Indian refiners will make payment in rupee to UCO Bank, which will be transferred to RBI for onward credit to the central bank of UAE. The UAE central bank will then make payments in dirhams to Iran
India will pay Iran $1.65 billion through the United Arab Emirates (UAE) central bank to clear over 40% of the backlog payments for oil imports.
Since February 2013 when the US blocked payment channels, India has been paying 45% of its oil bill to Iran in rupees through a UCO Bank branch in Kolkata. For the rest, it has been waiting for a payment channel.
As much as $4 billion has been accumulated in past dues. A payment mechanism is now in place under which $1.65 billion in three equal instalments of $550 million each will be transferred to Iran via the UAE central bank, senior government and industry officials said.
Under the two-stage payment mechanism worked out, Indian refiners, in proportion to their dues, will make rupee payment to the UCO Bank. This money will be transferred to the Reserve Bank of India (RBI) for onward credit to the central bank of UAE.
The UAE central bank will then make payments in dirhams to Iran.
Officials said the first two instalments may be paid this month and the third $550 million tranche by 20th July deadline set by the US and five other world powers for Iran to receive part of its past payments from its oil buyers.
The two instalments this month will be made up of $238 million by Mangalore Refinery and Petrochemicals Ltd, $232 million from Essar Oil, $57 million by Indian Oil Corp (IOC), $8 million by Hindustan Petroleum Corp Ltd (HPCL) and $15 million by HPCL Mittal Energy (HMEL).
Iran is seeking interest on pending dues. However, the Indian government as well as the RBI have flatly refused to pay interest saying they have always been ready to make timely payments but the problem of mode and channel were due to Iran.
Under an interim nuclear deal with US and five other world powers, Iran on 24 November 2013, won access to $4.2 billion in past oil revenues from a number of countries including India.
The funds, which previously could not be transferred as western powers clamped down on payment routes, were to be paid in eight instalments of $550 million each beginning with the first transfer by Japan on 1st February.
South Korea was to make two payments in March totalling $1.1 billion and India was to make its first payment on 17th May, but in absence of payment modalities it was delayed.
There is now a broad understanding on the payment route and subject to agreement with Iran the first tranche may go out as early as next week, officials said.
India had been, since July 2011, paying in euros to clear 55% of its purchases of Iranian oil through Ankara-based Halkbank. The remaining 45% due amount was remitted in rupees through UCO Bank.
Payments in euro through Turkey ceased from 6 February 2013 but the rupee payments for 45% of the purchases continued through UCO Bank.
India’s high budget deficits are partly due to a large population and low per capita income levels, which increase macro-economic imbalances and thus 'expose the economy to shocks', say Moody’s
Indian economy is exposed to 'shocks' due to high fiscal deficit and the country’s credit outlook will depend on the Narendra Modi government’s initiatives in the next month’s budget to contain expenditure and reduce exposure to global commodity prices, says Moody’s in a research note.
The ratings agency said, “More relevant to (determine) the sovereign credit outlook will be whether the budget includes measures that address the Government’s low revenue base, high current expenditures and exposure to commodity prices”.
India’s budget deficit is high and this increases macro-economic imbalances and thus 'expose the economy to shocks', Moody’s Investors Service said in the report titled, “Frequently asked questions on India’s fiscal position and the forthcoming budget”.
“In absence of measures to reduce the fiscal deficit, the future high growth rates many forecast for India may not be realised. The July Budget could indicate whether fiscal constraints on India’s sovereign credit profile will ease over the coming years,” it added.
The Union Budget is expected to be presented in the second week of July.
Whether the new government’s FY15 deficit estimate is above or below the previous regime’s estimate of 4.1% of GDP, it will not be the key determinant of India’s credit outlook, Moody’s said. The deficit in 2013-14 fiscal was 4.5%.
Moody’s assigns a ‘Baa3’ rating on India, with a stable outlook.
“India’s high budget deficits are partly due to a large population and low per capita income levels. Low income levels limit the government’s tax revenue base and at the same time drive socio-political pressure to increase government spending on subsidies and economic development,” it added.
However, Moody’s said that other countries with low per capita income have avoided deficits as large as India’s. This suggests that fiscal discipline can improve budget outcomes despite structural challenges.
The report added that wide budget deficits have kept India’s inflation high and contributed to a widening current account deficit between 2011 and 2013, which heightened exchange rate volatility and resulted in higher domestic interest rates.
These trends have exacerbated the slowdown in GDP growth since 2011, it added.
The report outlines the reasons behind India’s high fiscal deficits, provides a comparison between recent fiscal developments in India and in other similarly rated countries, explains how fiscal policy has affected growth and addresses the possible credit implications of the newly elected Government’s forthcoming budget.
Guru Pandyar, his wife Arundathi as well as Srinivas Sista and his wife Lalita filed applications for personal bankruptcy at Western District of Washington after being involved in multimillion dollar business fraud
Guru Pandyar (Prasad Rao Pandyar-Guru), his wife Arundathi as well as Srinivas and Lalita Sista, all associated with beleaguered Prithvi Information Solutions have filed for personal bankruptcy in the US.
Both the couples are named in a multi-million dollar business fraud in which Kyko Global Inc, a Canadian company, is seeking $18 million from Prithvi Info Solutions, its promoters and associates.
The Pandyar couple is director/president of Avani Investment Inc while Guru Pandyar himself is an officer of Prithvi Info Solutions and Prithvi Catalytic (now renamed as Abilius) and full time employee of various other affiliated companies of Prithvi Info. On the other hand Sista is named as director/president of Ananya Capital Inc and officer of certain related affiliates and full time employee of various other affiliated companies of Prithvi Info Solutions and Madhavi Vuppalapati, founder of the company.
Both Guru Pandyars and Sistas have filed bankruptcy petition on 17 June 2014 before the Western District of Washington. In most cases, the filing of the bankruptcy case automatically stays certain collection and other actions against the debtor and the debtor's property. Under certain circumstances, the stay may be limited to 30 days or not exist at all, although the debtor can request the court to extend or impose a stay.
The case related to a suit filed by Kyko Global seeking to recover damages of over $18 million from Prithvi Info Solutions, which was once a high flying part of India's software story and had been purchased by many top foreign funds.
As reported by Moneylife in November 2011, Prithvi Info Solutions entered into an agreement with Kyko Global Inc, a Canadian company, for certain factoring services. Prithvi was to sell to Kyko some of its customer account receivables for IT services and authorise direct payment on those customer accounts receivable to be made to Kyko.
When Kyko tried to contact the alleged customer companies directly for payments, it discovered that some of them were associates of Prithvi, who had posed as clients and created and executed the verifications. In order to get the money back, Kyko filed a lawsuit on 16 June 2013 against Prithvi Information Solutions at the US District Court in Seattle.
In the lawsuit, Kyko alleged that, "To further secure the amounts owed to Kyko, on or about 29 March 2013, Madhavi, Pandyar and Sista agreed on behalf of various affiliated companies of Prithvi Info Solutions to enter into a cross-guarantee promising to pay on demand the full amounts owned to Kyko. The cross-guarantee was signed by Madhavi, Pandyar and his wife, Sista and their affiliated companies, Catalytic, Prithvi Solutions, Prithvi Info Solutions, Inalytix Inc, Ananya and Avani. Each of these cross-guarantors promised 'on a joint and several basis, to guarantee the obligations of each debtor to Kyko in respect to the payments of all the accounts receivable...by each debtor'."
"In reality the cross-guarantees were yet another component of defendants' fraudulent schemes, and an attempt to conceal the scheme and ultimate truth of the scam from Kyko," the Canadian company alleged in its complaint.
In September 2013, Kyko filed a Writ of Garnishment against Prithvi Information Solutions. Kyko claimed damages of $18,431,765.90 ($18.43 million) inclusive of balance of judgement, prejudgement interest and interest of judgement from 9 June 2013 to 23 September 2013.
In the Writ of Garnishment, Kyko had named Prithvi Information Solutions Ltd, Prithvi Catalytic Inc, Prithvi Information Solutions International LLC, Prithvi Solutions Inc, Inalytix Inc, International Business Solutions Inc, Avani Investments Inc, Ananya Capital Inc, Madhavi Vuppalapati and her husband Anandhan Jagaraman, Guru Pandyar and his wife Arundathi, Srinivas Sista and his wife Lalita, DCGS Inc, EPP Inc, Financial Oxygen Inc, Huawei Latin American Solutions Inc and L3C Inc.
Earlier in April 2014, following directions from a US District Court to recover money, the Sheriff from King County auctioned personal assets of Madhavi Vuppalapati, founder of Prithvi Info, to recover $17 million.
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