FinMin likely to finalise Rs 540-bn capital infusion for PSBs by Nov end

The Finance Ministry is likely to finalise the second round of capital infusion for public sector banks (PSBs) towards the end of this month taking into account the latest quarter's performance, sources said.
In this round of fund infusion, most of the banks would be getting growth capital for expanding their lending, particularly to micro, small and medium enterprises (MSMEs).

Last week, Prime Minister Narendra Modi launched a slew of measures, including loan sanction of up to Rs 10 million in less than an hour and relaxation in labour and environmental laws for MSMEs to give a boost to the sector, the country's second-biggest employer.
Second quarter result announcements of banks, barring one or two, would be over this week and subsequently the ministry would start discussions with them, sources said.
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After assessing the requirement, the ministry is expected to finalise the capital infusion of about Rs 540 billion by November-end or by the first half of the next month.
The ministry had earlier this year provided capital infusion of Rs 113.36 billion to five PSBs to help them meet their interest payment commitments.
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Punjab National Bank (PNB), hit by the Nirav Modi scam, got the highest amount of Rs 28.16 billion, while Allahabad Bank received Rs 17.9 billion.
Andhra Bank got capital support of Rs 20.19 billion, Indian Overseas Bank Rs 21.57 billion and Corporation Bank Rs 25.55 billion.
The infusion was part of the remaining Rs 650 billion out of Rs 2.11-trillion capital infusion over two financial years.
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The government announced the Rs 2.11-trillion capital infusion programme in October last year.
As per the plan, the PSBs were to get Rs 1.35 trillion through re-capitalisation bonds, and the balance Rs 580 billion through raising of capital from the market.
Out of the Rs 1.35 trillion, the government has already infused about Rs 820 billion through recap bonds and the balance would be done during this fiscal.

Satyam scam: Sebi asks Raju, three others to return Rs 8.13 billion

Passing a fresh order in the nearly a decade-old Satyam scam, Sebi Friday barred B Ramalinga Raju and three other entities from the securities markets for 14 years and directed them to return Rs 8.13 billion worth unlawful gains with interest.
The 14-year ban imposed by the regulator would include the debarment period already served by them. Besides, Sebi has reduced the disgorgement amount to Rs 8.13 billion from Rs 12.58 billion along with interest, as per the order.

Besides Raju, founder of erstwhile Satyam Computer, the watchdog has passed the order against his brother B Rama Raju, B Suryanarayana Raju and SRSR Holdings Pvt Ltd.
The latest Sebi ruling, pertaining to insider trading and fraudulent activities, has been passed after the Securities Appellate Tribunal (SAT) directed it to pass a fresh order in the matter.
The debarment already undergone by Ramalinga Raju and Rama Raju since July 15, 2014 as well as Suryanarayana Raju and SRSR Holdings Pvt Ltd since September 10, 2015 would be taken into account for calculating the total 14-year ban period, according to the order.
These entities have been barred for violating regulations pertaining to PFTUP (Prohibition of Fraudulent and Unfair Trade Practices) and PIT (Prohibition of Insider Trading).
The present case relates to Ramalinga Raju and Rama Raju -- who were promoters and directors of Satyam Computer Services -- falsifying the company's financial statements and making illegal gains by way of insider trading.
Besides, B Suryanarayana Raju and SRSR Holdings dealt with shares of Satyam Computer on the basis of unpublished price sensitive information.
While SRSR Holdings has been asked to disgorge Rs 6.75 billion,
Suryanarayana Raju has to pay Rs 818.4 million and Rama Raju has to cough up Rs 295.4 million. Ramalinga Raju has been directed to pay Rs 266.2 million, as per the order.
These amounts have to be paid along with 12 per cent annual interest effective from January 7, 2009 -- the day when the scam came to light through a letter written by Ramalinga Raju, then chief of Satyam Computer.
Sebi has directed the entities to deposit the amount within 45 days.
In July 2014, Sebi barred Ramalinga Raju, Rama Raju and others from the securities market for 14 years as well as asked them to disgorge illegal gains.
While agreeing with Sebi's finding that the individuals violated regulations, the tribunal had said the decision to uniformly restrain all the appellants from accessing the securities market for 14 years "without assigning any reasons is unjustified".
Similarly, the quantum of illegal gains directed to be disgorged by each appellant is based on grounds which are mutually contradictory and also without application of mind, the tribunal had added.
On January 7, 2009, Raju -- then Chairman of Satyam Computer admitted to manipulating the company's accounts.

US allows India, 7 other nations to buy oil from Iran even after sanctions

The United States said on Friday it would temporarily allow eight importers to keep buying Iranian oil when it reimposes sanctions on Monday to try to force Iran to curb its nuclear, missile and regional activities.
US Secretary of State Mike Pompeo, who announced the decision, did not name the eight, which he referred to as “jurisdictions”, a term that might include importers such as Taiwan, which the United States does not regard as a country. However, he said the European Union as a whole, which has 28 members, would not receive a waiver.
Turkish Energy Minister Fatih Donmez said Turkey had been told it would be granted a waiver. India, Iraq and South Korea were also on the list, said a source familiar with the matter who spoke on condition of anonymity. Under US law, such exceptions can only be granted for up to 180 days.
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US Treasury Secretary Steven Mnuchin also said Washington had told the Brussels-based SWIFT financial messaging service that it was expected to disconnect all Iranian financial institutions that the United States plans to blacklist as of Monday. He declined to name the targeted institutions.
The restoration of sanctions is part of a wider effort by US President Donald Trump to force Iran to curb its nuclear and missile programs as well as its support for proxy forces in Yemen, Syria, Lebanon and other parts of the Middle East.
Trump set in motion the resumption of sanctions on May 8, when he announced U.S. withdrawal from a 2015 deal between Iran and world powers under which Tehran had agreed to curtail its nuclear program in return for relief from sanctions.

ALSO READ: US to let 8 'jurisdictions' continue buying Iran oil after Nov 5 sanctions
"This part of the campaign is aimed at depriving the regime of the revenues it uses to spread death and destruction around the world, Pompeo said. "Our ultimate aim is to compel Iran to permanently abandon its well-documented outlier activities and behave as a normal country."
Pompeo said Washington will issue temporary waivers to the eight Iran oil importers "only because they have demonstrated significant reductions in their crude oil and cooperation on many other fronts".
Two would stop imports and the other six would greatly reduce them, Pompeo said.
ALSO READ: Oil sees weekly loss of over 6% as US waives Iran sanctions on 8 countries
Iran said it was not troubled over the re-imposition of US sanctions, which target not only its vital oil and gas sector but also shipping, ship-building and banking industries.
"America will not be able to carry out any measure against our great and brave nation ... We have the knowledge and the capability to manage the country's economic affairs," Iran's Foreign Ministry spokesman Bahram Qasemi told state TV.
The United States believes global oil supplies will exceed demand next year, making it easier for countries to cut Iranian oil imports to zero, a senior U.S. official told reporters.
Brian Hook, the US special representative for Iran, also said Saudi Arabia had been "very helpful" in bolstering oil supplies while the United States moved to reimpose sanctions.

Apple posts flat growth in India in September quarter over weakening rupee

Apple is not growing in India at a pace its CEO Tim Cook would like it to. Cook, who has earlier called India a high-growth market with potential to match China in the next decade, admitted to analysts and investors on Thursday that the company’s growth in the second most populous nation remained flat in the quarter ended September.
Cook attributed Apple’s lacklustre performance in India and other emerging markets to weakening currencies, which forced the technology giant to raise prices of its devices in some markets. However, analysts say Apple’s growth woes in India are not limited to a weak rupee but are more systemic in nature.
ALSO READ: Apple's decision to stop reporting iPhone sales data worries investors
“Our business in India in Q4 was flat. Obviously, we would have liked to see huge growth,” Cook said in a call with analysts. “The emerging markets that we're seeing pressure in are Turkey, India, Brazil and Russia, where currencies have weakened over the recent period. In some cases, that resulted in us raising prices and those markets are not growing the way we would like to see.”
Apple’s fiscal year starts in October and ends in September, making the July-September period its fourth quarter.
Cook in the past has pointed out that Apple was witnessing growth in high double-digits in India. In May this year, he reassured investors that the country represented a huge opportunity for the company. Apple refrained from making any comments on its India business during its Q3 earnings call, around the time when sales of its iPhone began to sag here.
While the rupee has weakened significantly in the past few months, increasing the cost of iPhones, which are largely imported into India, analysts say Apple has not revised prices of its products. While Apple does charge a premium for its iPhones in India compared to the US, a fluctuation of just 2 per cent was seen when compared to last year.

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The launch of premium devices from OnePlus and Samsung in the second half of Apple’s reporting period added to Apple’s woes. Moreover, the company’s entry level line-up of devices, including the iPhone SE and iPhone 6, are over four years old, making them unappealing to customers who once preferred these devices.
Apple didn’t see any uptick in sales from its latest iPhone XS and XS Max in the fourth quarter as the devices were launched in October. But response to even these devices, the starting price for which is ~99,900, is said to be lukewarm, providing no respite to Apple from its falling India sales even in the current quarter.
“Apple has realised that India’s smartphone market has a very low average selling price (ASP) and for it to get to a point where they can cash in using scale is going to take at least four to five years. So I think they’ve realised they have to wait to tap into the potential of the India market,” said Neil Shah, research director at Counterpoint Research.
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According to Counterpoint, Apple India’s revenue from smartphones was down 30 per cent in the quarter ended September, as shipments of iPhones halved in comparison to the year-ago period.
Luca Maestri, chief financial officer at Apple, did call out the strong growth of revenues from the Mac line-up in the emerging markets, including India, in his opening remarks in the call with analysts. Additionally, he said, “We generated iPad growth in a number of key regions around the world, including Latin America, Europe, Japan, India and South Asia.”
The drop in shipments of iPhones in India has had a significant impact on Apple’s already insignificant market share in the smartphone segment. From controlling 2.2 per cent of the market in Q3 2017, Apple just cornered 1 per cent of India’s smartphone market in the July-September period in 2018, according to the Counterpoint data. The company’s revenue share in the market was also down to 5 per cent in the quarter from 8 per cent in the year-ago period.
Apple India report card
50%: Year-on-year decline in iPhone shipments to India in the quarter ended September
30%: Fall in revenue from iPhones in the same period
56%: The previous generation iPhone 8 and X’s contribution to Apple’s sales
1%: Apple's market share in the smartphone segment, down from 2.2% in the year-ago quarter

Rupee, bonds recover sharply, stocks get boost on soft oil, US-China talks

The rupee and bonds recovered sharply and equity indices rallied on Friday as oil prices softened after Saudi Arabia warned of an oversupply.
The rupee closed at 72.4 a dollar against its previous close of 73.5. The rupee had ended at 74 a dollar in October. The yields on the 10-year bonds closed at 7.78 per cent, down from its previous close of 7.82 per cent.
As yields fall, prices of bonds rise.
In absolute terms, the rupee's gain was the sharpest since September 19, 2013, when it had strengthened by Rs 1.6 against the dollar. The Reserve Bank of India (RBI) was not seen intervening in the market, currency dealers said. The rupee may strengthen some more, riding on the momentum, dealers said, but strengthening beyond 70 a dollar is unlikely.
ALSO READ: In biggest single-day gain in 5 yrs, rupee leaps 100 paise on crude respite
The local equity markets also rallied on Friday along with global equities amid a possible thaw in the US-China stand-off. The sharp decline in oil prices and pullback in the rupee boosted sentiment as it helped ease pressure on the domestic macro.
The benchmark Sensex rose 580 points, or 1.68 per cent, to end at 35,012. The Nifty50 ended at 10,553, up 173 points, or 1.7 per cent -- extending its weekly gain to nearly five per cent. The gains for the week were the most since May 2016. Last week, the Nifty had ended at a seven-month low.
Market players said crude oil below $73 a barrel had been a big sentiment booster. Brent crude prices have come off by 16 per cent from $86 a barrel a month ago. The waiver granted to India by the US from Iran sanctions further helped sentiment.

ALSO READ: Why a depleting forex chest is good news for the Indian bond market
Besides, improvement in GST collections and favourable earnings posted by some companies saw investors adding to risky bets.
The rupee was mirroring the sentiment of its Asian peers, which also saw sharp gains against the dollar as the greenback lost against major currencies worldwide. At the close of market hours in India, the US dollar index was down 0.24 per cent to 96.05. The index measures the dollar's strength against major global currencies. Ironing out differences with China on trade issues also led the US dollar to lose up some strength, as investors went easy on their safe haven concerns.
chart
Crude oil prices were trading at $73 a barrel, with the contract for it being down 6.4 per cent this week for a fourth consecutive week. However, Iran sanctions may upset the math once again, but emerging markets are clearly cheering the fall in crude prices.
ALSO READ: Oil drops 1 percent as U.S. allows Iran sanctions waivers
In Asia, the rupee gained 1.4 per cent against the dollar, closely following the South Korean won, which gained 1.45 per cent against the greenback. Still, the rupee is the worst-performing in the region, having fallen 11.82 per cent year to date.
While currency dealers say banks and oil importers have started taking long positions on the rupee, expecting the momentum to continue, brokerage Morgan Stanley continued to remain bearish on the rupee.
"The tension between the RBI and the government raised investors' concern about the RBI's independency and risks of a steeper curve in India rates. Thus, we remain bearish on the rupee despite the lower oil price having temporarily relieved some pressure on inflation and the currency," Morgan Stanley wrote in a report.
ALSO READ: US allows India, 7 other nations to buy oil from Iran even after sanctions
"Our oil strategists continue to see oil prices moving higher in 2019 as oil balance remains tight. In addition, the continued global volatility and widening twin deficits could keep INR under pressure. Our economists see funding pressure as likely to persist and pose downside risks to growth," Morgan Stanley said.
After a sharp rebound from recent lows, experts said, investors should exercise with caution.
"The problems that we were stuck with earlier have not gone away completely. I don't see markets going up dramatically from here. The concerns surrounding IL&FS and NBFC liquidity aren't entirely resolved. These issues are still lingering and could blow up anytime," said UR Bhat, director, Dalton Capital Advisors.
ALSO READ: Tough road ahead for bruised rupee amid trade war, political risks: Poll
In a report, Nomura said Asian currencies could be gaining against the US dollar on China-US trade concerns easing out and a possible Democratic win in the US mid-term elections. Nomura, while cautious on other Asian currencies, said it would go long on rupee for now.
The data released by the RBI showed that India's foreign exchange reserves were at $392 billion, the lowest since July 2017. The reserves have fallen as a result of the RBI's intervention in the market to give support to the exchange rate. The reserves were at $425 billion in April this year.
The data also showed that the RBI not only intervened in the spot market but also heavily in the forwards market. The net dollar position in the forwards markets of the RBI is in negative now, from being a long $17 billion in April.
"This essentially implies a change of net short of $20 billion from end-March in forwards. The recent spurt in RBI's selling activity reflects increased intervention in forwards, in conjunction with spot," wrote brokerage Edelweiss in a report.
This implies an estimated spot and forward forex intervention of $39.5 billion in the first half of financial year 2018-19 (FY19), which is "possibly a much more significant number" than the brokerage's estimated balance of payment deficit of $25-30 billion for FY19.
This also explains the liquidity deficit and the recent spike in bond yields, which has started correcting on oil prices cooling and on the RBI's secondary market bond purchases.
After buying Rs 360 billion of bonds in October, the RBI plans to buy Rs 400 billion of bonds from the secondary market in November.
The India VIX index fell five per cent to 18.23. Overseas investors pulled out nearly Rs 2 billion from the cash segment, while domestic investors bought shares worth Rs 8.5 billion, the provisional data provided by the stock exchanges showed.
Among the Nifty stocks, 37 gained, while 13 ended with losses. Vedanta, Maruti and BPCL gained more than six per cent each, while Tech Mahindra and Wipro declined more than three per cent.

Early Diwali for MSME sector: Modi unveils a dozen measures ahead of polls

Prime Minister Narendra Modi on Friday announced a 12-point package for micro, small and medium enterprises (MSMEs), aimed at giving them access to credit and increasing their cash flows, along with a liberal business environment.
This comes two years after the Prime Minister had announced demonetisation of old currency notes of Rs 500 and Rs 1,000 — a move that had affected small and medium businesses the most. The package, which he termed Diwali gift and includes relaxation in labour laws and environmental rules along with changes in company laws, may come as a relief to small and medium enterprises, which are facing liquidity crunch owing to issues related to non-banking finance companies (NBFCs) and weak banks.

Citing official figures, MSME Minister Giriraj Singh said 65 million firms employed 120 million workers in the sector and generated the highest number of jobs after agriculture.
ALSO READ: Modi announces online loans of up to Rs 10 mn for MSME sector in 59 minutes
“In this age of globalisation, these reform measures will go a long way in strengthening the MSME sector. I will myself do a focused monitoring of the government’s reach-out to small businesses across 100 districts in the next 100 days,” Modi said here in the national capital while announcing the move.
The Prime Minister announced a 2 per cent interest subvention for all goods and services tax (GST)-registered MSMEs on fresh or incremental loans up to Rs 10 million. Modi announced a Rs 60 billion package for creating 20 hubs and 100 tool rooms for technology upgrade.
He also announced an increase in interest rebate from 3 per cent to 5 per cent for exporters who receive loans in the pre-shipment and post-shipment period.
ALSO READ: MSME outreach drive starts today: Loan approvals for Rs 1-10 mn in 59 mins
He also announced the countrywide launch of a web portal to sanction loans of up to Rs 10 million in just 59 minutes. The loan portal, which was launched as a pilot project in September, has already seen in-principle approval to 72,680 loan proposals worth Rs 236 billion.
Companies with an annual turnover of Rs 15 million or less are considered MSMEs and this definition will be expanded to include those with an annual turnover of up to Rs 50 million. MSMEs are allowed to file quarterly returns under the goods and services tax instead of monthly returns.
“Increasing the interest equalisation from 3 per cent to 5 per cent is a timely move and will help exporters to get credit at competitive rates close to international benchmarks,” said Federation of Indian Export Organisations President Ganesh Kumar Gupta, adding that banks should move proactively to increase the flow of credit to the export sector as there is about 50 per cent drop in credit in August 2018 compared to last year.
A reduction of 2 percentage points in interest by banks to MSMEs is a "real Diwali gift" and will encourage more firms to register with the GST, Confederation of All India Traders Secretary Praveen Khandelwal said.
ALSO READ: FM Arun Jaitley launches portal to grant MSME loans within an hour
In a bid to increase market access, central public sector enterprises (CPSEs) have been asked to procure 25 per cent of their purchases, up from 20 per cent, from MSMEs.
Of the 25 per cent, 3 per cent purchase will now be reserved for MSME firms belonging to women entrepreneurs.
All public sector undertakings will also compulsorily be part of government e-Marketplace (GeM), which will give market access to smaller companies as out of 150,000 suppliers on the portal, 40,000 are MSMEs.
All companies with a turnover of more than Rs 5 billion will be compulsorily brought on the Trade Receivables e-Discounting System (TReDS), which facilitates the financing of trade receivables of MSMEs through multiple financiers. “Often, delay in getting payment for supplying goods to big firms impact their cash flows and business comes under pressure. This platform will help entrepreneurs, who can upload confirmed receipts or bills which are pending payment, to access credit from banks,” Modi said.
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Modi said MSMEs can now register their complaints related to delay in payment from large firms on the MSME Ministry’s Samadhan portal and the government will intervene to ensure they receive their payments.
For ‘ease of doing business’, Modi said an Ordinance has been promulgated through which entrepreneur will no longer have to approach the courts for minor violations under the Companies Act.
“For minor mistakes, under the Companies Act, entrepreneurs face criminal case and sometimes they even have to go to jail. For resolving minor mistakes, go to the courts. Now this to be resolved through some penalties,” Modi said.
Industrial clusters of small pharmaceutical companies will be set up and 70 per cent of the cost will be borne by the Central government. MSME firms will now have to file their returns under eight labour laws and 10 Union regulations only once a year, instead of the present requirement of two.
ALSO READ: Govt announces states' financial inclusion index, easy online MSME loans
Instead of two separate clearances (environment clearance and consent to establish) for setting up a firm, under air pollution and water pollution laws, both have been merged as a single consent. He also said that the routine inspection of firms for environmental norms will substantially be reduced along with a computer-generated inspection for labour laws to do away with inspectors’ discretion.
Key announcements
Approval of loans up to Rs 10 million in 59 minutes through web portal
GST-registered MSMEs to get 2 per cent subvention benefit on incremental and new loans
Pre- and post-shipment credit increased to 5 per cent from 3 per cent for exporters
Mandatory 25 per cent procurement from MSMEs by CPSEs, up from 20 per cent
Ordinance for simplifying levy of penalties for minor offences under Companies Act
Single approval for environmental clearance
All CPSEs and corporate above Rs 5 billion turnover to be on TReDS

Tough road ahead for bruised rupee amid trade war, political risks: Poll

There will be little respite for the bruised Indian rupee over the coming year, depressed by an escalating US-China trade war and rising domestic political risks ahead of a general election, a Reuters poll showed.
Investors have generally shunned emerging-market assets this year, made riskier by the international trade tensions and the increasing attractiveness of dollar yields, thanks to the US Federal Reserve's steady pace of rate increases.

That, and a widening current account deficit due to higher global crude oil prices and capital outflows, has pushed the rupee down almost 16 per cent this year, regularly setting all-time lows. It's one of the worst performing Asian currency this year.
"The Indian rupee reflects emerging market concerns and is facing significant depreciation pressure," noted Tuuli McCully, head of Asia-Pacific economics at Scotiabank.
"In addition to the twin-deficit position, political uncertainty in India will remain high over the coming months due to four state elections that will be held by the end of January 2019, followed by general elections in April-May 2019; accordingly, we remain bearish on the INR over the medium-term."
The poll of about 40 foreign exchange strategists taken Oct 26-31 showed the rupee was expected to gain slightly to 72.5 per dollar in 12 months from about 73.95 on Wednesday.
But the predicted outlook for the currency will still leave it much weaker than where it started 2018 around 63.80.
The latest consensus was only slightly better compared to the previous month, and more than one-quarter of strategists with a year-ahead view predicting the currency to hit a new record low by then.
The recent lifetime low for the rupee was 74.485 per dollar on October 11.
ALSO READ: Rupee falls 38 paise to 74.06 over strengthening US dollar, RBI-govt rift
In a month, nearly one-fifth of respondents expect the currency to hit a new record low.
That is likely driven by worries about growing policy disagreements between the Reserve Bank of India (RBI) and the government after deputy governor Viral Acharya warned that undermining the central bank's independence could be "potentially catastrophic."
The Economic Times newspaper reported the government had invoked never-before-used powers to issue directions to the central bank governor on matters "of public interest," related to support for the financial sector and small companies.
The rupee hit 74 on the dollar on Wednesday after television channels reported RBI Governor Urjit Patel may resign due to the spat with the government.
That will put further pressure on the currency, which has lurched lower since the RBI unexpectedly left rates on hold at its Oct 5 meeting when many thought it would raise them, in part to prop up the weak currency.
"We have altered our forecasts considerably after the RBI's decision to keep its policy rates on hold in October, which, in our view, is a policy error," said Hugo Erken, senior economist at Rabobank.
"We hold on to our view that the INR will return to its fundamental value of approximately 68/69 against the US dollar, but the trajectory towards this value will take much longer and be more painful than we initially anticipated."
Most Asian currencies are forecast to gain against the dollar in a year, though the Chinese yuan is expected to have a bumpy ride in that period.