The Tribune, Chandigarh, India

ADB to lend $6 bn to India

Noida, May 5
India will get a loan of about $6 billion from the Asian Development Bank (ADB) over the next three years for various projects, including those in energy and education sectors. "Our idea is ADB will maintain its lending level to India, approximately $2 billion over the next three years.

"We are now working on the country partnership strategy and we are planning to maintain the level of lending to India," ADB president Takehiko Nakao said at the concluding day of the 46th annual meeting of the funding agency here.

India is the biggest borrower of ADB as the Manila-based multilateral lender had extended $2.4 billion loan to it in 2012 across sectors like transport, energy, commerce and industry, trade, finance, agriculture and natural resource management and it is likely to continue extending assistance in these sectors.

Nakao said the bank will continue to lend $10 billion a year across the member-nations despite generating lower return from investments.

Stating that ADB is facing a resource challenge, he said this issue will require urgent and careful attention. "We will look at all options for ensuring that our lending level remains adequate." Actively investing in different kinds of assets can be one of the options for larger revenue, he said, adding "financial safety and return is the key objective while making investment".

Asked whether there was discussion on augmenting the capital of the bank at the Board of Governors meeting, Nakao said: "That is a very difficult issue. At this point I want to mention what kind of objections we are getting to maintain the level of lending. I don't want to specify what kind of idea we have at this moment." ADB's capital was tripled in 2009. The fund enhancement came after a gap of 15 years.

On economic growth in Asia, Nakao said the region is recovering from the slowdown caused by the global meltdown.

"I think growth momentum is strong, supported by strong domestic demand, consumption and production capacity of the region. So, Asia is becoming more and more the consuming Asia, or factory Asia. So, I have a very positive view of Asia and the future of Asia," he said.

With regards to quantitative easing being carried out by developed nations, he said it is needed for supporting growth in these countries which have been facing slowdown.

He, however, cautioned countries against spillover effects which could be in the form of asset price bubble or overheating (of the economy).

"If there is a problem, countries, of course, have the ability to manage it through micro economic or macro prudential measures," he said. — PTI

India biggest borrower

India is the biggest borrower of ADB

The bank had extended $2.4-bn loan to India in 2012 across sectors like transport, energy, commerce and industry, trade, finance, agriculture and natural resource management

It is likely to continue extending assistance in the above sectors

Our idea is ADB will maintain its lending level to India, approximately $2 billion over the next three years. We are now working on the country partnership strategy and planning to maintain the level of lending to India.

— Takehiko Nakao, president, ADB

BIZ TALK
Unified communications market growing significantly: Polycom

Polycom is a global leader in open standards-based unified communications and collaboration (UC&C) solutions for voice and video collaboration and trusted by lakhs of customers around the world. Polycom solutions are powered by Polycom RealPresence Platform, comprehensive software infrastructure and rich application programming interface that interoperate with the broadest set of communication, business, mobile and cloud applications and devices to deliver secure face-to-face video collaboration in any environment. Neeraj Gill, managing director, India and SAARC, Polycom, talks to Girja Shankar Kaura about the future plans of the company.

Q. What is the size of the UC market in India and where does Polycom stand?

Polycom is the industry leader in audio-video-conferencing segment, delivering flexible and effortless collaboration. Polycom has the largest market share in India (49%), followed by Cisco and Lifesize. The market size of unified communications in India is also growing at a significant pace. According to IDC, the unified communications market in Europe, the Middle-East and Africa (EMEA) was worth $8 billionn in 2010 and will grow to $16.6 billion by 2014.

Q. How has the video-conferencing market evolved over the past years?

As per the Frost & Sullivan ‘Video Conferencing Endpoints & Infrastructure Market in India CY 2011’ report, the value of video conferencing market in India was anticipated at $83.2 million, accounting for a growth rate of 38.9% in 2011 over the previous year. The industry is likely to sustain a compound annual growth rate (CAGR) of 20.1% over the next seven years, attributed to industry trends such as: the changing mindset of enterprises that look at video as a corroborator in their business processes; support of the service provider community in deploying managed video conferencing services; enhanced reach through system integrators; and greater enterprise drive for open standards among others.

Q. What differentiates Polycom UC solutions from others in a space that sees almost all players offering the same solutions?

Polycom is the global leader in open standards-based UC&C solutions. In India, the Frost & Sullivan report estimates the company’s market share to be 50.2% in the overall video conferencing endpoints and infrastructure market. At present, Polycom remains the only pure play video collaboration solutions provider and we stand to gain as enterprises, governments and educational institutions increasingly recognise the productivity enhancing benefits of video conferencing.

At Polycom, our vision is to make video collaboration ubiquitous. Our goal is to make it possible for everyone to use video as their preferred way to collaborate easily, reliably, and securely regardless of network, carrier, protocol, application, or the device they want to use.

Polycom’s USP is that it offers easy-to-use, interoperable video solutions that are backwards and forward, compatible and deliver the best Total Cost of Ownership (TCO). We take a partner-centric approach to deliver the most complete video solutions with the most flexible delivery options. We are not only propagating an open and interoperable platform that allows all vendors to work together for the benefit of enterprises but also lowering the total cost of ownership for them by using up to 50% less bandwidth.

Q. What are some of the latest solutions that you have announced for the Indian market?

Polycom’s RealPresence Platform interoperates with the broadest range of business, mobile and social applications and devices.

Our range of cutting-edge solutions in standards-based unified communications and collaboration (UC&C) deliver relevant collaborative solutions to over 4,15,000 customers globally which includes 98% of the Fortune 100 and 95% of the Fortune 500 companies from around the world.

Q. Which industry verticals do you see maximum traction for unified communications solutions and what are the reasons?

It has been observed that UC in India is increasingly being adopted by businesses that are manpower-intensive but widely distributed, for example healthcare and education.

Healthcare organisations face challenges in three areas: delivering quality patient care, streamlining care delivery processes and improving business processes. These challenges are compounded by an environment with many time-dependent critical processes, multiple modes of communication and many mobile caregivers and other workers with widely varying availability throughout the day.

Healthcare organisations across the country are adopting and leveraging unified communications (UC) solutions that can consolidate systems and solve communications challenges encountered on a daily basis.

Q. What are trends we can look forward to in enterprise unified communications in 2013? What about mobile UC, virtualisation of UC applications, interoperability and open standards?

Video collaboration solutions are fast gaining traction in India as well as globally. Indian companies have started realising the importance of video collaboration solutions, as they see immediate benefits after deploying these solutions. These life-like collaboration tools help companies to create interactive and communicative environments, utilising their time more efficiently and saving travel costs. As more and more organisations implement video collaboration for real time communication, technology companies such as Polycom are working towards enhancing the employee’s experience from these solutions.

SEBI mulls steps to check manipulation through BBM, WhatsApp

New Delhi, May 5
Amid a large-scale usage of smartphone messaging services like BlackBerry Messenger (BBM) and WhatsApp by manipulators to spread sensitive information about their target stocks, market watchdog SEBI is mulling over steps it can take to check risks being posed by these new-age mobile applications.

To strengthen its probe and oversight on stock market transactions, SEBI has already got software tools in place along with IT experts to analyse discussions on social networking sites like Twitter and Facebook.

However, applications like WhatsApp and BBM are proving to be too tricky for SEBI, given the multi-level difficulties faced in tracking the source and spread of market-sensitive information through these mass-messaging platforms, a senior official said.

While these applications use the Internet servers of smartphones, the transmission of messages through these platforms happen in a highly encoded manner and it is very difficult for a third party to decode them.

The official said the market manipulators started using blogs and social media platforms like Facebook and Twitter in a big way a couple of years ago whenever they wanted to spread a word for influencing some stocks.

However, most of the information shared on blogs and social media platforms can be easily tracked, given the highly public nature of such platforms.

After finding out that the source and spread of any sensitive information through social media platforms could be apprehended easily by the regulators, the manipulators are nowadays mostly using BBM and WhatsApp.

The free messaging services available on these platforms seem to have added to their attractiveness among the manipulators.

The official said SEBI is as such finding it difficult to get details like Call Data Records from telecom companies and it would not be easy to get information on messages shared through mobile apps - a commonly used term for such applications.

SEBI’s investigations into a number of insider trading and market manipulation cases during the recent months have shown that apps like BBM and WhatsApp were used. — PTI

Tax Advice
No tax payable on EPF proceeds
by SC Vasudeva

Q. My salary income for 2012-13 is Rs 2,16,000 and I got Rs 2,00,000 from my EPF account. I want to know my net taxable income for the financial year 2012-13. Please advise whether I have to show my EPF money in my I-T return. Our account department says the EPF amount is tax-free and therefore it is not to be included in I-T return. Please advise.

— Dheeraj

A. The amount of EPF received by you is not taxable and therefore it should be reflected in the tax return in the column in which exempted incomes are required to be indicated.

Q. For FY11-12, I received a demand of Rs 1,100 on 13-02-2012 (AY 2011-12) from the I-T Department. I deposited this amount on 29-02-2012 as Self Assessment Tax. I again received the same demand to clear Rs 1,100 due on 5-03-2013. I applied for an online rectification request. I again received a letter on 21-03-2013 in which Rs 1,100 has been updated under B) Payments made against demand(s) raised by the previous order(s). But now I am being asked to pay Rs 14,910. But an amount of Rs 14,000 which was in both of the columns under Self Assessment Tax (As Provided by taxpayer in return of income - Rs 14,000 & as computed under Section 143(1) - Rs 14,000) in communication received on 13-02-2012 has been changed to Self Assessment Tax (as provided by taxpayer and/or information available on record - Rs 14000 and as computed under Section 154 - Rs 0) in communication received on 21-03-2013. Please advise.

— Vivek Kumar Gupta

A. The mistake pointed out by you is an account of a systematic problem at the level of the Income Tax Department. This problem is arising in a number of cases. The department has issued a circular whereby tax officers have been asked to verify the payment in such cases on the basis of proof submitted by the assessee and rectify the records. Recently, the Delhi High Court has also passed an order on the similar lines. You should, therefore, apply for rectification under Section 154 of the Act and tender the necessary proof for such rectification. The rectification application should be made to the Assessing Officer concerned. He is supposed to pass a rectification order in accordance with the directions contained in the circular and in the order of the Delhi High Court.

Govt aims at 2.5% current a/c deficit by 2017: Montek

Noida, May 5
The government aims to bring down current account deficit (CAD) to about 2.5 per cent of the GDP by March 2017, Planning Commission Deputy Chairman Montek Singh Ahluwalia said today. "...current account deficit, which (we aim to bring down) from 4 per cent of GDP going down to about 2.5 per cent by the end of 12th Plan (2012-17)," he said while speaking on 'Mobilising Long Term Financing for Infrastructure' on the concluding day of 46th annual meeting of the Asian Development Bank (ADB) here.

CAD represents the difference between inflows and outflows of foreign currency. It had touched a record high of 6.7 per cent in the December quarter of last fiscal year. The CAD in 2012-13 fiscal is likely to be around 5 per cent of the GDP.

Describing the high CAD as "by far the biggest risk to the economy", RBI had last week said in its annual monetary policy for 2013-14 that "monetary policy will also have to remain alert to the risks on account of the CAD and its financing, which could warrant a swift reversal of the policy stance".

Ahluwalia said the government aims to finance the CAD as much as possible through foreign direct investment and through portfolio inflows and as little as possible through debt.

He said the government was making efforts to bring the deficit down in a phased manner. He also said there is a need to channelise domestic savings into long-term infrastructural projects, but high fiscal deficit is also a hindrance. — PTI

RBI extends lead bank scheme to urban areas

Mumbai, May 5
Stating that there are millions of unbanked people even in urban areas, the RBI in a significant move has asked banks to bring all districts in metropolitan areas under the lead bank scheme (LBS) fold. The lead bank scheme, launched way back in 1969, is an integrated mechanism to extend banking services at the doorsteps of consumers, especially the poor.

The move is part of increasing the scope of its financial inclusion drive to urban areas on one hand and helping the government realise its efforts to plug the loopholes in subsidy deliveries by transferring all the benefits directly to the bank accounts of the target people.

Announcing the annual monetary policy, RBI Governor D Subbarao said, the purpose of the LBS extension is to bring all the unbanked urban areas under the banking fold.

"With the objective of providing an institutional mechanism for coordination between government authorities and banks, facilitating doorstep banking to the excluded segment of urban poor, and to implement direct benefit transfer scheme of the government, it has been decided to bring all the districts in metropolitan areas under the LBS fold," he said. — PTI

Equity as an asset class will outperform
A. Balasubramanian

Recent measures taken by regulators with respect to expansion of investor base, distribution network, simplified advertisement code, stepping up the focus in creating investor awareness and education among others, should revive the mutual fund industry significantly in the coming years

Equity diversified funds have delivered returns in excess of 25 per cent. The year 2012 saw many challenges such as high inflation, high interest rates, shaky external environment and policy logjams. Despite these issues, it turned out to be a good year from the equity mutual fund investor’s point of view. As it always happens, markets do get dictated by optimism and pessimism that exists in the street among investors. Global investors constantly watch the developments that could potentially have an impact, both in increasing optimism and actual fundamentals.

We believe that the year 2013 has started on a good note with reasonably good optimism and action from various quarters, including regulators, government departments and global developments.

As it is known, price movements in both — the bond and equity markets — are driven by expected changes, hopes and the real fundamental change that is more visible. While the hope and optimism is rising, there has been a simultaneous effort from policy makers in enabling the trend reversal. This definitely enhances, or we can also say brings back the credibility, so as to ensure that the downside of the economy is limited and it can only get better as we move forward.

At Birla Sun Life AMC, while drafting our outlook for 2013, we were getting reasonably positive vibes that the recent policy initiatives would enhance the probability of deliverables in various economic senses for the better. This starts from moderating inflation to trend reversals — in industrial activity, in GDP growth, in policy interest rate (i.e. repo rate and reverse repo rate) and reversal in currency trend.

We believe the year ahead will see a mean reversion across all parameters. Interest reduction undoubtedly will depend upon visible change in the inflation. On the other hand, various government measures such as increase in electricity tariff, fuel prices are logically speaking, bringing about fiscal correction and fiscal discipline. There have been scores of policy changes within the energy sector which would go a long way in seeing the benefit in the fiscal balance and the burden on oil companies. As this increases the burden on consumer, he as always, will be smart about when to cut expenses of things that become unaffordable for him.

Therefore, we believe that there will be a right balance in fiscal and inflation will moderate in 2013. This makes a case for interest rate to moderate in the coming year. Obviously, this increases the probability of improving the corporate balance sheet.

As per our analysis, interest cost as a percentage of PAT has doubled close to 40% compared to the year 2010. Therefore, any reduction in interest rate will directly impact the bottom line of companies, thereby enhancing profitability. We, therefore, believe that there is a strong case for upgrade in earnings of Indian corporates in 2013. This makes a compelling case for investing in equity as an asset class. We would even say that equity investments through mutual funds deserve higher allocation than before.

Lastly, mean reversion should also in general apply to other asset classes which have equally given phenomenal experience to investors. These are basically gold and real estate. Both asset classes are trading at long-term average with respect to the Sensex. This makes us believe that these asset classes might see an underperformance at the cost of outperformance coming from equity assets. Equity investment will also get a flip over other asset classes on improved earnings outlook for the next year and also mean reversal.

Globally, every economy is putting the right effort to get back onto the growth path and at the same time, increasing the scope for better government finance. This in essence, reduces the downside risk substantially and increases the probability of making reasonably good money for investors in the capital market.

While we keep attempting to look at investment opportunities in various sectors, it is becoming increasingly important to examine the fundamentals, management credibility measured through management score card and accordingly invest in companies that can deliver returns to investors. We believe that the equity market will provide sufficient opportunity to portfolio managers to pick the right stocks that will outperform.

With respect to mutual fund industry, we believe that the uptick on growth is now on the cards in a big way. The recent measures from the regulators with respect to expansion of investor base, distribution network, simplified advertisement code, stepping up the focus in creating investor awareness and education among others, should revive the mutual fund industry significantly in the coming years.

I am also personally given to understand that all big, direct investors in the market are beginning to realise that investing in mutual fund equity schemes brings the high probability of making more money than direct investing. This realisation has gone up in recent times as the market is polarised, and equity schemes have outperformed various indices. Let me conclude by forecasting high optimism and return of confidence to invest in equity in the coming years.

The author is CEO, Birla Sun Life AMC. The views expressed in this article are his own

How should an NRI invest in mutual funds?
Rohit Beria

Financial institutions across the world are keeping a close eye on the Indian capital markets. Indian and foreign investors strongly believe in the growth of Indian capital markets in the long run.

Considering this positive outlook, many NRIs are keen to be a part of the "India growth story". If you are an NRI and want to invest your surplus in Indian markets and if investing directly in the equity market is not your cup of tea, then a very attractive alternative is mutual funds. Mutual funds are the ideal option for investing in equity segment as well as in debt segment of Indian capital markets.

Investing in Indian mutual fund schemes is actually not a very tedious task for an NRI, as it is perceived to be. All an NRI needs is a right bank account and other documents which even Resident investors have to submit. Non-resident Indians are allowed to invest in mutual funds in India — in both debt and equity schemes — without any approval from RBI.

NRIs have an option to invest on repatriable or non-repatriable basis. Non-repatriable basis in basic terms means that an NRI can’t take the principal amount back from India unless special permission is taken from the RBI, whereas repatriable basis means he can take back to his home country the principal amount if and when he desires. Further simplifying, a repatriable account means the owner of that account can take back the principal plus the interest or capital gain back to his home country. And in a non-repatriable account the owner can’t take back the principal but he is allowed to take back only the interest or capital gains of the investment.

It is compulsory for an NRI to have a bank account in India for investing in mutual funds. For investing in repatriable basis, the NRI should open an NRE (Non-Resident External) account in India, whereas for non-repatriable basis, the NRI should open an NRO (Non-Resident Ordinary) account in India. Although NRO account can be used for the purpose of investing in mutual funds, which is a non-repatriable account, it restricts the option of taking back the principal amount back to the NRI’s current home country. Therefore, an NRE account is recommended for investments in mutual fund for an NRI.

The next important step is to understand the procedure for KYC (Know Your Customer). Apart from the normal documents required for any Indian investor, which are proof of identity i.e. a PAN card copy and proof of address, for KYC of an NRI, the additional requirement is of submission of a certified true copy of passport, certified true copy of the overseas address and permanent address. If any of the documents (including attestations/certifications) towards proof of identity or address is in a foreign language, they have to be translated in English for submission. The documents can be attested, by the Consulate office or overseas branches of scheduled commercial banks registered in India.

The next step is to remit funds from the NRE/NRO account, the fund that is to be used for the investment purpose. Mutual funds in India have to compulsorily take money in Indian currency. Mutual funds in India are not allowed to accept investments in foreign currency. As an NRI you have to transfer money to the NRE/NRO account in India and then give a rupee cheque or demand draft from this NRE/NRO account to the mutual fund houses.

It goes without saying that the investors should consult a financial adviser before making any investment decision. Investor should also assess the risk involved in the investment and make sure that the risk is within his risk-taking capacity.

Steps for investing in MFs:

Open an NRO/NRE account

Do KYC according to the norms for an NRI

Choose, evaluate and decide which mutual fund’s schemes to buy according to your goals

Remit money to fund houses from these NRE/NRO accounts to the mutual fund house

With so many global employments available, more and more Indians are migrating to foreign lands. However, there is always a feeling to stay connected to our mother land and tiny part of it always wants to invest in India through different avenues. Mutual funds is one of the lucrative ways to invest in India. And why not invest in India, which we know has more potential of growth than most of the other countries.

The author is a research analyst, Apnapaisa. The views expressed in this article are his own