Friday, May 15, 2009
RBI governor sees signs of recovery
RBI governor sees signs of recovery
Business Standard, May 15, 2009, Section II, Page 2
BS Reporter / Bangalore May 15, 2009, 0:00 IST
Pins hope on good crop prospects, rural demands.
Reserve Bank of India (RBI) Governor D Subbarao on Thursday said India’s economic recovery will be sharper and swifter than many others, once the world economy starts to recover from the global financial crisis of 2008. Some sectors of the economy have shown incipient signs of recovery, he said.
“In my view, India’s recovery will be faster as we are backed by strong fundamentals and untapped growth potential. Our overarching policy objective is to restore the economy to a high growth path, consistent with price stability and financial stability,” he said.
Addressing a press conference here after holding the central board meeting of RBI, Subbarao clarified that the Indian economy was not constrained by demand, but by supply. Household income in India was substantially higher than in China, as a percentage of the gross domestic product (GDP). “In my view, demand is there, but we need to invest more in infrastructure, manufacturing and services sectors to achieve rapid recovery,” he said.
Further, Subbarao said the pace of decline in certain areas has started to moderate, with some sectors showing tentative signs of recovery. “There are incipient signs of revival of business confidence. But, these signs may have to be more widespread across indicators and more durable to draw any clear inference on the timing and pace of recovery.”
According to him, certain sectors like FMCG, capital goods, cement and steel are doing reasonably well. The two-wheelers and commercial vehicles sector have shown signs of recovery. The sowing of rabi crop has improved by two million hectares in the present season as against a fall of 2.4 million hectares in the kharif season. Port traffic, freight revenues and road transport are showing improvement. And, the provisional results of 954 companies shows the growth in profit after tax in Q4 of 2008-09 is minus 2.1 per cent, as compared to minus 53.4 per cent in the third quarter, he added.
However, he said, there are still some negative indicators. Most notably, the Index of Industrial Production (IIP) is still negative. Rural consumption demand depends on the monsoon and crop prospects and in the next few months, we are hoping that private sector demand and investment will pick up, he stated.
“The balance of assessment at this stage continues to support our earlier assessment of real GDP growth of about 6 per cent for 2009-10. Once the crisis is behind us, managing inflationary expectations and unwinding the present expansionary policies will be our task and challenge.”
“Like all emerging economies, India too has been impacted by the global financial crisis, and by much more than what was expected earlier. Short and medium term outlooks are decidedly mixed. GDP growth has moderated, reflecting decelerating production, negative export growth, dented corporate margins, slowing credit demand and diminished business confidence,” the governor said.
However, he said, there are some strong positives that point to recovery. Inflation has declined sharply, the banking system remains sound, well-capitalised and prudently regulated. “The comfortable foreign exchange reserves should help us manage any short-term constraints in the balance of payments. Since there is no discernible “wealth loss effect”, consumption, specially rural consumption, is holding up. Because of India’s mandated priority sector lending, institutional credit for agriculture has remained unaffected,” he said.
Business Standard, May 15, 2009, Section II, Page 2
BS Reporter / Bangalore May 15, 2009, 0:00 IST
Pins hope on good crop prospects, rural demands.
Reserve Bank of India (RBI) Governor D Subbarao on Thursday said India’s economic recovery will be sharper and swifter than many others, once the world economy starts to recover from the global financial crisis of 2008. Some sectors of the economy have shown incipient signs of recovery, he said.
“In my view, India’s recovery will be faster as we are backed by strong fundamentals and untapped growth potential. Our overarching policy objective is to restore the economy to a high growth path, consistent with price stability and financial stability,” he said.
Addressing a press conference here after holding the central board meeting of RBI, Subbarao clarified that the Indian economy was not constrained by demand, but by supply. Household income in India was substantially higher than in China, as a percentage of the gross domestic product (GDP). “In my view, demand is there, but we need to invest more in infrastructure, manufacturing and services sectors to achieve rapid recovery,” he said.
Further, Subbarao said the pace of decline in certain areas has started to moderate, with some sectors showing tentative signs of recovery. “There are incipient signs of revival of business confidence. But, these signs may have to be more widespread across indicators and more durable to draw any clear inference on the timing and pace of recovery.”
According to him, certain sectors like FMCG, capital goods, cement and steel are doing reasonably well. The two-wheelers and commercial vehicles sector have shown signs of recovery. The sowing of rabi crop has improved by two million hectares in the present season as against a fall of 2.4 million hectares in the kharif season. Port traffic, freight revenues and road transport are showing improvement. And, the provisional results of 954 companies shows the growth in profit after tax in Q4 of 2008-09 is minus 2.1 per cent, as compared to minus 53.4 per cent in the third quarter, he added.
However, he said, there are still some negative indicators. Most notably, the Index of Industrial Production (IIP) is still negative. Rural consumption demand depends on the monsoon and crop prospects and in the next few months, we are hoping that private sector demand and investment will pick up, he stated.
“The balance of assessment at this stage continues to support our earlier assessment of real GDP growth of about 6 per cent for 2009-10. Once the crisis is behind us, managing inflationary expectations and unwinding the present expansionary policies will be our task and challenge.”
“Like all emerging economies, India too has been impacted by the global financial crisis, and by much more than what was expected earlier. Short and medium term outlooks are decidedly mixed. GDP growth has moderated, reflecting decelerating production, negative export growth, dented corporate margins, slowing credit demand and diminished business confidence,” the governor said.
However, he said, there are some strong positives that point to recovery. Inflation has declined sharply, the banking system remains sound, well-capitalised and prudently regulated. “The comfortable foreign exchange reserves should help us manage any short-term constraints in the balance of payments. Since there is no discernible “wealth loss effect”, consumption, specially rural consumption, is holding up. Because of India’s mandated priority sector lending, institutional credit for agriculture has remained unaffected,” he said.
Libor has biggest drop in eight weeks
Libor has biggest drop in eight weeks
Business Standard, May 15, 2009, Section II, Page 3
Bloomberg
The cost of borrowing in dollars for three months between banks dropped the most in eight weeks as government and central bank efforts to unlock credit markets showed signs of bearing fruit.
The London interbank offered rate, or Libor, for such loans fell almost three basis points to 0.85 percent today, according to the British Bankers’ Association. The Libor-OIS spread, a gauge of the unwillingness of banks to offer each other cash, narrowed three basis points to 65 basis points, the lowest level since June 16.
Libor, a benchmark gauge for about $360 trillion of financial products around the world from student loans to mortgages, has tumbled as the US government and the Federal Reserve pledged $12.8 trillion to drag the economy out of its longest recession since the 1930s.
“I wouldn’t say that nothing can stop Libor’s fall, but there isn’t enough out there to cause any big panic,” said Padhraic Garvey, head of investment-grade debt strategy at ING Groep NV in Amsterdam. “So far so good.”
Libor hasn’t fallen so much since March 19, the day after the Fed said it would buy as much as $300 billion of US government bonds and step up purchases of mortgage and agency bonds to revive growth.
Bank Deposits
The rate of decline accelerated even as stocks fell worldwide on concern the recovery from the global recession will falter. The MSCI World Index fell for the fourth-consecutive day. The economy may face near-stagnation for 10 years, similar to Japan’s “lost decade” in the 1990s, Nobel Prize-winning economist Paul Krugman said at a forum in Taipei today.
The decline in Libor has less to do with rising confidence among financial institutions than it does with surging customer deposits, according to Jim Vogel, an analyst at FTN Financial. While the rate dropped, deposits at U.S. banks jumped by almost $400 billion in the past six months. The increase in deposit funding has reduced demand for loans in the interbank market, Vogel said.
Royal Bank of Scotland Group Plc quoted the highest rate today for borrowing dollars for three months, at 0.96 percent. Deutsche Bank AG contributed the lowest, at 0.70 percent. It’s the first time all banks in the panel gave rates below 1 percent, the BBA data showed. The difference between the highest and the lowest rate was 26 basis points, down from 30 basis points yesterday.
Business Standard, May 15, 2009, Section II, Page 3
Bloomberg
The cost of borrowing in dollars for three months between banks dropped the most in eight weeks as government and central bank efforts to unlock credit markets showed signs of bearing fruit.
The London interbank offered rate, or Libor, for such loans fell almost three basis points to 0.85 percent today, according to the British Bankers’ Association. The Libor-OIS spread, a gauge of the unwillingness of banks to offer each other cash, narrowed three basis points to 65 basis points, the lowest level since June 16.
Libor, a benchmark gauge for about $360 trillion of financial products around the world from student loans to mortgages, has tumbled as the US government and the Federal Reserve pledged $12.8 trillion to drag the economy out of its longest recession since the 1930s.
“I wouldn’t say that nothing can stop Libor’s fall, but there isn’t enough out there to cause any big panic,” said Padhraic Garvey, head of investment-grade debt strategy at ING Groep NV in Amsterdam. “So far so good.”
Libor hasn’t fallen so much since March 19, the day after the Fed said it would buy as much as $300 billion of US government bonds and step up purchases of mortgage and agency bonds to revive growth.
Bank Deposits
The rate of decline accelerated even as stocks fell worldwide on concern the recovery from the global recession will falter. The MSCI World Index fell for the fourth-consecutive day. The economy may face near-stagnation for 10 years, similar to Japan’s “lost decade” in the 1990s, Nobel Prize-winning economist Paul Krugman said at a forum in Taipei today.
The decline in Libor has less to do with rising confidence among financial institutions than it does with surging customer deposits, according to Jim Vogel, an analyst at FTN Financial. While the rate dropped, deposits at U.S. banks jumped by almost $400 billion in the past six months. The increase in deposit funding has reduced demand for loans in the interbank market, Vogel said.
Royal Bank of Scotland Group Plc quoted the highest rate today for borrowing dollars for three months, at 0.96 percent. Deutsche Bank AG contributed the lowest, at 0.70 percent. It’s the first time all banks in the panel gave rates below 1 percent, the BBA data showed. The difference between the highest and the lowest rate was 26 basis points, down from 30 basis points yesterday.
Worst may be over
Worst may be over
Economic Times, May 15, 2009, Page 12
But A Decisive Upturn Still Not In Sight
THE worst may be behind for the Indian economy, reveals an ET poll of heads of India’s leading companies (ET, May 14). The majority verdict comes even as some of the recent macroeconomic data, read exports and industrial growth, make for dismal reading. The recent stock market rally has had a large part to play in this improvement in sentiment. Equity, which had lost currency, is suddenly back in business, making it easier for cash starved companies to raise funds. Promoters of real estate major DLF, for instance, recently managed to raise nearly Rs 4,000 crore through a 9.9% stake sale. A couple of weeks ago Unitech had raised over Rs 1,600 crore through institutional placement. Admission of pick up in auto and home loans by some big banks has also helped. However, it is important to appreciate that though the economy may have bottomed out, it does not necessarily mean that there would be a quick recovery. Indeed, many CEOs in the 31 company survey — all sensex constituents except IT, Steel Authority of India and Hero Honda — were of the view that though the worst of the slowdown was behind us, they still did not see any immediate signs of recovery. So, the risk that the economy continues to trundle along near the bottom remains, though it is unlikely to immediately slip further from the current levels. And the longer the economy takes to recover, greater the chances of some adverse developments causing serious harm and prolonging the sluggishness.
The expected sluggishness in the OECD economies remains a worry. But the bigger worry is the post-election uncertainty and the formulation of the next government. While consumption demand may improve as fears recede, investments, the big driver of the economy in recent years, will not pick up in an uncertain political situation. The biggest challenge for the next government is to find ways to spur growth while ensuring that the large government borrowing does not deny funds to industry. Walking this tightrope will be difficult for a patchwork government. Political risk has never been so high for the Indian economy.
India Inc votes for non-Left govt
India Inc votes for non-Left govt
Times of India, May 15, 2009, Page 21
Prabhakar Sinha, TNN, NEW DELHI
India Inc is heaving a sigh of relief. Its main worry that the Third Front, with Left parties playing an important role, will form a government receded to an extent as exit poll results showed that the new government at the Centre will be formed by either Congress or BJP.
A senior industrialist, who did not want to be quoted, said though the picture so far was not very clear, it was expected that either Congress or BJP-led coaliations would form the government, a preferable option in the present scenario.
According to Goldman Sachs, the worst fears of the market, that Third Front will play a major role in the new government, will be removed, if the projections of the various exit polls come true. While the fear of Left playing some role in the government exists, the best scenario would be a government without any Left representation, it said, adding, reduction in the seats of the regional parties is a positive sign for decision making.
Citigroup in a report said a coalition led by the Congress or BJP would be the best outcome of the poll. "A combination with the Left could put reforms on the back-burner, while a non-Congress/non-BJP coalition would have more implication for stability than policy," it said.
Industry captains are worried over the stability of the new government. The past experiences showed that non-Congress/non-BJP formations have not been able to give stable governments at the Centre. Manoj Vohra, a senior consultant of Economic Intelligence Unit, said as Congress-led UPA is more acceptable to small parties, it is likely to provide more stable government than by BJP-led NDA. He said as economic reforms have already entered into an irreversible phase, the policies would remain more or less same, irrespective of the combinations that will form the government. But, the issue of stability will affect the sentiment if an unstable combination forms the government.
Goldman Sachs also argued for Congress-led UPA government for stability. It said, "Given the experience of the past five years, the UPA is skilled at building coalition, which could provide some comfort that a stable government will take over post-election.''
The evidence, according to Goldman Sachs, appears to suggest that if a stable government comes to power, markets would be driven by fundamentals and global cues. In that event, leading indicators suggest a recovery in economic activity in the second half of 2009-10. The economic activity has increased immediately after five elections out of seven since 1984, when a stable combination formed the government. The two elections after which the industrial production declined were 1989, when VP Singh-led government was formed and 1996 when Third Front-led government under HD Deve Gowda was formed.
RBI survey reduces GDP to 7.5% for 10 yrs
RBI survey reduces GDP to 7.5% for 10 yrs
The Times of India, May 15, 2009, Page 21
New Delhi: A Reserve Bankconducted survey on Thursday lowered India's growth rate projection to 7.5% per annum for the next 10 years, down from 8.8% estimated earlier. "For the next 10 years, GDP is expected to grow at 7.5%, revised downward from 8.8% in the last survey," RBI said releasing the results of Professional Forecasters' Survey.
The central bank has been conducting the survey on a quarterly basis on major macroeconomic indicators of medium-term economic developments since the quarter ended September 2007.
The survey, which cut the growth forecast for 2008-09 to 6.6% from 6.8% and the 2009-10 outlook to 5.7% from 6%, also gave median forecasts for quarters ahead. The fourth quarter of the last fiscal 2008-09 is expected to have grown at 5.5%, down from the earlier forecast of 6.2%, the survey comprising views of 17 professional forecasters said.
However, RBI said the results of the survey represent views of the respondent forecasters and in no way reflect the central bank's views or forecasts. The forecasters, on average, expect India to grow faster with each passing quarter, as they view growth of 5.3%, 5.6%, 6.2% and 6.5% for the four quarters of 2009-10, respectively.
Further, the survey revised its forecast for real GDP growth for the next five years to 7%, down from its earlier estimate of 7.7% reported in the last survey. Meanwhile, among other indicators, the survey expects negetive 1.4% WPI inflation in the first quarter of 2009-10, and 5% and 4.5% over the next five and 10 years, respectively. The professional forecasters expect CPI-IW inflation to be at 5.9% for the next five years and at 5% on an average over the next 10 years. PTI
‘There’s room to cut rates’
Bangalore: Making a case for further softening of interest rates, RBI governor D Subbarao on Thursday said banks still have room to cut lending rates. "I am a regulator and (am) not an owner of banks. I can't hazard any guess over the quantum of reduction the banks can do. But I feel there is scope for reduction in lending rates," he told reporters here.
Following reduction of repo and reverse repo rates by 25 basis points in April, several public and private sector banks have reduced lending and deposit rates. Referring to prospects of economic growth in the current fiscal, Subbarao reiterated the earlier position by saying that GDP was likely to grow by 6% in 2009-10. PTI
Asian property market sees 83% in Q1 sales
Asian property market sees 83% in Q1 sales
The Hindu Business Line, May 15, 2009, Page 17
Weak investor appetite for risk cited as reason.
--------------------------------------------------------------------------------
‘The investment market in India will see a revival when the global sentiment stabilizes and international and domestic financial institutions and equity funds get the confidence to participate.’
--------------------------------------------------------------------------------
Our Bureau, Mumbai
The Asian property investment market has recorded an 83 per cent fall in sales (quarter-on-quarter) in the first quarter of 2009, from $18.02 billion to $3.1 billion, according to a survey by global real estate services provider CB Richard Ellis.
Data for the first quarter of 2009 indicated that Japan, Singapore and Hong Kong suffered the biggest fall in sales volume.
The industrial property sector underwent the largest drop, plummeting 95 per cent from the same quarter a year earlier.
Office property transactions slid 89 per cent and retail property transactions 40 per cent.
Prime office properties continued to attract investors, accounting for seven of the 10 largest deals recorded during the quarter.
The combined value of the 10 transactions was $1.7 billion, a drop of 81 per cent from the same period in 2008.
The survey attributes the fall in sales to weak investor appetite for risk and the gap between buyer/seller expectations.
The market review, however, said there was noticeable improvement in sentiment in a number of key markets in March as the rate of economic decline appeared to be easing.
India market
Mr Anshuman Magazine, Chairman and Managing Director, CB Richard Ellis, South Asia, said, “The Indian real estate market more or less mirrored the Asian markets with declining transaction volumes and scarcity of capital.
The investment market in India would see a revival when the global sentiment stabilises and international and domestic financial institutions and equity funds get the confidence to participate in the market.”
Activity in the Indian real estate investment market continued to be slow under the impact of the global economic downturn. There was a further drop in end-user activity which in turn caused a correction in prices across various segments.
Transaction Volume
In Greater China, investment sentiment rallied on the back of increased confidence in the recovery of the domestic economy.
Transaction volume nevertheless remained low owing to the ongoing market slowdown and falling capital values.
Institutional investment activity in Hong Kong evaporated as investors continued to find it difficult to raise debt and equity.
Stake sale seemed to be a right solution: Rajiv Singh
Stake sale seemed to be a right solution: Rajiv Singh
The Economic Times, May 15, 2009, Page 10
IT IS always a wrench to part with a slice of your company. But selling stake in DLF was the only pragmatic way forward, says DLF vice-chairman Rajiv Singh. In a chat with Sanjeev Choudhary and Chaitali Chakravarty, he explains why a stake sale was the ‘right’ solution, and what makes it a pretty good option for fixing India’s fiscal deficit, too. Excerpts:
Was it painful to decide to sell stake at a time when your share is trading at almost one-fifth of its peak?
Yes, it was (painful), but only up to a point. Dilution anyway could have taken place. But timing perhaps could have been better. It was a pragmatic decision. It was not that company was doing badly and making losses. There is no loss here. This only goes to strengthen the balance sheet of the company.
Do you think this was the best option before you to raise funds?
Best or worst nobody knows. Only history will judge it. But it seemed to us the right solution. We explored and continue to explore private equity as option and eventual listing as option for DAL. Private equity investors would have taken more time. They believe in their way of working and we believe in our company and its assets.
When did you seriously start considering a stake-sale? Did Unitech’s successful QIP too encourage you to think on these lines?
Bankers keep coming to us with ideas. But the idea started becoming real in the last few weeks. Unitech’s QIP certainly helped.
How much money do you expect to raise through asset sale and how do you plan to utilise that?
Hopefully, we will be able to raise Rs 10,000 crore in two-three years through asset sale, exit from certain businesses, and our strategic investments. We have a treasury portfolio with certain investments.
We can’t give you details on our investments at present as we are negotiating with potential buyers. We expect to raise Rs 5,500 crore this fiscal through asset sale. We will use the sale proceeds to repay our current debt of Rs 14,000 crore. Our forecast is we will halve our debt this year.
You will be selling your hotels. Do you plan to exit this segment entirely?
We will not exit the entire business. We would like to retain the Aman brand. But we will look at other hotel properties just as investment.
Is your joint venture with Hilton Hotels intact? Are You open to exiting the JV?
Hilton is with us. But we are reasonably open to all initiatives. Since our interest level had reduced in hotels, we and Hilton agreed that why should we stand in their way. We reworked the agreement and gave Hilton greater access to third parties.
Have you sold your properties in New Delhi’s Saket area?
For one hotel, we have reached an agreement with a buyer. But for the other, negotiations are still underway.
Is housing demand actually picking up?
Yes, it is. I’d say the worst is over. But I will still be sort of cautious and say recovery is four-to-five months away. But I think we will not see further price correction.
What do you think of the broader economic picture? Are we on the path to recovery?
There is a feeling across the board that the panic is over and customer confidence is back. Political uncertainly remains, but people are thinking beyond government formation. There is generally a revival across many industries. Everybody has taken the hard decision, taken inventory cut and now is trying to move ahead.
How important is it for companies which political combine comes to power?
Government policies have been fairly consistent. My opinion is that since mid-80s, all governments have been pro-development. Some-body increases or decreases the pace of initiative, but there is no major difference.
What can the next government do to stimulate the economy?
Most of the economy is not realising the benefits of lower interest rate because of high fiscal deficit or the potential deficit overhang. The government should be able to deal with it by monetising some its assets. We have sold stake. The government should also look at selling minor stakes. Sell some stake, get funding and life carries on. And if you hold back, you set yourself back by several years.
There is a talk of bringing back money stashed away in Swiss banks. A resolution should be passed unanimously in the next parliament in this regard after the elections. It could be a win-win idea. The government should come up with some scheme as it had done earlier and bring out bonds.
Anyway, everyone is afraid of keeping money in foreign banks these days! So if the government offers safety and some return on the money, the scheme should work. The number being discussed is so large that even if the government were to capture a portion of it, it will solve the short term problem of infrastructure funding in India.
The Economic Times, May 15, 2009, Page 10
IT IS always a wrench to part with a slice of your company. But selling stake in DLF was the only pragmatic way forward, says DLF vice-chairman Rajiv Singh. In a chat with Sanjeev Choudhary and Chaitali Chakravarty, he explains why a stake sale was the ‘right’ solution, and what makes it a pretty good option for fixing India’s fiscal deficit, too. Excerpts:
Was it painful to decide to sell stake at a time when your share is trading at almost one-fifth of its peak?
Yes, it was (painful), but only up to a point. Dilution anyway could have taken place. But timing perhaps could have been better. It was a pragmatic decision. It was not that company was doing badly and making losses. There is no loss here. This only goes to strengthen the balance sheet of the company.
Do you think this was the best option before you to raise funds?
Best or worst nobody knows. Only history will judge it. But it seemed to us the right solution. We explored and continue to explore private equity as option and eventual listing as option for DAL. Private equity investors would have taken more time. They believe in their way of working and we believe in our company and its assets.
When did you seriously start considering a stake-sale? Did Unitech’s successful QIP too encourage you to think on these lines?
Bankers keep coming to us with ideas. But the idea started becoming real in the last few weeks. Unitech’s QIP certainly helped.
How much money do you expect to raise through asset sale and how do you plan to utilise that?
Hopefully, we will be able to raise Rs 10,000 crore in two-three years through asset sale, exit from certain businesses, and our strategic investments. We have a treasury portfolio with certain investments.
We can’t give you details on our investments at present as we are negotiating with potential buyers. We expect to raise Rs 5,500 crore this fiscal through asset sale. We will use the sale proceeds to repay our current debt of Rs 14,000 crore. Our forecast is we will halve our debt this year.
You will be selling your hotels. Do you plan to exit this segment entirely?
We will not exit the entire business. We would like to retain the Aman brand. But we will look at other hotel properties just as investment.
Is your joint venture with Hilton Hotels intact? Are You open to exiting the JV?
Hilton is with us. But we are reasonably open to all initiatives. Since our interest level had reduced in hotels, we and Hilton agreed that why should we stand in their way. We reworked the agreement and gave Hilton greater access to third parties.
Have you sold your properties in New Delhi’s Saket area?
For one hotel, we have reached an agreement with a buyer. But for the other, negotiations are still underway.
Is housing demand actually picking up?
Yes, it is. I’d say the worst is over. But I will still be sort of cautious and say recovery is four-to-five months away. But I think we will not see further price correction.
What do you think of the broader economic picture? Are we on the path to recovery?
There is a feeling across the board that the panic is over and customer confidence is back. Political uncertainly remains, but people are thinking beyond government formation. There is generally a revival across many industries. Everybody has taken the hard decision, taken inventory cut and now is trying to move ahead.
How important is it for companies which political combine comes to power?
Government policies have been fairly consistent. My opinion is that since mid-80s, all governments have been pro-development. Some-body increases or decreases the pace of initiative, but there is no major difference.
What can the next government do to stimulate the economy?
Most of the economy is not realising the benefits of lower interest rate because of high fiscal deficit or the potential deficit overhang. The government should be able to deal with it by monetising some its assets. We have sold stake. The government should also look at selling minor stakes. Sell some stake, get funding and life carries on. And if you hold back, you set yourself back by several years.
There is a talk of bringing back money stashed away in Swiss banks. A resolution should be passed unanimously in the next parliament in this regard after the elections. It could be a win-win idea. The government should come up with some scheme as it had done earlier and bring out bonds.
Anyway, everyone is afraid of keeping money in foreign banks these days! So if the government offers safety and some return on the money, the scheme should work. The number being discussed is so large that even if the government were to capture a portion of it, it will solve the short term problem of infrastructure funding in India.
HDFC chief sees interest rates falling further
HDFC chief sees interest rates falling further
The Hindu Business Line, May 15, 2009, Page 6
Mr Deepak Parekh
Our Bureau, Hyderabad
The HDFC Chairman, Mr Deepak Parekh, on Thursday hinted at both deposit rates and lending rates coming down further, taking a cue from the SBI’s initiative to slash deposit rates recently.
Responding to queries from reporters here, Mr Parekh said that other banks will follow SBI moves and “we will initially see deposit rates coming down. However, while lending rates will also come down, it will not happen overnight”.
Speaking on the sidelines of the launch of ‘India and the Global Financial Crisis, Managing Money and Finance,’ a book written by the former RBI Governor, Dr Y.V. Reddy, the HDFC chief said there is enough liquidity in the system compared with October-November last. Mr Parekh said “the interest rates continued to show downward trend and this will also reflect in positive credit growth in the financial year 2010. For instance, HDFC sees a credit growth of about 20 per cent in FY 2010.”
He expressed optimism in the country recording a GDP growth rate of over 6 per cent for FY 2009.
SATYAM CASE
The HDFC chief, who is also a Government-nominated member on Satyam Computer’s board, said that senior members of the company are in the process of interacting with Satyam’s clients overseas and assuring them of business continuity.
He said once they are back, a meeting of the company board will be convened for further action.
The Hindu Business Line, May 15, 2009, Page 6
Mr Deepak Parekh
Our Bureau, Hyderabad
The HDFC Chairman, Mr Deepak Parekh, on Thursday hinted at both deposit rates and lending rates coming down further, taking a cue from the SBI’s initiative to slash deposit rates recently.
Responding to queries from reporters here, Mr Parekh said that other banks will follow SBI moves and “we will initially see deposit rates coming down. However, while lending rates will also come down, it will not happen overnight”.
Speaking on the sidelines of the launch of ‘India and the Global Financial Crisis, Managing Money and Finance,’ a book written by the former RBI Governor, Dr Y.V. Reddy, the HDFC chief said there is enough liquidity in the system compared with October-November last. Mr Parekh said “the interest rates continued to show downward trend and this will also reflect in positive credit growth in the financial year 2010. For instance, HDFC sees a credit growth of about 20 per cent in FY 2010.”
He expressed optimism in the country recording a GDP growth rate of over 6 per cent for FY 2009.
SATYAM CASE
The HDFC chief, who is also a Government-nominated member on Satyam Computer’s board, said that senior members of the company are in the process of interacting with Satyam’s clients overseas and assuring them of business continuity.
He said once they are back, a meeting of the company board will be convened for further action.
Struggling builders plan to sell off their non-core land holdings
Struggling builders plan to sell off their non-core land holdings
ET Realty, May 15, 2009, Page 1
In a bid to raise money for their ongoing projects and survive the downturn, many builders are planning to sell off their non-core land holdings. In a booming property market, several builders had built land banks. Often, land was purchased even in markets where they had a comparatively low presence. With the market situation having changed, and other routes of raising funds — bank loans, private equity and going public — proving to be difficult, builders have resorted to selling their land, even at a discount. Anuj Puri, managing country head of real estate consultancy Jones Lang LaSalle Meghraj (JLLM), said: “Yes, the present market situation has forced many developers to sell their non-core land where they had invested earlier. Builders are just focusing on their core projects for the moment and looking to complete them.” Ostensibly, the builders are not getting the price they had paid earlier. In some cases, say industry sources, builders are willing to settle for a drop in 30% over what they paid.
ET Realty, May 15, 2009, Page 1
In a bid to raise money for their ongoing projects and survive the downturn, many builders are planning to sell off their non-core land holdings. In a booming property market, several builders had built land banks. Often, land was purchased even in markets where they had a comparatively low presence. With the market situation having changed, and other routes of raising funds — bank loans, private equity and going public — proving to be difficult, builders have resorted to selling their land, even at a discount. Anuj Puri, managing country head of real estate consultancy Jones Lang LaSalle Meghraj (JLLM), said: “Yes, the present market situation has forced many developers to sell their non-core land where they had invested earlier. Builders are just focusing on their core projects for the moment and looking to complete them.” Ostensibly, the builders are not getting the price they had paid earlier. In some cases, say industry sources, builders are willing to settle for a drop in 30% over what they paid.
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