Federal Bank launched the all new version of FedMobile, the Mobile Banking App of the Bank. The new and improved version comes with added convenience to customers making it simpler, faster and friendlier to use. Customers can register for mobile banking anywhere, anytime, and start availing the service immediately after downloading the App. To facilitate this, options for generating new PIN and resetting new PIN are enabled through the mobile App itself. Thus it dispenses with the need to visit the branch to register for availing the service.Fedmobile facilitated funds transfer to other bank accounts as well which can be done through NEFT and IMPS modes. It now has value-added services such as top up, recharge of mobile phones, payment of utility bills, payment of school fees etc. FedMobile is integrated with Bank’s e-passbook App, Fedbook thus facilitating access of FedBook through FedMobile.As a launch offer, the Bank has announced a Cash Back of Rs 50 for customers who initiate a transaction worth Rs 100 or above as their first transaction using the new version of FedMobile. The Cash Back amount will be credited to the customer’s account within 24 hours of the transaction. This offer is valid up to 31st July 2015.The new version is currently available in smart phones with Android Version 4 upwards, and will soon be made available in iOS, Windows and Blackberry based phones.
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The government is also planning to bring in a series of steps that help in enhancing the mechanisms that support e-payment, says Manish Kumar PathakThe Union Government has proposed tax benefits for users taking the route of e-payment, which includes payment made through credit cards, debit cards or via any other mode of online transaction. This move is a follow up on the speech made by Union finance minister Arun Jaitley, during his budget speech, when he indentified that e-payments will go a long way in curbing the flow of black money in the economy. The Government is also planning to bring in a series of steps that helps in enhancing the mechanisms that support e-payment. This idea, if executed strategically, will be a major boost for the government, as it will help curtail counterfeit cash transactions, as the payment which are made online, leave a trail which can be traced if there is any ambiguity. Also, this will be beneficial in gauging the prevalent trends of investments made in the country. There is then the issue of fake currency, and this menace can be mitigated if electronic transactions take off.The main clauses are:Any high value transactions that exceed Rs 1 Lakh, will have to be settled through the electronic mode.For the purchase of gas, railway tickets etc, there will be no additional costs charged.The Government departments will now have to espouse ‘PayGov India’, for collection of any revenue, penalty or fee.The benefit will also be extended to shopkeepers and small businessmen, if they accept a substantial value of the sales through plastic money. Also a reduction of about 1-2 per cent in VAT may be considered.Utility service providers could be advised to provide a discount to users for small ticket payments online. BSNL, for instance which provides an incentive of 1 per cent of the billed amount for any online payment. These proposals were prepared by the government, after extensive consultations with RBI, NPCI, NIBM, and different private and public sector banks. Also, the opinion of different card service providers, mobile service providers, and different research and government departments, was taken into account. The people however, will have to be taken into confidence first, as the major chunk of Indian population is still sceptical about paperless transactions, and before these proposals are rolled out, these potential customers will have to be taken on board first.
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India has moved down to 61st place in terms of foreigners' money in Swiss banks and it now accounts for a meagre 0.123 per cent of the total global wealth worth $1.6 trillion in Switzerland's banking system. While not every penny lying in the Swiss Banks is black, a substantial amount of it is unaccounted for and falls in the category of black money. Does the latest ranking in Swiss money provide a reason to cheer? On the face of it, anybody would like to pat the NDA government for launching an attack on the black money. The government has used a threatening language for people involved in the generation of black money and has brought the black money law to walk its talk on the issue. But one must be cautious before giving any credit to the government. Rather, by the end of the story this story you would want to question the intent of the government in controlling the generation and spread of black money in the Indian economy. Data collected by Global Financial Integrity between 2006 and 2014 suggests that Switzerland has ceased to be the favourite destination for Indians to save their black money. Between 2006 and 2014, the amount of money parked in Swiss accounts has consistently come down, except for 2011. The figures in the chart suggests that the rich Indians have got wary of investing in Swiss banks because the of the constant pressures from governments all over the world over Swiss authorities to curtail the parking of black money in its banking system. So where is the money going? In 2014, as much as three-fifths of India's total gold imports came from Switzerland, reflecting a significant jump in just a couple of years. India imported 471.9 tonnes of gold from Switzerland in 2014, hinting that the Indians have been over invoicing their gold imports from Switzerland to bring back the black money as white money in the country. In India, most of the jewellery transactions are in cash and tax is levied only on cash purchases of 500,000 rupees or more. This means most of these transactions remain unreported. Bringing Back MoneyA recent report by a real estate consultancy, CBRE revealed that in India as many as 1.2 crore newly constructed houses are lying vacant. Where is the money coming from to invest in these never to be sold properties? Of course it is the black money. Other than gold and real estate, the traditional way of bringing back the money into the white economy is by way of foreign direct investment (FDI). A look at the FDI inflows to India reveals that most of the companies investing in India rout their money from Mauritius to avoid tax through paper companies. Between 2000 and 2015, Mauritius accounted for 35% of FDI inflows to India followed by Singapore at 12%. All other countries account for less than 10% in making foreign direct investment in India. Mauritius is a tax heaven with no taxes for offshore companies and offshore bank accounts; the jurisdiction provides confidentiality and privacy for both individuals and corporations and has laws which allow flexibility. So a large part of the FDI investment that has been coming to India, including the 40% growth registered in 2014-15 at Rs 1.76 lakh crore could be the black money. Any government that wants to curtail the black money will have to deal with the challenge of attracting FDI in the Indian economy through fair channels. Till then governments can only bring in white papers and amnesty schemes to live up to the hype that they create around the issue of black money during elections.
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Parents do whatever it takes to give their children a good life. Despite the high cost of education, they want the best. But only few can afford. For others, there’s education loan, writes Sunil DhawanParents always want the best for their kids. Especially, when it comes to education. Needless to say that the best comes at a price. Children bank upon their parents to fund their dreams. But, are parents ready?The cost of education, especially higher studies, is rapidly going up. It’s estimated that inflation in education is double that of general inflation, which presently is hovering around 6 per cent per annum. At any rate, an MBA course from a premier institute in India would cost in excess of Rs 15 lakh and a minimum of Rs 20 lakh outside India. Engineering courses cost between Rs 5 lakh and Rs 10 lakh, while a five-year course in medicine from a private college could set you back by up to Rs 50 lakh.Parents today are well aware of the sky-high costs of education and, therefore, invest in mutual funds, insurance and fixed deposits. But sometimes, all these investments put together can still be less than what is required. In such cases, there’s education loan.Where To StartThe first step is to zero in on the course one wants to pursue. The next is clearing the entrance exams of institutes offering the course. And then comes funding. According to Ajay Bohora, co-founder and CEO of Credila Financial Services, an HDFC company, “Students and parents are advised to start planning and saving for education much in advance. So while preparing for entrance exams, it’s wise to also prepare for your funding options.”Most reputed institutes have tie-ups with banks offering educational loans. Banks have an approved list of courses and institutes for which loan approval is faster and even the terms and conditions are favourable for students. Typically, a loan issuer insists on four things when processing education loans: student’s academic profile, university and course, collateral and the co-borrower’s profile. How The Loan Works Unlike home, car or personal loan, education loan doesn’t need to be serviced from the very first month of its disbursement. The equated monthly instalment (EMI) in the case of education loan begins after the completion of the course and only when the student starts earning. According to Naveen Kukreja, managing director of loan comparison website Paisabazaar.com, “Typically, education loan lenders extend multiple repayment options, including repayment after ‘a moratorium period / holiday’ and a ‘step-up EMI’ under which the EMI increases as the years progress.” The MoratoriumWhat makes education loans unique is the moratorium period that stretches across the duration of the course. During this period, different issuers can structure the loan differently. For instance, in some cases, the moratorium is as long as the entire course period, which means no simple interest has to be paid during that time, while for other banks, the moratorium could only be on principal repayment and not simple interest. In the case of most banks, the moratorium can be extended up to 6-12 months even after the course ends.How Much Will The Bank LendAs per Indian Bank’s Association guidelines, the maximum loan for studies in India can go up to Rs 10 lakh, while for studies abroad up to Rs 20 lakh. The guidelines, however, allow banks to offer a higher amount depending on the course and the institute.Banks grade institutes on the basis of their reputation. The more premier the institute, the higher the grade and so is the loan amount that comes with a lower interest rate. The borrower should get an estimate from the bank on the EMI that has to be paid towards the loan when the course ends. Ideally, it should not be more than 25 per cent of students’ net take- home salary. Collateral Depending on the loan amount, banks can ask for collateral. Typically, for a loan of up to Rs 4 lakh, no collateral is required, but a co-borrower is needed; usually, parents become one. For loans between Rs 4 lakh and Rs 7.5 lakh, most banks make parents the co-borrower as well as ask for a third-party guarantee. And for loans above Rs 7.5 lakh, banks see collateral — property papers, post office savings products, life insurance policy, share or mutual funds and bank deposits amongst others — of equal value.Collaterals aren’t a must in all cases. A bank may have a maximum limit of Rs 30 lakh, but can ask for collateral for loans above Rs 20 lakh. Also, banks have different slabs for different institutes. For instance, State Bank of India can offer loans up to Rs 30 lakh without collateral in case of specific institutes.Will There Be Margin Money?In some cases, borrowers are asked to furnish margin money (for loans above Rs 4 lakh), which could be up to 5 per cent of loan amount for courses in India and up to 15 per cent for outside India. A few banks, however, provide 100 per cent funding. Says Bohora, “It’s important to see that the education loan covers the entire cost of attendance and not just the tuition fee. Most students end up spending a lot of money on entrance test preparations, application process related expenses, etc. Living costs in overseas destinations also add up quite a bit. It’s important to find a lender that doesn’t require any margin money.”When The Loan Has To Be RepaidRepayment has to be made within eight years of completion of the course. The simple interest payment is mostly made by parents who avail tax benefit on such payment under Section 80E of the Income Tax Act, 1961. Once, the moratorium ends, students can start paying EMIs. For tax benefit, there is no ceiling on the interest amount and such deduction from income can be availed for eight years. However, principal repayment doesn’t fetch any tax benefits.Interest RateThe interest rates for educational loans are floating. Every bank has its own base rate (BR) and the interest rate of education loan is linked to it. Typically, the interest rate is BR plus 1.5-3 per cent; it could be higher in case of a few banks and vary as per loan amount. Currently, the BR is around 10 per cent for most banks, which makes the interest rate for education loans around 14 per cent. Vijaya Bank has a fixed rate of 11.75 per cent for students of premier institutions such as IIMs and IITs. Credila, according to Bohora, doesn’t follow the ‘one size fits all’ approach. “Parents’ background, employment track record, credit scores, academic record of students, country of study, the institute and the course being pursued, collateral security, etc., play an important role in defining the interest rate,” says Bohora.The Cost Of LoanThere could be a loan processing fee of about 1-1.5 per cent of the loan amount depending on whether the course is in India or broad. Plus, there could be a pre-payment charge as well.So how long does it take for a loan to be sanctioned? Says Kukreja, “Dedicated education loan providers such as Credila and Avanse promise to disburse loans within 5-10 days of filing an application, while public sector banks can take close to 3-4 weeks for processing the loan. Disbursement of loan in case of foreign institutes can take time and hence, it is advisable for prospective students to apply for loan at least 5-6 weeks in advance.” LOAN HUNTIf you are looking for a bank loan to fund your way to a B-school or an engineering degree, here is how you should go about it: 1. Get a fix on the course and the institute2. Select 2-4 banks offering loan for the course. Look for banks with tieups with the institute3. Evaluate on the basis of any preferential treatment for the course or institute in terms of interest rate or loan amount or collateral4. Consider conditions for moratorium and provisions for grace period5. Compare the processing fee, prepayment charges and other costs to seeif they are on the higher side6. Get an estimate of EMI from selected banks. Ideally, EMI should not be more than 25 per cent of your net take-home salary7. You need a co-borrower. Spouse, siblings, parents or even parent-in law can be one. For loans between Rs 4 lakh and Rs 7.5 lakh, a third-party guarantor can be required8. If the loan amount is high, make sure you have enough collateral to satisfy bank’s requirementPitfallsNot all education loans qualify for tax benefits. To avail benefits under Section 80E, the loan has to be from an approved entity. Sometimes simple interest payments are ignored or are not paid to bank on time. Doing so disqualifies the borrower from getting the agreed 1 per cent concession on the rate of interest. Besides, the bank keeps adding the defaulted amount to the principal, which keeps growing until the repayment begins after the completion of the course. Avoiding such situations make the best out of the funding facility of banks.To avoid ending up with a bad loan or a lender, Kukreja suggests, “You must enquire about interest rates, tenure of loan, margin money, prepayment charges and processing fee that may be levied by banks. Take all expenses, including tuition fee and lodging expenses, into consideration, and quote the loan amount accordingly.” Conclusion A loan is a liability and hence, the co-borrower should get an insurance cover equal to the loan amount, preferably a pure-term insurance plan. The borrower should try to keep a healthy repayment record to ensure a high credit score so future requirements for debt do not get impacted.Taking an education loan to fulfil one’s dreams could also help students in learning the nuances of money. After all, it is the first loan for most. sunil@businessworld.in(This story was published in BW | Businessworld Issue Dated 13-07-2015)
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India has moved down to 61st place in terms of foreigners' money in Swiss banks and it now accounts for a meagre 0.123 per cent of the total global wealth worth $1.6 trillion in Switzerland's banking system. While the UK and the US have retained their top two positions with the largest shares of the foreign clients' money with Swiss banks, Pakistan has inched up to 73rd place. Interestingly, just two big banks - UBS and Credit Suisse - account for nearly two-third of the total money kept by foreigners in Swiss banks, while their share in case of Indians is even higher at about 82 per cent. As per the latest data released by Switzerland's central banking authority SNB (Swiss National Bank), Indians' money in Swiss banks declined by over 10 per cent to about 1.8 billion Swiss francs ($1.98 billion or Rs 12,615 crore) in 2014. This accounts for just 0.123 per cent of the total funds kept in the Swiss banks by people from across the world. This is the second lowest level of Indian money in Swiss banks - after an increase of over 40 per cent in 2013 - and the latest data comes amid an enhanced clampdown against the famed secrecy wall of Switzerland's banking system. The funds, described by SNB as 'liabilities' of Swiss banks or "amounts due to the customers of banks in Switzerland" are official Swiss figures and do not indicate to the quantum of the much-debated alleged black money held by Indians in the safe havens of Switzerland. Besides, SNB's official figures do not include the money that Indians or others might have in Swiss banks in the names of entities from different countries. An analysis of the latest SNB data also showed that the big banks accounted for 1.48 billion Swiss francs of Indians' money, up from 1.36 billion Swiss francs a year ago. At the end of 2014, there were 275 banks in Switzerland, but only two - UBS and Credit Suisse - were classified as 'big banks' by Zurich-based SNB at that time. There are also many foreign-controlled banks operating in the country. The two big banks' share also rose in the case of the UK, the US and a number of other countries. Their share almost doubled in case of Pakistan to 472 million Swiss francs, but still accounted for just 36 per cent of the total amount of 1.3 billion Swiss franc held in all Swiss banks by their clients from that country (up from just about one billion Swiss franc a year ago). This pushed Pakistan one place higher to 73rd place on the overall list of the countries in terms of foreigners' money in Swiss banks. India has come down three places. In the top-ten, the UK and the US are followed by West Indies, Guernsey, Germany, Bahamas, Luxembourg, France, Jersey and Hong Kong. The UK alone accounts for 22 per cent of total global funds in Swiss banks. Just four top nations together account for over half of all foreigners' wealth in Swiss banks, which rose to 1.47 trillion Swiss franc (about Rs 102 lakh crore or $1.6 trillion) in 2014. There are only 19 countries with share of over 1 per cent each and they together command more than 80 per cent of funds. The remaining 20 per cent is divided among close to 200 other countries. China (up at 26th place with 8.2 billion Swiss franc) has a share of 0.55 per cent, while Pakistan has 0.09 per cent. A number of perceived tax-havens rank higher than India in terms of money in Swiss banks, while others placed above India include Singapore, Italy, Japan, Australia, Russia, the UAE, Saudi Arabia, the Netherlands, Belgium, Spain, Israel and Cyprus. More than half of the total funds comes from the developed countries (854 billion Swiss franc), while the offshore centres account for 415 billion Swiss franc and all the developing countries put together 207 billion Swiss franc. Europe accounts for about 900 billion Swiss franc, while Asia Pacific's share is close to 500 billion Swiss franc. Indian MoneyAs per the latest data, the total Indian money held in Swiss banks at the end of 2014 included 1,776 million Swiss franc or Rs 12,350 crore held directly by Indian individuals and entities (down from 1,952 million a year ago), and another 38 million Swiss franc (down from 77.3 million Swiss francs at 2013-end) through 'fiduciaries' or wealth managers. However, "amounts due to customers' savings and deposit accounts" was only CHF 52 million (down from CHF 63 million a year ago), while over CHF 100 million was due through other banks and the remaining amount of well over one billion Swiss francs have been classified as "other amounts due to the customers" from India. As per the latest data, the amount held by Indians through fiduciaries has reached a record low level, while it used to be in billions till about seven years ago. The latest data from Zurich-based SNB comes at a time when Switzerland has begun sharing foreign client details on submission of evidence of wrongdoing provided by India and some other countries. It has been facing growing pressure from India and many other countries to share foreign client details, although its own lawmakers were resisting such measures for a long time. According to the SNB data, funds held by the US entities in Swiss banks rose for the second consecutive year and stood at 244 billion Swiss franc at the end of 2014, despite a major crackdown by the American authorities against the Swiss banks. The countries ranked below India include Qatar, Oman, Iran, Mauritius, Norway, Denmark, Finland, Nepal, Bangladesh, Vatican, Zimbabwe, Sri Lanka, Afghanistan, Myanmar and Bhutan. Greece, Lebanon, Argentina, Turkey, Canada, Mexico, Austria, Brazil, Ireland, Venezuela, Indonesia, Kuwait, Sweden, Egypt, Malaysia, Jordan, Thailand, South Africa, South Korea, Philippines and New Zealand are above India. Money Laundering In a first major admission of being an "attractive location" for laundering of assets amassed illegally abroad, Switzerland said last week it needs to further strengthen systems for combating money laundering and terrorist financing. The admission comes at a time when Switzerland has been facing immense pressure from India and many other nations to share details of Swiss bank customers suspected to have used the famed secrecy walls of banking institutions in the European country to hide their illicit funds. It followed a report from Switzerland's interdepartmental group on combating money laundering and terrorism financing (CGMT) amid a corruption scandal surrounding Zurich-based FIFA, world soccer's governing body. The report was discussed by Switzerland's apex decision making body, the Federal Council, in its meeting on Friday. Switzerland is the world's largest trading hub for crude oil and iron ore, with many big trading houses, such as Trafigura or Glencore, based in the country. Two thirds of these suspicious notifications involved transactions made by companies located outside of Switzerland, a stumbling block in tracking red-alert deals, CGMT said in its report. Deals often involve an opaque chain of people, such as consultants or brokers, as well as several financial backers which make transactions difficult to track. "Switzerland is running the risk of being abused as a platform for money laundering by certain commodities trading parties," CGMT said. (Agencies)
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Online plans can be 30 per cent cheaper than offline versions, points out Sunil DhawanRs 10 lakh in 30 years, out of thin air! That’s the amount you can accumulate without even stretching your investible surplus but merely by shifting your buying decision from offline to online while purchasing an online term plan. All this not through Return-of-premium plans but pure term plans! The pure term insurance plans are low premium, high cover plans. The premiums paid towards them are entirely for risk coverage (covers the mortality charge) and therefore on surviving the term of the plan, one gets nothing. Many of us actually dislike this and instead shun term plans in favour of insurance plans with savings element. What they might overlook is that even in such savings-cum-insurance plans, a portion of premium is treated for risk coverage too. So, both in Term and Savings plan, the amount equal to providing mortality doesn’t end up coming back. From mobiles to grocery to real estate while online buying is spreading across customer’s preferences, getting a life protection isn’t behind. More and more people are logging on and buying insurance online. According to many insurers, a marked difference among policies bought offline through an agent or distributor and the ones bought online is emerging. The persistency ratio indicating how many policies are getting renewed by policyholders on renewal date is showing a higher number for online compared to offline. It goes on to show, more serious buying is happening when it comes to buying insurance online. But, does it actually helps you save money as it did when you last bought your Smartphone online. Let’s see. Annual premiums of term plan either bought online or offline varies a lot. The difference in premium of an offline and online term plan even from same insurer varies. Online plan can be 30 percent cheaper than its offline version. Illustratively, for a 30-year male, sum assured of Rs 1crore and for a term of 30-years, the annual premium for its offline plan comes to Rs 19,000, while the online version is available with same insurer at Rs 13,000 (including service tax for both). The difference of Rs 6,000 a year (31 per cent) is not all. Rather, use it to your advantage further. Investing this amount for 30-year, by when your term plan ends, could accumulate to Rs10 lakh, assuming growth in equity mutual funds happens at 10 percent annually. Over long periods, 12 per cent CAGR can be safely assumed to be the growth in equity. So, what you do now. Buy the online version of Term Plan and start SIP of Rs 500 a month (Rs 6, 000 a year saved by buying online). For 30-years, you are covered for Rs. 1-crore by paying Rs. 3.90 lakh in total (Rs 13, 000 *30 years) and get about Rs 10 lakh on surviving the term. There are few things to keep in mind while buying online term plans:Location Check: Check, if the insurer is offering online term plans in your city. Not all cities are currently available for buying term plan online through net banking or credit cards. Get a Briefing: Even before you start filling up the online application form, call up the insurer once. Get to know the process including that for medicals and sending of documents and most importantly the claim process. Get What You Need: When you are buying a Smartphone nowadays, you are pretty clear that you need a 2GB RAM and not less. Similarly, get it confirmed from the insurer on your desired sum assured, term and payment options. At times, high sum assured is not available on online mode. The online version also have a lower term period compared to offline plans. Getting to know the insurer’s restrictions on features helps to avoid last-minute disappointments. Newer Features: Of late, pure term plans are getting new look and newer features. Instead of getting a lump sum payment on death of policyholder, there can be a series of payment in addition to a lump sum. For example, 20 percent will be paid on death and rest on instalments till the end of term. Also, in some plans, the sum assured will keep on increasing every five years. Therefore, while selecting and comparing such plans be sure that similar plans are being compared. Formalities: There could be medical tests as per insurer’s underwriting requirement to be undergone by anyone applying for term plans. Such tests are at insurer’s costs and report is generally shared with policyholders. For online term plans too, tests are done for which policyholder might have to set up appointment with the doctor (from approved list of insurer). At times, post the results, premium may show an increase as there could be a ‘loading’ in premium because of adverse results. The documents required as per insurer also needs to be sent across either digitally after scanning or by courier to insurer office. Drawbacks: Getting all risks covered is always better than keeping some risk exposed to chance. See, if the online term plan allows you to attach an accident benefit rider or a critical illness rider. Online plans are restrictive in features. Unless you know what the insurer’s offline version offer, the online version, which could be a trimmed version wouldn’t be of much help. The absence of any agent or intermediary may not be a big drawback for all. For change in policy details such as address change, nomination etc, the agent comes handy. Remember, on online platform, it’s just you and the insurer’s call centre. Even at the time of claim, it’s the family of the deceased policyholder who might have to initiate the claim process and get the documentation in place. The End Note: When it comes to buying pure term plans, do not merely go by premium amount. Go for the insurer with whom you are comfortable and is your preferred insurer. Remember, insurance is a long term business; your coverage too is for a long 25-30 years. Adequate insurance cover taking care of your family’s standard of living, from your preferred insurer is what one needs to spend quality time with them and have a good night sleep every night.
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A new bond is in town; the name’s green-bond (GB). On 16 February this year, Yes Bank launched the country’s first: a Rs 500-crore 10-year paper with a coupon of 8.85 per cent per annum. When the issue closed a week later, it had mopped up Rs 1,000 crore — the Rs 500-crore green-shoe option was fully subscribed. Insurance firms, pension and provident funds, foreign portfolio investors and mutual funds had lapped it up.But first things first. What are GBs? They fall into a category called “theme bonds” — akin to what was issued to fund the railways in the 19th century, the war bonds (to kill one another!) in early 20th century, or the ones issued to finance highways in the 60s. Of course, all of this was largely in the western world — the idea being, you raise funds where investors know where exactly the proceeds will be deployed. It’s this that differentiates such issuances from the “general purpose” variety. And as the name suggests, GBs help finance green concerns; it’s caught fire of late.“Demand for GBs is mostly from institutional investors, particularly those with a mandate to consider the environmental or social impact of their portfolios, and that’s where the big money is,” says Jaideep Iyer, group president, financial management , Yes Bank. Proceeds (from the issue) will fund 5,000 MW of renewable energy (RE) projects. Iyer concedes that it will take another 3-4 years for GBs to mature in India, but early signs hold promise.On 25 March, we saw another first: a dollar-denominated GB issuance by the Export Import Bank of India (Exim Bank): a five-year $500-million offering priced at 147.50 basis points over US Treasuries (2.75 per annum). It was priced tighter than Exim’s $500 million (Regulation S bonds) issued a month earlier with a tenure of five-and-a-half years. The issue attracted bookings worth over $1.6 billion across 140 accounts with significant participation from green investors. “The goal was to get India global visibility in this huge market,” says Kaku Nakhate, president & country head, Bank of America-Merrill Lynch, one of the lead managers of Exim Bank’s offering.Many others like state-run energy firms, which have been given a target by the Centre to invest more in RE , now look to raise funds through GBs, be it rupee or dollar-dominated.What’s The Driver?A report prepared by the Partnership to Advance Clean Energy-Deployment’s (PACE-D) technical assistance program, funded by the United States Agency for International Development, tells us how the market has shaped up. Globally, GBs have grown exponentially since 2013: fresh issuances over the past two years accounted for 80 per cent of the outstanding. As of October 2014, the size of the GB market stood at $54 billion, which included $32.5 billion of fresh issuances — that’s more than the cumulative issuance of GBs over the last eight years. It forecasts that issuances will top $100 billion by the end of 2015.“The growth of GBs can be attributed to an overarching trend towards environment, social and governance (ESG) issues in the decision process for investments by institutional investors. Currently, $45 trillion of global assets under management incorporate ESG issues,” says Anirban Chatterjee, manager, Second Party Audit and Sustainability Services, Bureau Veritas.This trend presents opportunities for Indian entities to participate in GBs at this nascent stage with ticket sizes in the range of $150 million to $250 million. It will help them capture the attention of investors in an uncluttered market, and ensure better terms due to the low-risk perception of international investors for prospective similar issuances.It’s Just BegunWith an aggressive target of 165 GW of installed RE by 2022, the Centre will require large investments. As on date, project financing sources — be it commercial banks, non-banking finance companies, multi-lateral and bi-lateral lines of credit (to financial institutions) and domestic bond issuances — are inadequate. It holds true for not just green causes, but about every other big, long-gestation project.And you need to explore options beyond traditional sources of funds. GBs will enable us to attract capital and consequently, scale up RE investments and meet the target set under the National Action Plan on Climate Change. Along the way, analysts feel large-scale foreign capital inflows will boost the forex kitty and help offset the energy (read oil) import bill.Climate Bond Initiative (CBI), an international not-for-profit investor that focuses on tapping the potential $100-billion GB mark has set standards to be met by issuers. It has appointed seven global certified verifiers: Bureau Veritas, KPMG, EY, DNV-GL, Ethifinance, Oekem Research, and TRUCOST. Their job is to verify RE projects which meet environmental and financial guidelines set by CBI and issue a Climate Bond Certificate.To get funded, projects have to meet criteria in five areas: environmental protection, contribution to local development and the well-being of local communities, fair and ethical relationships with suppliers and sub-contractors, human resources management, and good corporate governance. “These (projects) need to have positive longer-term societal impact. They have to be sustainable and should not turn out to be negative for the society and the environment at any point, otherwise the projects can be withdrawn or rejected,” says Das.Adds Santhosh Jayaram, director, Climate Change and Sustainability Practice, KPMG: “Investors need to be assured that GB proceeds are being allocated to qualifying projects appropriately, and are subsequently producing the intended positive impacts.”The Centre has floated proposals to private, state-run financial institutions and certified verifiers to become part of the accredited National Implementing Entity (NIE), which is a single entity to govern the functioning of GBs. The Department of Public Enterprises (DPE) has approached PSUs to raise low-cost long-term funds to quadruple its RE production and make it viable for debt-laden distribution companies to buy clean power.Challenges GaloreIn our context, GBs entail high hedging costs due to poor sovereign ratings (currently at ‘BBB’) and shorter tenures (they are concentrated in the 3-10 years bucket with only some at or over 15 years). While capital demand from the sector — in general — has been low in the past 2 -3 years due to policy paralysis and the economic slowdown, the need to diversify capital pools to meet fresh capacity targets remain intact.“In order to meet the needed RE, the financial markets will need to bring in instruments and mechanisms which meet the specific requirements of the sector such as long tenure, high infusion of funds, and active participation of a variety of investors such as pension funds, sovereign wealth funds, insurance companies (which are estimated to manage over $80 trillion),” says Chatterjee.“It is tough to educate foreign investors about the viability to invest in India in GBs, as the standards and norms are still evolving,” says Nakhate. She feels that the fact that the domestic debt market is yet to offer depth and flexibility will be a key limitation as demand (for debt finance) is expected to rise in the near future, and that instruments that allow financial institutions and independent power producers to access capital at suitable terms are critical.“In India, GB is not yet huge, as there are only two so far. But there is opportunity, given the financing needs. We expect to see 5-10 more GBs from India before the end of the year,” says Sean Kidney, CEO, Climate Bond Initiative (CBI).GB is one bond that’s going to shake and stir up RE! monica@businessworld.in @monicabehura(This story was published in BW | Businessworld Issue Dated 13-07-2015)
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Nilesh Shivji Vikamsey has been appointed as part-time Chairman of Federal Bank. Vikamsey, who will assume office on 20th June 2015, succeeds Abraham Koshy, who retired from the Board of Federal Bank on 17th May 2015 on successful completion of his term of eight years.Vikamsey joined the Board of Directors of the Bank in June 2011 as an Independent Director. At Federal Bank, he was instrumental in ushering in professionalism and good governance in various areas more particularly to the Inspection, Audit, Accountancy and Credit practices. The Bank also owes a lot to his erudition in improving a myriad of processes that are critical to the functioning of the Bank.A Chartered Accountant by profession, Nilesh Shivji Vikamsey is a member of the Central Council of the Institute of Chartered Accountants of India (ICAI) for the last 5 years, and also holds a Diploma in Information System Audit. He has also done the Business Consultancy Studies Course of Jamnalal Bajaj Institute of Management Studies (JBIMS) jointly with Bombay Chartered Accountants Society. He is the senior partner of Khimji Kunverji & Co, a firm which has over 79 years of experience in the areas of Auditing, Taxation, Due Diligence, Valuations, Inspections, Investigations and Business Consulting and Advisory.
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India-born former Google executive Nikesh Arora has been appointed the President of Japan's telecommunications giant SoftBank Corp that paid the "rising star" a whopping $35 million for the financial year 2014. Arora, 47, who earlier held the vice president's post, was appointed company president and chief operating officer at a general meeting of shareholders in Tokyo on Friday (19 June). In a management reshuffle last month, Arora - then investments head - was named as a potential successor to company chairman and CEO Masayoshi Son, as the telecoms conglomerate steps up its overseas expansion. Arora joined the Japanese company just last September. He was previously chief business officer of Google Inc., which he entered in 2004 as a telecom industry analyst before being recruited by Son. Hailed by Son as a "rising star", Arora received 16.556 billion yen (nearly USD 135 million) for the period through March, 2015. Of the total, 14.6 billion yen was paid as an entering bonus and compensation for his work as an executive at a SoftBank subsidiary, the Asahi Shimbun reported today, citing the conglomerate's latest financial report. Unlike elsewhere in the world, there are few business executives in Japan who are paid several billions of yen a year and rare for a Japanese company to pay more than 16 billion yen annually to an executive, it said. In less than a year at SoftBank, Arora has already directed about 200 billion yen ($1.67 billion) worth of deals that include investments in Indian technology startups Snapdeal, an online marketplace, and taxi-booking service Ola Cabs, Nikkei Business Daily reported.(Agencies)
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Money held by Indians in Swiss banks fell by over 10 per cent last year to 1.8 billion Swiss franc (about Rs 12,615 crore), amid an enhanced clampdown against the famed secrecy wall of Switzerland's banking system by Indian and other governments.The funds held by Indians with banks in Switzerland fell by CHF 215 million to CHF 1,815 million ($1.98 billion), from 2,030 million Swiss franc, as per the latest data released today by the country's central banking authority SNB (Swiss National Bank).This is the second lowest amount of funds held by Indians in the Swiss banks and follows an increase of over 40 per cent in the previous year, 2013.In contrast, the money held in Swiss banks by their foreign clients from across the world surprisingly rose during 2014 to 1.5 trillion Swiss franc ($1.6 trillion or Rs 103 lakh crore), from about Rs 90 lakh crore at the end of 2013 - the record low level so far.During 2012, the Indians' money in Swiss banks had fallen by over one-third to its lowest ever level of 1.42 billion Swiss franc (Rs 8,530 crore).As per the latest data, the total Indian money held in Swiss banks at the end of 2014 included 1,776 million Swiss franc or Rs 12,350 crore held directly by Indian individuals and entities (down from 1,952 million a year ago), and another 38 million Swiss franc (down from 77.3 million Swiss francs at 2013-end) through 'fiduciaries' or wealth managers.However, "amounts due to customers' savings and deposit accounts" was only CHF 52 million (down from CHF 63 million a year ago), while over CHF 100 million was due through other banks and the remaining amount of well over one billion Swiss francs have been classified as "other amounts due to the customers" from India.(PTI)
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