Time for opening up of New Banks extended by Six Months

The RBI (Reserve Bank of India) on 3 June 2013 released certain clarifications on the guidelines issued for licensing of new banks. Based on the feedback received from the interested entities, the RBI increased the validity period of the in-principle approval of setting up of banks from one year to 18 months. RBI stated that intending applicants have brought out several complex issues pertaining to reorganization of the existing corporate structure, restructuring of businesses and meeting the regulatory requirements. Once the in-principle approval is given by the RBI for setting up of a bank, the promoter group has to set up a non-operative financial holding company (NOFHC) and the bank within 18 months from the date of in-principle approval. The bank has to start banking business within this period after getting the banking licence. The RBI had released the Guidelines for Licensing of New Banks in the Private Sector in February 2013. Accordingly, the RBI had stated that corporates and public sector entities with sound credentials, 500 crore rupees capital and a minimum track record of 10 years would be allowed to enter the banking business. The last date to submit applications is the 1 July 2013. The RBI had also invited queries from intending applicants seeking clarifications on guidelines.

Mechanism for Coal Supply to Power Producers approved

The Cabinet Committee on Economic Affairs (CCEA) on 21 June 2013 approved the following mechanism for supply of coal to power producers:

• Coal India Ltd. (CIL) to sign Fuel Supply Agreements (FSA) for a total capacity of 78000 MW including cases of tapering linkage, which are likely to be commissioned by 31 March 2015. Actual coal supplies would however commence when long term Power Purchase Agreements (PPAs) are tied up.

• Taking into account the overall domestic availability and actual requirements, FSAs to be signed for domestic coal quantity of 65 percent, 65 percent, 67 percent and 75 percent of Annual Contracted Quantity (ACQ) for the remaining four years of the 12th Five Year Plan.

• To meet its balance FSA obligations, CIL may import coal and supply the same to the willing Thermal Power Plants (TPPs) on cost plus basis. TPPs may also import coal themselves. MoC to issue suitable instructions.

• Higher cost of imported coal to be considered for pass through as per modalities suggested by CERC. MoC to issue suitable orders supplementing the New Coal Distribution Policy (NCDP). MoP to issue appropriate advisory to CERC/SERCs including modifications if any in the bidding guidelines to enable the appropriate Commissions to decide the pass through of higher cost of imported coal on case to case basis.

• Mechanism will be explored to supply coal subject to its availability to the TPPs with 4660 MW capacity and other similar cases which are not having any coal linkage but are likely to be commissioned by 31 March 2015, having long term PPAs and a high Bank exposure and without affecting the above decisions.

Background

A proposal had earlier been moved for approval of CCEA for import of coal by CIL in order to meet the shortfall in the domestic coal requirement of the thermal power plants (TPPs) from time to time. In the meeting held on 5 February 2013, the CCEA had laid down certain guidelines for import of coal on cost plus basis/pooling of prices and also directed formation of an Inter-Ministerial Committee (IMC) to consider the cases of power plants with aggregate capacity of about 16000 MW which would be commissioned by 31 March 2015 but are not having any linkage for supply of coal. On the basis of the recommendations of IMC, the matter was further considered by CCEA in the meeting held on 22 April 2013. The CCEA inter-alia directed to consider the feasibility of higher cost of imported coal being allowed as a pass through in case of PPAs signed on competitive bid basis. The revised proposals submitted by Ministry of Coal (MoC) in pursuance of the above directions and in consultation with Ministry of Power and other Ministries were considered by the CCEA.

Foreign Investment Limit hiked by 5 Billion Dollar in Government Securities

The Union Government of India on 12 June 2013 enhanced the limit ofForeign Investments in Government Securities by 5 Billion US Dollar. This decision of the Government is an effort to increase the overseas capital inflows and strengthen the value of rupee. The enhancement has raised the total limit of investments from foreign entities to 30 billion US dollar from previous 25 billion US dollar. The notification released by the Union Government mentioned that the Foreign Institutional Investors registered to SEBI are only eligible for investment in the enhanced limit of 5 billion US Dollars. The investments can be made in categories named Sovereign Wealth Funds, Multilateral Agencies, Endowment Funds, Insurance Funds, Pension Funds and Foreign Central Banks.

Five-Fold Increase in Power Generation in India

India witnessed a five-fold increase in the additional power generation capacity during the last nine years as per the official data released by the union government on 2 June 2013. It has gone up from over 3900 MW in 2004-05 to 20660 MW in 2012-13.

Over 9 lakh million units of power was generated in 2012-13 as against 5.8 lakh Million Units in 2004-05. The total installed capacity of electricity generation was more than two lakh 23 thousand MW as on 31 March 2013 while the demand was one lakh 35 thousand MW. Power sector has grown positively over the 11th plan period registering a growth rate of nearly 4 per cent in 2012-13.

Rice Support Price raised by 4.8 Percent

Union Government on 27 June 2013 raised the base price it will pay farmers for common rice to 1310 rupees per 100 kilograms from 1250 rupees as compared to year 2012. The government has set a minimum support price (MSP) for key crops to give farmers an incentive to produce supplies needed for welfare programmes that give cheap food to half a billion poor. The MSP help protecting the farmers from excessive price falls. India is one of the world’s major producers and consumers of grains. It has built up massive stocks of rice and wheat because of abundant harvests encouraged by these assured prices. The government is already making a plan to expand its food subsidy programmes which will need some extra supplies, but the country is still able to export both wheat and rice and sell at preferential prices to domestic bulk buyers.

Cap for Online Repatriation of Export Proceeds hiked

Reserve Bank of India (RBI) on 11 June 2013 raised the limit for online repatriation of export proceeds by over three-folds to 10000 US dollars. RBI also made it mandatory to repatriate full value of exports within 12 months for units in Special Economic Zones (SEZs). The decision from RBI came up with an aim of arresting the rupees slide by boosting Forex inflows. At present the rupee has touched its life time low of 58.98 against the US dollar and in last two days it has gone down by 3.5 percent against dollar. Since April 2013, it has gone down by 8 percent. At present, banks can offer the facility to repatriate export related remittances via online payment gateway for export of goods and services up to 3000 US dollar per transaction. In case of SEZs also earlier there existed no time limit for realization of exports. The new instructions from RBI came into force with immediate effect.

SEBI made Registration Compulsory for Investment Advisors

Securities and Exchange Board of India (SEBI) on 29 May 2013 in its notification made it compulsory for investment advisors to first obtain a certificate of registration for the same. SEBI ruled that in terms of Investment Adviser Regulations, no person shall act as an investment adviser unless he has obtained a certificate of registration from the Board or he is specifically exempt.

In a move to curb the risks related to advisory services, the regulator said the investment adviser cannot enter into transactions on its own account contrary to the advice given to clients for at least 15 days from the day of such advice. SEBI further instructed that advisors must disclose the fee they get for advice on a particular product, their holdings in products on which they are advising, the risks involved and any conflict of interest arising out of their association with issuers of the financial products.

The market regulator stated that the applicant seeking to act as an investment adviser should make an application to SEBI in a prescribed format along with the necessary supporting documents. A time period of one year has been given for existing investment advisers to comply with necessary capital adequacy requirements.

Duty Drawback Rate on Gold Ornaments hiked

Government of India on 21 June 2013 increased the duty drawback rate of gold ornaments by 73 rupees to 173.7 rupees per gram. The decision to increase the drawback rate was taken with an aim to increase jewellery exports.

Duty drawback is the refund of duties on imported inputs for export items.

Central Board of Excise and Customs released a notification in this respect in New Delhi. The notification claimed that the drawback or tax-refund rate for articles of jewellery and parts thereof made of gold is 173.70 per gram of net gold content (.995 or more purity) in the jewellery. Earlier, the drawback rate on gold jewellery was 100.70 rupees per gram.

The drawback rate has been increased by the government at the time when access in imports of gold has shown an adverse impact on the Current Account Deficit (CAD) of the country.

CAD is likely to be at a high level of around 5 percent of the Gross Domestic Product (GDP). Earlier, to curb the imports and manage CAD, the Government raised the import duty on Gold to 8 percent from previous six percent. Apart from this, restriction on import of gold was sanctioned on banks by Reserve Bank of India (RBI).

Central Board of Excise and Customs

Central Board of Excise and Customs (CBEC) is a part of the Department of Revenue under the Ministry of Finance, Government of India. It deals with the tasks of formulation of policy concerning levy and collection of Customs & Central Excise duties and Service Tax, prevention of smuggling and administration of matters relating to Customs, Central Excise, Service Tax and Narcotics to the extent under CBEC’s purview. The Board is the administrative authority for its subordinate organizations, including Custom Houses, Central Excise and Service Tax Commissionerates and the Central Revenues Control Laboratory.

51 new low-cost Airports to be set-up

The Union Government of India on 28 June 2013 decided to set up 51 new low-cost airports in Tier-II and Tier-III cities of the nation. The decision was taken with an aim to the give a boost to civil aviation sector and increase air connectivity to Tier-II and Tier-III cities.

Airport Authority of India (AAI) will be responsible for setting-up the airports in 51 different cities across different states like Andhra Pradesh, Bihar, Jharkhand, Punjab, Uttar Pradesh, Arunachal Pradesh, Assam, Madhya Pradesh, Rajasthan and Maharashtra.

The Union Government also made a decision to grant international airport status to the airports of Imphal and Bhubaneswar at a cost of 20000 crore rupees.
The decisions were taken at a meeting that was headed by the Prime Minister to finalise infrastructure projects for 2013-14. During the same meet, the Union Government also decided to award construction of eight Greenfield Airports in 2013 under public-private-participation (PPP) mode that includes Navi Mumbai, Juhu in Mumbai, Goa, Kannur, Rajguru Nagar Chakan at Pune, Sriperumbudur, Bellary and Raigarh. To encourage investors, the Union Government declared an investment target of 1.15 lakh crore rupees under the PPP project in different sectors of infrastructure like civil aviation, rail, port and power in the next six months.

Cost inflation index for 2013-14 raised

The Central Board of Direct Taxes (CBDT) in month of June 2013has specified a value for the cost inflation index for 2013-14.

A brief insight into Cost Inflation Index as declared by CBDT

In year 2012-13 the index was 852, and this year it is 939 which signify that there has been a 10.2 per cent rise in the cost inflation index for 2013-14.

Use of Cost Inflation Index

A cost inflation index helps in reducing the inflationary gains, thereby reducing the long-term capital gains tax payout for a taxpayer. The index is useful for income-tax assesses in the computation of tax on long-term capital gains (for indexation purposes). In the previous year (2011-12), the cost inflation index increased 8.5 per cent. As per the income-tax law it is required by the CBDT to state the cost inflation index for a financial year after factoring out 75 per cent of average rise in consumer price index for urban non-manual employees for the immediately preceding financial year. The model of indexation has been conserved even under the proposed direct taxes code, which may come into force from 1 April 2014.

Indian Money in Swiss Banks Dropped to Record Low

The official figures by the Swiss National Bank (SNB) in Zurich on 20 June 2013 unveiled that the Indian money found in Swiss banks dropped down to record lowest level at 9000 crore Rupees or 1.42 billion Swiss francs. The official data released by the Swiss National Bank (SNB) is a part of annual report of Swiss Banks released by SNB.

The overall funds held by Indian entities as well as individuals included 1.34 billion Swiss francs being held by entities and individuals directly while another 77 million Swiss francs held through wealth managers or fiduciaries at 2012 end. The data indicated that Indians’ money in Swiss banks dipped down around 35 percent or 4900 crore Rupees in 2012. Fiduciaries are the wealth fund managers that hold wealth of Indian private families or holders in numbered accounts. It is also important to note that this was steeper than the 9.1 percent dip in funds held by entities from all over the world in Swiss Banks. The overall funds held by the entities from across the world also hit all-time low of 1.4 trillion Swiss francs at 2012 end. In the beginning of 2012, the overall funds of Indians in Swiss banks was almost 14000 crore Rupees or 2.18 billion Swiss francs. In the meanwhile, the funds from across the world in Swiss Banks in the beginning of 2012 were 1.5 trillion Swiss francs or 1.65 trillion US dollar.

These funds from India in the Swiss banks are described by the SNB as liabilities of the banks towards Indian clients. It is also important to note that these figures are the official ones released from Swiss authorities and they are not the indicator of the black money of Indians held in Swiss banks.

The funds held by the Indians in Swiss banks at the end of 2006 was at a record height of 6.5 billion Swiss francs or more than 41000 crore Rupees, but it declined by more than 5 billion Swiss francs or 32000 crore Rupees since then. For the clients from all over the world, the total funds in the Swiss banks was at record height of 2.6 trillion US dollar by the end of 2007 but since then it has dipped down by more than one trillion dollars. According to the SNB data, the funds of Indians held directly in the Swiss banks decreased steeply by around 700 million Swiss francs in 2012 to 1.34 billion Swiss francs in 2012. In the meanwhile, the funds held by Indians through fiduciaries halved to 77.4 million Swiss francs in the year 2011, which marked the sixth year of decline in a row. The direct liabilities of Swiss banks towards the Indian clients include funds which are held in the deposit accounts as well as savings accounts by the Indian corporate houses, financial institutions as well as individuals.

Disinvestment of 5 Percent Paid Up Equity in NLC Approved

The Cabinet Committee on Economic Affairs on 21 June 2013 approved disinvestment of 5 percent equity of Neyveli Lignite Corporation (NLC). This 5 percent equity was approved out of its holding of 93.56 percent through an Offer for Sale (OFS) in the domestic market according to Securities and Exchange Board of India (SEBI) rules and regulations. NLC is authorised the capital of 2000 crore Rupees, out of which the subscribed as well as issued equity capital was 1677.71 crore Rupees as on 31 March 2013. This comprised of 167.771 crore equity shares of face value of 10 Rupees each. After this disinvestment, the holding of the Government of India in NLC would drop down to 88.56 percent.

About Neyveli Lignite Corporation (NLC)

• Neyveli Lignite Corporation (NLC) is the Central Public Sector Enterprise.

• It has Navratna status under the administrative control of the Ministry of Coal.

• It was incorporated in the year 1956 under the Companies Act, 1956.

• The objective of the company is meeting the electricity demand of the southern states of India by excavating lignite for generation of power.

• At present, NLC has the lignite mines and power stations in Tamil Nadu and Rajasthan.

Restrictions on Co-Operative banks for Loans against Gold coins

Reserve Bank of India on 7 June 2013 extended the restriction on advance against gold on co-operative banks set to curb the demand for gold. The decision taken by RBI was in the backdrop of Government raising the import duty on gold to 8 per cent from 6 per cent. As per the RBI, while granting advance against the security of specially minted gold coins sold by banks, state/central co-operative banks should ensure that the weight of the coin(s) does not exceed 50 grams per customer. RBI has also asserted that the amount of loan to any customer against gold ornaments, gold jewellery and gold coins (weighing up to 50 grams) should be within the board approved limit. An advisory has also come up from the Central Bank in regard to selling of gold coins. High rise in gold imports has become a cause for concern for both the government as well as the RBI as it is putting pressure on the current account deficit, which is likely to be around 5 per cent of the GDP in 2012-13. If we see the statistics of gold imports there is surely significant spurts in first two months of current fiscal 2013-14, to present an appropriate figure the average imports stood at 152 tonnes in April and May 2013. The monthly average import in 2012-13 was 70 tonnes. The increase in gold import is accredited to the bend in its prices in the international market.

Commodities Transaction Tax Applicable on Non-Farm Products

Central Board of Direct Taxes (CBDT) on 19 June 2013 announced that the Commodities Transaction Tax (CTT) shall be levied on the derivative contracts of non-agricultural commodities which are transacted via recognised commodity bourses. This rule shall apply with effect from 1 July 2013. It is also important to note that 23 specified agricultural commodities are exempted from this tax. All the processed agricultural items such as guar gum, soya oil and sugar are subject to the CTT on future contracts. CTT will not be applicable to the agri-commodities but it will apply to energy complex as well as metals which are traded in the futures exchanges. Levying CTT at the rate of 0.01 percent on the contract price will have an impact on the commodity bourses. This will happen because the higher cost of transaction would grip the margins of the traders. In the meanwhile, the commodity markets have factored in CTT already, which means that the turnover would not be affected in a huge way. The agricultural commodities which are exempted from CTT include wheat, turmeric, soya bean, red chilli, mustard seed, potato, pepper, cotton, cotton seed, coriander, copra, channa, castor seed, cardamom, barley and almond. It is worth noticing that CTT was proposed for the first time in the 2008-2009 Union Budget. It was not implemented because of widespread opposition.

Pipavav Port Regained Top Position in Seafood Exports

Pipavav port, the first private sector port of India located in Saurashtra, Gujarat, remained at the top most position for second year in a row in FY13 on the basis of quantity. The Pipavav port registered a jump of 6 percent in comparison to 2012-13 financial year. The reason why Pipavav port remained a forerunner in terms of quantity was because it handled lot of pre-processed fish. The export figures by the Marine Products Export Development Authority revealed that Pipavav port handled 233738 tonnes of marine exports in 2013-14 in comparison to 219801 tonnes in 2012-13 fiscal year. In terms of value, nevertheless, Kochi as well as Vizag ports shared almost equal share of earning, i.e., 3344.97 crore and Rs 3265.64 crore respectively in 2013-14 financial year. Vizag registered 26.12 percent jump in terms of value, while Kochi registered 14.22 percent. Pipavav, on the other hand, registered 3 percent increase from 2710.34 crore to 2808.25 crore Rupees.

South-east Asia was the largest buyer of marine products. This was followed by EU, US, Japan, China and Middle East.

About the Pipavav port

• Pipavav port is the first private sector port of India on West Coast.

• The lead promoter of this port is APM Terminals, which is among the largest container terminal operators in the world.

• This port is meant for the liquid cargo, bulk cargo as well as containers.

• The services offered by this port include logistics support, cargo handling as well as pilotage and towage. The port handles bulk, container as well as liquid cargo.

• Pipavav port is situated in Saurashtra, Gujarat, at a distance of 90 km South of Amreli.

• In the year 1998, the concession was given to Gujarat Pipavav Port Limited by Gujarat Maritime Board. Then in the year 2000, this port went into the Joint Venture with Indian Railways in order to initiate Pipavav Rail Corporation Limited. The commercial operations of the port kicked off in the year 2002.

• The Pipavav port is situated along the major trade routes and is also in proximity with major Indian Port of Nhava Sheva.

• The Pipavav port is the captive reefer port.

Indian Bank Association to set up Oversight Mechanism

The Finance ministry on 6 June 2013 has asked the Indian Banks’ Association to set up an independent body to manage the corporate debt restructuring (CDR) mechanism to restrict the use of loan restructuring mechanism only to deserving cases. The decision was taken in light of increasing number of debt restructurings over the past two years. The effect was that, the banks and their clients are taking undue advantage of the CDR mechanism, giving in the issue of non-performing assets’ (NPA) formation. Now, the banks should have the committee which will consist of an expert from the legal field, investigative agencies and finance professional, and the task will be to make sure that there will not be any scope for allegations. The government will set up an independent oversight mechanism which will not have any government representative or serving banker but is supposed to have some experts who inspect from the accuracy point of view whether the case brought up is genuine. The oversight mechanism committee will act as only an advisory body, will help the bank vet a particular case going to the committee which will not be mandatory for a bank. It is important to note that Under Corporate debt Restructuring CDR, there were 106 cases of restructured loans, of 76470 crore rupees in 2012-13, a rise from 50 cases (exposure of 39600 crore Rupees) in 2011-12. Also, apart from the CDR platform, lenders had also gone for significant recast at the bilateral level during the period. As per finance ministry estimate, if all restructured loans are classified as NPA, the gross level of these for public sector banks (PSBs) would shoot up to 11.6 per cent of gross advances, from 4.2 per cent at the end of December 2013. The estimate suggests reorganized standard advances formed 7.4 per cent of all advances for PSBs.

Repo Rate Unchanged at 7.25 Percent

The Reserve Bank of India (RBI), in its June mid-quarter monetary policy on 17 June 2013, left its key policy, repo rate unchanged at 7.25 percent in line. Cash reserve ratio (CRR), remained at 4 percent. Repo is the rate at which banks borrow from the Central bank. CRR is the portion of deposits that banks are mandated to keep with RBI. Consequently, the reverse repo rate will remain unchanged at 6.25 per cent, and the marginal standing facility (MSF), rate and the Bank Rate at 8.25 per cent.

RBI kept the interest rate stable possibly because despite the fact that the inflation rate has been coming down and manufacturing growth has not been much to speak of, it realised that the interest rate difference between Indian markets and Western market has actually shrunk, which is why the Foreign Institutional Investors, who are playing in our debt market have pulled off about three billion dollars. They would not like to aggravate the situation by reducing interest rate at this point of time and encouraging FII to pull out more from the debt market.

National Mission on Food Processing to be continued

The Cabinet Committee on Economic Affairs on 28 June 2013 approved the continuation of the National Mission on Food Processing (NMFP) for the remainder of 12th Five Year Plan (2013-17) based on detailed proposals submitted by the Ministry of Food Processing Industries (MOFPI). The NMFP outlay for 2012-17 has been kept at 1600 crore rupees consisting of 1250 crore rupees provided by the Government of India (GOI) and corresponding State share of 350 crore rupees. This includes 320 crore rupees already approved for 2012-13, of which 250 crore rupees was the GOI share and 70 crore rupees was the State share.

The following schemes under the NMFP will be implemented by State Governments for the remainder of 12th Five Year Plan in pursuance of today‘s approval:

• Scheme for technology up-gradation / establishment / modernisation of food processing industries.

• Scheme for cold chain, value addition and preservation infrastructure for non- horticulture products.

• Setting up/ modernization/ expansion of abattoirs.

• Scheme for Human Resource Development (HRD).

• Scheme for promotional activities.

• Creating primary processing centres / collection centres in rural areas.

• Modernization of meat shops.

• Reefer vehicles.

• Old Food Parks.

Continuation of NMFP shall help in the decentralization of the implementation of the Ministry‘s schemes, which will lead to substantial participation of State Governments / Union Territories (UTs). Beneficiaries of MOFPI schemes will also find it easier to deal with State Governments.

The continuation of NMFP will also help States / UTs in maintaining requisite synergy between agriculture plans of States and the development of the food processing sector. This in turn would help in the increase in farm productivity, thereby leading to an increase in farmers‘ incomes. It would also help in ensuring an efficient supply chain by bridging infrastructural / institutional gaps.

A National Food Processing Development Council (NFPDC) has been provided for under the chairmanship of the Minister for Agriculture and Food Processing Industries. The NFPDC will have representatives of State Governments, industry associations and related GOI departments. The council will provide guidance to MOFPI relating to the food processing sector, including the NMFP.

The Import Duty on Gold and Platinum hiked

The government hiked the import duty on Gold and Platinum from 6 to 8 per cent on 5 June 2013.The hike is aimed at curbing import of gold, which is mainly responsible for the rise in Current Account Deficit (CAD) impacting on the country’s foreign exchange reserves as well as the rupee value. This is the second hike in the duty in six months as gold imports touched an alarming 162 tonnes in May 2013. The imports touched a staggering figure of 15 billion US dollars in the last two months. The CAD, which is a difference between inflow and outflow of foreign currency, touched a historic high of 6.7 per cent of GDP in the quarter ending December 2012.

International Pepper Conclave 2013

Three kinds of International Pepper Community (IPC) Common Sales Contracts were launched by International Pepper Conclave 2013 in order to standardise the contract terms for export of pepper from various origins. The International Pepper Conclave 2013 was organised with the assistance of Jakarta-based International Pepper Community (IPC), which is an inter-governmental organisation. All these contracts were earlier approved by member countries of International Pepper Community in 2013. IPC explained that the buyers as well as sellers would adopt the terms of these contracts in some time and trading on these terms would also begin. The prices of pepper, at present are a little more than 6 US dollar per kg or 6000 US dollar per tonne. There has been area expansion because of higher prices since the year 2010. Also, it has led to better yields through better agronomy and new origins. This would eventually lead to an increase in the production. It is important to note that the Emirate has become the hub for commodity trade because free trade policies exist there.

SEBI notified Norms for Listing of Preference Shares

Market regulator Sebi in Month of June 2013 notified a new set of regulations to regulate issuing and listing of non-convertible preference. The listing of preference shares is basically meant to bring more transparency in raising of funds through such securities. The listing of privately placed non-convertible redeemable preference shares would require a minimum application size of 10 lakh Rupees for each investor which will safeguard the interest of small investors from high risk securities. The definite structure for issuance and listing of such shares is supposed to make it easier for banks and infrastructure companies to gain funds through this route. There is also a requirement of minimum three year term for the instruments of share besides public issuance of it and also a rating of AA- or equivalent investment grade. The new regulations is applicable to issuing by banks of non-equity instruments such as ‘Perpetual Non-Cumulative Preference Shares’ and ‘Innovative Perpetual Debt Instruments’, which are in according with the specified criteria for inclusion in Additional Tier I Capital.

What is Preference Shares?

Preference share is an equity security which has the properties of both equity and a debt instrument. Preference share usually carries no voting rights but sometimes it may carry a dividend.

There would be a comprehensive regulatory framework as per the new norm for the public issuance of non-convertible redeemable shares also for listing of privately placed redeemable preference shares. It is important here to note that in the last three years, Indian companies have raised over 25000 crore rupees through preference share issuance.

Revival of Nagaland Pulp and Paper Company Limited approved

The Cabinet Committee on Economic Affairs (CCEA) on 4 June 2013 approved the revival of the Nagaland Pulp and Paper Company Limited (NPPC) with the infusion of funds of 309.38 crore, Rupees.

The Committee also approved the regularization of inter se diversion of fund of 54.60 crore, rupees and had increased the authorized capital of NPPC from150 crore rupees to 250 crore Rupees. To avail term loan from commercial banks against government guarantee a sum of around 156.50 crore was also approved by the committee.

About Revival Plan

The revival plan includes rebuilding/re-furbishment of paper machine, pulping mill, new power plant etc.

• The company is supposed to produce both pulp and paper in the first phase but after with the implementation of the revival plan, the net value of the company will become positive and it will start posting profit from the first year after implementation.

• The company will start making profit on continuous basis and its reliance on Government of India for financial assistance for disbursement of salary and wages and statutory dues to employees shall come to an end, it will come out of the purview of the Board of Industrial and Financial Restructuring (BIFR).

India 3rd Most Attractive Destination for Investment

A survey conducted by United Nations Conference on Trade and Development (UNCTAD) revealed on 26 June 2013 that India was the third most attractive destination for investment in the world. The survey by UNCTAD included transnational corporations (TNCs) as the respondents. India was ranked at the third position after china and the United States. The survey was based on the responses given by 159 top global companies of the world. The World Investment Report 2013 by the United Nations Conference on Trade and Development (UNCTAD) revealed that the ranking of top five host economies of the world remained unaltered since 2012. China was still leading the list of top most destinations for investment with 46 percent respondents agreeing on it. This was followed by US, which got 45 percent agreeing votes. Among other top five investment destinations as responded by TNCs, were Indonesia and Brazil. An interesting fact about the survey was that, among top five most attractive destinations for investment in the world, four were the developing countries. Apart from this, six out of top 10 prospective host countries were also from the developing world. Thailand and Mexico appeared in this list for the very first time. As far as the developed countries were concerned, Japan climbed up three positions because of its reconstruction efforts after 2011 tsunami as well as expansionary monetary policies, which led to increased attractiveness of the country for foreign investment in the medium term. In the meanwhile, Australia, Russia and United Kingdom came down the rankings in comparison to 2012 survey, while Germany gained two positions.

The Real Estate Bill 2013 Approved

The Union Cabinet of India on 4 June 2013 approved the Real Estate (Regulation and Development) Bill 2013 to set up a regulator for the real estate sector in the country. This was done with the objective of protecting home buyers from dishonest builders. The bill seeks to make it mandatory for developers to launch projects only after acquiring all the statutory clearances from relevant authorities.

It also has provisions under which all relevant clearances for real estate projects would have to be submitted to the regulator and also displayed on a website before starting construction work. A real estate regulator will be set up in every state. It will ensure that private developers get all their projects registered with it before sale and only after obtaining all necessary clearances. The commercial real estate is not covered under the purview of the proposed bill. However, it will apply to residential buildings. The bill has a provision for mandatory public disclosure of all project details such as lay out plan, land status and credentials of promoters etc. An adjudicating officer in the state will be appointed by the authority for fast tracking settlement of disputes. There will be Real Estate Appellate Tribunal as per the bill. It will hear appeals from orders, decisions or directions of regulator and adjudicating officer.

Mineral Production during April 2013

The index of mineral production of mining and quarrying sector in April 2013 was lower by 16.9 percent compared to March 2013 as per the data released by ministry of mines. The mineral sector has shown a negative growth of 3.1 percent during April 2013 as compared to that of the April 2012. The total value of mineral production (excluding atomic & minor minerals) in India during April 2013 was 17772 crore rupees. The contribution of coal was the highest at 5673 crore rupees (32 percent). Next in the order of importance were: petroleum (crude) 5671 crore rupees, iron ore 2712 crore rupees, natural gas (utilized) 1883 crore rupees, lignite 490 crore rupees and limestone 382 crore rupees.

These six minerals together contributed about 95 percent of the total value of mineral production in April 2013. Production level of important minerals in April 2013 were: coal 435 lakh tonnes, lignite 39 lakh tonnes, natural gas (utilized) 2942 million cu. m., petroleum (crude) 31 lakh tonnes, bauxite 2035 thousand tonnes, chromite 242 thousand tonnes, copper conc. 10 thousand tonnes, gold 120 kg., iron ore 119 lakh tonnes, lead conc. 16 thousand tonnes, manganese ore 194 thousand tonnes, zinc conc. 124 thousand tonnes, apatite & phosphorite 198 thousand tonnes, dolomite 520 thousand tonnes, limestone 242 lakh tonnes, magnesite 16 thousand tonnes and diamond 2928 carat. In April 2013, the output of apatite & phosphorite increased by 33.6 percent, bauxite 14.7 percent and iron ore 1.3 percent. However the production of petroleum (crude) decreased by 3.7 percent, natural gas (utilized) 5.5 percent, limestone 5.9 percent, lead conc. 8.9 percent, gold 11.1 percent, dolomite 15.0 percent, manganese ore 18.1 percent, copper conc. 18.6 percent, magnesite 20.3 percent, zinc conc. 23.0 percent, lignite 27.9 percent, chromite 30.3 percent, coal 33.0 percent and diamond 33.6 percent.

India’s Foodgrain Production registered 30 % Growth

India’s foodgrain production registered an impressive growth of over 30 percent in the last nine years. It went up to 259 million tonnes in 2012-13 from 198.36 million tonnes in 2004-05. This is result of government initiatives like National Food Security Mission, NFSM, and Rashtriya Krishi Vikas Yojana.

While NFSM is an area and crop specific scheme, RKVY is a highly flexible mega scheme to incentivise states for investment in agriculture. The flow of agricultural credit was raised from 86981 crore rupees in 2003-04 to 5.75 lakh crore in 2012-13.

The Minimum Support Price of major crops also increased by more than hundred per cent during the period. India has now become food surplus and exports of agriculture and allied products have increased from 29.8 billion Dollars in 2011-12 to 33.54 billion Dollars in 2012-13.

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