares to list ICICI Securities, the investment banking and broking unit, on the stock exchanges. The bank said its board approved the initial public offer “subject to requisite approvals and market conditions” without giving any further details on the proposed share sale. If and when the sale materialises, it would be the third from the ICICI stable to get listed on stock exchanges after ICICI Prudential Life Insurance and ICICI Lombard General Insurance. ICICI Securities offers both retail and institutional broking along with private wealth management, according to its website. Headquartered in Mumbai, it has offices in 66 cities and towns in India and global offices in Singapore and New York. ICICI Securities' net profit increased by 32% year-on-year from 99 Cr in Q2 FY17 to 131 Cr in Q2 FY18. ICICI CEO Chanda Kochhar is the chairperson of the board in ICICI Securities which also includes ICICI Bank executive directors Anup Bagchi and Vishakha Mulye. ICICI Bank stock ended 1.25% down at 312. The announcement to list ICICI Securities is in line with the bank's plan to unlock value in its subsidiaries, an official said.

Money is Money, Says PNB Chief; Favours Highest Bidder (ET 08.11.17)

Lenders struggling to recover their dues to financial troubled companies will give preference to whosoever gives the highest bid for the distressed companies that are on the block which will also include promoters of troubled company. Stating this, Sunil Mehta, CEO of Punjab National Bank said, “Processes of evaluation will be decided by the committee of creditors and anyone who gives highest bid will get preference. We will go by net present value.“ As many as two dozen companies, including 11 large cases that are referred to the bankruptcy court are on block. Bankers are in the process of formulating a uniform evaluation criteria for these companies, he indicated. Mehta said: “If you see basically no creditor would like to continue with the same promoter, but participation of the promoter is equally necessary in maintaining the asset during the intervening period.... But we cannot deny a promoter from participating in the bidding as per the law.“ He was speaking to media soon after addressing bank analysts on the second quarter performance. Comments from Mehta comes a day after SBI chief Rajnish Kumar made it amply clear that lenders will not consider bids from wilful defaulters. “There is no place for wilful defaulters or people who have diverted funds as proved in forensic audit for bidding,“ Kumar said. Mehta said that he expects a resolution will worked out for the five steel companies that are on the block however those companies that are in EPC contacts will be a challenge. These five steel companies include Essar Steel, Bhushan Steel, Electrosteel Steel, Monnet Ispat and Bhushan Power and Steel.

Cash-Surplus Banks Cut Costly Deposits (ET 08.11.17)

The liquidity boost resulting from the demonetisation announcement on November 8, 2016 has stayed with the banking sector a year after the event, helping banks reduce their high-cost deposits and boosting their current account and savings account (CASA) ratio. A study by Bhupal Singh and Indrajit Roy, RBI directors from the monetary policy department and department of statistics and information management, published in August this year showed that the excess deposits accrued to the banking system due to demonetisation range between 2.8-4.3 trillion. “Excess deposit growth in the banking system during the demonetisation period (i.e., November 11, 2016 to December 30, 2016) works out to 4-4.7 percentage points. If the period up to mid-February 2017 is taken into account to allow for some surge to taper off, excess deposit growth is in the range of 3.3-4.2 percentage points. Considering some more temporal tapering of deposits, the exercise taken up to end-March 2017 reveals that excess deposit growth would be in the range of 3-3.8 percentage points,“ the researchers said in a study published on the RBI website. Udit Kariwala, senior analyst, financial institutions at India Ratings & Research, estimates that 55% to 60% of the deposits have remained with banks either in the form of fixed deposits or CASA. “All banks have benefitted. For public sector banks the benefit has been due to mark-to-market gains due to the rise in prices of government securities together with a cut in their bulk deposit rates and for private sector banks especially those that are building their deposit franchise the gains have been due to a sharp rise in CASA,“ Kariwala said. Indeed, new age private sector banks like Yes Bank, IndusInd Bank and Kotak Mahindra Bank have seen a quickening in CASA accretion which will help them reduce their cost of deposits earlier than previously forecasted. Digital banking also got a push post demonetisation with private sector banks taking the lead armed with cutting-edge technology and full government backing to ensure that transactions move online.

Digital Transactions Need Higher Adoption to Sustain (ET 08.11.17)

Demonetisation led to the rapid evolution of digital payments. Transactions shot up in December and January, then stabilised over the following months, bankers said. While cash in circulation at 16.3 lakh Cr is still at 91% of the pre-note ban days of 17.9 lakh Cr, digital transactions rose 31% from November last year to September this year, according to provisional RBI data. Digital transactions in September reached 877 million, down from the peak of almost 1 billion in December last year. “If 100 transactions were happening pre-demonetisation, after the note ban it shot up to around 300, which now has stabilised around 180 or 190 levels. Even the 80% to 90% jump would have taken at least three years under normal circumstances,“ said Axis Bank executive director Rajiv Anand. “This is just the starting point. The more people get comfortable with the safety and ease of digital transactions, we will find higher adoption and a new normal.”

Bankers say the fact that digital payments are growing even while cash is slowly creeping back to pre-demonetisation levels is proof of changing habits. This is also reflected in the spurt in debit card transactions at point of sales (PoS) terminals and a slump in ATM usage. Even the installation of new ATMs has been affected as bankers are concentrating on digital channels more than cash machines. New ATMs grew by a meagre 2% in August this year to 220,000 against 210,000 last year. PoS usage grew 89% to 265.4 million transactions in August compared with 140.4 million last October, according to RBI. ATM transactions dropped 10% to 716.3 million from 802 million in the same period. PoS terminals have doubled to 2.9 million from 1.5 million in October last year.

Financial system much cleaner now: Jaitley (BL 08.11.17)

Political backlash notwithstanding, the government stayed firm that its November 8, 2016, decision to withdraw Rs. 500 and Rs. 1,000 notes has helped crack down on black money. On Tuesday, the Narendra Modi-led government fielded Finance Minister Arun Jaitley to defend last year’s decision as Opposition parties mounted their attack, terming November 8 as ‘Black Day’. Taking on those who opposed to the decision to withdraw 86% of the currency in circulation on November 8, 2016, Jaitley said it had “removed anonymity”, increased the tax base and resulted in higher tax payments. “Overall, it would not be wrong to say that country has moved on to a much cleaner, transparent and honest financial system” even if its benefits may not yet be visible to some people, he said in a Facebook post on the first anniversary of demonetisation. In fact, official data released on Tuesday showed that net direct tax collections rose 15.2% to Rs. 4.39 lakh Cr between April and October this fiscal. “This amounts to 44.8% of the total Budget Estimates of direct taxes of Rs. 9.8-lakh-Cr for 2017-18,” said the Finance Ministry. Gross collections (before adjusting for refunds) increased by 10.7% to Rs. 5.28-lakh Cr during April-October 2017. Jaitley pointed out that post-demonetisation, currency in circulation is lower by Rs. 3.89-lakh Cr and is no longer anonymous. “With the return of Rs. 15.28-lakh Cr into the banking system, almost the entire cash holding... now has an address,” he said, adding that the tax administration and other agencies are using big data analytics to crack down on suspicious transactions. While self-assessment tax paid by non-corporate taxpayers increased by 34.25% between April 1 and August 5, advance tax paid by non-corporate taxpayers rose 42%. Action has also been taken against more than 1,150 shell companies.

Change 28% slab to 18%: Amit Mitra (BS 08.11.17)

West Bengal Finance Minister, Amit Mitra has written to Union Finance Minister Arun Jaitley to change the 28% bracket to 18% for all items except cigarettes and other tobacco items under the goods and services tax (GST) regime. The letter, contents of which were tweeted by the Trinamool Congress, mentioned that many household consumer items had fallen under the 28% GST bracket. Mitra argued that the 28% bracket should be changed to 18%. He also said that the consumer items under the 18% bracket should be brought under the 12%. The letter from the state finance minister comes ahead of the GST Council meeting on Friday. It was widely expected that the tax rates on a number of items, especially under the 28% bracket, would be taken up.

Net direct tax collections rise 15.2% between Apr- Oct (BL 08.11.17)

Net direct tax collections rose by 15.2% to Rs. 4.39 lakh Cr between April and October this fiscal. “This amounts to 44.8% of the total Budget estimate of direct taxes of Rs. 9.8 lakh Cr for 2017-18,” said the Finance Ministry. Gross collections (before adjusting for refunds) have increased by 10.7% to 5.28 lakh Cr during April-October 2017. Refunds amounting to Rs. 89,507 Cr have been issued during April 2017 to October 2017.

The digital register is ringing loud and clear (BL 08.11.17)

If there is one big positive that demonetisation has brought to the economy, it is the digitalisation drive. This has brought dividends to the common man in various spheres, including efficiencies in government services such as payment of taxes and utility bills. Clearly, the Centre has helped the cause by remaining steadfast in its commitment to automate the tax administration — both IT and GST. Prime Minister Narendra Modi’s actions to digitise India has brought a momentum to the entire payment ecosystem and helped build a new framework for the digital economy. According to government sources, digital transactions since demonetisation have grown manifold on a month-on-month basis. For instance, volume wise, transactions via NACH, IMPS, UPI+BHIM and Rupay have grown to ₹1,47,624 Cr in September 2017, against ₹1,07,987 Cr in October 2016. Similarly, transactions through debit cards, credit cards, NEFT, RTGS and mobile wallets have grown from ₹1,07,59,649 Cr in October 2016 to ₹1,23,28,369 Cr as of July this year. Although the quantum of digital payments is still a drop in the bucket (cash is still king), it has led to several positives for NBFC and insurance players. The clear winners of the note-ban are the digital backbone providers — smartcard manufacturers, payment gateway firms, electronic wallet companies, e-commerce platforms and telecom companies. The financial services industry is more or less positive on the impact of demonetisation on digital payments. Raman Aggarwal, Chairman, Finance Industry Development Council, a representative body for NBFCs, says that digitisation has indeed picked up, but it’s difficult to quantify it. The adaptability to various digital payment modes has picked up, he added. “Demonetisation, while temporarily affecting collections in the third and fourth quarter of 2016-17 (now NBFCs have bounced back), has clearly acted as a catalyst to boost the digital payments mode,” he says.

 

Demonetisation a watershed moment in Indian history: Jaitley on note ban anniversary (BS, FE 08.11.17)

Finance Minister Arun Jaitley called demonetisation a “watershed moment in the history of Indian economy”. He quoted data extensively to make a case for the announcement by Prime Minister Narendra Modi’s announcement on November 8 last year to put 86% of currency out of circulation. In a blog and at a press conference later at the Bharatiya Janata Party (BJP) headquarters here, Jaitley said the note ban had achieved its objectives of reducing the cash component in the economy, widening the tax net, exposing unaccounted wealth and reducing anonymity of cash. The FM also rejected criticism of ‘tax terrorism’ that followed demonetisation and the goods and services tax. “A more efficient system to check evasion is a fair and honest system. It can’t be a terrorism system. An efficient system enables us to check evasion. It only enables us to ensure people pay what they have to pay.” Jaitley also responded to the criticism of demonetisation by former prime minister Manmohan Singh. Jaitley said he was “amazed that an economic exercise that has an ethical and moral rationale has been termed as loot.” What is ethically and morally correct has to be politically correct. The examples of “loot”, Jaitley said, were the sundry scams during the UPA years, like 2G, Commonwealth Games and coal block allocations scams. “As far as ethics go, our and Congress’ perspectives are different. Their primary objective is to serve the family. Ours is to serve the nation.”  On criticism by former RBI governor Raghuram Rajan, the FM said he doesn’t share that criticism.

Bond yields rise on crude shock (BS 08.11.17)

The yields on the 10-year bond rose to a six-month high of 6.93% on Tuesday as crude oil prices spiked to $64 a barrel a day earlier on political tensions in Saudi Arabia. According to bond dealers, crude oil prices worked as a catalyst for the yields, which anyway were on the rise. The 10-year bond yields have risen from 6.41% in July to 6.93% now even as the Reserve Bank of India (RBI) cut its rates once in August. The market is under pressure for a number of reasons, the most important being the 200-basis point rise in inflation between June and August readings. Besides, the bank recapitalisation plans, excise duty cuts in oil process and farm debt waivers would widen the fiscal deficits of the Centre and the states, triggering extra borrowing. The banking system is also getting drained of its surplus liquidity and on top of that, the RBI’s open market operations to sell bonds in the open market are further drying up the surplus cash. Yields were to rise anyway under such circumstances. However, the spike in crude prices is a clear case for worry for the market. Rise in crude prices, inevitably, will widen the fiscal deficit, which will have to be financed through market borrowing. “Rise in crude prices is always a bad news for India,” said Harihar Krishnamurthy, head of treasury at First Rand Bank. The scope for passing on the rise in crude prices to customers is limited, considering the prices in the retail market are already quite high and the government didn’t really pass on the benefits of lower crude prices to customers earlier. Therefore, bond dealers expect the government, or the oil marketing companies, to absorb the cost. This will widen deficits by a significant margin and the government could be prompted to borrow from the market. “The yields may test the seven% mark soon, but whether it will sustain there is difficult to say. The yields are rising steadily and slowly, but there is no panic in the market,” Krishnamurthy said.

 

Aditya Birla Capital net rises 68% on NBFC business (BL 08.11.17)

Aditya Birla Capital has reported a 68% increase in its September quarter net profit at Rs. 227 Cr (Rs. 135 Cr) on the back of higher income from its non-banking financial company (NBFC) business. Revenue from operations more than doubled to Rs. 3,243 Cr (Rs. 1,254 Cr). Lending book of the company has risen by 40% to Rs. 44,675 Cr in the quarter under review against Rs. 31,823 Cr logged in the same period last year. Aditya Birla Finance, the subsidiary of Aditya Birla Capital, posted profit before tax of Rs. 277 Cr against Rs. 221 Cr reported last year – the lending book has increased by 36% to Rs. 38,898 Cr ( Rs. 28,951Cr). Gross NPA was down to 0.53% from 0.93% logged in Q2 FY’17. The company has reported a capital infusion of Rs. 250 Cr each in Aditya Birla Finance and Aditya Birla Housing Finance to fuel growth. During the first half of this fiscal, the company recorded a net profit of Rs. 400 Cr (Rs. 245 Cr) and revenue of Rs. 5,894 Cr (Rs. 2,372 Cr).

Manappuram Finance profit falls (BL 08.11.17)

Demonetisation seems to have made a dent in the profitability of several micro-finance institutions and Manappuram Finance is no exception. The net profit of the Kerala-based gold loan company in the second quarter of FY18 has declined to Rs 160.37 Cr compared to Rs. 192.40 Cr in the corresponding quarter of the previous fiscal. However, the company witnessed a 3.5% increase in profit in the second quarter compared to the Rs. 155.01 Cr in the preceding quarter of the current fiscal. VP Nandakumar, MD & CEO, said: “After demonetisation, the company went through three quarters without growth. But now our consolidated AUM has grown by 2.6% over the preceding quarter. The pick-up in the rural economy following good monsoon has brightened the prospects.” The total consolidated operating income during the quarter stood at Rs 830.03 Cr against Rs 830.74 Cr reported in the preceding Q1. The company’s consolidated assets under management (AUM) was Rs. 13,723 Cr, an increase of 2.6% compared to Rs. 13,380 Cr reported in the preceding first quarter. The consolidated AUM was Rs. 14,490 Cr in the year-ago quarter. The board of directors has approved payment of an interim dividend of Rs. 0.50 per share of face value Rs. 2.

Insolvency code: Due diligence framework tightened for resolution applicants (BL, BS 08.11.17)

The Insolvency and Bankruptcy Board of India (IBBI) — the insolvency regulator — has tightened the due diligence framework on resolution applicants, including promoters. Corporate resolution applicants including promoters will now be put through a stringent test as regards their credibility and creditworthiness before a resolution plan is approved by the committee of creditors. This is going by the latest changes effected by IBBI in the regulations governing the corporate insolvency resolution process. Further, the IBBI has also imposed greater responsibility on the resolution professional and Committee of Creditors in discharging their duties. For this purpose, the IBBI has tweaked its regulations on corporate insolvency resolution process so as to ensure that it results in a credible and viable resolution plan. Prior to approval of a resolution plan, the Committee of Creditors has now been empowered to take into account the antecedents, credit worthiness and credibility of a resolution applicant, including promoters, according to an official release. An amendment to this effect has been made to the IBBI (Insolvency Resolution Process for Corporate Persons) Resolution Process, 2016 (CIRP Regulations). The revised regulations make it incumbent upon the Resolution Professional to ensure that the resolution plan presented to the Committee of Creditors contains relevant details to assess the credibility of the resolution applicants, the release said. The details to be provided would include information with respect to the Resolution Applicant in terms of convictions, disqualifications, criminal proceedings, categorisation as willful defaulter as per Reserve Bank of India guidelines, debarment imposed by SEBI, if any, and transaction, if any, with the corporate debtor in the last two years. The resolution professional has to also submit details in respect of transactions observed or determined, if any, covered under Section 43 (Preferential Transactions); Section 45 (Undervalued Transactions); Section 50 (Extortionate Credit Transactions); Section 66 (Fraudulent Transactions) under Insolvency and Bankruptcy Code, 2016.

IDBI Federal hires JPMorgan for sale of promoters' stake (BS 08.11.17)

Global investment bank JPMorgan has been appointed to sell the stake of the promoters in IDBI Federal Life Insurance. IDBI Bank, Federal Bank and Belgian insurer Ageas are the promoters of the insurer. “JPMorgan has started the process to find the new buyer(s),” said an insider at one of these promoters. IDBI Bank owns a 48% stake in the life insurance entity. The former has been under stress because of a rise in bad loans and negative returns on assets. In May, the Reserve Bank of India invoked its rule on Prompt Corrective Action (PCA) against the bank. Following this, the latter announced it was selling off non-core assets worth Rs 5,000 Cr.  The RBI has mandated a maximum net NPA (non-performing asset) ratio of six% under the PCA framework, introduced in April. A breach of this limit can result in the central bank ordering the lender in question to sell assets or cut unsecured exposure. An IDBI Bank executive said, “We have hired an investment bank with the intent to monetise (sell stake) by March 2018. It is part of our plan to sell non-core assets and investments.” “There cannot be a better time for IDBI Bank to monetise its investment in the life insurer,” says a banker familiar with the development. “Multiple life insurance companies have been listed in the recent past on very high valuation.”

One year of demonetisation: Microfinance industry recovering slowly (BS 08.11.17)

With the completion of one year of demonetisation, leading players of the microfinance industry (MFI) were of the view that things were recovering slowly and delinquency levels were still on the higher side. Arohan Financial Services, a city-based MFI, was already feeling the heat as the demonetisation exercise was having a telling effect on its financials. "Demonetisation has severely affected the poor women as they were not being able to repay in the old Rs 500 and Rs 1,000 currency notes from November 9 last year. As a result, they were failing in paying the instalments", MD of Arohan Manoj Nambiar said. Prime Minister Narendra Modi announced demonetisation of Rs 500 and Rs 1,000 currency notes on November 8 last year. Nambiar said the company had to work with these borrowers so that they were able to make the repayments. "Our customers are those who belong to the bottom of the pyramid. It was not possible for them to leave their daily chores and stand in the long queues to get old notes exchanged", he said. Even the livelihood of the genuine customers got affected due to demonetisation, he said. "However, things are recovering now but very slowly. It is improving each month. Even today, the delinquency levels are high for which we are required to make higher provisioning, which in turn is affecting out financials", he said. Kuldip Maity, MD and CEO of Village Financial Services, another city-based MFI, said that industry was shaken by the sudden announcement. "As this sector is cash driven, the whole industry faced tremendous challenges in the first few months of demonetisation. There were issues related to both loan disbursement and repayment", Maity said. "But, it is heartening to watch the industry recovering fast. We have been able to overcome the initial impact of demonetisation", he added.

India Inc foreign borrowings down 40% (BS 08.11.17)

Indian companies raised 40% less in foreign currency loans this year till date at $13.5 billion against $23.6 billion in the same period of 2016. No new capacity addition is planned for 2018 and capital expenditure plans are on hold.  Corporate fund-raising abroad will remain muted as many companies struggle with high debts and plan to sell assets. “Barring re-financing of old loans by top-rated companies like Reliance Industries, Indian companies were not present in the foreign currency loan market this year,” said a banker asking not to be named. At present, Tata Motors is in the market with a pound-denominated loan to raise $840 million and the proceeds will be used to retire old loans. Bankers said India was witnessing a declining trend since 2014 in both the volume and number of foreign currency loans. In 2017, corporate India signed only 41 deals, down 37% from 65 in 2016. Over the same period, fund-raising from the Asia-Pacific region, excluding Japan, was down 15%. Corporate chiefs say 2017 was a watershed with some large companies going bankrupt or selling assets to remain out of bankruptcy court. Demand was also weak due to demonetisation and the teething problems of the goods and services tax that was rolled out in July. “Defaults by a few top Indian companies on bonds overseas further affected investor sentiment. Despite lower rates in the foreign currency market this year, corporate India was busy trying to keep its house in order,” said the chief financial officer of a large power company.