Money & Banking
First qualified institutional investor opens account in India

Recently, a senior Finance Ministry official had said the government expects investment from at least one foreign retail investor from the Gulf region within a month


New Delhi: The Indian government's efforts to attract investments from qualified institutional investors (QFIs) have started yielding results, albeit slowly, with one QFI opening an account to invest in the markets, reports PTI.

"First account under QFI has been opened," said Bombay Stock Exchange (BSE) Interim CEO Ashish Kumar Chauhan at an event organised by Assocham in the capital.

He, however, did not identify the QFI.

Recently, a senior Finance Ministry official had said the government expects investment from at least one foreign retail investor from the Gulf region within a month, after having conducted roadshows in the five nations of the region to attract such investments.

A QFI is an individual, group or association resident in a foreign country that is compliant with Financial Action Task Force (FATF) standards. QFIs do not include FIIs/ sub-accounts.

Meanwhile, Thomas Mathew, Joint Secretary in the Ministry of Finance said the government will seek assistance of US India Business Council (USBIC) for recognition of QFI in USA.

The Finance Ministry had last month conducted roadshows in five nations in the Gulf region -- Riyadh, Dubai, Muscat, Kuwait and Bahrain -- projecting India as the "incredible investment destination".

The team led by Economic Affairs Secretary R Gopalan met several potential QFIs, FIIs, wealth funds, PE investors and wealth fund managers and advisors during the road shows.

The QFIs have also expressed keen interest in the disinvestment programme of the government and sought further details on the disinvestment plan. The sovereign wealth fund of Kuwait -- KIA, KIPCO Group -- the one of the biggest diversified holding companies in the middle east and North Africa -- evinced interest in participating in the disinvestment programme.

The government has budgeted to raise Rs30,000 crore by way of divesting stake in PSUs in the current fiscal.

According to an estimate, individual foreign investors could bring in about $90 billion to India within two years.

In a major initiative to attract foreign capital and stabilise rupee, the government had permitted QFIs from the Gulf nations and EU nations to invest directly in stock markets. A separate sub-limit of $1 billion for QFI investment in corporate bonds and mutual fund debt schemes has also been created.

Earlier, only QFIs from 34 FATF (Financial Action Task Force) member nations were allowed to directly invest in stocks.

The finance ministry is also working on a tax structure for the QFIs, such that the gains made by these investors be treated at par with the tax treatment given to the foreign institutional investors (FIIs).

A short-term capital gains tax of 15% would be deducted at source in case the QFI makes a profit on investment


Corporate debt restructuring up 3-fold to Rs68,000 crore in FY12

The sharp increase in CDR cases has continued unabated in FY13 as well and there were about three dozen cases involving nearly Rs20,000 crore referred to CDR cell in the June quarter


New Delhi: In a clear indication of growing financial difficulties of the corporate, a record number of 87 cases with an aggregate debt of about Rs68,000 crore or over $12 billion were referred for Corporate Debt Restructuring (CDR) last fiscal, reports PTI.

While the amount of such distressed debt has grown nearly three-fold from Rs23,000 crore in 2010-11, the number of cases also grew sharply by 78%.

The total corporate debt sought to be restructured last fiscal accounts for nearly one-third of the aggregate debt amount referred for restructuring ever since the CDR mechanism was established by RBI about 10 years ago in 2001.

The preliminary data suggests that the sharp increase in CDR cases has continued unabated in the current fiscal, as nearly three dozen cases involving nearly Rs20,000 crore were referred to CDR cell in the first quarter ended 30 June 2012.

RBI had helped set up CDR system in 2001 to help the corporates facing financial difficulties due to "factors beyond their control and due to certain internal reasons."

Besides helping the corporates manage their huge debts, it also seeks to safeguard the interest of banks and financial institutions through restructuring of certain debt cases.

High interest costs, along with overall sluggishness in the domestic and global economies have made it difficult for the companies to meet their debt obligations -- resulting in a spurt in CDR cases.

As per the CDR data, a total of 50 cases involving an aggregate debt amount of Rs40,000 crore were approved during the last fiscal. In comparison, a total of 27 cases with Rs7,000 crore were approved for CDR exercise in 2010-11.

During the fiscal ended 31 March 2010, a total of 31 CDR cases were approved for debt of Rs18,000 crore.

Experts say that rising number of CDR cases does not augur well for the banking sectors, as also for the corporates.

The aggregate amount of debt referred for CDR -- since this system began in 2001 -- crossed Rs2 lakh crore in 2011-12, when it reached Rs2.1 lakh crore.

Out of the total 392 cases referred for CDR so far, a total of 292 cases (Rs1.50 lakh crore) were approved at the end of last fiscal, while 59 cases (Rs20,817 crore) were rejected. Besides, 41 cases involving debt of Rs35,161 crore were under finalisation of restructure packages.

Industry-wise, the iron and steel sector account for the largest share of total restructured debt (26%), followed by infrastructure (11 pc), textiles (8 pc), telecom (6 pc) and fertilisers (5.6 pc).

In terms of number of approved cases, textiles is on top (59), followed by iron and steel (31), sugar (26), paper and packaging (17), chemicals (15) and infrastructure (13).


Kingfisher, lenders meet inconclusive

The meeting could not make any headway as the Vijay Mallya-led Kingfisher Airlines could not commit on fresh fund infusion


Mumbai: The much-anticipated meeting between the management of the crippled Kingfisher Airlines with the consortium of 17 banks, which have a combined stressed exposure of over Rs7,500 crore to airline, on Thursday failed to make any headway, reports PTI.

The meeting, held in Mumbai at the State Bank of India (SBI) headquarters, was attended by most of the lenders and the airlines' chief executive officer Sanjay Aggarwal and chief financial officer HG Raghunath.

Though the airline made a presentation, they could not commit on fresh fund infusion, according to bankers.

Lenders' sources said the meeting could not make any headway as the company could not commit on fresh fund infusion.

They said that they have appointed HDFC Securities to value two of the already pledged properties of Kingfisher--the Airline House in suburban Andheri here which has a market value of around Rs90 crore and a villa in Goa, having a market value of Rs30 crore.

According to banking sources, the existing 17 lenders also discussed the loan sell-off by ICICI Bank (worth Rs430 crore) early this week to a hedge fund run by Srei Infra Finances.

Bankers, who have over 20% stake in the airlines following last Corporate Debt Restructuring (CDR), also said they may meet next month.

At the last meeting of the consortium in March, the bankers insisted on the promoters bringing in at least 50% of the fresh funding requirement (around Rs2,000 crore) as a precondition for any new advances to the airline, after it stopped servicing its loan from January.


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