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Cabinet approves National Steel Policy 2017
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for National Steel Policy (NSP) 2017.

The new Steel Policy enshrines the long term vision of the Government to give impetus to the steel sector. It seeks to enhance domestic steel consumption and ensure high quality steel production and create a technologically advanced and globally competitive steel industry.

Key features of the NSP 2017:

1. Create self-sufficiency in steel production by providing policy support & guidance to private manufacturers, MSME steel producers, CPSEs

2. Encourage adequate capacity additions,

3. Development of globally competitive steel manufacturing capabilities,

4. Cost-efficient production

5. Domestic availability of iron ore, coking coal & natural gas,

6. Facilitating foreign investment

7. Asset acquisitions of raw materials &

8. Enhancing the domestic steel demand.

The policy projects crude steel capacity of 300 million tonnes (MT), production of 255 MT and a robust finished steel per capita consumption of 158 Kgs by 2030 - 31, as against the current consumption of 61 Kgs. The policy also envisages to domestically meet the entire demand of high grade automotive steel, electrical steel, special steels and alloys for strategic applications and increase domestic availability of washed coking coal so as to reduce import dependence on coking coal from about 85% to around 65% by 2030-31.

Some highlights of New Steel Policy

n++ The Indian steel sector has grown rapidly over the past few years and presently it is the third largest steel producer globally, contributing to about 2% of the countrys GDP. India has also crossed 100 MT mark for production for sale in 2016-17.

n++ The New Steel Policy, 2017 aspires to achieve 300MT of steel-making capacity by 2030. This would translate into additional investment of Rs. 10 lakh Crore by 2030-31.

n++ The Policy seeks to increase consumption of steel and major segments are infrastructure, automobiles and housing. New Steel Policy seeks to increase per capita steel consumption to the level of 160 Kgs by 2030 from existing level of around 60 Kg.

n++ Potential of MSME steel sector has been recognised. Policy stipulates that adoption of energy efficient technologies in the MSME steel sector will be encouraged to improve the overall productivity & reduce energy intensity.

n++ Steel Ministry will facilitate R&D in the sector through the establishment of Steel Research and Technology Mission of India (SRTMI). The initiative is aimed to spearhead R&D of national importance in iron & steel sector utilizing tripartite synergy amongst industry, national R&D laboratories and academic institutes.

n++ Ministry through policy measures will ensure availability of raw materials like Iron ore, Coking coal and non-coking coal, Natural gas etc. at competitive rates.

n++ With the roll out of the National Steel Policy-2017, it is envisaged that the industry will be steered in creating an environment for promoting domestic steel and thereby ensuring a scenario where production meets the anticipated pace of growth in consumption, through a technologically advanced and globally competitive steel industry. This will be facilitated by Ministry of Steel, in coordination with relevant Ministries, as may be required.


Steel is one of the most important products in the modern world and forms the backbone to any industrial economy. India being one of the fastest growing economies in the world, and steel finding its extensive application right from construction, infrastructure, power, aerospace and industrial machinery to consumer products, the sector is of strategic importance to the country. The Indian steel sector has grown exponentially over the past few years to be the third largest producer of steel globally, contributing to about 2% of the countrys GDP and employing about 5 lakh people directly and about 20 lakh people indirectly.

Untapped potential with a strong policy support becomes the ideal platform for growth. Owing to the strategic importance of the sector along with the need to have a robust and restructured policy in present scenario, the new NSP, 2017 became imminent. Though, National Steel Policy 2005 (NSP 2005) sought to indicate ways and means of consolidating the gains flowing out of the then economic order and charted out a road map for sustained and efficient growth of the Indian steel industry, it required adaptation in view of the recent developments unfolding in India and also worldwide, both on the demand and supply sides of the steel market.

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Cabinet approves MoU between the Defence Services Staff College, Wellington and Defence Services Command and Staff College, Mirpur, Dhaka
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given ex-post facto approval to the Memorandum of Understanding (MoU) between the Defence Services Staff College, Wellington and Defence Services Command and Staff College, Mirpur, Dhaka for Cooperation concerning Military Education in the Field of Strategic and Operational Studies.

The MoU will enable establishment of a framework for enhanced cooperation in the field of military education concerning strategic and operational studies and promotion of closer and long-term cooperation between the two countries.

Given the geographical and cultural closeness between the two countries, there are many common challenges like countering terrorism that needs joint action. Hence, there is a need for better coordination and cooperation among the armed forces. The joint training and exercises will help to bring symmetry in capacities of the armed forces and contribute to countering and managing common threats and challenges much better. The MoU enhances public accountability by way of exchange of information and technology between India and Bangladesh.

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Cabinet approves signing of MoU between India and Spain on cooperation in the sphere of Civil Aviation
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the signing of Memorandum of Understanding (MoU) on Cooperation in the sphere of Civil Aviation between India and Spain.

The MoU signifies an important landmark in the civil aviation relations between India and Spain, and has the potential to spur greater trade, investment, tourism and cultural exchanges between the two countries.

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Cabinet approves Vijayawada Airport as International Airport
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its approval for the declaration of Vijayawada Airport as International Airport, as per the provisions of Andhra Pradesh Reorganisation Act, 2014.

The proposal will add to improved connectivity to the State capital. It will provide wider choice of services at competitive costs to the air-travelers and give a boost to domestic/international tourism and socio-economic development of Andhra Pradesh by bringing in international passengers and cargo traffic.


Declaration of an airport as International Airport depends upon traffic potential and demand from airlines for operation of international flights. Further, availability of Ground Lighting Facilities, Instrument Landing System for operation of aircrafts at night, adequate runway length to cater to medium capacity long-range aircraft or equivalent type of aircraft, availability of Customs, Immigration, Health and Animal & Plant Quarantine Services are also required for international operations.

The declaration of Vijayawada Airport as International has been taken up in accordance with the provisions of Andhra Pradesh Reorganisation Act, 2014 and keeping in view the passenger traffic growth, demands from airlines and Andhra Pradesh Government. Airports Authority of India has undertaken upgradation of requisite infrastructure and facilities for international operations.

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Cabinet approves transfer of land and building belonging to Department of Posts at Thrissur (Trichur) in Kerala to Thrissur Municipal Corporation
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved transfer of 16.5 cents of land and building belonging to Department of Posts at Thrissur in Kerala to Thrissur Municipal Corporation for widening of Pattalam Road, in public interest on the principle of land in exchange of land.

The Department of Posts will get an equal area of land of 16.5 cents which is about 200 metres away from the existing Thrissur Central Post Office. The Thrissur Municipal Corporation will also construct a Post Office having a built up area of 3500 sq.feet, as per the specifications of Department of Posts including compound wall with two gates at their own cost. This proposal of the Thrissur Municipal Corporation related to widening of the existing Pattalam road, to have accident-free movement of traffic, will benefit people of the area.

The proposal under consideration will benefit the people in the locality to travel freely without any traffic block and within a short time through the Pattalam Road in front of the existing Thrissur Central Post Office.

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Cabinet approves MoU signed in 2011 and Renewal of MoU between the ICAI and Higher Colleges of Technology, United Arab Emirates
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval for the Memorandum of Understanding (MoU) signed in 2011 and Renewal of MoU between the Institute of Chartered Accountants, of India (ICAI) and Higher Colleges of Technology (HCT), United Arab Emirates.

The renewal of the MoU with the HCT, UAE is on the following terms:-

1. ICAI will provide technical assistance to HCT by reviewing the current curriculum of HCT related to accounting and finance;

2. ICAI will recommend introduction of new/revised courses and modules that will facilitate HCT students to write ICAIs Technical professional Examination with aim to acquire membership of ICAI;

3. ICAI will provide technical assistance in holding ICAIs professional examination for qualified HCT students;

4. ICAI will collaborate to provide seminars and workshops for HCT students and faculty;

5. ICAI will provide specialized relevant Adjunct faculty on mutually agreeable basis;

6. ICAI will provide certification courses for HCT students;

7. HCT will provide facilities to hold ICAIs professional and technical exams;

8. HCT and ICAI will encourage faculty and student exchange programmes;

9. HCT and ICAI will collaborate to hold professional development and technical events, seminars and conferences at various HCTs colleges in UAE. HCT will provide venue for such events and will encourage its students and faculty member to attend these events;

10. HCT and ICAI will collaborate to offer short professional courses in the domain of accounting, finance and audit in UAE via HCTs Centre of Excellence for applied Research and Training (CERT).

The proposal seeks to advance the goals on equity, public accountability and innovation.


The ICAI is a statutory body established by an Act of Parliament of India namely The Chartered Accountants Act, 1949 to regulate the profession of Chartered Accountancy in India. HCT UAE is a community of more than 23,000 students and 2,000 staff based on 17 modern, technology-enhanced campuses in Abu Dhabi, Al Ain, Dubai, Fujairah, Madinat Zayed, Ras Al Khaimah, Ruwais and Sharjah, making it the largest higher education institution in the United Arab Emirates (UAE). HCT is dedicated to the delivery of technical and professional programs of the highest quality to the students within context of sincere respect for all beliefs and values and has the vision to be an internationally recognized and accredited provider of technical and professional tertiary education. The mission of HCT is to be a key education fundamental pillar on which a modern nation is built.

The ICAI has considered renewal of the MoU between ICAI and HCT, UAE to work together in strengthening the Accounting, Financial and Audit knowledge base within UAE through this MoU. The MoU with HCT was signed on 4th January, 2011 for a period of 5 years.

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Cabinet approves Policy for providing preference to domestically manufactured iron & steel products in government procurement
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has approved the policy for providing preference to domestically manufactured iron & steel products on Government procurement

This policy seeks to accomplish the PMs vision of Make in India with objective of nation building and encourage domestic manufacturing.

The policy mandates to provide preference to Domestically Manufactured Iron & Steel Products (DM1&SP), in Government Procurement. The policy is applicable on all government tenders where price bid is yet to be opened,

DMI&SP policy provides a minimum value addition of 15% in notified steel products which are covered under preferential procurement. In order to provide flexibility, Ministry of Steel may review specified steel products and the minimum value addition criterion.

While implementing who shall provide the policy, it poses trust on each domestic manufacturer who shall provide self-certification to the procuring Government agency declaring that the iron & steel products are domestically manufactured in terms of the domestic value addition prescribed. It shall not normally be the responsibility of procuring agency to verify the correctness of the claim. In few cases, the onus of demonstrating the correctness-of the same shall be on the bidder when asked to do so.

In case any manufacturer is aggrieved, a grievance redressal committee set up under the Ministry op Steel shall dispose of the complaint in a time bound manner, in four weeks

There are provisions in the policy for waivers to all such procurements, where specific grades of steel are not manufactured in the country, or the quantities as per the demand of the project cannot be met through domestic sources.

The policy is envisaged to promote growth and development of domestic steel Industry and reduce the inclination to use, low quality low cost imported steel in Government funded projects. It shall be the responsibility of every Government Agency to ensure implementation of the policy.

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Cabinet approves modifications in the 7th CPC recommendations on pay and pensionary benefits
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi approved important proposals relating to modifications in the 7th CPC (Central Pay Commission) recommendations on pay and pensionary benefits in the course of their implementation. Earlier, in June, 2016, the Cabinet had approved implementation of the recommendations with an additional financial outgo of Rs 84,933 crore for 2016-17 (including arrears for 2 months of 2015-16).

The benefit of the proposed modifications will be available with effect from 1st January, 2016, i.e., the date of implementation of 7th CPC recommendations. With the increase approved by the Cabinet, the annual pension bill alone of the Central Government is likely to be Rs.1,76,071 crore. Some of the important decisions of the Cabinet are mentioned below:

1. Revision of pension of pre - 2016 pensioners and family pensioners

The Cabinet approved modifications in the recommendations of the 7th CPC relating to the method of revision of pension of pre-2016 pensioners and family pensioners based on suggestions made by the Committee chaired by Secretary (Pensions) constituted with the approval of the Cabinet. The modified formulation of pension revision approved by the Cabinet will entail an additional benefit to the pensioners and an additional expenditure of approximately Rs.5031 crore for 2016-17 over and above the expenditure already incurred in revision of pension as per the second formulation based on fitment factor. It will benefit over 55 lakh pre-2016 civil and defence pensioners and family pensioners.

While approving the implementation of the 7th CPC recommendations on 29th June, 2016, the Cabinet had approved the changed method of pension revision recommended by the 7th CPC for pre-2016 pensioners, comprising of two alternative formulations, subject to the feasibility of the first formulation which was to be examined by the Committee.

In terms of the Cabinet decision, pensions of pre-2016 pensioners were revised as per the second formulation multiplying existing pension by a fitment factor of 2.57, though the pensioners were to be given the option of choosing the more beneficial of the two formulations as per the 7th CPC recommendations.

In order to provide the more beneficial option to the pensioners, Cabinet has accepted the recommendations of the Committee, which has suggested revision of pension based on information contained in the Pension Payment Order (PPO) issued to every pensioner. The revised procedure of fixation of notional pay is more scientific, rational and implementable in all the cases. The Committee reached its findings based on an analysis of hundreds of live pension cases. The modified formulation will be beneficial to more pensioners than the first formulation recommended by the 7th CPC, which was not found to be feasible to implement on account of non-availability of records in a large number of cases and was also found to be prone to several anomalies.

2. Disability Pension for Defence Pensioners

The Cabinet also approved the retention of percentage-based regime of disability pension implemented post 6th CPC, which the 7th CPC had recommended to be replaced by a slab-based system.

The issue of disability pension was referred to the National Anomaly Committee by the Ministry of Defence on account of the representation received from the Defence Forces to retain the slab-based system, as it would have resulted in reduction in the amount of disability pension for existing pensioners and a reduction in the amount of disability pension for future retirees when compared to percentage-based disability pension.

The decision which will benefit existing and future Defence pensioners would entail an additional expenditure of approximately Rs. 130 crore per annum.

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Cabinet approves cooperation between Indian and Japan on Railway Safety
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval to the signing the Memorandum of Cooperation (MoC) with Japan on Railway Safety. The MoC has already been signed in February, 2017.

The signing of MoC will enable cooperation in the following areas:

i. Track Safety (e.g. rail welding, rail inspection, track circuit etc.) ii. Latest technology related to railway track safety (automatic inspection technology etc.)

ii. Rolling stock safety (e.g. maintenance etc.)

iii. Any other relevant railway safety matter jointly determined by both the sides within the scope of this MoC with consideration for major railway accident preventions based on the analysis of accident causes.

The MoC would provide a platform for Indian Railways to interact and share the latest development and knowledge in the railway sector. The cooperation under this MoC will involve:

a. Dispatch of experts

b. Training of core staff in Japan

c. Sharing of information and best practices

d. Facilitating the participation of other institutions, organization and ministries, including contribution of National Traffic Safety and Environmental Laboratory of Japan to Research Design and Standards Organisation, Ministry of Railway, Government of India (RDSO), subject to their respective national laws and regulations where appropriate and possible.

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Cabinet approves MoU on Urea manufacturing Plant in Malaysia
May 04,2017

The Union Cabinet chaired by the Prime Minister Shri Narendra Modi has given its ex-post facto approval to the signing of Memorandum of Understanding with Malaysia on development of a Urea and Ammonia manufacturing plant in Malaysia with off take to India and/or off take of existing surplus Urea from Malaysia to India.

The project is expected to cost US$ 2.1 billion with capacity to produce 2.4 million tonnes of Urea and 1.35 million tonnes of Ammonia per annum and dedicated supplying to Indian market.

The signing of MoU will ensure consistent supply of Urea and Ammonia to cater the need of the country at a lower price, if agreed to by both the participants.

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Global air freight demand increases 14% in March 2017: IATA
May 03,2017

The International Air Transport Association (IATA) released March 2017 demand growth results for global air freight markets showing a 14% expansion measured in freight tonne kilometers (FTKs) compared to the same period last year. This was the fastest pace of growth recorded since October 2010. Freight capacity, measured in available freight tonne kilometers (AFTKs), grew by 4.2% year-on-year in March 2017.

March performance contributed to very strong first quarter (Q1) growth in freight volumes. After adjusting for the impact of the leap year in 2016, freight demand in Q1 2017 increased by nearly 11%. Capacity increased by 3.7% over the same period (leap year adjusted).

The strengthening of air freight demand in March is consistent with an uptick in world trade and a six-year high in new export orders. An increase in the shipment of silicon materials typically used in high-value consumer electronics shipped by air, is also likely underpinning a portion of the strong performance.

March capped a robust first quarter with the strongest year-on-year air freight growth in six-and-a-half years. Optimism is returning to the industry as the business stabilizes after many years in the doldrums. There is, however, still much lost ground to recover while facing the dual headwinds of rising fuel and labor costs. It remains critical to use the improvement in the industrys fortunes as an opportunity to enhance the value offering by implementing modern customer-centric initiatives that streamline processes and reduce costs, said Alexandre de Juniac, IATA s Director General and CEO.

Regional Performance

All regions, with the exception of Latin America, reported year-on-year increases in demand in March 2017. Airlines in Europe and Asia-Pacific posted the strongest growth accounting for two-thirds of the industry-wide increase in demand. The remaining growth was split between North American and Middle Eastern carriers, with African airlines making a modest contribution.

Asia-Pacific airlines freight volumes expanded 13.6% in March 2017 compared to the same period a year earlier and capacity increased by 4.8%. The increase in volumes reflects the strength of the order books reported by exporters across the region. Seasonally-adjusted volumes increased in March and are now back to levels reached in 2010 during the post-global financial crisis bounce-back. Demand has strengthened considerably on all key routes to and from Asia over the last six months with the exception of Pacific routes (Asia to North America).

North American carriers posted an increase in freight volumes of 9.5% in March 2017, and a capacity increase of 2.8%. International freight volumes increased 14.2% over the same period - the fastest pace since the boost to air freight from the consequences of congestion at US West Coast seaports in 2015. Seasonally-adjusted volumes have slowed to a near standstill alongside a weakening in demand in Pacific routes. The further strengthening of the US dollar continues to boost the inbound freight market but is keeping the export market under pressure.

European airlines posted an 18.2% increase in freight volumes in March 2017 and a capacity increase of 6.7%. International freight volumes grew by 18.1% year-on-year, the fastest pace in six years. Seasonally-adjusted freight volumes continue to trend upwards. The ongoing weakness of the Euro persists in boosting the performance of the European freight market which has benefitted from strong export orders over the last few months.

Middle Eastern carriers year-on-year freight volumes increased 16.3% in March 2017 and capacity increased 2.7%. International freight volumes increased 16.4% year-on-year in March - the fastest pace since June 2015. Seasonally-adjusted freight volumes maintained their upward trend. The year-on-year growth rate has recovered after having moderated in late-2015 and is now back in line with the long-run average. Demand remains strong between the Middle East and Europe but traffic to Asia has weakened.

Latin American airlines experienced a contraction in demand of 4.2% in March 2017 compared to the same period in 2016. Capacity decreased by 1.9% over the same period. Freight volumes have now been in contractionary territory in 26 out of the last 28 months. Recovery in seasonally-adjusted volumes also stalled with demand in March reaching its lowest level since October 2010. Demand is now 18% lower than at the peak in 2014. The regions carriers have managed to adjust capacity, which has limited the negative impact on the load factor.

African carriers posted the largest year-on-year increase in demand of all regions in March 2017 with freight volumes growing 33.5%. Capacity increased by 6.3% over the same time. Demand has been boosted by very strong growth on the trade lanes to and from Asia following an increase in direct services between the continents. The increase in demand has helped the regions load factor rise by 6 percentage points compared to March 2016.

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Gramin Bank Employees Contribute 29.85 Lakh to Army Battle Casualties Welfare Fund
May 03,2017

The Managing Director & Chief Executive Officer of the Punjab National Bank Ms Usha Ananthasubramanian presented a cheque of Rs. 29.85 lakh to Defence Minister Shri Arun Jaitley as donation towards the Army Battle Casualties Welfare Fund, here today. Financial assistance will be provided to the families of the Army Battle Casualties out of this fund. The amount was contributed by the employees of the Madhya Bihar Gramin Bank, which is sponsored by the Punjab National Bank.

While accepting the cheque, Shri Jaitley appreciated the concern shown by the employees of the Bank towards the families of the defence personnel who have sacrificed their lives for the country and expressed his confidence that such efforts will be continued by them towards this noble cause.

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Domestic Manufacturing to be Given Preference in Public Procurement
May 03,2017

Visa restrictions need not be detrimental to India, said Cabinet Secretary, Mr Pradeep K Sinha.

A constructive engagement where both the Central and the State government work in tandem and engage with industry to take the reform agenda forward is critical to reduce Cost of Doing Business and take the economy to the higher growth trajectory. Mr Sinha dispelled apprehensions about the globalisation process turning restrictive due to inward looking policies of the advanced countries. While visa restrictions and curbs on people movement is a worry, this cannot be construed as a reversal of globalisation as the trade of goods is not impacted. He felt that as far as visa restrictions are concerned, our domestic economy has the absorptive capacity to tackle the situation.

Mr Sinha mentioned the reforms process being undertaken to develop a conducive ecosystem for attracting business. These include creating a simplified business climate especially in terms of starting, operating and exiting a business, ease of doing business reforms, operation of Single Window through portals such as SWIFT, direct delivery through ports, simplification of construction permits and electricity connection, among others. The implementation of the landmark GST reform and the Insolvency and Bankruptcy Code would help business operations. A focus on infrastructure development is another area of priority for the government. The keen participation of States Government in taking the reforms agenda forward is crucial for success, maintained Mr Sinha.

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Moodys Liquidity-Stress Index down again in April; liquidity checks defaults among spec-grade companies
May 03,2017

Moodys Liquidity-Stress Index (LSI) dipped to its lowest level since July 2015 last month, the rating agency says in its most recent edition of SGL Monitor Flash. The index declined to 4.9% in April from 5.3% in March, with liquidity conditions remaining fundamentally supportive for issuers across the speculative-grade rating spectrum.

Moodys Liquidity-Stress Index falls when corporate liquidity appears to improve and rises when it appears to weaken.

Speculative-grade liquidity continues to keep defaults in check, with a growing economy boosting profits and a lack of meaningful maturity and covenant concerns over the next year, said Senior Vice President John Puchalla. Speculative-grade bond and loan issuance slowed in April, but remained at levels healthy enough to give most companies the flexibility to resolve liquidity issues.

Last month, upgrades of Moodys speculative-grade liquidity (SGL) ratings continued to outnumber downgrades by nine to four, Puchalla says. SGL rating movements were dispersed across industries, with just one energy firm upgraded: Exploration and production company SM Energy Co.s liquidity rating was raised to SGL-1 following asset sales and a shift in spending that should lower its break-even costs.

Also in April, the SGL rating of Hospital operator Quorum Health Corp. was upgraded on the back of a covenant amendment and planned divestitures, while electronic component supplier KEMET Corp. saw its rating raised upon issuance of a new term loan and the refinancing of senior notes due 2018. Conversely, the SGL rating of apparel company Vince LLC was downgraded to SGL-4 on weak operating performance that will pressure its covenant compliance over the next 12 to 18 months.

Moodys forecasts that the US speculative-grade default rate will decline to 3.0% in March 2018 from a 4.7% level today that matches the long-term average.

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Banks Governance Standards to Strengthen on RBIs NPL Guidelines
May 03,2017

The Reserve Bank of India (RBI) has asked banks to make disclosures pertaining to divergence in the asset classification and provisioning a step towards improving governance and smoothening transition to IFRS9 (IND AS 109) says India Ratings and Research (Ind-Ra). The additional disclosure requirements for banks would compel banks to tighten their internal non-performing loans (NPLs) recognition and provisioning norms, thereby improving the overall quality of disclosures and provide a platform for more uniform recognition of stressed assets as non-performing across different banks.

Ind-Ra believes the journey towards enhanced governance structure started last year with the clean-up exercise by the RBI in the form of the Asset Quality Review (AQR), where a significant proportion of the unrecognized stressed assets in the system got reclassified which led to a sharp jump in NPLs. Also, in some way, the quantum of divergence would highlight the level of banks proactive governance initiatives and effectively enhances the importance of RBIs assessment from being descriptive to prescriptive. The disclosure norms for divergences enhances the accountability on the banks part to be compliant with the norms. Any sharp divergence is likely to be questioned by the stakeholders.

The requirement for boards of banks to proactively assess risks across sectors and make provisions above the minimum regulatory standards, starting with the telecom sector are intended to strengthen the banks balance sheet for possible shocks on account of deterioration in asset quality. These provisions are also in-line with the migration to IFRS -9 (IND AS 109). This migration is slated to take place from the next year, but the proforma numbers will be released from June 2017 quarter onwards. The new accounting standards would require provisioning based on expected loss replacing the current incurred loss provision.

The blanket higher provisioning however generally seems to have been prescribed for meeting a larger objective and is not necessarily limited to credit risk. The RBI has prescribed higher risk weights for telecom, real estate lending, unhedged foreign exposure, capital market exposure among others. The provisioning enhancement on sectoral exposures in anticipation of credit losses may bring in subjectivity and may achieve the objective only partially. However, Ind-Ra notes that the notification is more in the nature of an advisory for the board and put the onus on them to be cautious and pro-active in terms of identifying the risk that could be building up in specific sectors, especially considering that there may be few large exposures residing and any slippage can impact the banks buffer materially.

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