The week that was.

Shriram City Union Finance Ltd.

Centre to pump Rs. 70,000 cr. into PSU

banks
The Modi government has announced a big-bucks
boost to investments in the economy. Union Finance Minister Arun Jaitley told Parliament that
the Centre will over the next four years infuse
Rs.70,000 crore out of budgetary allocations into
state-owned banks.
Later, Minister of State for Finance Jayant Sinha
told reporters that the proposed National Investment and Infrastructure Fund (NIIF) will make
equity investments of Rs. 20,000 crore every year
in commercially viable long gestation projects
which will help to kick-start the economy.
FLIPs View: Definitely a short term relief for
PSBs. The structural problem of NPAs still remains. Till that is addressed, no amount of capital
will be sufficient.
-----------------------------------------------------RBI holds rate but says open to cuts
In line with market expectations, the RBI has
kept the key interest rate unchanged at 7.25% at
its third bi-monthly review of monetary policy.
The central bank cited uncertainties related to the
monsoon and a spike in core inflation. It, however, added it would monitor developments pertaining to room for more rate cuts.
FLIPs View: I think RBI is just being a little
more cautious. If Fed hikes rates in September or
in December (more likely), I think RBI will make
its move in September with a 25 bps cut.
-----------------------------------------------------Banks may face RBI action if they mis-report
NPA numbers
The RBI has said it will now begin to take action
against banks that misreport the non-performing
assets on their books. It had been observed that
in certain cases, loans that had already become
NPAs were still treated as standard assets.
Apart from ensuring that the numbers put out by
the banks are correct, the regulator is also going
to closely monitor the cases being refinanced under the 5/25 scheme by banks are using for the
right purpose.

Shriram City Union Finance Ltd. is a part of Shriram

Group (financial conglomerate engaged in providing
various services like insurance, chit fund, stock broking etc.)
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Under the 5/25 scheme, banks can extend loan
repayments for a period up to 25 years, with an
option of refinancing the loan every five years.
FLIPs View: There is still some grey area especially among PSBs, on the amount of NPAs. The
amount of loans that have been restructured, may
also be NPAs for example. That remains the worry.
-----------------------------------------------------Centre liberalizes single-brand retail norms
India might see a flurry of single-brand retailers
entering , with the government allowing them to
operate across multiple platforms.
Several investment proposals by Tommy Hilfiger,
H&M, Swarovski, Sketchers, Nike and Adidas were
stuck in the pipeline as they wanted to run company-owned direct retail outlets as well as franchise
outlets. Some of them like Tommy Hilfiger wanted
to have a wholesale presence as well.
In an important clarification, the government
tweaked the foreign direct investment (FDI) policy
on single-brand retail last month stating that nonresident entity/entities will now be allowed to undertake single-brand retail trading business
through "one or more wholly owned subsidiaries or
joint ventures (JVs)."
According to an official, proceeds from franchise
business will come into the current account, while
those through the FDI route will be accounted in
the capital account.
Presently, 100% FDI is allowed in single-brand retail trading, out of which proposals beyond 49%
require prior approval from the government.

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FLIPs View: This might ease business on the Retail side, and India can become a global Retail
destination, given the huge purchasing power in India today.

Understanding Money!
HDFC Bank has launched Dhanchayat, an educational film to raise awareness on the dangers of borrowing money from unorganized
sources. The film has been launched under the
aegis of Swachh Banking, the banks corporate
social responsibility (CSR) initiative.

government's vision for financial inclusion. The vans will also

As a part of the initiative, HDFC Bank-

have micro-ATMs with biometric facility fitted in them to

branded Dhanchayat video vans will travel

enable instant e-KYC using Aadhar.

across India, covering thousands of villages.

Through the film, the bank will showcase to
the rural population, the importance of transparency in dealings, as also the dignity of the
individual in the borrowing process.

Besides a low presence of banking channels, lack of awareness has also contributed to the financial exclusion of rural
communities. Low or non-availability of cheap credit is one of
the major causes of socio-economic inequity in rural areas.
Lets hope public and private sector initiatives in this direc-

The bank will cover 5000 villages in phase 1

tion make a difference in the current scenario!

and encourage the local populace to join the

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organized banking sector in line with the

National Investment and Infrastructure Fund (NIIF)

Cabinet approves creation of National Infrastructure and Investment Fund
Recently, the Union Cabinet cleared the proposal for creation of National Infrastructure and Investment Fund. The fund will have a corpus of INR 20,000 crore.
The NIIF is being created with an objective to maximize the economic impact mainly through infrastructure development, for commercially viable projects. The fund was proposed by Finance Minister
Arun Jaitley in his Budget for 2015-16.NIIF would raise debt, to invest in the equity of infrastructure
finance companies such as Indian Rail Finance Corporation (IRFC) and National Housing Bank (NHB).
These infrastructure finance companies can then leverage this extra equity, manifold.
In that sense, NIIF is a banker of the banker of the banker (For example -It will finance NHB, which
finances Housing finance companies). It will be run on a commercial basis by managers, who will be
paid globally competitive salaries. The Centre will own 49% of this Mumbai-based fund, which wont
be answerable to Parliament nor audited by the CAG. The Fund will be regulated by market regulator
SEBI.
To be operational by the year end, NIIF will primarily focus on fund infusion in infrastructure projects
-greenfield, brownfield and the stalled ones. Smart cities would be an important area of investment
for NIIF.

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