Monaco, may 25
AirAsia, which smashed order records for Airbus jets to become Asia's largest budget carrier, could buy another 50 planes as it targets aggressive expansion in India, chief executive Tony Fernandes said.

Discussion of an order for another 50 A320-family jets, worth $5 billion at list prices, comes weeks ahead of the Paris air show and five months after the Malaysian carrier added 100 jets to its order book to lift total purchases to 475 planes.

AirAsia is set to launch an airline in India in partnership with the Tata Group to cash in on rising demand for domestic air travel among India's expanding middle class. It would start with planes already on order but potentially trigger new orders.

"We're looking at putting in almost a plane every month. We decided that sometimes when we pussyfoot around it takes too long to catch up so we decided just to go for it," Fernandes told Reuters in an interview.

"We've bought a lot of planes but we're still short, we're still leasing planes at the moment, so I was right buying these planes, and we may have to put in another order...(for) 50 or something like that," Fernandes said.

Fernandes said the affiliate, AirAsia India, was recruiting to be ready to launch in the fourth quarter, subject to final clearances. He denied a report the launch had been delayed from September, saying he had always planned the final quarter.

Fernandes was speaking ahead of Sunday's Formula One Monaco Grand Prix, where his Caterham racing team is trailing behind a field that includes cars of Indian drinks tycoon Vijay Mallya — whose Kingfisher Airlines has been grounded by cash shortages.

"I think we run a better airline and he's run a better Formula One team," Fernandes said, asked how his airline would make money in a market known for losses and bureaucracy. "My point is, we're two very different models. Two very different leaders and you can't compare one with the other." — Reuters

Mumbai/Kolkata, may 25
Dalia Ghosh, a 28-year-old nurse in Kolkata, invested her savings in an unlicensed fund run by media conglomerate Saradha Group last year, hoping to start her own clothes business.

But Saradha went bust in April, wiping out as much as US $3.7 billion in deposits from mostly low-income Indians, miring West Bengal's government in scandal, and illustrating the risks faced by the millions who live outside the banking system.

Saradha, which until April had at least two high-profile MPs on its payroll, lost money in bad investments, and on paying steep commissions to its agents, government officials said.

"We trusted them like fools because the return they assured was four times more than a nationalized bank," said Ghosh, who says she lost Rs 100,000 in the collapse of Saradha, believing it to be a government-approved fund.

Until it fell apart, Saradha was a powerful outfit in parts of India with holdings in real estate and media, including several newspapers and TV channels. That media business has dissolved.

Saradha ran one of the thousands of unlicensed financial schemes in India, many of which thrive below the regulatory radar with the protection of local politicians, economists say.

Lack of education and the absence of bank branches across huge swathes of the country puts more than half of India's population outside the formal banking sector.

Reserve Bank of India governor D. Subbarao worries about the number of unregulated investment and savings schemes, but says the central bank alone cannot stamp them out.

"Curbing all this will need investigation, will need enforcement of law, but more importantly ... we must provide access to the formal financial system for a large segment of the population which do not have access now," he said.

The distinction between licensed and unlicensed financial services firms is lost on millions of Indians, many of whom have never stepped inside a bank branch.

"The basic problem is a lot of these para-banking models are based on Ponzi schemes," said Abheek Barua, chief economist at HDFC Bank, referring to a type of pyramid selling where returns are taken from money coming in from new joiners.

"Unless we have very aggressive bank penetration, these para-banking models will always have allure."

India has 10.6 bank branches for every 100,000 adults, compared with about 35 in the United States, according to the World Bank, while only 12 percent of adults said they had saved money at a formal financial institution in the past year.

Assets at nonbank finance companies in India have increased 20% annually for the past five years — faster than at banks — and stand at over $670 billion, a November report by the Switzerland-based Financial Stability Board said. — Reuters

BRIEFLY

New Delhi
Gold snaps 3-day losing streak, up by Rs 100: Snapping a three day losing streak, gold prices recovered by Rs 100 to Rs 27,050 per 10 grams in Delhi on Saturday on scattered buying by retailers at prevailing lower levels. Silver also advanced by Rs 200 to Rs 44,300 per kg on increased offtake by industrial units. Marketmen said scattered buying by retailers at attractive lower levels mainly led to recovery in gold prices. Gold of 99.9% and 99.5% purity rallied by Rs 100 each to Rs 27,050 and Rs 26,850 per 10 grams, respectively. It had lost Rs 100 in the last three sessions. — PTI