The Tribune, Chandigarh, India

	Economy to gain momentum, to grow 4.9% this year: OECD New Delhi, May 6 India's economy is likely to make a gradual recovery this year, helped by a rebound in capital investments as well as a pick-up in private consumption, but rising bad loans at its banks threaten to choke the recovery, the Organisation for Economic Cooperation and Development (OECD) said on Tuesday. In its latest economic outlook, the Paris-based think-tank said growth in India, the Asia's third largest economy, was expected to edge up to 4.9% in calendar year 2014 from 4.5% a year earlier and accelerate further to 5.9% in 2015. The estimates are predicated on hopes of an upturn in capital investments after the ongoing General Election and a boost in consumption driven by slowing inflation. India is facing the worst economic slowdown since the 1980s as investment growth has hit an 11-year low. Capital investment contributes nearly 35% to the economy, but it probably barely grew in the fiscal year that ended in March. To break the investment logjam, the Cabinet Committee on Investment (CCI), has cleared projects worth about 6 per cent of gross domestic product (GDP). "Investment is to rebound after the spring General Election and as large investment projects recently approved by the Cabinet Committee on Investment are gradually implemented," the OECD report said. The report urged New Delhi to rapidly carry out pending labour, fiscal and tax reforms for a faster economic revival. It also backed a Reserve Bank of India panel's proposal for moving to an inflation target of 4 per cent in three years while setting the monetary policy, sharply below current levels. "The proposed inflation targeting framework will help anchor price expectations and improve business sentiment and consumer confidence," it said. The report, however, flagged off rising bad banking assets at Indian lenders as a major risk to the country's economic recovery. The economic slowdown and higher interest rates are making it tougher for companies to repay loans, leading to a steady growth in non-performing assets, especially among state-run banks. Stressed loans in India —those categorised as bad and restructured — total $100 billion, or about 10 per cent of all loans. Fitch Ratings expects stressed assets to reach 14 % of loans by March, 2015. This has made some lenders shift focus from corporate lending to consumer credit, which is mostly secured against borrowers' assets, contributing to a slump in capital investment. "On the negative side, failure to halt the rise in non-performing loans could derail the pick-up in investment," the report said. — Reuters Rising bad loans, a threat The OECD report says fiscal consolidation and supply bottlenecks, coupled with still high non-performing loans and corporate leverage, will weigh on the economic recovery Economic slowdown and higher interest rates are making it tougher for companies to repay loans, leading to a steady growth in non-performing assets Stressed loans - those categorised as bad and restructured - total $100 billion or about 10 per cent of all loans. Fitch Ratings expects stressed assets to reach 14% of loans by March, 2015
	HDFC Q4 profit up 11% on retail loan growth Mumbai, May 6 Mortgage major HDFC today reported an 11 per cent increase in standalone net profit to Rs 1,723.1 crore in the three months ended March on a 26 per cent growth in retail loans. "It's the volume-driven growth that we have seen in the course of the year and that is what has contributed to our profitability," vice-chairman and chief executive officer Keki Mistry told reporters. For the full year, HDFC's standalone profit rose 12 per cent to Rs 5,440.24 crore, while profit before dividend, sale of investments and tax stood at Rs 6,635.67 crore, reflecting a growth of 15 per cent. On a consolidated basis, the full-year net income grew 20 per cent to Rs 7,947.82 crore. The mortgage lender's standalone net interest margin for the year stood at 4.1 per cent, up from 4 per cent in the December quarter, and the spread on loans stood at 2.29 per cent. "In the last 10-15 years, our real spread has been between 2.2 and 2.3 per cent. We continue to believe the spread will continue to be broadly in that range," Mistry said. Gross non-performing loans stood at Rs 1,357 crore, equivalent to 0.69 per cent of the loan portfolio, at the end of March compared with 0.77 per cent in the December quarter. The NPA of individual portfolio stood at 0.53 per cent, while that of non-individual portfolio was 1.01 per cent. During the quarter, HDFC received almost Rs 550 crore from the sale of Hiranandani Palace Gardens, a Chennai-based property, which became a non-performing asset in the second quarter. The property was developed by Mumbai-based Hiranandani Group and Hirco, an ex-Hiranandani group company. HDFC declared the property an NPA after the promoters defaulted on repayment. Vijaya Bank Q4 net drops 39.3% Bangalore: Vijaya Bank today reported a 39.3 per cent decline in net profit at Rs 135.84 crore for the fourth quarter ended March, 2014, due to mark-to-market provisioning. The bank had posted a net profit of Rs 224.15 crore in the January-March quarter of 2012-13 fiscal. Total income increased to Rs 3,029.34 crore in the January-March quarter, as against Rs 2,680.20 crore in the year-ago period. "....net profit declined by 39 per cent that is due to mark-to-market provisioning," Vijaya Bank chairman and managing director V Kannan said. — PTI
	No fine if minimum balance not kept in dormant bank a/c Mumbai, May 6 The Reserve Bank today asked banks not to levy penalties on customers who don't maintain a minimum balance in any inoperative account as part of a consumer protection initiative. "It is advised that henceforth banks are not permitted to levy penal charges for non-maintenance of minimum balances in any inoperative account," the RBI said. Several banks, including the State Bank of India, do not levy any charge if the minimum balance is not maintained in an inoperative savings account. The RBI directed banks in 2012 not to charge customers for non-operation or activation of basic savings accounts. For operative accounts, customers of ICICI Bank and HDFC Bank are charged Rs 750 per quarter if they don't maintain a minimum average quarterly balance of Rs 10,000 in urban centres and Rs 5,000 in semi-urban areas. “Instead of levying penalty for non-maintenance of minimum balance in ordinary savings accounts, banks should limit services available on such accounts to those available to basic savings accounts and restore the services when the balances improve to the minimum required level," the RBI said. — PTI Minors over 10 can open accounts Minors above 10 years of age can open and operate independently savings bank account and use other facilities such as ATM and cheque books. The RBI on Tuesday issued the guidelines allowing minors to operate bank accounts independently with a view to promote financial inclusion and bring uniformity in opening of such bank accounts.
	Improving business environment DIPP identifies six best practices Sanjeev Sharma Tribune News Service New Delhi, May 6 The Department of Industrial Policy and Promotion (DIPP) has zeroed in on six best practices, including the single-window clearance process operating in Punjab and Rajasthan, which can be utilised to improve business environment in the country. It was stated in the DIPP report on "Improving business environment in India". Accenture has conducted the report which was released today. The six selected practices are the integrated and comprehensive system for managing indirect taxes by Karnataka, labour management solution by Maharashtra, single-window clearance for Industries-MAITRI by Maharashtra, land-related interventions in Gujarat, implementation of e-governance in pollution in Gujarat and single-window clearance mechanism in Rajasthan and Punjab. Maharashtra and Gujarat have been selected for two practice models in the respective states. The report said the World Bank and the World Economic Forum had ranked India poorly in terms of business environment in their surveys. "Problems and restrictions plague the business throughout its lifecycle, making it difficult, expensive and cumbersome to start, grow or exit from a business. There is a need to make it easier to do business in India. Improving the business environment is likely to spur growth and generate employment for millions across the country," it said. The DIPP has engaged Accenture which interacted with various stakeholders and helped identify various parameters for measuring the state of doing business in India, the methodology to measure and collect information and the best practices being followed by states/UTs. In all these cases, technology has been the key driver of change and a critical state official has been the change agent, the report said. The single-window clearance model for investments in Rajasthan and Punjab has been identified as a best practice. In the Punjab model, the portal has been branded "Udhyog Sahayak". A separate executive panel is set up under the Empowered Committee which deals with the problems of entrepreneurs.
	Private sector output falls for 2nd successive month New Delhi, May 6 The output of the private sector in India fell for the second consecutive month in April, as manufacturing production rose at a softer rate and the service sector output declined further, an HSBC survey said. The HSBC India Composite Output Index, which maps both services and manufacturing, increased from 48.9 in March to 49.5 in April, but remained below the crucial 50 mark which indicates contraction for the second successive month. Meanwhile, the HSBC services business activity index inched up from 47.5 in March to 48.5 in April, but this index too remained below the 50 mark. "While the Business Activity Index improved, it remained below the water line. This points to still subdued service sector activity," HSBC chief economist for India & ASEAN Leif Eskesen said. According to survey participants, a difficult economic climate, combined with the elections and a further drop in new orders had all contributed to the latest fall in business activity. Private sector companies registered lower new business for the second month running and workforce numbers in the private sector as a whole remained broadly unchanged. In terms of price rise, the report said input prices faced by Indian services firms continued to rise in April, with panelists reporting higher prices paid for food, packaging materials, fuel and paper. "The slight uptick in inflation readings suggests that inflation pressures are still lingering, which calls for the RBI to continue its starring contest with inflation," Eskesen said. — PTI
	Bank association releases 400 defaulters' list Charanjit Singh Teja Tribune News Service Ludhiana, May 6 The All India Bank Employees’ Association (AIBEA) released a list of 400 defaulters of 24 public sector banks (PSBs) here today. Prithvi Raj Mehta, president, Punjab Bank Employees Federation, said by releasing the list, the AIBEA wanted to stress why PSBs were not making profits. “Bad loans (non-performing assets) have increased to Rs 1,64,461 crore in 2013 from Rs 39,030 crore in 2008. Every year, banks are utilising their profits to cover the deficit due to non-performing assets,” he said. Naresh Gaur, secretary, Punjab Bank Employees Federation, said, "The wilful bank loan default by customers to various public sector banks have increased manifold. Surprisingly, the list of defaulters include Rajya Sabha member, Padam Shri Awardees, companies run by ministers and others.
	TCS, Infy in fray for Airtel’s IT contract New Delhi, May 6 Domestic firms, including TCS, Infosys and Wipro, are vying for Bharti Airtel's IT services contract worth $1-2 billion, which is likely to close soon. Airtel had scaled down the value of its IT services contract, which was renewed with IBM last month for a five-year period. The previous pact between the two companies was based on revenue sharing and was worth $2 billion. For the renewed pact with IBM, the value is about $500-$550 million, sources said. — PTI