Money Morning…


Tackling bad loans; Government to meet top bankers to discuss financing options for stuck power projects- Positive for ICICI Bank, Axis and PSU banks like SBI, BOB, BOI, PNB ,etc
On October 17, finance ministry officials led by Financial Services Secretary Gurdial Singh Sandhu will meet top bankers to explore ways to get projects going and help banks avert a blow. Banks take a hit if projects financed by them fail to generate cash flow after the announced date of completion.

As various projects were stuck due to delays in land acquisition and environmental clearance, the Reserve Bank of India had given a two-year grace period during which banks do not take any loss on these loans. For some projects, the grace period will end in the next six months to a year. Few issues like whether more than 10% cost overrun can be funded without considering it a restructured asset may also crop up. Unless these issues are addressed now, losses will start showing up on banks’ books by the close of this financial year. We expect some positive outcome post this meeting which shall be beneficial for banks with such stressed corporate exposure. Positive for ICICI Bank, Axis and PSU banks like SBI, BOB, BOI, PNB, etc.

India Inc’s foreign investment doubles to $3.02 billion in September
India Inc’s overseas direct investment in September 2014 more than doubled from a year ago period to $3.02 billion. Total investment abroad by Indian firms were at $1.43 billion in September 2013. In the previous month August, the Indian companies had undertaken investments of $1.25 billion in overseas markets. The investments were a mix of issuance of guarantees ($2.53 billion), loan ($257.60 million) and of equity ($232.59 million).

FIPB to take up 48 foreign investment proposals on October 21
With the government on a fast-track to lure foreign investments, FIPB will consider as many as 48 FDI proposals, including that of the HDFC Bank and about a dozen from the pharma sector, at its meeting on October 21. Pharma proposals including those of Lupin, Sanofi- Synthelabo and Sun Pharma will come up for consideration in the meeting to be chaired by the Economic Affairs Secretary.

China Sep Trade Surplus Falls More Than Expected
China’s trade surplus decreased more than expected in September while exports and imports growth exceeded expectations. The trade surplus came in at $ 31 billion in September, which was less than the $ 41.41 billion expected by the economists. In August, a surplus of $ 49.8 billion was recorded. Exports grew 15.3% YoY in September, which was faster than the 12% rise expected by economists. In August, exports had increased 9.4%.

U.S. Import Prices Continue To Fall Amid Another Sharp Drop In Fuel Prices
With fuel prices showing another substantial decrease, a continued decline in U.S. import prices in the month of September. The import price index fell by 0.5% in September following a revised 0.6% drop in August. Economists had been expecting import prices to slide by about 0.7% compared to the 0.9% decrease originally reported for the previous month.

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