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AirAsia incorporates Indian venture; files papers with MCA
New Delhi, March 31
Gearing up to launch services in partnership with Tatas, Malaysian low-cost carrier AirAsia has incorporated a company in India with the filing of all requisite documents with the ministry of corporate affairs.

BIZ TALK
Banks face growing pressure to clean up their NPAs
Asset Reconstruction Co Ltd (ARCIL) is the country's largest entity in the business of buying bad loan portfolios. It is hopeful of acquiring significant portion of non-performing assets of banks in a scenario where NPAs are on the rise and there is pressure on the banks to clean up their books.

China ‘resolutely opposes’ US curbs on IT imports
Beijing, March 31
China expressed "resolute opposition" and "strong dissatisfaction" with a new US cyber-espionage rule limiting imports of Chinese-made information technology products, state media reported on Saturday.


EARLIER STORIES


Wipro, Siemens to exit Nifty from today
Mumbai, March 31
Information technology major Wipro and diversified group Siemens will exit the National Stock Exchange's benchmark Nifty index from Monday, April 1. The two stocks would be replaced by private sector lender IndusInd Bank and the state-run mining giant, National Mineral Development Corp (NMDC), in the 50-share benchmark index of the National Stock Exchange, according to an exchange circular.

People stand outside shipping containers serving as their accommodation, as a car passes through a street, in Shanghai. 20 minutes' drive from the city's glitzy financial district, dozens of migrant workers are preparing to abandon homes in old shipping containers, as one of the more unusual solutions to China's housing shortage faces the wrecking ball. The country aims to spend an estimated $6 trillion on infrastructure, including housing, as a projected 400 million people become urban residents over the next decade. — Reuters

Tax Advice
Regulation of charitable trusts
Q: Which is the agency/body/regulator that keeps tabs on charitable trusts on the lines of SEBI’s Registrar of Companies for firms? What are the statutory obligations/legal formalities that a trust has to comply with during the year in normal course of its activities?

8 bluechip firms add Rs 44,239 crore in market cap; ONGC top gainer
Mumbai, March 31
Buoyed by a rally in the market capitalization of state-run Oil & Natural Gas Corp (ONGC), the combined valuation of eight of the top ten Indian companies advanced by Rs 44,239 crore last week.

Nabard extends Rs 6,031 crore support to Haryana in FY13
Chandigarh, March 31
The National Bank for Agriculture & Rural Development (Nabard) has given a total support, including refinance, of Rs 6,031 crore to Haryana this fiscal. This is almost 19% above the support of Rs 5,091 crore given during last fiscal.



Finding the cheapest personal loan

Personal loans are unsecured loans offered by financial institutions without taking any collateral security though some sate-owned banks may insist on a guarantor. The end purpose of the personal loan is not monitored and can be used for any personal needs like weddings to vacations or may be to buy lifestyle products or medical emergencies or perhaps the down payment for buying a home. As the process of applying for a personal loan is quite hassle-free with minimum documentation and disbursement in real quick time, it continues to remain one of the most favourite options for borrowers.

Graphic:
Home Loan Floating interest rates for loan amount Rs 30 Lakh as on March 28, 2013

Markets may see shaky start; to rally later in week
Indian equities may see sluggish trading sentiment early this week following data that India's current account deficit touched a record high of 6.7 per cent in the October-December quarter, but the markets are expected to bounce back in view of the recent downtrend. Analysts said the sentiment is likely to be subdued as investors may react to the current account deficit data that was made public by the Reserve Bank of India in its report on the balance of payments - released after market hours on Thursday, followed by long weekend because of the Good Friday holiday.

 





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AirAsia incorporates Indian venture; files papers with MCA

New Delhi, March 31
Gearing up to launch services in partnership with Tatas, Malaysian low-cost carrier AirAsia has incorporated a company in India with the filing of all requisite documents with the ministry of corporate affairs.

The venture, AirAsia (India) Pvt Ltd, was incorporated as an "Indian non-government company" with its registered office in Mumbai. It will be an "unlisted" company, as per the documents filed with the Registrar of Companies (RoC).

The private sector company was incorporated on March 28, 2013 with an initial authorised capital of Rs 5 lakh. nA company can change its share capital, as also other details, at a later stage.

Most of the existing air carriers present in the country, including SpiceJet, Go Air, Kingfisher, Jet Airways and IndiGo have authorised share capitals running into hundreds of crores of rupees, their RoC filings show.

Among various documents submitted by AirAsia (India), the incorporation certificate was filed on March 28, while Article of Association, Memorandum of Association, image of airline logo and other forms were filed earlier on March 11. Prior to that, AirAsia had registered the name for its Indian venture on March 1, after getting the necessary approval from the ministry.

The filing process for this new venture has been completed on a fast-track basis, a senior official said.

AirAsia chief Tony Fernandez has also tweeted that the company formation has been done for the Indian venture.

"AirAsia India has been formed. One more step. Been studying the Indian market hard. Exciting. We can make a difference," he wrote on the micro blogging site.

The Foreign Investment Promotion Board has already approved investment in the new venture, wherein Malyasia-based AirAsia would hold 49% stake, Tata Sons will have 30% and 21% stake would be owned by Telestra Tradeplace's Arun Bhatia, whose son is married to the daughter of NRI billionaire Lakshmi Mittal.

Being started with an initial investment of $14.5 million (about Rs 80 crore), AirAsia India will compete in the domestic passenger aviation space with Jet Airways, Spicejet, IndiGo, Go Air and state-run Air India.

The airline now needs to get a no-objection certificate from the Aviation Ministry, and thereafter an air transport license from the Directorate General of Civil Aviation to be declared a scheduled airline.

AirAsia India would also mark the reentry of Tatas into the aviation space after about 60 years of JRD Tata-founded Air India being nationalised in 1953.

AirAsia and Tatas announced their plans to start the low-cost airline in India on February 20, while the FIPB approved the foreign investment for the venture in March. — PTI

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BIZ TALK
Banks face growing pressure to clean up their NPAs


P. RudranThe total NPAs estimated in India’s banking system are inching towards the Rs 200,000 crore mark. While it’s evident NPAs are rising steadily, the dangers emanating from them over the medium term are becoming more visible. The time calls for proper analysis and proactive action to admit the issue and initiate ways to resolve it. — P. Rudran, MD & CEO, Asset Reconstruction Co

Asset Reconstruction Co Ltd (ARCIL) is the country's largest entity in the business of buying bad loan portfolios. It is hopeful of acquiring significant portion of non-performing assets of banks in a scenario where NPAs are on the rise and there is pressure on the banks to clean up their books. In an interview to Sanjeev Sharma, P. Rudran, managing director & CEO of ARCIL, talks about the threat of rising NPAs to the tune of Rs 2 lakh crore and the issues involved in acquiring NPAs.

Q: How does ARCIL deal with nonperforming loans?

Being the first and the largest asset reconstruction company formed under the aegis of the Securitization & Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002, Arcil is in the business of acquiring and resolving the nonperforming assets in the Indian banking system. This entails a process of acquiring the nonperforming loans, duly backed by collaterals from the banks and financial institutions and ensuring value unlocking through prudent resolution as provisioned under the Act. Besides the corporate nonperforming assets, we also acquire retail NPAs through our dedicated division Arms.

Q: Even with the NPA problem with Indian banks visible and growing, what are the major roadblocks being faced by the Indian ARCs?

The main bone of contention remains a five-letter word — “value”. Unfortunately, this factor remains the biggest roadblock to the impending deals since the perception of the bank with regard to the asset value may not be its actual realizable value; most of the deals fall through due to this discord. This is where the perception gap lies and so does the opportunity to script a success story for not only the ARCs but also the Indian banking system. So to establish strong foundations for proactive resolution of nonperforming assets between the banks and ARCs in the country, it is important to address the valuation issue first. The banks, as I would believe, have been more than willing to clear their closet, in terms of nonperforming loans.

However, they are now stressing upon all-cash deals when it comes to selling their nonperforming loans. This has led to few bottlenecks – one, the trust deficit between the banks and asset reconstruction companies has widened since the banks perceive the asset reconstruction companies to make windfall gains at their expense; two, the cash components have posed a ceiling on the ability of asset reconstruction companies to participate in bigger deals; and third, the capability of asset reconstruction companies in speedy resolution of NPAs. I would agree that these are valid concerns.

Q: How can the ARCs partner banks and FIs in such challenging environment?

The total nonperforming assets estimated in the banking system are inching towards Rs 200,000 crore mark as we speak. While the increase in nonperforming assets in the Indian banking system is evident, the dangers emanating from them over the medium term are becoming more visible. The time calls for proper analysis and proactive action to admit the issue and initiate ways to resolve it. Banks have already started admitting the seriousness of the NPAs problem and have started taking baby steps towards resolving the same. Realistic valuation will not only enable creation of a credible ecosystem for improved resolution of nonperforming assets.

Q: What is the total amount of assets that you have acquired so far from the banks during the current financial year? Do you expect this number to shoot up in the coming year?

Till date, we at Arcil have acquired NPAs valued around Rs. 50,000 crore since our inception. During FY2011-12, our acquisitions were less, at sub-Rs 100 crore level, largely as the banks and FIs chose not to sell their NPAs. However, with the rising NPAs and stricter regulations by the Reserve Bank of India, cleaning up the books has become vital for banks and financial institutions.

In 2012-13, we have acquired NPAs worth Rs. 1,000 crore in relatively sizeable measure, which in some manner is a clear verdict on the urgency being demonstrated albeit slow, by the banks in resolving their nonperforming assets. We expect the situation to further improve in fiscal 2013-14 as far as sales of nonperforming assets to sset reconstruction companies by the banks and financial institutions are concerned.

Q: What kind of growth in acquisition of assets are you eyeing in the next financial year?

To our advantage, we feel confident that given the state of the economy and the stressed banking sector, the flow of nonperforming assets into the asset reconstruction companies would definitely improve during 2013-14. If that happens, we would definitely be at the forefront, both in terms of acquisition and growth.

One phenomenon that we are witnessing today is lack of appropriate “reconstruction” activity in the asset reconstruction companies space. We are trying to address this by focussing on understanding more and more reconstruction in respect of potentially viable NPAs.

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China ‘resolutely opposes’ US curbs on IT imports

Beijing, March 31
China expressed "resolute opposition" and "strong dissatisfaction" with a new US cyber-espionage rule limiting imports of Chinese-made information technology products, state media reported on Saturday.

The remarks underscore growing tension between the world's top two economies after the United States accused China of backing a string of hacking attacks on U.S. companies and government agencies. China says the accusation lacks proof and that it is also a victim of hacking attacks, more than half of which originate from the United States.

The new provision, tucked into a funding bill signed into law on Thursday, requires NASA, as well as the Justice and Commerce Departments, to seek approval from federal law enforcement officials before buying information technology systems from China. The United States imports about $129 bn worth of "advanced technology products" from China, according to a May 2012 report by the US Congressional Research Service.

State media including Xinhua, the China Daily and the People's Daily, quoted a spokesman for the Ministry of Commerce as saying the U.S. bill "sends a very wrong signal".

"This will directly impact partnerships of Chinese enterprises and American business as they conduct regular trade," said Shen Danyang, the commerce ministry spokesman.

"This abuse of so-called national security measures is unfair to Chinese enterprises, and extends the discriminatory practice of presumption of guilt," the article in the official People's Daily said, quoting Shen. "This severely damages mutual trust between the US and China." The US should eliminate the law, Shen said.

Technology security lawyer Stewart Baker wrote in a blog post this week that China could claim that the US is violating World Trade Organization rules. — Reuters

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Wipro, Siemens to exit Nifty from today

Mumbai, March 31
Information technology major Wipro and diversified group Siemens will exit the National Stock Exchange's benchmark Nifty index from Monday, April 1. The two stocks would be replaced by private sector lender IndusInd Bank and the state-run mining giant, National Mineral Development Corp (NMDC), in the 50-share benchmark index of the National Stock Exchange, according to an exchange circular.

Nifty is managed by India Index Services & Products Ltd, an NSE-Crisil joint venture, which has decided to drop Wipro and Siemens as part of its periodic index review exercise.

Wipro is undertaking a business restructuring exercise, which includes hiving off its non-IT businesses into a separate unit.

In November last year, the Wipro board approved demerger of the non-IT businesses — Wipro Consumer Care & Lighting (including furniture business), Wipro Infrastructure Engineering (hydraulics and water businesses) and Medical Diagnostic Product & Services — into a privately held company to be named Wipro Enterprises Ltd.

While Wipro Ltd will continue to remain a publicly listed company with exclusive focus on the information technology business, Wipro Enterprises would be an unlisted company. — PTI

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Tax Advice
Regulation of charitable trusts
By S.C. Vasudeva

Q: Which is the agency/body/regulator that keeps tabs on charitable trusts on the lines of SEBI’s Registrar of Companies for firms? What are the statutory obligations/legal formalities that a trust has to comply with during the year in normal course of its activities?

Rohan

A: Charitable trusts in Bombay are regulated by the charity commissioner. However, in Delhi and other northern areas of the country there is no such regulatory body in existence. Basically in Delhi and other adjoining parts of the country Income-tax department keeps a regular check on the charitable trusts and societies. It may difficult to explain in detail the statutory obligations required to be complied under the provisions of the Income Tax Act, 1961 due to the space constraint. However few of the obligations required to be met by such institutions are:

a) Filing of an application for registration of such charitable institutions with the tax authorities under section 12A of the Income Tax Act read with Section 12AA of the Act as also making an application for the grant of certificate under section 80G of the Act.

b) Keeping books of account so as to record the transaction of charitable institutions and getting the accounts audited in case income of such institutions exceeds the maximum amount not chargeable to tax.

c) Filing income tax returns along with financial statements for the financial year which is required to be filed under Section 139(4A) of the Income Tax Act.

d) Ensuring that 85 per cent of the income is utilized for the objectives of the trust during the financial year.

Q: I am a senior citizen and acquired US citizenship in 2012, also an Overseas Citizen of India. I have a bank savings and fixed in India since 1970. What type of bank account should I have?

Rohan

A: The bank account maintained in India after acquiring the status of a nonresident Indian should be a Nonresident Ordinary (NRO) Account. You should therefore approach your bankers to convert the savings and fixed deposit account under the aforesaid category.

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8 bluechip firms add Rs 44,239 crore in market cap; ONGC top gainer

Mumbai, March 31
Buoyed by a rally in the market capitalization of state-run Oil & Natural Gas Corp (ONGC), the combined valuation of eight of the top ten Indian companies advanced by Rs 44,239 crore last week.

Except Reliance Industries Ltd and State Bank of India, the rest eight companies, including Tata Consultancy Services, ONGC, Coal India Ltd and HDFC Bank, saw rise in their m-cap in the week gone by, where the BSE 30-stock Sensex also rose by 0.53% to 18,835.77.

ONGC’s market cap spurted by Rs 13,432 crore to Rs 2,66,546 crore. During this period, the company’s stock also jumped 5.3% to Rs 311.55.

Coal India 2.62 % added Rs 7,390 crore to Rs 1,95,270 crore in its m-cap, while HDFC Bank saw a gain of Rs 6,076 crore to Rs 1,49,771 crore. TCS' value soared by Rs 6,038 crore to Rs 3,07,635 crore, while the m-cap of HDFC climbed Rs 4,582 crore to Rs 1,27,164 crore. The market worth of ITC jumped Rs 3,077 crore to Rs 2,43,866 crore. — PTI

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Nabard extends Rs 6,031 crore support to Haryana in FY13
Tribune News Service

Chandigarh, March 31
The National Bank for Agriculture & Rural Development (Nabard) has given a total support, including refinance, of Rs 6,031 crore to Haryana this fiscal. This is almost 19% above the support of Rs 5,091 crore given during last fiscal.

An official press release said of the total support, Rs 4,950 crore was extended to cooperative and regional rural banks to meet the short-term credit needs of farmers for crop production and other activities.

A sum of Rs 603 crore was provided by Nabard towards investment credit as refinance for capital formation in the state’s agriculture and rural economy covering farm and nonfarm sector activities to commercial, regional rural and cooperative banks.

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Finding the cheapest personal loan
Nikolai Kirtikar

Personal loans are unsecured loans offered by financial institutions without taking any collateral security though some sate-owned banks may insist on a guarantor. The end purpose of the personal loan is not monitored and can be used for any personal needs like weddings to vacations or may be to buy lifestyle products or medical emergencies or perhaps the down payment for buying a home.

As the process of applying for a personal loan is quite hassle-free with minimum documentation and disbursement in real quick time, it continues to remain one of the most favourite options for borrowers. The personal loan amount and rate of interest is dependent on three major factors, i.e., the borrower’s income and his ability to service the loan, credit history of the borrower and the company for which the borrower is working (so be prepared to pay higher interest rate if you are not an employee of their list of preferred employers)

Being classified as unsecured loans, personal loan is usually more expensive in terms of interest rate as compared to any other loan taken against collateral security. In current scenario (March 2013) the prevailing rate for personal loan varies from minimum 14% to maximum of 48% per annum. So could there be any cheaper options to this? What are these?

Let’s look at the cheaper options to personal loan in case of short-term financial needs.

Loan from family and friends

Borrowing from one’s family members, friends and relatives is the easiest and safest option of borrowing as they may lend you at better terms and conditions than the financial institutions. Secondly, whenever you have additional funds to prepay, you can foreclose the loan without paying any penalty. They will be most happy in this case and will designate you as your preferred customer.

Loan against fixed deposits

One can borrow up to 90% of one’s fixed deposit amount in a bank. The interest rates charged on such loans are generally one to two per cent higher than the interest you receive on your fixed deposits. Hence, if you are earning 9% p.a. on your fixed deposits, the interest you will have to pay on your loan overdraft will be around 10-11% pa.

Here one must note that you cannot avail loan against tax saving fixed deposits.

Loan against gold jewellery

You can pledge your gold jewellery and avail up to 60% of the realizable value of gold jewellery/ornaments though banks can and do provide a higher percentage of the realizable value of the jewelry as well. A gold loan is usually available for tenure of one year and it can be further extended at the prevailing rate of that time. You just need to walk into any branch office of the lender along with the gold jewellery. The lender will evaluate the jewellery and provide the loan based on their valuation rather than the cost mentioned in your purchase bill. Depending on the LTV opted by you the rate of interest will vary from 12-25% pa. The trick to get lower rate of interest is to ensure that your loan does not exceed more than 50-60% of the jewelry value. Muthoot Finance and Manapurram Finance are two very active players in loans against gold.

Loan against property

Typically you can get up to 50-60% of the value of the property or twice your annual income (whichever is lower) as a loan against your immovable property. It is available for a period of five years to 15 years and the rate of interest will be in the range of 11.75% to 17% p.a. Loan against property is usually a time consuming and lengthy process and is not ideal for the people who have a relatively smaller cash requirement of a couple of hundred thousand rupees.

Loan against securities

This loan is available against pledging of securities like mutual funds, demat shares, insurance policies (ideally traditional like endowment policies) with high surrender value, NSC/Kisan Vikas Patra, bonds, etc. Lending institutions generally have their own list of approved mutual funds and shares and will provide loans against this list only. Since the value of mutual funds and shares fluctuate frequently, the lenders will keep a higher margin while financing against these securities. The rate of interest on these loans will be around 12.5% to 14% p.a.

Loan against PPF

A subscriber can take loan against his Public Provident Fund balance only for specific purposes like education, marriage and medical expenses etc. subject to restrictive terms and conditions. Subscribers can avail of the loan facility from the third financial year up to the end of fifth financial year. However one cannot take loan after the end of sixth financial year.

Top-up loan

If you are an existing home loan borrower, you can ask your lender to give you a top-up loan on the security of the house. You will be eligible for a top-up loan only if your repayment track record is good and your income is sufficient to service both the home loan and the top-up loan. It is also important that the property value also is sufficiently large to provide an appropriate margin for both the loans put together. The top-up loan is likely to be slightly higher than your existing home loan but lower rate than the personal loan; hence it is a good idea.

Loan from employer

Under certain circumstances your employer might agree to offer you the loan and adjust the amount against your monthly salary. All the above options are not only cheaper than personal loan but can be availed even if your credit rating is poor. The exception to the rule is loans against property and top-up loans, where your credit history will play a major role in getting your loan sanctioned.

The author is product manager at Apnapaisa.com. The views expressed in this article are his own

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Markets may see shaky start; to rally later in week

Indian equities may see sluggish trading sentiment early this week following data that India's current account deficit touched a record high of 6.7 per cent in the October-December quarter, but the markets are expected to bounce back in view of the recent downtrend.

Analysts said the sentiment is likely to be subdued as investors may react to the current account deficit data that was made public by the Reserve Bank of India in its report on the balance of payments - released after market hours on Thursday, followed by long weekend because of the Good Friday holiday.

The current account deficit, which is the difference between inflow and outflow of foreign exchange, widened from 5.4 per cent in the second quarter (July-September) to a record high of 6.7 per cent of India’s gross national product in the third quarter of fiscal 2012-13 fiscal, driven mainly by large trade deficit.

However, some analysts said that the recent downtrend in the market may prompt some value buying and push it up after the initial reaction to the current account deficit, if any. "The recent sharp fall in the market suggests that much of the negativity may be discounted and it can see a bounce back," Milan Bavishi, head of research at Inventure Growth & Securities.

The BSE 30-stock index, the Sensex, has lost over 2% in the last 15 trading sessions. Auto and cement stocks will be in focus as companies from these two sectors unveil monthly sales data for March from Monday. Besides, HSBC India manufacturing PMI for March will also be announced on Monday, while the performance of services sector will come out on Wednesday.

According to Rakesh Goel, Senior Vice President, Bonanza Portfolio: "This week, 5,700 shall be crucial deciding level for the National Stock Exchange Nifty in near-term and the index is likely to witness further buying above this level."

Stock specific action will be seen in IndusInd Bank, NMDC, Siemens and Wipro. IndusInd Bank and NMDC will be part of the Nifty index with effect from Monday, replacing Siemens and Wipro.

Stock markets closed the fiscal 2013 on a positive note, coming off four-month lows and with the BSE benchmark Sensex rising by 0.53% last week. — PTI

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