Money & Banking
Differentiating between banks entails systemic risks: Moody's
Global credit agency Moody's Investors Service on Monday cautioned the Indian government of significant systemic risks to the banking system if it reduces support to banks or differentiate among them.
 
The rating agency also said the Rs.700 billion capital planned to be injected into government banks over the next four years is insufficient.
 
The credit rating agency seeing gradual improvement in the operating environment for Indian banking system changed its outlook on Indian banking system from negative to stable.
 
The stable outlook is based on Moody's assessment of five drivers: Operating Environment (improving); Asset Risk and Capital (stable); Funding and Liquidity (stable); Profitability and Efficiency (stable); and Government Support (stable).
 
In relation to government support, Moody's says the Indian government will continue to provide a high level of support to the banks.
 
For the public sector banks in particular, Moody's expects that the government will not make any changes that could suggest the possibility of reduced support to or differentiation among the banks, because doing so could entail significant systemic risks.
 
"The stable outlook on India's banking system over the next 12-18 months reflects our expectation that the banks' gradually improving operating environment will result in a slower pace of additions to problem loans, leading to more stable impaired loan ratios," Srikanth Vadlamani, Moody's vice president and senior credit officer, was quoted in a statement issued by the firm.
 
Moody's said deteriorating asset quality was the key driver of Moody's negative outlook on India's banking system since November 2011.
 
"However, the recovery in asset quality will be U-shaped rather than V-shaped, because corporate balance sheets remain highly leveraged," adds Vadlamani who authored the report titled Banking System Outlook -- India: Gradual Improvement in Operating Environment Drives Stable Outlook.'
 
The credit rating agency expects India to record a gross domestic product (GDP) growth of around 7.5 percent in 2015 and 2016.
 
Growth has been supported by low inflation and the gradual implementation of structural reforms.
 
According to Moody's, an accommodative monetary policy should support the growth environment.
 
As for asset risk and capital, Moody's says that asset quality will stabilise.
 
In particular, while the banks' stock of non-performing loans may continue to rise, the pace of new impaired loan formation in the current financial year ending 31 March 2016 will be lower than the levels seen in the past four years.
 
Capital levels, however, are low for public sector (PSU) banks.
 
Such banks exhibit common equity Tier I ratios of only six-ten percent and their coverage of non-performing loans with loan-loss reserves averages 55 percent.
 
Terming the Indian government's decision to inject Rs.700 billion into public sector banks over the next four years as a credit positive, Moody's said the amount is short of overall capital needs of the banks.
 
"Ability to access equity capital markets remains key if the public sector banks have to address their capital shortfall," Moody's said.
 
As for funding and liquidity, these factors are credit strengths for Indian banks because retail deposits are their primary source of funding.
 
Most banks comply comfortably with required liquidity coverage ratios, even though only part of their holdings of government securities is categorised as high-quality liquid assets, the rating agency said.
 
Moody's rates 15 banks in India that together account for around 70 percent of system assets. Four are private-sector banks and the remaining 11 are public sector banks.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Reliance Communications to acquire Sistema Shyam Teleservices
 Industrialist Anil Ambani-led Reliance Communications on Monday announced a definitive agreement for the merger of Sistema Shyam Teleservices into its fold in a unique stock-cum-spectrum fee payment deal, triggering a major consolidation in India's telecom space.
 
"As result of the demerger, Sistema Shyam Teleservices will acquire and hold a 10 percent stake in Reliance Communications. In addition, Reliance Communications will assume the liability to pay the Department of Telecom installments for Sistema Shyam's spectrum, amounting to Rs.392 crore per annum for the next 10 years," the company said in a statement.
 
The deal, which was approved by the two companies here on Monday, also includes the acquisition of the "MTS" brand.
 
Sistema Shyam Teleservices is an arm of Sistema -- a publicly-traded, diversified holding company in Russia and the region that invests in companies across the globe in areas such as telecommunications, high technology, radars and aerospace, banking, retail, mass-media, tourism and healthcare services.
 
For Reliance, the deal means an addition of 9 million customers and around Rs.1,500 crore in annual revenues, apart from the valued telecom airwaves or spectrum in the 800 MHz and 850 MHz band that is ideally suited for 4G services to complement its own unique nationwide footprint of minimum 5 MHz of contiguous spectrum in this band aggregating 148.75 MHz.
 
This will also extend the validity of Reliance Communications spectrum in the 800 MHz and 850 MHz band in eight important circles by a period of 12 years from 2021 till 2033 -- Delhi, Gujarat, Tamil Nadu, Karnataka, Kerala, Kolkata, Uttar Pradesh-West, and West Bengal.
 
The development must also be read against the backdrop of chairman Anil Ambani's recent announcement that his company will partner with elder brother, Mukesh Ambani-controlled Reliance Jio to offer each other's subscribers seamless reciprocal access to three generations of data and voice telephony in the country.
 
Reliance Jio had entered into an agreement with Reliance Communications for sharing the latter's extensive inter-city as well as intra-city infrastructure of nearly 520,000 km of optic fiber pairs, besides some 45,000 towers. The aggregate value of the deal was pegged at Rs.12,000 crore (nearly $6 billion).
 
"The combination of our wireless businesses, through the demerger of Sistema Shyam Teleservices wireless business into RCOM for stock consideration, will generate significant capex (capital expenditure) and opex (operational expenditure) synergies for mutual benefit," said Gurdeep Singh, president and chief executive for consumer business with Reliance Communications, reacting to Monday's deal.
 
"The merger is a milestone event. Despite the numerous challenges the sector faced in recent years, the combination of two leading data service providers is a clear sign of progress for the Indian telecom industry," added Mikhail Shamolin, president and chief executive of Sistema.
 
The closing of the transaction, expected in the second quarter of 2016, is subject to applicable corporate, regulatory and other approvals. Post-closing, minority investors of Sistema Shyam Teleservices will be given an option to exchange their shares with the pro-rata Reliance Communications shares held by the demerged company.
 
Founded by legendary industrialist Dhirubhai Ambani, Reliance Communications is the flagship company of the Reliance Group, led by his younger son Anil Ambani. The Group currently places its net worth in excess $15 billion, cash flows of $1.7 billion and total net profit of over $800 million.
 
Reliance Communications has a customer base of over 118 million -- including 2.6 million individual overseas retail customers, over 39,000 Indian and multinational corporate clients in the large, small and medium enterprises space and over 290 global, regional and domestic carriers.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Safe Online Shopping
Online shopping is convenient; but, unless you take certain precautions and maintain highest security level, it may cause you headaches and financial losses
 
The festival season is now at its peak. Shopping online is convenient and saves time—but, at the same time, if you are not cautious, it may turn into a nightmare. While using the Internet for any purpose, always remember that there are risks. This is because the same Internet gives attackers/fraudsters ways to access your personal and financial information. Not every attacker would rob you: he will simply sell your personal information to someone else who will do the job. 
 
Attackers are always on the prowl to search for vulnerable computers or PCs, besides creating authentic-looking, but fake, sites and emails and intercepting insecure communication, including that of financial transactions. Here are some basic tips to protect you while shopping online:
 
1. Use Good Anti-virus and Anti-spyware Software: Avast Free AntiVirus 2015 and AVG AntiVirus Free are two popular free softwares. Anti-Malware from Malwarebytes, also free, helps you keep malware away from your PC. But do not forget to keep the virus/malware definitions up-to-date.
 
2. Keep Your Browser Updated: Although most browsers alert you about updates, keeping auto updates on and regularly updating your browser helps avoid attacks made using loopholes in the browser. For Firefox, you can use two add-ons, viz., No Script and Ad-Block Plus. Depending on the site, you can give temporary or permanent permission for scripts and advertisements which otherwise get downloaded automatically.
 
3. Browser Security: Not all browsers offer the highest level of security as default and you need to set it for individual browser/s.
 
4. Shopping Only with Reputed Vendors/Sites: Although high reputation does not always give you peace of mind and the product you ordered, it helps in avoiding certain issues and get them resolved, if required. Do not get lured to sites that offer the lowest price for any product. If someone is offering a price way below what’s available elsewhere, something is fishy. Stay away from such sites.
 
5. Avoid Impulse Shopping: Shopping, whether online or offline, should be done only based on needs and not on impulse. Many shopping sites and apps offer you a feature called wish-list (it may differ from site to site). Use this to bookmark a product that you need—or would need—in future. If there is any special offer on this product, you may get an alert as well. 
 
6. Never Share Data over Email: Despite several warnings from regulators and the police, many people still share their personal and financial information. Never do it. The same applies for clicking on links in emails. Unless you have received the mail from a known entity  and from a known email ID, never click on any link. It may open the door     to attackers. 
 
7. Check Encryption of the Site: Most sites, especially online shopping and email service-providers, provide a security layer (SSL or secured sockets layer) to encrypt information. Check for the additional ‘s’ in the address bar: It should be ‘https:’ and not just ‘http:’. There should also be a lock icon there, which, after clicking, will show details about the website, its certificate and confirm if the connection to the server used by the site is encrypted or not.
 
8. Use Cash on Delivery: If you are not comfortable with the site or the product, use the cash on delivery (CoD) option. In that case, open the product in the presence of the delivery person and try to do a video recording. Although it is rare now, several buyers have received stones/bricks instead of the product they ordered. So it is better to be cautious than sorry.
 
9. Keep Records: While buying online, we do get SMS alerts and email intimation from the shopping site. Do not delete these messages. They may come handy, in case you need to track shipment of your product or if there is any other issue and you need to file a complaint about.
Happy online shopping!

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COMMENTS

Anand Vaidya

2 years ago

Good list. Also consider using Linux - far better security out of the box compared to Windows

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