Monday 27 August 2018

Indian Navy to get 111 utility helicopters at Rs 21,000 crores. DAC approves defence equipments of nearly Rs 46,000 crores.

MH 60 Romeo Naval Utility Helicopters by Sikorsky Lockheed Martin.

The Defence Acquisition Council (DAC), chaired by Raksha Mantri Nirmala Sitharaman, met on 25 Aug 2018 and accorded approval for procurement for the Services amounting to approximately Rs. 46,000 crores.

The Defence Acquisition Council (DAC), in a landmark decision today, approved procurement of 111 Utility Helicopters for the Indian Navy at a cost of over Rs. 21,000 crores.  This is the first project under the MoD’s prestigious Strategic Partnership (SP) Model that aims at providing a significant fillip to the Government’s ‘Make in India’ programme.

SP Model envisages indigenous manufacturing of major defence platforms by an Indian Strategic Partner, who will collaborate with foreign OEM, acquire niche technologies and set up production facilities in the Country. The model has a long-term vision of promoting India as a manufacturing hub for defence equipment thus enhancing self-sufficiency and establishing an industrial and R&D ecosystem, capable of meeting the future requirements of the Armed Forces. The contract when finalised, would result in a vibrant and wide-spread Defence industrial eco-system in the Indian Aviation Sector with the Private Industry and MSMEs as major stakeholders.

The RFI has been floated on the same and it has found that the 111 helicopters will have anti-submarine torpedo aversion capabilities. The new helicopters will be in addition to KA 28 and Dhruv helicopters. As per LiveFistDefence, the likely contenders in the Naval Utility Helicopters fight include the Airbus Helicopters AS565 Panther, Bell 429, Lockheed Martin-Sikorsky S-76D and, perhaps the AgustaWestland AW 109.

In the further quest for modernisation of the Armed forces, the DAC also granted approval to a few other proposals amounting to approximately Rs. 24,879.16 crores, which included approval for procurement of 150 numbers of Indigenously Designed and Developed 155 mm Advanced Towed Artillery Gun Systems for the Indian Army at an approximate cost of Rs 3,364.78 crores. These guns have been indigenously designed & developed by DRDO and will be manufactured by production agencies, as nominated by DRDO. They are likely to be the mainstay of Artillery in the near future. A nod to these major schemes will provide a fillip to the ‘Make in India’ push by the Government, will help create self-reliance in the Country in Defence manufacturing sector and has the potential of making the Defence Industry as a major engine of India’s economic growth.

 To enhance the capability of Navy at sea, approval has also been granted for procurement of Anti-Submarine capable, 24 American MH 60 Multi-Role Helicopters, which are an integral part of the frontline warships like the Aircraft Carriers, destroyers, frigates and corvettes. Availability of MRH with the Navy would plug the existing capability gap.

In addition, procurement of 14 Vertically Launched Short Range Missile Systems was also cleared by the DAC. Of these, 10 systems will be indigenously developed. These systems will boost the self-defence capability of ships against Anti-Ship Missiles.

Source - Ministry of Defence, LiveFist Defence.

Thursday 23 August 2018

88% of rural households in India has a savings bank accounts says NABARD.

NABARD All India Financial Inclusion Survey (NAFIS), conducted by National Bank for Agriculture and Rural Development (NABARD), revealed that farm households register higher income than the families solely dependent on non-farm livelihood activities in rural areas. The report was released by NITI Aayog Vice Chairman in New Delhi.

The NABARD survey, with the reference year of 2015-16, which covered 40,327 rural households, highlighted that the average annual income of an agricultural household is Rs 1,07,172 compared to Rs 87,228 for families engaged only in non-agricultural activities. The survey defined farm households as families having over Rs 5,000 as the value of produce from agricultural operations in the year preceding the survey. For all rural households, the average annual income stood at Rs 96,708. The 48 percent of the rural families are agricultural households. Apart from assessing the income levels of rural households, the survey mapped aspects like debt, saving, investment, insurance, pension and financial aptitude and behaviour of individuals.

While 88.1 per cent rural households and 55 percent agricultural households reported having a bank account, average savings per annum per household was Rs 17,488. About 26 percent of agricultural households and 25 percent of non-agricultural households were found to have been covered under insurance. Similarly, 20.1 percent agricultural households as against 18.9 percent non-agricultural households have subscribed to pension schemes. The Incidence of Indebtedness (IOI) index, which is a proportion of households having outstanding debt on the date of the survey, was 52.5 percent and 42.8 percent for agricultural and non-agricultural households respectively. All India IOI taking rural households together stood at 47.4 per cent.

Highlights of the Nabard All India Financial Inclusion Survey

  • Agricultural households, which accounted for 48% of rural households, earned Rs 107,172 during 2015-16 from cultivation, livestock, non-farm sector activities and wages/salaries. Thus, farmers’ income grew at a compounded growth rate of 12% per annum compared to Rs 77,112 per annum as per NSSO assessment in 2012-13. The income levels for 19 out of 29 states are above all India average and 15 states recorded annual compound growth of above 10.5% between 2012-13 and 2015-16.
  • Agricultural households earned 34% of their income from cultivation. Wage earnings contributed the same proportion to the income followed by salaries (16%), livestock (8%) and non-farm sector (6%). Other sources accounted for the rest.
  • Non-agricultural households reported average annual income of Rs 87,228 majorly contributed by wages (54%), followed by salaries (32%) and non-farm sector activities (12%). Agricultural households earned 23% more than non-agricultural households.

Savings and Investment
  • 88.1 per cent of the households reported having a bank account.
  • 33% of households reported more than one savings account
  • 26% of HH have women with institutional (including SHG) savings account
  • 55 per cent of agricultural households reported any savings during the last year and of these 53 per cent saved with institutions like banks, post offices and SHGs.
  • Average savings per annum per saver households was reportedly Rs 17,488, of which 95 per cent is with institutional agencies
  • 10.4 per cent of agricultural households also reported investment with the average investment per investing agricultural households was reportedly Rs 62,734.
  • For all investments amounting more than Rs 10,000 in the year, 60% of the amount was funded through borrowings from either institutional or informal sources.

  • Incidence of Indebtedness (IOI), measured as proportion of households reporting outstanding debt on the date of the survey, is 52.5% for agricultural households and 42.8% non-agricultural households were reportedly indebted at the time of survey.  All India IOI taking all rural households together stands at 47.4%.
  • Average amount of outstanding debt (AOD) for indebted agricultural households is reportedly Rs 1,04,602 as on the date of the survey. Debt outstanding for indebted non-agricultural households is reportedly Rs 76,731. Overall extent of indebtedness taking all households combined is Rs 91,407.
  • 43.5% agricultural households reported to have borrowed any money during last year from some source or the other. 60.4% of them reportedly borrowed from institutional sources exclusively. Further, 30.3% borrowed from only informal sources and 9.2% of agricultural households borrowed from both sources. 56.7% of Non-Agricultural households and 58.6% of all households borrowed from institutional sources during last year.
  • During the year 2015-16, borrowing Agricultural households reportedly availed a loan of Rs 107,083 from various agencies, 72% of which was availed from institutional sources including MFIs and SHGs. 69% of borrowings of all households and 65% of non-agricultural households were from institutional sources.

Insurance and Pension
  • About 26% of agricultural households and 25% of non-agricultural households reported having been covered under one or the other type of insurance.
  • Among agricultural households who reported to have taken any loan for agricultural purposes in the last one year [2015-16] from institutional agencies, 6.9% reported being covered under crop insurance.
  • The coverage under any type of pension was reported to be about 18.9 % for non-agricultural households as against 20.1 % for agricultural households.
  • When assessed for the type of pension received, 32% of all households with senior citizens reported being covered by old age pension.

Read the full report here-

Tuesday 14 August 2018

Wonder Home Finance commences operations with 29 branches across Rajasthan.

Wonder Home Finance Rajasthan

With 29 branches spread across the big cities and small towns of Rajasthan, Wonder Home Finance Limited has announced its entry into India’s booming retail housing finance business. Wonder Home Finance is a part of RK Group, Rajasthan and India’s well-known business groups. From RK Marble to Wonder Cement and now Wonder Home Finance, RK Group is committed to holistic and transparent business practices. The vision and dedication of its promoters and employees had led to patronage amongst its consumers and business partners. Wonder Home Finance Limited has received final approval from the National Housing Bank to commence its business.

As a part of the first phase of roll-out, Wonder Home Finance will focus on its lending business across the length and breadth of Rajasthan. Currently, the company has 9 branches in Jaipur, Jodhpur, Bikaner, Udaipur, Chittorgarh and Rajsamand region and is in a process to set up 20 more branches across the state of Rajasthan by the end of August 2018. The branch spread will cover almost 70% of service area in Rajasthan state.

Wonder Home Finance will give financial assistance in the range of Rs 5 lakhs to Rs 35 lakhs to the people from lower and middle income strata of the society. The interest for home loans, repair and renovation of homes and construction of homes will be in the range of 11% to 14% with the tenure of 3 years to 20 years. With the focus of last-mile financial inclusion, the facility of home loans can be also availed on Gram Panchayat Properties and for the development of Non-Agriculture land.

In a boost to small businesses and proprietorship, Wonder Home Finance will offer financing at attractive interests. The loan amount ranges from Rs 5 lakhs to Rs 20 lakhs with the maximum loan tenure period of 15 years.

The lending by Wonder Home Finance is envisioned with PM Modi’s vision of ‘Housing for All by 2022’. The Pradhan Mantri Awas Yojana is an initiative by Government of India in which affordable housing will be provided to the poor with a target of building 20 million affordable homes. The scheme also includes an attractive credit linked subsidy on loan interest which aims to help PMAY beneficiaries from lower and middle income group. As per National Housing Bank, beneficiaries from lower and middle income group would be eligible for the interest subsidy at the rate of 6.5% for loan amount upto Rs 6 lakh, 4% for loan upto Rs 9 lakhs and 3% for the loan amount upto Rs 12 lakh. Wonder Home Finance Limited has signed a MoU with National Housing Bank keeping in mind the mission of Pradhan Mantri Awas Yojana which allows beneficiaries to apply for Credit linked subsidy scheme.

“With the launch of Wonder Home Finance Limited, we are confident that we will be able to deliver unified financial services to the people of this country. Our people centric business model and service oriented delivery mechanism will help to create an exceptional experience amongst our target audience. It will further enhance the groups philosophy of perfection and reaching to masses. Also envisaged by our Government’s vision of ‘Housing for all by 2022’, it is a step towards delivering last mile financial services to the people of this country. We are confident of this business proposition which is a unique one in the industry today and it will surely help us to drive the group’s growth to the next level.” - Shri Ashok Patni, Chairman, RK Group.

Wonder Home Finance uses easy, transparent and customer friendly loan processes. The company claims to offer home and business loans with the fastest decision time of 3 days. Convenience and use of technology are among the core values as customers can avail easy financing through the website, mobile app and door step service.

In order to take its financial services business to the highest level, Wonder Home Finance Limited will target to leverage the pedigree and network built by the RK Group. With its Pan-India license, the company plans to expand operations in Gujarat, Madhya Pradesh and Maharashtra in FY 2018-19. The company is confident of building a powerful brand ‘Wonder Home Finance’, which would become a synonym to housing finance segment in the near future.

- Chaitanya Kulkarni

Tuesday 7 August 2018

NHAI plans to raise Rs 8,000 crores from Toll Operate Transfer model.

National Highways Authority of India (NHAI) has invited bids for Second Bundle of national highways under the TOT(Toll Operate Transfer) model. The bundle consists of 8 stretches of national highways in the states of Rajasthan, Gujarat, Bihar and West Bengal. The total length of the project is 586.5 km. There are 12 Toll Plazas on these 8 road stretches. The Bid Due Date is 5th Nov 2018.

Concessionaires have to quote Bid Concession Fee against NHAI's estimated Initial Estimated Concession Value (IECV) of Rs. 5362 crore. TOT bundle-II also involves an initial construction cost of Rs 929 crore. The total contract period of TOT is for 30 years, which may increase/ decrease by 10/5 years based on an increase/ decrease in traffic. The concessionaire would be required to maintain and operate the stretch during this period.  In Lieu of this, the concessionaire would get the rights to collect user fee for this period, in accordance with prescribed fee rates under NH Fee Rules.

As per Bharatmala, the Ministry of Road Transport and Highways plans to build 34,800km of highways from a budgetary outlay of Rs 5,35,000 crores. These will have 9 greenfield expressways projects including the ambitious Mumbai - Delhi Expressway.

National Highways Authority of India (NHAI) is borrowing from the market through the Internal Extra Budgetary Resources (IEBR) route. In 2017-18, NHAI has raised Rs 8,500 crore from LIC and Rs 10,000 crore from EPFO through taxable bonds. Further, NHAI issued rupee denominated Masala Bonds of Rs 3,000 crores through the London Stock Exchange. 

In addition, NHAI is in the process of raising funds through monetization of operational National Highway assets through the Cabinet approved Toll-Operate-Transfer (TOT) model. It may be recalled that for TOT Bundle-I of 648 km, Macquarie had quoted highest as 1.5 times against the NHAI IECV of approx 1 billion USD (Rs. 6258 crores). The highest bid of Macquarie was approx 1.5 Billion USD (Rs. 9681 crores).

Source - PIB.

State Bank of Mauritius's India unit to open 6 new branches.

State Bank of Mauritius (SBM) Group has received Reserve Bank of India’s approval to operate in India through a wholly-owned subsidiary route. SBM is the first foreign bank in India to obtain a WOS Licence from the Reserve Bank of India. The bank will soon operate as a banking subsidiary of SBM Group in India under the name of SBM Bank (India) Ltd. This new structure will provide more leeway for SBM in its branch expansion strategy.

Established in 1994 in India, SBM currently operates four branches, namely located in Mumbai, Chennai, Hyderabad and Ramachandrapuram. To capture a wider market and increase its customer base, SBM plans to launch six new branches in Delhi, Bangalore, Kolkata, Pune, Ahmedabad and Jaipur by next year. The bank offers a diverse suite of products and services in the Indian market including deposits, advances, NRI Services, treasury products and trade finance services. It plans to revamp its customer base and solutions offering in line with its growth strategy.

Besides establishing a robust domestic franchise in India, SBM expects to capitalize on its geographic network in East Africa and the Indian Ocean region to add value to customers. It is reckoned that there is growing interest in trade and investment along the India-Africa corridor, where SBM can play an important role in financing and structuring.

“One of the reasons for SBM to start its international footprint in India is because of the strong links that exist between these two countries with around three-quarters of the Mauritian population being of Indian origin. This is a focused effort by SBM to grow its cross-border banking business and widen physical presence in geographies with untapped growth potential for better customer reach. With domestic expansion programme, SBM will continue to grow outside Mauritius.” - Mr Moses Harding John, CEO, India & East Africa, SBM Holdings Ltd.

As per Wholly Owned Subsidiary rules by RBI, the initial minimum paid-up voting equity capital for a WOS shall be Rs. 5 billion. The newly set up WOS of the foreign bank would be required to bring in the entire amount of initial capital upfront, which should be funded by free foreign exchange remittance from its parent. The CEO would be appointed on a full-time basis and should be resident in India. All notifications regarding Basel III have to be followed. RBI also states that at least 25% of branch network should be in Rural areas, this may be on the outskirts of tier 2 city or near State Industrial Zones.

Singapore’s DBS Bank is another lender which is awaiting final approval from the RBI to convert its 12 branches into a wholly owned subsidiary.

Saturday 4 August 2018

NHAI gets Rs 25,000 crores unsecured loan from State Bank of India

National Highways Authority of India (NHAI) is getting an unsecured loan of Rs 25,000 crore from State Bank of India for 10 years with 3 years of moratorium on repayments. This is the largest amount of loan to have been sanctioned to NHAI in one stroke by any institution. This is also the largest long term unsecured loan sanctioned by SBI at a time to any entity. A MoU in this regard was signed between Nitin Gadkari and Rajnish Kumar, Chairman, SBI was signed and the first tranche of Rs 5,000 was handed over to NHAI.
NHAI had invited an Expression of Interest from Scheduled Commercial Banks to fund Rs. 25000 Crore as an unsecured loan for 10 years with 3 years of moratorium on repayments. In response to this EOI, SBI offered to fund the entire requirement of Rs 25000 Crore based on one month MCLR.
The loan sanctioned by SBI is unsecured. There is no principal repayment liability for an initial three years. After three years, the repayment would be done in 14 equal half yearly instalments. The total loan tenure is 10 years. NHAI can repay/ prepay it at any time without any prepayment penalty.
The total sanctioned amount of Rs 25000 Crore is to be disbursed within 31st March 2019. The rate of interest would be based on one month MCLR. Interest accrued on the amount actually outstanding will be paid on monthly basis. NHAI can draw the amount in any number of tranches, latest by 31st March 2019.
NHAI has traditionally relied on borrowing through long term bonds issued to various investors, including LIC, EPFO and other qualified investors, and Tax-Free bonds and Masala Bond issued in the year 2017. NHAI also plans to raise investment of Rs 13,500 crores through Toll Operate Transfer model.
– Chaitanya Kulkarni
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