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Editorial

Season’s greetings,

In this edition we have Mr. Shyam Shrinivasan – MD and CEO, The Federal Bank Ltd,

discussing the future being “D.I.G.I.T.A.L”. He highlights the dominant themes –

“Volatility and unpredictability” in today’s market and importance of being

D.I.G.I.T.A.L. We thank Mr. Shrinivasan for his contribution to the newsletter.

For this month, APAS column evaluates various opportunities and certain challenges of

Payments bank. It also highlights critical success factors applicable to payments bank’s

viability and the way forward.

The economic indicators showed mixed performance. The manufacturing PMI rose

from 51.3% in June to 52.7% in July. Growth in core sectors slowed to 1.1% in July from

3% in June, on account of low expansion in coal output and contraction in steel. Also

decline in crude oil and natural gas production showed a weak industrial recovery. IIP

rose from 2.7% in May to 3.8% in June, mainly led by the manufacturing sector. PMI

services and composite PMI were respectively at 50.8% and 52.0% both accelerating

from 47.7% and 49.2% in the previous month. Inflation fell from 5.4% in June to 3.78%

in July, primarily driven by food inflation. WPI inflation remained in negative zone for

ninth straight month in July 2015. The Gross Domestic Product (GDP) in India expanded

7% in the first quarter for the current financial year slowing from a 7.5% growth in the

previous quarter.

The Reserve Bank of India has granted “in-principle” approval to 11 applicants to set

up payments banks. Finance minister launched a seven pronged plan called

“INDRADHANUSH” to revamp the working of public sector banks.

Also this newsletter covers the 13th issue of MFIN Micrometer. It provides an overview

of the Indian microfinance industry, as on 31st March, 2015.

ICICI Lombard, one of India’s leading general insurance companies conducted a multi-

industry survey to comprehend if India Inc. was sufficiently covered against its

potential risks. The survey covered 292 companies across various sectors and

concluded inadequate risk coverage to a large extent.

On the capital markets, the Securities and Exchange Board of India proposed to relax

the regulations for infrastructure investment trusts. In a consultation paper, it

proposed that they could be allowed investments through twin-level Special Purpose

Vehicles.

We hope that this newsletter is insightful and we welcome your inputs and thoughts

and encourage you to share them with us.

Ashvin Parekh

Table of Contents

Guest Column

Shri Shyam Shrinivasan – MD and CEO,

The Federal Bank Ltd.

APAS Team

Payments bank

Economy

IIP update – June

Inflation update - July

PMI update – July

Core Sector update – July

GDP – Q1 - 2015-16

Banking Sector

RBI granted “in-principle”

approval to 11 applicants to set

up payments banks

Indradhanush Plan

Microfinance

Micrometer – Issue 13

Insurance

A multi-industry survey by ICICI

Lombard and its key findings

Infrastructure

Cities identified under “Housing

For All” scheme

Capital Markets

SEBI relaxes regulations for Infra

Investments Trust

Capital Market Snapshot

Economic Data Snapshot

Draft regulations for Foreign Re-Insurers

GI Industry – Statistics

Ashvin Parekh – Managing Partner, APAS

The indices are way below its peak; Chinese markets,

PN, US interest rates, falling gold prices and many

other insights are flashing on the screens. Opinion and

thought leaders are actively offering

explanations/rationale and most importantly ideas to

help navigate the volatility.

As I look into the next few years and make an effort

to visualize what the landscape may be, the only thing

I have to draw upon to make my predictions is a look

back at the way the past few years have shaped up.

Not surprisingly volatility and unpredictability are the

dominant themes. Companies who were worshipped

in the 1990’s and 2000’s don’t seem to have stayed

the course while new and unexpected heroes have

emerged. And yet through these volatile and changing

times, a few (very few!) have indeed stood out and

appear almost unaffected by all that happens around

them. They are “Lotus like” (growing resplendently in

unpleasant waters) in their performance.

As we unpick the performance parameters of these

successful institutions what distinguishes them are

that they are ‘timeless’ yet contemporary, deliver

leadership performance with a high degree of

predictability.

It seems to me that they have, are and will be

D.I.G.I.T.A.L slaves. Mention of DIGITAL in today’s

environment conjures up images of an organization

that is significantly technology enabled, leveraging the

mobile and Internet as their success platform. This is

indeed true and will remain so. However what I would

like to reflect on is D.I.G.I.T.A.L as an acronym for some

characteristics/practices that those successful

institutions have mastered. To me consciously

pursuing this in the volatile and uncertain times, which

may be the order of the day for time to come is likely

to produce future winners. Let me expand on these:

D: Tomes have been written about Disruption and its

role in breaking the routine and establishing

leadership. Experience shows institutions that have

befriended Disruption as a religion and not as a one off

are likely to be winners. Often mega disruptions seem

to be the pursuit but history teaches us that those who

sweat the details, deliver process disruption are even

more sure of sustained success and operational

excellence. CapOne of the US is a great example of this.

Shri Shyam Shrinivasan,MD and CEO – The Federal Bank Ltd.

I: The winners seem to be strong at translating

information to Insights. Google and its likes have made

information no one’s prerogative-but the churning of

information to convert data to insight sharpens the

edge. Google, Apple, Amazon, HDFC Bank are great

examples,that beat the trend of organizations that are

often long on information but short on insight.

Geographic Dividend- Those who have and will crack

the code on reaching the unserved/underserved

probably are bound to be ahead and it is evident from

the trends of the timeless winners.

Implementation is everything. Military like doggedness

and execution distinguishes and will be all the more

key as building efficiencies is not an option, it’s a

survival must. Banks that have consistently delivered

high return ratios operate with cost/income of 40 % or

so suggesting their efficiency metrics in order.

Spotting Trends Early: Ability to connect the dots and

draw the pattern ahead of the pack distinguishes

leaders. ‘Friend the Trend’ as they say. Staying fresh

and relevant and having the confidence to launch

products/ services that can be category leaders is key.

Our own Bank’s “Fed Book” an electronic pass book is

one such example. We sensed that the Mobile is clearly

the 79th human organ and thereby will our services

need to be offered on that and it has since been

offered by most industry participants.

Authenticity: Experience shows trying to be a “Me too”

has its challenges and the staging time to its DNA and

ability to have its stamp of Authenticity is crucial.

Brands get built by building on core strength. They help

navigate the odds and deliver consistently.

Leading organizations are also perennially Learning

organizations. They have an inherent capability to stay

current, spot trends, invest into it and equally find the

opportunities and exit when a thought/idea is no

longer relevant.

Capital, Talent, Risk Management, Digital, Credit

alternatives, transaction efficiencies are all going to be

crucial drivers for success in the years ahead. Even

before Basel III and IFRS go fully operational, there is

likelihood of a new global standard emerging. This only

reiterates the fact that uncertainty and volatility will be

dominant themes, so there is no harm in learning from

the winners, and being D.I.G.I.T.A.L slaves, much like

the winners hitherto!

Reserve Bank of India came out with guidelines of

licensing for new structures on 27th Nov 2014 in the

Indian banking landscape. Inspiration for new

structures have been drawn from Nachiket Mor

committee report on differential licensing to enlarge

banking industry space and reach out to the

unbanked. Reserve Bank of India has identified two

niche areas and issued guidelines for Payments and

Small Finance banks. At the outset Reserve Bank of

India has issued in-principal approval to eleven

applicants to form Payments Bank (PB) on 19th Aug

2015. The licensees have 18 months to roll out

operations for this new structure. This note aims at

identifying opportunities and challenges for payments

bank and capturing some business expert’s views.

It is established that India is the market with ample

payments opportunity. Around 40% of 1.21 billion

population in India is still unbanked and transactions

are conducted in cash. Not only is there significant

headroom for new customers, there is also a large

number of dormant or under-utilized accounts. This

awaits disruption the digital currency can make. In a

2014 World Bank survey, only 15% of respondents

reported using their bank accounts to make/receive

payments. When this large untapped base is

considered alongside average per capita household

expenditure of $750 (World Bank, 2014), the

opportunity available to PBs begins to assume

sizeable monetary value. One has to recognize that

even at the present levels the annual value of

transaction conducted through digital channels by

way of credit and debit cards is staggering USD 60

billion. The question in the longer run is not the

viability but that of innovation and the survival of the

fittest.

There are three critical success factors applicable to

payments bank’s viability; large base of active

customers, latest payments technology platforms and

connectivity (pipeline) and partnerships with various

stakeholders of the landscape including other banking

companies. Of the 11 approved applicants, telecom

companies have large base of active customers. India

has a dominating size of 976 million mobile

subscribers. This substantially outnumbers the

number of bank accounts though a mobile subscriber

may have more than one connection. The second set

of players include those who have feet on the street

or a substantial infrastructure. Department of Post is

well equipped on this factor with 210 million savings

accounts and 154,822 branches across the country

and close to 90% of them—139,086 branches —are in

rural India. Frugal cost management and innovative

products and its delivery will go a long way in creating

a robust payments bank.

Innovation continues to dominate the agenda of

payments industry participants. We analyzed the

payments industry and explored innovation in the

areas of design, development, and implementation of

new or altered products, services, processes,

organizational structures, and business models. These

create value for payments banks and its customers

and encompasses more than just the ‘new’, extending

it out to the implementation of, or a change to, a

product, service, or proposition that has a positive

business impact. Industry continued to examine

innovation in the industry with a focus on the

customer-facing part of the payments value chain.

Banks developed products and services targeting four

‘Innovation Value Hotspots’ in the customer

acquisition space of the payments industry:

origination, acceptance and capture, security and

fraud, and value-added services. These hotspots

enable firms to make money from discrete parts of

the value chain by offering solutions in one or in a

combination of the four hotspots.

Partnerships and alliances are again important factors

that will influence the success of payments banks.

Identifying gaps in the value chain for the purpose of

selecting the partners will be the mantra.

Partnerships will be formed with a short term and a

long term view. After a certain stage the payments

banks will invest and own the capability possessed by

a short term partners and gradually reduce the play of

intermediaries.

In conclusion payments bank with deep pockets,

innovative technologies and products, faster and

cheaper flow of digital currency and acquisition of a

sizeable market share in the payment space will

survive and grow.

- APAS TEAM

IIP (Index of Industrial Production) – June

June IIP hits four-month high at 3.8% on the back of

rising consumer goods production. IIP in May was seen

at 2.7%.

Further, the growth in factory output was led by the

manufacturing sector, which expanded by 4.6% in June

against 2.2% in the month before. While mining output

fell 0.3%, that for electricity was up 1.3%.

Some of the important items showing high positive

growth during the current month over the same month

in previous year include H.R.Sheets, Gems and

Jewellery, Conductor, Aluminium, Woollen Carpets,

Wood furniture, Transformers (small), Plastic

machinery including moulding machinery, Stainless/

alloy steel, Pens of all kind, Apparels, Block Board,

Carbon Steel and Leather Garments.

Some of the other important items showing high

negative growth are: Air & Gas Compressors, Instant

Food Mixes, Grinding Wheels,

Linear Alkyl Benzene, Cable, Rubber Insulated, Aerated

Waters and Soft Drinks, Tractors (complete) and Furnace oil.

As per Use-based classification, the growth rates in June

2015 over June 2014 are 5.1% in Basic goods, (-) 3.6% in

Capital goods and 0.8% in Intermediate goods.

The Consumer durables and Consumer non-durables have

recorded growth of 16.0% and 1.3% respectively, with the

overall growth in Consumer goods being 6.6%.

5

2.1

4.1

2.7

3.8

Feb-15 Mar-15 Apr-15 May-15 Jun-15

IIP (%YoY)

Consumer Price Index - July

Inflation based on the consumer price index (CPI) fell

sharply in July to 3.78% from 5.4% in June, to its

lowest in the current series. This was much below

expectation and was mainly due to a sharp fall in food

inflation.

This drove retail food inflation down to 2.15% in July

from 5.48% in June.

As per media reports, the CPI number is significantly

lower than expected. Clearly, food is one significant

factor on the downside. Falling global crude prices

and very minimal Minimum Support Price (MSP)

increases have enabled food prices to be very soft.

This number is significantly below RBI's projection for

this period, and if the trend continues we should see

RBI marking down its year-end inflation projection.

WPI (Wholesale Price Index) – July

WPI inflation remained in negative zone for ninth

straight month in July 2015. The annual rate of

inflation, based on monthly WPI, stood at -4.05% for

the month of July, 2015. As per the revised data, the

inflation figure for May 2015 was scaled up to (-) 2.2%

from (-) 2.4% reported provisionally.

Inflation of primary articles declined (-) 3.7%, while

that for manufactured products slipped to (-) 1.5% in

July 2015. The inflation of fuel items also plunged to

(-) 12.8% in July 2015 from (-) 10.0% in May 2015.

As per major commodity group-wise, almost all

commodity groups recorded decline in inflation in July

2015. Inflation eased of food grains, fruits,

vegetables, spices, oilseeds, flowers, iron ore, mineral

oils, sugar, edible oils, beverages, leather products,

rubber and plastic products, chemical products, non-

metallic mineral products and basic metals in July

2015.

On the other hand, inflation increased for fish, raw

jute, crude oil, bakery products, textiles item and

wood products in July 2015.

The index for machinery and machine tools' group

rose by 0.1% due to higher price of ball/roller bearing,

industrial valves and electric motors, rubber

machinery, engines and conductor. The index for

'Transport, Equipment & Parts' group rose by 0.1%

due to higher price of shafts (all kinds).

-5

-4

-3

-2

-1

0

Mar-15 Apr-15 May-15 Jun-15 Jul-15

WPI (%YOY,2015-16)

5.174.86 5.01

5.4

3.78

Mar-15 Apr-15 May-15 Jun-15 Jul-15

CPI (%, YoY)

PMI update

Service PMI - July

After having fallen in the previous month, output

across the combined manufacturing and service

sectors in India rose during July. The seasonally

adjusted Nikkei India Composite PMI Output Index

climbed to 52.0 from 49.2 in June to signal a modest

increase in activity. Growth has now been recorded in

14 of the past 15 months. The seasonally adjusted

Nikkei Services Business Activity Index rose back

above the 50.0 no-change mark in July, posting 50.8

from 47.7 in June.

The upturn in incoming new work led Indian service

providers to take on additional workers in July.

Although slight, the rate of job creation was the

quickest in two years. Increased employment led

services outstanding business to decline for the first

time since February 2014. However, composite work-

in-hand increased fractionally due to a faster

accumulation at manufacturing firms.

Rates of cost inflation accelerated across both monitored

sectors in July. However, input prices still rose only modestly

overall. Services output prices rose, extending the current

sequence of charge inflation to eight months. Confidence

among Indian services firms deteriorated in July.

Although companies remained optimistic (on average), the

level of positive sentiment dipped to a survey low. However,

there are concerns surrounding future economic conditions

and competitive pressures.

Manufacturing PMI - July

July saw manufacturing business conditions across

India improve further. On the price front, a marginal

rise in costs was registered, whereas average selling

prices were unchanged over the month.

Posting a six-month high of 52.7 in July, from 51.3 in

June, the seasonally adjusted Nikkei India

Manufacturing Purchasing Managers Index – a

composite single-figure indicator of manufacturing

performance – was consistent with a solid

improvement in the health of the country’s goods-

producing sector.

Output continued to grow in July, with increases seen across

the three monitored market groups. Moreover, the overall

rate of expansion was solid and faster than in June. Indeed,

growth of new export business accelerated in July and was

the most pronounced in five months. Concurrently, stocks

of purchases were accumulated again in July and at a pace

that was the fastest in the year-to-date. Conversely,

holdings of finished goods fell, with survey respondents

indicating that orders were often fulfilled directly from

stocks.

Core Sector Growth – July

Growth in the eight core sectors slowed to 1.1% in July

after a growth of 3% in June, mainly on account of low

expansion in coal output and contraction in steel,

crude oil and natural gas production that hinted at a

weak industrial recovery.

Growth in coal production slowed drastically to a

depressing 0.3% compared to a robust growth rate of

6.3% in the previous month of June. In July, steel

production also shrank 2.6% from a growth of 4.9% in

the previous month. Electricity generation increased

by 3.5% in July.

Natural gas output was down 4.4% in July against

5.9% fall in June and 8.9% contraction in July, 2014.

Production of cement increased 1.3% in July.

Petroleum Refinery and fertilizer production

increased by 2.9 % and 8.6% respectively in July, 2015.

GDP Q1 - 2015-16

The Gross Domestic Product (GDP) in India expanded

7% in the first quarter for the current financial year

slowing from a 7.5% growth in the previous quarter

and below market expectations.

Among key components, growth in agriculture,

manufacturing, construction and mining sectors

stood at 1.9%, 7.2%, 6.9% and 4%, respectively, year-

on-year.

There was disappointment in public administration,

which grew 2.7% while electricity growth slowed to

3.2%. Trade, hotels, transport and communication

showed an improvement from 12.1% to 12.8%.

However, it was marginal. Also, financial, real estate

and professional services showed a decline from 9.3%

to 8.9%.

The GDP at gross value added (GVA), a key measure

that measures growth by expenditure, stood at 7.1%

versus 7.4% YoY.

Payments banks

The Reserve Bank of India has granted “in-principle”

approval to the following 11 applicants to set up

payments banks under the "Guidelines for Licensing

of Payments Banks" issued on November 27, 2014

1. Aditya Birla Nuvo Limited

2. Airtel M Commerce Services Limited

3. Cholamandalam Distribution Services Limited

4. Department of Posts

5. Fino PayTech Limited

6. National Securities Depository Limited

7. Reliance Industries Limited

8. Shri Dilip Shantilal Shanghvi

9. Shri Vijay Shekhar Sharma

10. Tech Mahindra Limited

11. Vodafone m-pesa Limited

RBI followed a selection process for selecting these

applicants. It may be recalled that on August 27,

2013, the Reserve Bank placed on its website, a

policy discussion paper on Banking Structure in India

– The Way Forward. One of the observations in the

discussion paper was that there is a need for niche

banking in India, and differentiated licensing could be

a desirable step in this direction, particularly for

infrastructure financing, wholesale banking and retail

banking.

Details of “in-principle” approval

The “in-principle” approval granted will be valid for a

period of 18 months, during which time the

applicants have to comply with the requirements

under the Guidelines and fulfil the other conditions

as may be stipulated by the Reserve Bank.

On being satisfied that the applicants have complied

with the requisite conditions laid down by it as part

of “in-principle” approval, the Reserve Bank would

consider granting to them a license for

commencement of banking business under Section

22(1) of the Banking Regulation Act, 1949. Until a

regular license is issued, the applicants cannot

undertake any banking business.

Indradhanush plan

Finance minister Arun Jaitley on Friday, 14th August,

2015 launched a seven pronged plan —

"Indradhanush" -- To revamp functioning of public

sector banks.

The seven elements include appointments, board of

bureau, capitalization, de-stressing, and

empowerment, framework of accountability and

governance reforms.

The Public Sector Banks (PSBs) play a vital role in

India’s economy. In the past few years, because of a

variety of legacy issues including the delay caused in

various approvals as well as land acquisition etc., and

also because of low global and domestic demand,

many large projects have stalled. Public Sector Banks

which have got predominant share of infrastructure

financing have been sorely affected. It has resulted in

lower profitability for PSBs, mainly due to

provisioning for the restructured projects as well as

for gross NPAs.

The present Government has put in place a

comprehensive framework for improving PSBs. Most

recently, the announcement of capital allocation by

Government for PSBs in the next four years.

Announcement of capital plans for the PSBs is only

one of the many steps taken by the Government.

The seven elements are explained in brief as under –

A. Appointments - The Government decided to

separate the post of Chairman and Managing

Director by prescribing that in the subsequent

vacancies to be filled up the CEO will get the

designation of MD & CEO and there would be

another person who would be appointed as non-

Executive Chairman of PSBs. This approach is

based on global best practices and as per the

guidelines in the Companies Act to ensure

appropriate checks and balances.

B. Bank Board Bureau - The announcement of the

Bank Board Bureau (BBB) was made by Hon’ble

Finance Minister in his Budget Speech for the year

2015-16. The BBB will be a body of eminent

professionals and officials, which will replace the

Appointments Board for appointment of Whole-

time Directors as well as non-Executive Chairman

of PSBs.

C. Capitalization - As of now, the PSBs are

adequately capitalized and meeting all the Basel III

and RBI norms. However, the Government of India

wants to adequately capitalize all the banks to

keep a safe buffer over and above the minimum

norms of Basel III. Out of the total requirement,

the Government of India proposes to make

available Rs.70,000 crores out of budgetary

allocations for four years.

D. De-stressing PSB’s - The infrastructure sector and

core sector have been the major recipient of PSBs’

funding during the past decades. But due to

several factors, projects are increasingly

stalled/stressed thus leading to NPA burden on

banks. Besides the recovery efforts under the DRT

& SARFASI mechanism additional steps have been

taken to address the issue of NPAs.

E. Empowerment - The Government has issued a

circular that there will be no interference from

Government and Banks are encouraged to take

their decision independently keeping the

commercial interest of the organization in mind. A

cleaner distinction between interference and

intervention has been made. The Government

intends to provide greater flexibility in hiring

manpower to Banks.

F. Framework of Accountability - The present

system for the measurement of bank’s

performance was a system called “SoI” –

Statement of Intent. A new framework of Key

Performance Indicators (KPIs) to be measured for

performance of PSBs is being announced.

G. Governance Reforms - The process of governance

reforms started with “Gyan Sangam” - a conclave

of PSBs and FIs organized at the beginning of 2015

in Pune which was attended by all stake-holders

including Prime Minister, Finance Minister, MoS

(Finance), Governor, RBI and CMDs of all PSBs and

FIs. There was focus group discussion on six

different topics which resulted in specific

decisions on optimizing capital, digitizing

processes, strengthening risk management,

improving managerial performance and financial

inclusion. Government has been constantly engaging with the Banks through review meeting and sessions for strategic reviews etc. Further, scheme of ESOPs

for top 12 management is under formulation. Other strategic initiatives such as consolidation etc. need to be discussed.

According to The Ministry of Finance, The Indradhanush framework for transforming the PSBs represents the most comprehensive reform effort undertaken since banking nationalization in the year 1970.

Micrometer – Issue 13

This is based on the 13th issue of MFIN Micrometer.

It provides an overview of the Indian microfinance

industry, as on 31st March, 2015. The publication

provides an analysis of four consecutive years (FY 11-

12 to FY 14-15).

Key highlights include:

As of 31 March, 2015, MFIs provided

microcredit to over 30.50 million clients, an

increase of 29% over FY 13-14

Annual disbursements (loan amount) in FY

14-15 increased by 55% compared to FY 13-

14

Total number of loans disbursed by MFIs

grew by 37% in FY 14-15 compared with FY

13-14 reaching 33.43 million

Funding to MFIs in FY 14-15 grew by 84%

compared with FY 13-14

Portfolio at risk figures remained under 1%

for FY 14-15

Average loan amount disbursed per account

as of March 2015 is INR 16,327

MFIs cover 32 states/union territories and

489 districts

MFIs' coverage is now geographically well

dispersed with Glp in south at 30%, east at

28%, north at 22% and west at 20%

Productivity ratios for MFIs continued to

improve. Glp per branch is now at INR 38.03

million, up by 49% over FY 13-14

As of 31 March 2015, insurance to over 36.36

million clients with sum insured of INR

670.50 billion was extended through MFI

network

Pension accounts were extended to over

1.87 million clients through MFI network.

A multi-industry survey by ICICI Lombard and its key findings

ICICI Lombard, one of India’s leading general

insurance companies conducted a multi-industry

survey to comprehend if India Inc. was sufficiently

covered against its potential risks.

The survey covered 292 companies spanned

technology, BFSI, steel, cement, pharmaceuticals,

petro and energy, engineering and manufacturing,

FMCG, reality and infrastructure, mining and

minerals, healthcare and hospitality, transportation

and logistics, media and entertainment, auto and

auto ancillary and telecom.

The study revealed that the coverage against risk was

not adequate. It showed that mostly companies

focused on employee and asset related risks.

Protection against liability related high impact risks

was limited. More attention was paid on having

group medical insurance, accidental insurance and

insurance against damage to their asset or

machinery. In fact, cyber liability along with director

and officer’s liability have been taken care of.

It revealed that while the number of high impact –

high propensity risk was more for smaller firms (125-

500 cr), larger firms (above 550 cr) primarily

considered employee health and accident related

risks as high impact-high propensity.

Key findings of the survey are as follows –

Key risks such as liability ignored at industry level,

high inclination among companies to cover basic

risks.

Data theft and intellectual property insurance

were not amongst the top 5 risks insured by ITES

Companies.

Only 24% BFSI companies opt for credit and money

insurance to protect transit of cash within

branches and ATMs.

Purchase of public liability and loss of profit covers

are low for steel and cement companies.

Only 44% Auto and Auto Ancillary companies opt

for product liability covers.

Only 27% FMCG Companies in India purchase

commercial general liability insurance, while 33%

opt for product liability insurance.

Pharma and chemicals companies hardly purchase

liability covers to insure their products and

employees.

51% Corporate prefer purchasing risk solutions

directly from the insurance companies.

Insurance companies provide risk solutions along

with managing risks for corporations.

305 cities identified under 'Housing for All' scheme

The government has identified 305 cities and towns

across nine states for implementation of its

ambitious 'Housing for All' scheme.

As per media reports, the HUPA Ministry would

provide assistance of over Rs 2 lakh crore over the

next six years for enabling two crore urban poor own

their own houses.

The selected cities and towns are in Chhattisgarh (36

cities/towns), Gujarat (30), Jammu and Kashmir (19),

Jharkhand (15), Kerala (15), Madhya Pradesh (74),

Odisha (42), Rajasthan (40) and Telangana (34).

Under the 'Housing for All' initiative of the central

government, named as Pradhan Mantri Awas Yojana

and launched by Prime Minister Narendra Modi on

June 25 this year, two crore houses are targeted to

be built for the poor in urban areas by year 2022,

coinciding with 75 years of Independence.

The states that have so far agreed to implement the

mandatory reform measures are Andhra Pradesh,

Bihar, Chhattisgarh, Gujarat, Jammu and Kashmir,

Jharkhand, Kerala, Madhya Pradesh, Manipur,

Mizoram, Nagaland, Odisha, Rajasthan, Telangana

and Uttarakhand.

As per the media reports, besides these nine states,

six more states have signed Memorandum of

Agreement (MoA) with the Ministry committing

themselves to implement reforms essential for

making the housing mission in urban areas a success.

By signing a memorandum of association, the states

have agreed to make certain changes.

These include -

Doing away with the requirement of separate

non-agricultural permission in case land falls

in residential zone earmarked in Master Plan

of city or town and preparing or amending

Master Plans earmarking land for affordable

housing, among others

Putting in place a single-window and time-

bound clearance system for layout approvals

and building permissions

Doing away with approvals below certain

built-up area size in respect of economically

weaker sections and low income groups

Amending existing rent laws on the lines of the Model

Tenancy Act, Providing additional Floor Area Ratio

(FAR)/Floor Space Index/Transferable Development

Rights (TDR) and relax density norms, for slum

redevelopment and low cost housing are other

reforms to be carried out by states as per the MoA.

Also, Under the urban housing mission, the Centre

will provide an assistance in the range of Rs 1 lakh to

Rs 2.30 lakh per unit under different components of

the scheme including in-situ redevelopment of slums

using land as resource, credit- linked subsidy scheme,

affordable housing in partnership, and beneficiary led

individual construction/improvement.

Sebi proposes to relax regulations for infra investment trusts

The Securities and Exchange Board of India (Sebi)

proposed to relax the regulations for

infrastructure "Infrastructure Investment Trusts". In

a consultation paper, it proposed that InvITs could be

allowed investments through twin-level Special

Purpose Vehicles (SPVs). Additionally, the sponsor

commitment could be reduced from 25% to 10%.

Comments are invited on the Consultation Paper

latest by September 06, 2015.

SEBI, in its discussions with the industry and in

various representations, has received suggestions for

making amendments/providing clarifications with

respect to the InvIT Regulations. Based on the

suggestions, certain amendments/clarifications are

proposed to the InvIT Regulations as under:

It says infrastructure investment trusts (InvITs) be

allowed to invest through 2-level Special purpose

vehicles (SPVs).

Sebi proposes InvIT hold not less than 50% in

holding company and the latter hold not less

than 50% in the SPV

Sebi proposes sponsor commitment be cut

from 25% to 10%

SEBI InvIT Regulations were notified on 26th

September, 2014, thereby providing a

regulatory framework for registration and

regulation of InvITs in India. The Regulations,

inter alia, provide for conditions for making a

public offer and private placement, initial and

continuous disclosures, investment

conditions, unit-holder approval

requirements, related party disclosures, etc.

Sources: National Stock Exchange

Sources: Bombay Stock Exchange

The rupee is seen weakening due to dollar

demand from importers, while government bond

yields are expected to trade in a range. The broad

range is seen between 65.75 and 66.50 a dollar in

the last week.

Sources: APAS Business Research Team

Sources: APAS Business Research Team

Sources: APAS Business Research Team

63.80 63.74

65.20 65.11

66.03

65.97

66.15 66.15

66.41

62.00

62.50

63.00

63.50

64.00

64.50

65.00

65.50

66.00

66.50

67.00

67.50

$/₹ (Aug-2015)

7.84

7.817.797.80

7.74

7.74 7.77

7.78 7.79

7.65

7.70

7.75

7.80

7.85

7.90

7.95

GIND10Y (Aug-2015)

8517

8589

8462 8477

78097949

7971

3-A

ug-

15

5-A

ug-

15

7-A

ug-

15

9-A

ug-

15

11

-Au

g-1

5

13

-Au

g-1

5

15

-Au

g-1

5

17

-Au

g-1

5

19

-Au

g-1

5

21

-Au

g-1

5

23

-Au

g-1

5

25

-Au

g-1

5

27

-Au

g-1

5

29

-Au

g-1

5

31

-Au

g-1

5

CNX Nifty (Aug-2015)

28072

28236

2751227832

27608

2603226392

26283

3-A

ug-

15

5-A

ug-

15

7-A

ug-

15

9-A

ug-

15

11

-Au

g-1

5

13

-Au

g-1

5

15

-Au

g-1

5

17

-Au

g-1

5

19

-Au

g-1

5

21

-Au

g-1

5

23

-Au

g-1

5

25

-Au

g-1

5

27

-Au

g-1

5

29

-Au

g-1

5

31

-Au

g-1

5

BSE Sensex (Aug-2015)

15.39

14.73

17.02 17.12

23.3324.60

0.00

5.00

10.00

15.00

20.00

25.00

Indian VIX (Aug-2015)

China’s unexpected currency devaluation and fears

over its economic health boiled over and scalded

global markets worldwide.

Indian stocks tumbled, crashing by the most in more

than seven years. In china itself, stocks tumbled by a

level last seen in 2007. Crude oil fell further and

commodities plummeted to a 16-year low. Brent

crude slipped below $45 a barrel for the first time

since March 2009.

The Dow Jones took a 1000 point plunge at the

opening. Globally, equity markets are in turmoil.

Equities worldwide have lost more than $5trillion.

MSCI Emerging market Index dropped to its lowest

since July 2009. Hongkong’s snowballing stock losses

have been the most extreme since the crash of 1987.

Taiwan, Brazil and Indonesia entered a bear market

by the developing nation gauge. 10-year US Treasury

yields fell below 2%.

For Indian markets, VIX jumped 64% on covering of

Short Nifty put options and squaring off of bullish

bets. Wealthy investors and proprietary brokers bore

the fury of Monday (24th August, 2015) crash as the

selloff, triggered by global

market fears sent all their bets awry. Many derivative

traders suffered severe losses as they rushed to cover

these bets, jacking up volatility by a staggering 64%,

its steepest daily rise in five years.

The Indian Rupee on 24th August, 2015 hit a fresh

two-year low mirroring weakness in other emerging

market currencies versus the US dollar. As per the

media reports, depreciation is not unexpected as it’s

still overvalued by 8-10%. India importers are not

rushing to hedge their dollar exposure as they did in

2013 as many believe in the rupee’s stability and

India’s improved macro fundamentals.

On Monday 24th August, RBI Governor Raghuram

Rajan passed a statement which said, RBI would not

hesitate to use its $380-b forex reserves to stem

volatility in the exchange rate. As per the media

reports, the currency market crash will tie the hands

of Reserve Bank of India Governor on lowering

interest rates even if inflation eases.

On the 4G battleground, it India v/s China. Chinese

phone makers have taken a substantial lead in the

Indian smart phone market for the high speed

devices.

* The Economist poll or Economist Intelligence Unit estimate/forecast; ^ 5 year yield

Countries GDP CPI Current Account

Balance Budget Balance

Interest Rates

Latest 2015* 2016* Latest 2015* % of GDP, 2015* % of GDP,

2015* (10YGov), Latest

Brazil -1.6 Q1 -1.7 0.6 9.6 July 8.7 -4.1 -5.8 14.0

Russia -4.6 Q2 -3.6 0.4 15.6 July 14.8 5.0 -2.8 11.7

India 7.5 Q1 7.6 7.8 3.8 July 5.4 -1.2 -4.1 7.79

China 7.0 Q2 6.9 6.7 1.6 July 1.5 3.0 -2.7 3.21^

S Africa 1.2 Q2 2.0 2.4 5.0 July 4.9 -5.3 -3.8 8.43

USA 2.3 Q2 2.4 2.7 0.2 July 0.4 -2.6 -2.6 2.12

Canada 2.1 Q1 1.5 2.1 1.3 July 1.1 -2.7 -1.8 1.44

Mexico 2.2 Q2 2.6 3.3 2.7 July 3.0 -2.4 -3.4 6.09

Euro Area 1.2 Q2 1.4 1.7 0.2 July 0.2 2.5 -2.1 0.71

Germany 1.6 Q2 1.7 2.0 0.2 July 0.5 7.4 0.7 0.71

Britain 2.6 Q2 2.6 2.4 0.1 July 0.2 -4.8 -4.4 1.84

Australia 2.3 Q1 2.4 2.8 1.5 Q2 1.7 -3.1 -2.4 2.66

Indonesia 4.7 Q2 4.9 5.5 7.3 July 6.3 -2.6 -2.0 8.97

Malaysia 4.9 Q2 5.5 5.6 3.3 July 2.6 3.4 -4.1 4.45

Singapore 1.8 Q2 3.1 3.2 -0.4 July 0.4 21.3 -0.7 2.68

S Korea 2.2 Q2 2.8 3.3 0.7 July 1.0 7.6 0.4 2.26

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