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CII, ISB and GE join hands to develop Compliance leaders in the Indian Industry
Jun 15,2016

The Confederation of Indian Industry (CII), Indian School of Business (ISB) and GE have joined hands to launch an executive education course, a programme aimed at positioning and enabling compliance professionals as strategic business partners. This Compliance Management programme will provide essential skills to managers to support Indian companies in implementing compliance norms to advance corporate governance, growth and sustainability in the economy. This unique partnership will provide both public and private sector participants an opportunity to experience and interact with each other, with local and global subject matter experts, understand the underlying challenges in the space as well as better appreciate global best practices.

Currently, India ranks No. 130 out of 189 countries on the ease of doing business as per a World Bank Report and No. 76 out of 168 in the Corruption Perception Index. With two leading partners in the field of education and compliance, CII took the lead by recognizing the need for formal instruction on topics related to ethics and compliance as per the recommendation by its National Committee on Integrity & Transparency in Governance to assist Indian industry to be more competitive and compliant. GE which has a reputation of being a leader in compliance and has won the Ethisphere award for one of worlds most ethical company for 10 years in a row will provide technical content and practical industry expertise and experience. ISB, a premier management institute that has set new benchmarks of executive education in India will augment the course with its excellent management faculty as compliance officers step up to take their place as senior management as part of its Centre for Executive Education (CEE) portfolio. The faculty will consist of eminent academicians, legal and compliance experts and industry, both local and global.

Congratulating the initiative, Dr. T.M. Bhasin, Vigilance Commissioner, said, n++As India strengthens its position in the world economy and becomes an important destination for international players, it will become important to highlight adherence to global norms, strong corporate governance and transparency in daily functioning. This programme can go on to play a pivotal role in that journey. I congratulate CII, GE and ISB in their attempt to step forward and champion this cause.n++

Announcing the collaboration, Dr. Naushad Forbes, President, Confederation of Indian Industry (CII) & Co-Chairman of Forbes Marshall, said, n++The business environment in India is undergoing a significant transformation characterized by increased regulatory enforcement, government scrutiny and market uncertainties. Therefore, more than ever before companies are expected to adhere to the highest standards of corporate governance by shifting focus on ensuring long term sustainability. The CII National Committee on Integrity & Transparency in Governance is focused on promoting the agenda of ethical business practices. We believe that companies will benefit immensely from the Compliance Management Programme by equipping their management with the skills and exposure to establish and develop necessary norms that will improve ethical practices and transparency in business. Professionals who undertake this course and apply the learning outcomes will take themselves and their organizations one step closer to becoming good corporate citizens.n++

The Compliance Management Programme, is a two-phased 10-day long programme aimed at providing participants with proven practical tips and techniques on how to best convert theory into practice and ensure ethical and compliant behavior in their respective companies. Besides theoretical discussions and lectures, the Compliance Management Programme includes practical sessions such as case studies, simulations and exercises which will provide participants with the wherewithal to understand the elements of an effective compliance program and the considerations to be mindful of while implementing the same.

Commenting on the MoU signing, Professor Rajendra Srivastava, Dean, ISB, said, n++In an increasingly complex and dynamic business environment where corporate decisions are in the public and global scrutiny, the requirement for good corporate governance, and its impact on business performance among Indian corporates has never been greater than today. However, while ethics forms a portion of the management education curriculum, few programmes exist that assist company management design policies and processes to ensure ethical and fair business practices. We at the ISB are pleased to offer just such a programme in partnership with CII and GE, which will help transform the way businesses are run in India. The course is perfectly aligned to ISBs goal of balancing theory with practice and imparting education that will impact scholarship, practice and policy. We firmly believe that participants of this course will, in the years to come, contribute significantly in turning around the global perception of doing business in Indian++.

Sharing the industry perspective, Mr. Banmali Agrawala, President & CEO, GE South Asia said, n++GE has built its reputation as one of the worlds most admired companies and has been consistently ranked as one of the most ethical companies. Companies that build credibility with customers and government are ones which not only deliver on quality and financial performance but also on corporate governance and ethical business practices. GE has always actively promoted the creation of a fair and ethical business environment amongst all its stakeholders and is delighted to partner with CII and ISB to offer this programme. I hope that the participants define and advance the agenda of ethical business practices in the country.n++

Who will benefit from the Compliance Management Programme?

The Compliance Management Programme is designed for professionals from functions such as human resources, company secretaries, finance, quality, legal, regulatory, environment health and safety in a variety of industries especially SMEs and suppliers to global programmes, pharmaceuticals, IT companies, growth phase startups.

About the Compliance Management Programme

The Compliance Management Programme (CMP) is designed to address the learning needs of professionals who have or aspire to have compliance responsibilities in organizations. The programme is comprehensive blend of courses in functional compliance skills, business acumen, leadership and behavioral subjects, which will help participants in understanding compliance in their organizations business/operations; help gain leadership and communication skills to push the compliance agenda internally. The courses will be taught by globally renowned faculty from ISB with experienced industry practitioners and consultants.

The two-phased programme is scheduled to commence in July 2016, and will include ten days of classroom at the Mohali and Hyderabad campuses, interspersed with self-study and practical projects. The ISB is offering the course at a competitive price of Rs. 2,25,000 per participant plus service tax, for the inaugural batch, thanks to the support from GE India. For more information - www.isb.edu/cee/CMP or email to ExecEd@isb.edu

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Government Sanctions Rs. 164 Crore for Rajasthan, Rs. 156 Crore for Telangana for Compensatory Afforestation
Jun 15,2016

The Centre sanctioned Rs. 164 crore for Rajasthan and Rs. 156 crore for Telangana, following a meeting on Compensatory Afforestation Fund Management and Planning Authority (CAMPA) with the two States. Speaking after chairing the meeting, Minister of State (Independent Charge) of Environment, Forest and Climate Change, Shri Prakash Javadekar, said that the money has been sanctioned for afforestation, relocation and other biodiversity works in the two states. The Minister said that according to courts guidelines, only 10 per cent of the funds can be released this year.

Shri Javadekar expressed the hope that the Compensatory Afforestation Bill will be passed in the Monsoon session, making available more money for afforestation and related activities.

The delegations of Rajasthan and Telangana were led by Minister of Environment and Forest, Rajasthan, Shri Rajkumar Rinwa and Minister of Environment and Forest, Telangana, Shri Jogu Ramanna.

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Government Approves Series of Measures for Conservation and Preservation of Lakes in Bengaluru
Jun 15,2016

The Government has approved a series of measures for the abatement of pollution and for the conservation and preservation of lakes in Bengaluru. The decision was taken at a meeting jointly chaired by Union Minister of Chemicals & Fertilizers, Shri Ananth Kumar and Minister of State (Independent Charge) for Environment, Forest & Climate Change, Shri Prakash Javadekar.

Shri Javadekar said that it has been decided to initiate 24x7 online monitoring of all Sewage Treatment Plants (STPs), as well as lake water quality to be by concerned authorities in Bengaluru. The Minister said that the corporate sector is also being involved in the effort to conserve and preserve the lakes in Bengaluru. He also said that the progress will be monitored every six months.

Shri Ananth Kumar said that bio-development of lakes of Bengaluru will be undertaken. He said that the lakes will be restored in a bio-diverse manner in Public-Private Partnership mode.

Some of the other actions that have been agreed upon include:

n++ All residential group housing projects/apartments with >20 units and total build-up area of 2000 sq.mtr. to install STP.

n++ Re-use of treated sewage for various purposes and dual piping system to be prescribed in apartments/commercial establishments for re-use of treated sewage.

n++ Regular monitoring of STPs to be carried out by State Pollution Control Board.

n++ Retrofitting of existing STPs to meet the revised effluent norms.

n++ Proper management of plastic waste to ensure that it is not dumped in the lakes.

n++ Madivala lake to be developed as a biodiversity park on the lines of Yamuna Biodiversity Park under the guidance of Karnataka Knowledge Commission.

n++ Lake Wardens to be appointed for involvement of public in lake conservation.

n++ CSR funds to be tapped for conserving and developing lakes.

Discharge of untreated sewage being generated in the city into the lakes is a major cause for their degradation. Against present sewage generation of around 1320 mld (million litres per day), installed treatment capacity is 721 mld (with quantity of sewage treated in these STPs is only 600 mld). To bridge the gap between sewage generation and treatment, the Bengaluru Water Supply & Sewerage Board expect to complete 336 mld STP capacity (which is under construction) by December 2018, 515 mld STP capacity by December 2019 and 189 mld STP capacity by December 2020. Thus, by the end of 2020, STP capacity totalling 1761 mld and its related sewerage system is likely to be available for treating the entire sewage generated in the city.

Projects totalling to Rs.887.97 crore relating to sewerage system and STPs in Bengaluru have been approved/initiated under AMRUT programme of Ministry of Urban Development. Apart from other benefits, these projects will help in rejuvenating lakes in Bengaluru by reducing the pollution load being discharged into them.

This meeting was a follow-up of the earlier meeting taken by Minister of State (Independent Charge) for Environment, Forest & Climate Change on October 19, 2015, in Bengaluru, for preparing a concrete plan for revival of lakes in the city. Minister of Forest, Environment & Ecology, Karnataka, Shri Ramnath Rai attended the meeting, along with senior officials from the State Government.

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Ministry of Railways Signs Joint Venture Agreement with Government of Odisha
Jun 15,2016

Ministry of Railways signed a Joint Venture Agreement with Govt. of Odisha on 14 June 2016. Shri A K Mittal, Member Engineering, Railway Board presided over the signing function. The agreement was signed by Shri V. P Dudeja, ED/Works on behalf of Ministry of Railways and Shri Sanjay Rastogi, Pr. Secretary/ Transport, Govt. of Odisha. This is a very important step for formation of Joint Venture Company for development of Railway Infrastructure in the State.

The company shall identify projects to be developed and find avenues for financing of the same. Ministry of Railways and Govt. of Odisha shall be essentially funding part of such identified projects. Project specific SPVs shall be formed after financial closure of the project.

Background:

n++ In view of the growing demands for railway lines in various states and huge requirement of funds to execute them, Minister for Railways announced in his budget speech regarding setting up of Joint Ventures with states for focused project development, resource mobilization, land acquisition, project implementation and monitoring of critical rail projects.

n++ 17 State Governments consented for formation of Joint Venture Companies in collaboration with the Ministry of Railways for development of rail infrastructure in their respective States. Draft MoUs were sent to these State Governments and discussions were also held with them to clarify various provisions of the MoU.

n++ MoUs have already been signed by the Ministry of Railways with seven State Governments viz. Odisha, Maharashtra, Chhattisgarh, Andhra Pradesh, Telangana, Kerala and Haryana.

n++ Jharkhand and Gujarat have shown their keenness to sign MoU/JV Agreements.

n++ Joint Venture Agreements were sent to all the above nine State Governments.

n++ Apart from the above 9 States, the other States who have consented/ shown keenness for formation of State JVs are Punjab, Bihar, West Bengal, Madhya Pradesh, Rajasthan, Tamil Nadu and Uttar Pradesh. Karnataka is already having a Joint Venture (by the name K-RIDE) with Ministry of Railways.

n++ The MoU envisages formation of a Joint Venture company having 51% stake of the State Government and 49% stake of Ministry of Railways. Thus, the JV company shall be fully owned by the Government. The company will primarily identify projects and possible financing avenues in addition to Govt. of India and the State Government. After finances for a project are tied up, project specific SPVs or special purpose vehicles shall be formed. These SPVs can have other stake holders from Industries, Central PSUs, State PSUs etc. However, the JV companies shall be mandatory stake holders with minimum 26% shares in the SPVs.

n++ The ministry of Railways will sign a concession agreement of 30 years with the project SPV for safe and sound operation, revenue sharing and providing technical & marketing logistics to the SPV. The revenue sharing shall be based on already established formula being used for inter zonal apportionment of revenue.

n++ The most important aspect of this MoU is that the ownership of the land shall vest with the SPVs which is a departure from previous practice. This will give financial leverage to the company to exploit commercial potential of the land. This is likely to result in making project viable which are otherwise not viable.

n++ At the end of concession period, the railways will have option to take over the assets at a nominal price. This is largely in line with average codal life of the assets as most of the assets will need large scale replacement after 30 years.

n++ Indian Railways has been playing a major role in national integration by connecting the remotest places and bringing people closer to each other. Railways receive a large number of demands for network expansion as a railway line acts as an engine of growth for the area it serves.

n++ However, Railways have a large shelf of ongoing New Line, Gauge Conversion and Doubling projects needing about Rs 3.86 lakh crores to complete. We have been trying to meet the aspirations of public within limited availability of funds.

n++ To expedite the projects, Railways have been trying to mobilize resources through other than Gross Budgetary Support. However, on the initiative of Honble Minister for Railways Sh. Suresh Prabhu, Indian Railways have tied up funds for critical capacity enhancement project of doubling, third line, electrification etc. This tied up loan will ensure dedicated and assured funding for such critical projects.

n++ Formation of Joint Venture Companies with the State Governments will go a long way in faster commissioning of critical rail infrastructure projects as it will not only help in mobilization of funds but also in facilitating various clearances and land acquisition.

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Investments in the industrial economy will be the key driver for sustaining a higher growth path & creating jobs-FICCI
Jun 14,2016

Commenting on the inflation numbers released today Mr. Harshavardhan Neotia, President, FICCI said, n++Latest numbers report prices edging up on the back of elevated food prices. Upward pressure in prices is noted in the case of fruits and vegetables and protein rich items. This clearly calls for a more proactive management from the supply side. Several steps have been taken by the government to augment supplies and improve distribution of such items. We hope that the situation would be managed well and that inflation will remain within RBIs indicative trajectory.n++ n++Industrial growth, particularly the manufacturing sector, continues to remain under pressure with limited signs of improvement in a few sectors. We need to broad base the growth impulses and this calls for support by way of an accommodative monetary policy. FICCIS latest Business Confidence Survey indicates some improvement in capacity utilisation rates and for this to translate into higher investments there is a need to strengthen demand further. Investments in the industrial economy will be the key driver for sustaining a higher growth path & creating jobs and the current situation calls for all measures to be deployed towards this endn++, Mr Neotia added.

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Government Approves two Proposals of Foreign Direct Investment (FDI) Amounting to Rs. 2.19 Crore Approximately
Jun 14,2016

Based on the recommendations of Foreign Investment Promotion Board in its 235thmeeting held on 20th May 2016, the Government has approved two FDI proposals involving FDI of Rs. 2.19 crore, and recommended one proposal for approval of the Cabinet Committee on Economic Affairs.

First approval was sort by Aurobindo Pharma for FDI of Rs 2.19 crore for the following categories:

(i) Grant of ESOPs to non-resident employee of Aurobindo Pharma Limited, after issue of Press Note 3 of 08.11.2011, which remained unexercised as on 11.06.2015, and against which no shares were issued upto as on 11th June 2015,(which could be vested and exercised later on and shares issued against them at that stage), totalling to 2,42,600 ESOPs and exercise amount aggregating to INR 1,11,11,080/-.

(ii) Grant of ESOPs to non-resident employee of Aurobindo Pharma Limited, after issue of Press Note 3 of 8 November 2011, which were exercised and shares issued against them after 8 November 2011 but before 11 June 2015, totalling to 1,18,700 ESOPs and the exercise amount aggregating to INR 1,08,72,920/-

Second approval has been sought by Sterling Commerce for acting as an Investing company for:

a) Curan software international Private Limited, Emptoris Technologies India Private Limited, Kenexa technologies Private Limited and Rational Software Corporation (India), which are currently owned by Overseas companies of IBM and currently dormant companies.

b) From time to time act as an investing company for companies undertaking software development, technologies services or those which have become dormant pursuant to transfer of their business to IBM India.

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EU brings policy and financial experts, business offering to help India achieve energy efficiency in Agricultural Demand Side Management
Jun 14,2016

Agriculture uses about 18% of the electricity consumed in India. This means that to tackle energy security, to implement Indias climate commitments, as well as to ensure food security and deal with water challenges, India must consider energy efficiency in irrigation. Hence, the European Union (EU) has brought policy and financial experts as well as European Business to India offering concrete solutions in this regard, said Mr. Tomasz Kozlowski, Ambassador, European Union Delegation to India.

While delivering his keynote address at a workshop on Agricultural Demand Side Management (AgDSM)-Adopting Technologies to Boost Efficiencies, the first in the series, organised by FICCI and European Commission, Mr. Kozlowski said that the partnership between India and the EU will facilitated policy dialogue, will bring best practices, business solutions and joint research and innovation and will look at financing models for clean energy and climate change.

In terms of finance, he said that the European Investment Bank has already provided loans for more than Euro 1.2 billion to support implementation of energy and climate related projects in India. Speaking about technologies and solutions, Mr. Kozlowski added that the EU was closely involved in developing offshore wind, solar parks and energy efficiency in India.

In his special address Mr. B P Pandey, Additional Secretary, Ministry of Power & Director General, Bureau of Energy Efficiency (BEE), said that there are about 20.27 million electrified pumpsets installed in agriculture sector. Further, due to the increasing demand for water to meet the agricultural needs, about 0.25 to 0.5 million new pump sets are being added annually, therefore by adoption of high efficiency pumps about 25-30% energycan be saved. He added that the industry had sufficient pumpsets to supply but there was a need to work out a feasible finance models for adoption of these pumpsets.

Speaking about the initiatives to achieve energy efficiency in various sectors, Mr. Pandey said that governments Perform-Achieve-Trade (PAT) scheme is a market-based mechanism launched in 2008 under Indias national climate change action plan, and is designed to increase the energy efficiency of the most energy-intensive sectors. The first phase of PAT was completed in March 2015 and the second phase began with the inclusion of three industrial sectors, of which two are railways and utilities. Similarly, the Labeling Program is providing the consumer an informed choice about energy saving, and thereby it is enabling cost saving of the marketed household and other equipment. He added that the government was promoting use of energy efficiency equipment such as LEDs as well.

In his theme presentation Mr. Nitin Zamre, Managing Director, ICF International India, speaking about the opportunities, he said that AgDSM is a recognised intervention area by every DISCOM and both EE and RE options are available for agricultural pumps. Also there star rated pumps available in India and there is increased awareness among farmers, pump manufacturers about it. He added that India was getting international support and cooperation as well to fulfil its commitment to INDC goals.

Pointing out the challenges, Mr. Zamre said that there was a lack of effective Centre-State coordination for policy push and demand-supply gap of star rated pumps. Also, concentration of agriculture pump manufacturers was inlimited locations and the high initial cost of EE pumps becomes a deterrent. He added that there was a need to make international technology easily accessible and mindset change towards transition to EE technology was also needed.

Ms. Henriette Faergemann, Counsellor (Environment, Energy & Climate Change), Delegation of the European Union to India, said that there are cost issues involved with the implementation of energy efficiency technology in agriculture but in the long term adoption of such technology would prove to be beneficial for green growth. She added that the EU had an incredible GDP growth with reduced emission by adopting energy efficient technologies and Indian too could attain the same by using energy efficient equipment.

Dr. A Didar Singh, Secretary General, FICCI, said that by bringing together stakeholders from the EU and India, the workshop focused on promoting cooperation between the two sides in the area of AgDSM, one of the biggest focus areas for Indian policymakers in the DSM space. The workshop is a stepping stone to build a framework for implementation of efficient pumping technology and best practices in Indian agricultural sector in cooperation with European partners.

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WPI inflation rises to 19-months high of 0.79% in May 2016
Jun 14,2016

The Wholesale Price Index (WPI)-based inflation accelerated to 19-months high of 0.79% in May 2016. The WPI inflation had entered into positive zone at 0.34% in April 2016 after 17-months of consistent deflation. An increase in inflation was mainly driven surge in inflation for primary articles and manufactured products, while inflation for fuel products moderated in May 2016.

Inflation of primary articles increased to 4.5% in May 2016 from 2.3% in April 2016. After 12 months of deflation, the inflation for manufactured products turned positive to 0.1% in March 2016 and accelerated to 0.9% in May 2016. However, the inflation for fuel items declined to (-) 6.1% from (-) 4.8%.

As per major commodity group-wise, inflation increased for foodgrains, vegetables, fruits, egg, fish, spices, sugar, iron ore, steel products, non-metallic mineral products, and machinery & machine tools in May 2016. On the other hand, inflation declined for milk, fish-marine, oilseeds, flowers, raw rubber, fodder, crude petroleum, mineral oils, edible oils, oilcakes, tea, wood & products, leather products in May 2016.

Inflation of food items (food articles and food products) rose to 7.8% in May 2016 from 5.4% in April 2016. Meanwhile, inflation of non-food items (all commodities excluding food items) declined to (-) 2.2% in May 2016 from (-) 1.9% in April 2016.

Core inflation (manufactured products excluding foods products) rose to (-) 0.4% in May 2016, from (-) 0.8% in April 2016.

The contribution of primary articles to the overall inflation, at 0.79%, was 125 basis points (bps) in May 2016 compared with 65 bps in April 2016. The contribution of manufactured products was 51 bps compared with 41 bps, while that of fuel product group was (-) 99 bps against (-) 75 bps in April 2016.

The contribution of food items (food articles and food products) to inflation rose to 232 bps in 0.79% in May 2016 compared with 164 bps to 0.34% in April 2016. Meanwhile, the contribution of non-food items (all commodities excluding food items) was (-) 154 bps in May 2016 compared with (-) 132 bps in April 2016.

As per the revised data, the inflation figure for March 2016 was revised up to (-) 0.45% compared with (-) 0.85% reported provisionally.

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Procurement of Rabi pulses reaches to 64,000 MT
Jun 14,2016

Procurement of Rabi pulses has reached to 64,000 MT as on June 13, 2016. Thus together with earlier procurement of 51,000 MT of Kharif, total domestic procurement of pulses by government agencies has reached to 1,15,000 MT.

The Government has also ordered further import of 12,500 MT pulses for buffer stocks which include 10,000 MT Masur and 2,500 MT Urad. So far 14,321 MT pulses have already imported by the government agencies against the total contracted quantity of 38,500 MT.

This was informed in an inter-ministerial review meeting chaired by Secretary, Department of Consumer Affairs, Shri Hem Pande. The meeting reviewed the prices of essential commodities and discussed measures to ensure availability these commodities at reasonable prices.

Shri Pande reviewed lifting and distribution of the pulses allocated from the buffer stock. Only Andhra Pradesh, Tamil Nadu, Telangana and Safal and Kendriya Bhandar in Delhi, have lifted allocated pulses. Lifting and requests for allocation is still awaited from other States. Shri Pande directed NCCF to start distribution of Tur and Urad through mobile vans in Delhi at Rs. 120/kg. He expressed hope such steps will also be taken up by other States to make pulses available at reasonable prices.

The meeting also discussed lowering of import duty on wheat. The representative of FCI informed that it has sufficient stocks of wheat to cater to requirements of PDS and buffer norms besides open markets sale operations.

The meeting was also reviewed the enforcement measures being taken by the States to check hoarding of essential commodities and suggested that these should be further strengthen.

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ADB, Munich Re Sign Deal to Boost Trade in Developing Asia
Jun 14,2016

The Asian Development Bank (ADB) and Germany-based Munich Re have signed an agreement on $250 million cover to help ADBs Trade Finance Program expand support for trade in developing Asia.

The agreement will see Munich Re, via one of its specialist primary insurers, provide up to $250 million insurance capacity on financing of trade transactions conducted by ADBs Trade Finance Program (TFP). The TFP fills market gaps for trade finance in developing Asia.

The agreement marks the first contractual business deal between Munich Re and ADB.

n++We are pleased to expand the programs risk distribution capacity through this agreement with Munich Re,n++ said Steven Beck, ADBs head of trade finance. n++With the private sector involved we can add capacity to trade financing in challenging markets, leverage ADBs own resources, and most importantly, expose the private sector to new markets.n++

Despite a recent global growth slowdown and softer economic activity in the Peoples Republic of China, developing Asia still accounts for about 60% of overall world growth. However many countries in the region still find it difficult to export or import key goods because they struggle to get the trade finance they need from international and local banks.

To fill that gap, ADBs Trade Finance Program provides guarantees and loans to banks to support trade, particularly in so-called frontier economies. In 2015, the program supported 1,908 trade transactions worth $2.5 billion, with banks in Bangladesh, Pakistan, Sri Lanka, Uzbekistan, and Viet Nam as the five most active users.

The agreement with Munich Re will enable ADB to provide even more support to the countries that need it most. The relatively short-term nature of transactions under the program also mean that funds can be rolled over quickly and could result in up to $500 million in additional trade finance support being extended annually.

Marcus Winter, head of Munich Res reinsurance development division said, n++The signing of this agreement is a milestone for the cooperation between ADB and Munich Re. Our partnership will further support Asian economies in their trade relations with the international community.n++

Short-term trade finance is considered a relatively safe investment, with statistics released yearly by the International Chamber of Commerce showing that its default rates only reach, on average, one fifth of comparable Moodys default rates for other forms of financing. ADBs Trade Finance Program was instrumental in creating these important industry-wide statistics. TFP conceived of and funded the first such statistics in 2010. Besides providing loans and guarantees to banks to support trade, the TFP aims to close market gaps also by creating knowledge products, such as these statistics, to fill information gaps and encourage greater private sector participation in financing trade in developing countries. Munich Res decision to enter the trade finance business was at least partly founded on these encouraging industry default rate statisticsn++affirming the relevance of ADB TFP knowledge products.

Munich Re stands for exceptional solution-based expertise, consistent risk management, financial stability, and client proximity. In the financial year 2015, the group - which combines primary insurance and reinsurance under one roof - achieved a profit of n++3.1 billion on premium income of over n++50 billion. It operates in all lines of insurance, with over 43,000 employees throughout the world. With premium income of around n++28 billion from reinsurance alone, it is one of the worlds leading reinsurers.

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Commercial Vehicle Loans Recover in 4Q16; Stress in Construction Equipment and Tractor Loans Unabated
Jun 14,2016

India Ratings and Research (Ind-Ra) believes that the recovery that started in commercial vehicle loans in the 2014 originations has picked pace for 2015 originations. As of 4Q16, the weighted average (WA) 90+dpd delinquency in the 2015 vintage stood at 1.03% (WA amortisation: 50%), which is 142bp lower than that in the 2014 vintage for similar seasoning levels and indicates a recovery.

Tractor loan portfolios across originators continue to show heightened stress with no improvement in 90+dpd delinquency for 2014 and 2015 vintages unlike commercial vehicle loans where the stress has subsided for recent vintages. While the agency maintains a negative outlook on tractor loans, the ratings of the current transactions may not be impacted due to a higher level of amortisations and credit enhancement build-up. 2015 vintage securitised tractor loans have performed better than 2014 vintage with the formers WA 90+dpd delinquencies dropping sharply to 4.73% compared to 9.37% for 2014 vintage at 11 months seasoning, which the agency considers to be an isolated instance at variance with the portfolio performance.

The stress in construction equipment loans remains elevated with little signs of recovery even after significant seasoning. The plateau observed in 90+dpd delinquency indicates that CE borrowers continue to face stress and are unable to repay loans after missing payments on over three instalments. As of 4Q16, the 180+dpd delinquency increased by 263bp to 3.90% in the 12 months ended March 2016, showing no reversal of loans to lower delinquency buckets.

A stable performance was observed in Ind-Ra rated mortgage loans owing to steady delinquency rates and high prepayment and amortisation levels.

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Ind-Ra: Highway Projects Worth INR255bn May Be Under Stress
Jun 14,2016

Around INR255bn of project level debt across 37 highway projects, both under construction and completed projects that were bid out by National Highways Authority of Indias (NHAI: IND AAA/Stable) may be under stress, says India Ratings and Research (Ind-Ra). Ind-Ra has identified stressed projects based on the sponsor credit profile, existing credit metrics of the projects and the ability for funding at the sponsor or project level.

Ind-Ras analysis highlights that out of the total projects bid out by NHAI, sponsors of around 102 projects could have limited flexibility to support projects if the need arises. Of these, the credit profiles of 37 projects (29 Projects under BOT Toll & 8 Projects under BOT Annuity) may be under stress, unless these projects undergo any structural transformation. Out of the 102 projects, around 54% of these are under implementation and the cumulative length of the potentially stressed assets is 3,360kms.

The strain which is visible in the cash flow of highway projects, as highlighted in Refinancing, Risk-balancing Could Steer Highway Sector Out of Troubles, is primarily due to the unfavourable macro-economic conditions, slippages from the original project timelines, lower traffic performance and higher debt levels. Ind-Ra believes the credit metrics for these projects are unlikely to improve substantially, unless the projects undergo structural changes, in terms of additional money infused by the sponsor which is difficult, or by way of debt restructuring or refinancing.

The outstanding rating of at least 20 of these projects is currently Default (by various agencies), while the balance projects have a non-investment grade rating. The projects under the latter is what Ind-Ra believes are at risk of default.

The existing debt levels of projects further compounds the problems of the sector already saddled with a plethora of issues. Ind-Ras analysis reveal that projects are 19% over leveraged over FY17-FY25 to meet the lenders restrictive covenants of 1.2x debt service coverage ratio. In case the over leverage is not reduced it could lead to the project breaching the restrictive covenants embedded in the financing agreements. In the absence of a major maintenance reserve creation this could lead to re-gearing for meeting the life cycle costs, especially with limited ability of the sponsors to infuse funds when it falls due.

The banking sectors exposure to the highway sector, declined to 7.1% in FY16 from 7.7% in FY15 (INR1.79trn compared to INR1.67trn). Ind-Ra expects the trend of the decline in banks exposure to the highway sector to continue in the medium term owing to the higher level of possible risk.

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Import of Vegetable Oil down by 25% in May 2016-Solvent Extractors Association of India
Jun 14,2016

The Solvent Extractors Association of India has compiled the Import data of Vegetable Oils (edible & non-edible) for the month of May 2016. Import of vegetable oils during May, 2016 is reported at 1,024,878 tons compared to 1,371,662 tons in May, 2015, consisting of 1,004,685 tons of edible oils and 20,193 tons of non-edible oils i.e. down by 25% due to highest stock at port and pipeline and reduced demand due to summer. The overall import of vegetable oils during first seven months of the current oil year 2015-16, November 2015 - May 2016 is reported at 8,593,587 tons compared to 7,833,524 tons i.e. up by 10%.

Sharp increase in RBD Palmolein Import (107%): - The import of RBD Palmolein during the first seven months of the current oil year i.e. from November 2015 to May 2016 jumped to 15.87 lakh tons from 7.66 lakh tons (107%) replacing import of CPO and expected to increase further in the coming months. The alarming increase in import of RBD Palmolein, seriously hurting the domestic refining industry. This situation has arisen due to the fact that currently the landed cost of RBD olein (finished product) is lesser than Crude Palm Oil (CPO - raw material). Due to this situation, the domestic refining industry is facing severe crisis of under-utilization of capacity and is on the verge of closure. Presently tax on export of CPO from Indonesia/Malaysia is higher by 5% in comparison to Refined Palm Oil/Olein. This differential will keep increasing with increase in prices of Palm Oil in the origin countries. Therefore, duty differential in India has to be made variable to be in line with the differential duty prevailing in Malaysia/Indonesia and justify to increase in duty difference between crude and refined vegetable oils from 7.5% to 15%.

Stock Position at Port and in Pipelines: - Current stock of edible oils as on 1st June 2016 at various ports is estimated at 865,000 tons (CPO 270,000 tons, RBD Palmolein 250,000 tons, Degummed Soybean Oil 210,000 tons, Crude Sunflower Oil 110,000 tons and 25,000 tons of Rapeseed (Canola) Oil) and about 1,465,000 tons in pipelines. Total stock at ports and in pipelines decreased to 2,330,000 tons from 2,440,000 tons in May 2016. Indias monthly requirement is about 16.5 lakh tons and operate at 30 days stock against which currently holding stock over 23.30 lakh tons equal to 42 days requirements. The overall stock as on 1st June, 2016 has decreased by 110,000 tons compared to 01 May 2015.

Import of Palm & Soft Oil Ratio: - Sharp increase in import of Soft Oils During November 2015 - May 2016, Palm Oil import has marginally decreased to 4,998,344 tons from 5,116,361 tons during the same period of last year, while, soft oils import sharply increased to 3,512,570 tons from 2,591,915 tons last year. The share of soft oils imports increased to 41% from 34% last year while, share of palm oil products down to 59% from 66%.

Average Prices and Rupee depreciation: - In last three months, due to reduction in stock of Palm Oil at origins, CIF Indian port prices of edible oils has moved upward. The difference between RBD Palmolein & CPO reduced from month to month.

Import of Non-Edible Oils: Import of Non-edible oils during November 2015 - May 2016 is reported at 82,673 tons compared to 125,248 tons during the same period last year. i.e. down by 34%. P.F.A.D., P.K.F.A.D., C.P.K.O. & RBD Palm Stearin are the major import of non-edible oils.

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Party time may come to end on auto fuel prices; Duty roll back may be answer: ASSOCHAM
Jun 14,2016

The party time on driving around on cheap fuel seems to be over, though there is no danger of hard times as yet even though the automobile fuel has witnessed about 20% increase in the recent past, an ASSOCHAM paper has said.

Sharp increase in the retail prices of automobile fuel, particularly diesel, the lifeline of the public transport, will have a cascading impact on the prices of a large number of consumer items, particularly food and beverages, further building the inflationary pressure and making the task of the Reserve Bank of India (RBI) difficult in moderating the interest rates, according to the Associated Chamber of Commerce and Industry of India (ASSOCHAM).

While the crude oil prices have shot up by about 20% in the last few months, the auto fuel prices at the filling stations have increased between 12 -18 % in different cities, depending on the level of state levies, adds the ASSOCHAM paper.

It said when the transportation costs go up, typically the entire food basket along with other materials, come under the cascading effect. In the present scenario, the big danger of the rising diesel prices is on the food and food a beverage which, as a group has weight of over 50 per cent in the retail inflation, measured by the Consumer Price Index (CPI).

The price of petrol in Delhi has touched Rs 63.2 per litre in June 2016 from Rs 56.61 in the month of March, 2016 with an increase of 11.3%. In Kolkata, it has risen to Rs 66.44 from Rs 62.32 in March 2016 (6.6%), Mumbai to Rs 66.12 from 62.75 (5.3%) and in Chennai Rs 62.47 from Rs 56.08 (11.3%), reveals the ASSOCHAM findings.

n++If the crude oil prices further go up, the government should seriously think of rolling back the duties which were imposed when the prices had touched rock bottom,n++ ASSOCHAM Secretary General Mr D S Rawat said while releasing the paper.

Similarly, the price of diesel in Delhi has also gone up to Rs 53.93 in June 2016 from Rs 46.43 in March, 2016 with an increase of about 16%. In Kolkata, increased to Rs 56.13 from Rs 49.57 in March 2016 (13%), Mumbai to Rs 59.21 from Rs 53.06 per litre (12%) and in Chennai to Rs 55.44 from Rs 47.13 in March 2016 (18%), adds the chamber.

The crude prices shot up from $25 per barrel to $50 per barrel in last six months on the back of pickup in demand from China, India and reduction in stock piles in US.

If the trends of rising prices continue, the profit margins could be hit since the corporate India is not in a position to pass on the rising raw material cost to the consumers even among the industrialized goods.

India currently consumes over four million barrels of oil a day and is on its way to overtake Japan to become the worlds third-largest guzzler, according to the IEA. An increase in the number of vehicles and growth in refining activities are pushing demand higher.

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Holistic credit assessment & monitoring imperative to rein in high levels of NPAs & restructured assets: ASSOCHAM-PwC study
Jun 14,2016

A holistic regulatory framework encompassing participation from all stakeholders in the credit rating ecosystem is imperative to improve the efficacy of credit rating agencies (CRAs) and effective credit risk assessment and monitoring in India, suggested an ASSOCHAM-PwC joint study.

n++Improving efficacy of CRAs needs to be looked from a holistic perspective where all participants in the ecosystem, the regulators, CRAs, corporate, investors (banks), borrowers and others need to work jointly towards a better system of credit risk assessment and monitoring,n++ noted the study titled Growing NPAs in banks: Efficacy of credit rating agencies, jointly conducted by The Associated Chambers of Commerce and Industry of India (ASSOCHAM) and Pricewaterhouse Coopers (PwC).

Banks credit risk assessment, administration and monitoring have increasingly come into focus owing to considerable increase in levels of non-performing assets (NPAs) and stressed assets (SAs) in past couple of years, the study added.

n++The banks, apart from putting up a strong regulatory framework, should also upgrade their skills for greater due diligence to effectively evaluate the ratings given by the CRAs,n++ it said.

n++Besides, banks need to move towards risk based pricing whereby they can use rating as more than just a mandatory exercise by identifying greater incentives for them to adopt ratings,n++ suggested the study.

n++Banks and CRAs should be able to contribute to developing an ecosystem where credit assessments become more effective,n++ it added.

Banks should treat the credit rating only as an opinion and not as the gospel truth and the information generated by their ratings should be used in conjunction of banks credit risk framework to decide on suitability of loan exposure, further noted the ASSOCHAM-PwC study.

Banks should also be encouraged to develop their internal rating models and validate these ratings by comparing them with publicly available ratings and also seek more information from the rating agencies, if necessary to be doubly sure of their credit assessment process, it said.

A forward-looking and market based credit rating mechanism as part of a move towards risk based pricing can also help the system to take proactive corrective steps to reduce the burden of stressed assets and potentially reduce NPAs systemically and avoid panic and kneejerk reactions, recommended the ASSOCHAM-PwC study.

Besides, early warning systems along with dynamic rating mechanism measuring all the risks of the market can help the banks and other lending institutions to effectively predict the credit risk associated with the borrower and take necessary actions to mitigate such risks.

Considering that financial education in India is still at a nascent stage, the ratings should be displayed on a common website for comparison, the study recommended.

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