Financial Services Management Assignment On Articles collected from Financial Dailies

Submitted to Dr.B.Charumathi

Submitted by Ramya Make 11397083 II year DMS. AMFI to waive registration fees from first time mutual fund distributors (Financial Express)
Mumbai: Industry body Association of Mutual Funds in India (AMFI) today decided to waive registration fees, estimated at Rs 3,000, for first time distributors for a period of five months beginning February 1.

The initiative is aimed at enlarging distribution network and attracting new cadre of distributors or Independent Financial Advisors (IFAs) for selling mutual fund products, AMFI said in a release here. AMFI has "decided to waive registration fees for all registrations of first time distributors for a period of five months from February 1, 2013 to June 30, 2013." The objective is to create larger number of 'feet-on-street' to distribute mutual fund products, AMFI Chief Executive H N Sinor said. In November last year, AMFI had slashed registration fees to Rs 3,000 for three years per distributor from Rs 5,000. The distributors registering under the category of individuals, including senior citizens and new cadre of distributors, need not pay the registration fees during the five-month period, the release said today. After two years of successive decline, the mutual fund industry managed to register rise in assets base nearing Rs 8 lakh crore with an increase of about Rs 2 lakh crore in 2012. As per industry data, the total assets under management (AUM) of all the fund houses put together rose by 30 per cent on strong inflows in fixed income, gold schemes and liquid funds. Market regulator SEBI last year introduced a new cadre of distributors, who have been allowed to sell units of simple and performing schemes to increase the strength of mutual fund distribution

Bankers seek 50 bps cut in lending rates, CRR (Economic Times)

PRESS TRUST OF INDIA Mumbai BANKERS on Tuesday asked the Reserve Bank of India (RBI) to reduce the key policy rates by 50 basis points (0.5 per cent) and slash cash reserve ratio (CRR) by 25-50 basis points in the credit policy review scheduled for January 29. The bankers have urged RBI to reduce interest rates by 50 bps at least. Even the CRR should come down by 25-50 bps, Indian Banks Association (IBA) chief executive K Ramakrishnan said after the customary pre-policy

consultation meeting held by RBI with the bankers here. One basis point is equal to 0.01 per cent. He said if both these rates are lowered, it will send a positive signal to market. If both these things happen, transmission will happen and it will be a good sign to the market that growth is going to happen in a big way. The likelihood of a rate cut became strong with manufacturing growth remaining in the negative terrain and WPI-based headline hitting a threeyear low at 7.18 per cent in December. Moreover, RBI governor D Subbarao had in the October policy as well at the subsequent mid-quarter review had hinted at a rate cut in the January policy. On the poor deposits growth, the IBA chairman said the bankers raised concerns regarding sluggish deposit growth along with low credit uptake. Sluggish deposit growth is a matter of concern to the bankers. Credit is also not picking up the way it should pick up. It is around 8 per cent now, he said. According to Ramakrishnan, both bankers and the central bank are concerned about the rising bad assets in the financial system.

IMF team advises RBI against giving banking licences to industrial houses (Busines
BS Reporter / New Delhi Jan 17, 2013, 00:45 IST

Staff writers of the International Monetary Fund today cautioned the Reserve Bank of India against giving licences to industrial houses to set up banks. And, commended the draft guidelines on keeping out those with real estate and brokerage businesses. International experience has supported the prudent policy position of disallowing industrial houses from promoting and owning banks, went an update on the Financial system stability assessment of India put out by the IMF.

Recently, Nobel laureate Joseph Stiglitz had also advised against giving licences to industrial houses for setting up new banks. C Rangarajan, chairman of the Prime Ministers Economic Advisory Council, had suggested preference be given to the non-corporate sector in issuing these. However, the IMF report clarified these were not the views of the Funds executive board but of the staff team. The latter support the RBI draft guidelines for acknowledging the risks in issuing new licences. It says these are sought to be addressed through several prudent means those with greater than 10 per cent income from assets in volatile sectors like real estate and brokerage are not eligible, for instance. The finance ministry recently wrote to the central bank to drop this clause while issuing the final guidelines, as RBI had already spoken of ring-fencing banking companies from other commercial and industrial activities within a group. The IMF update also praised the RBI draft norms for suggesting a non-operating holding company, which cannot be leveraged, must be set up to hold all the financial entities in the group and in turn be supervised by RBI as a non-bank finance company. The report also

noted the draft norms had said half the directors (increased to a majority in some cases) must be independent of the promoter, and the bank, group entities, non-operating holding company and promoter would be subject to RBIs consolidated supervision.

Vishwaraj Sugar to launch IPO for raising Rs 374 crore (Economic Times of India)
Karnataka-based Vishwaraj Sugar Industries plans to hit the capital market in February-March with initial public offer (IPO) to raise up to Rs 374 crore for doubling its production capacity. Karnataka-based Vishwaraj Sugar Industries plans to hit the capital market in February-March with initial public offer (IPO) to raise up to Rs 374 crore for doubling its production capacity. Tata Power Company Ltd. BSE 105.70 -0.40 (-0.38%) Vol:46536 shares traded NSE 105.85 -0.25 (-0.24%) Vol:574615 shares traded Prices|Financials|Company Info|Reports NEW DELHI: Karnataka-based Vishwaraj Sugar Industries plans to hit the capital market in February-March with initial public offer (IPO) to raise up to Rs 374 crore for doubling its production capacity. The company has an integrated plant at Belgaum district with a sugarcane crushing capacity of 5,500 tonnes per day. "We are planning to launch our IPO in February or March," company's Executive Director Mukesh Kumar said. Market regulator SEBI has given its nod to launch the IPO, he added. "We plan to raise up to Rs 374 crore. The company will use the proceeds of the IPO for expansion, which include doubling the cane crushing capacity to 11,000 tonnes per day (TCD) from the present 5,500 TCD," Kumar said. The company would also expand the distillery capacity to 1,00,000 litre per day from the current 35,000 litres per day, which would lead to doubling of IMFL

(Indian Made Foreign Liquor) production capacity to 5,000 boxes per day, Kumar added. The company would utilise part of IPO proceeds to expand its power cogeneration capacity to 66 MW from current 36 MW. Apart from IPO funds, Kumar said the company would take a bank loan of Rs 70 crore to meet the total expansion cost of Rs 425 crore. "At present, we have surplus power of 22 MW, out of which 14 MW is sold through Tata Power Trading Company while the balance is sold to Hubli Electricity Supply Company ( HESCOM)," Kumar said. Vishwaraj Sugar posted a net profit of Rs 51.59 crore over a turnover of Rs 425.81 crore during 2011-12 fiscal. The company has association with farmers of 49 villages for assured supply of sugarcane.

Bank customers may get 26-digit international a/c number soon (Express India)
Mumbai Bank customers will get 26-digit International Bank Account Number (IBAN) in place of the existing account numbers if the Reserve Bank approves the proposals submitted by its technical committee on uniform routing code and account number structure. The committee felt that IBAN implementation should be done in a phased manner where the payment systems at the RBI and at bank levels should support both the existing account numbers and the new IBAN account numbers for a minimum period of 3 years. Till such time, customer should be able to operate his account through the existing account number as well as the new account number, it said. This scheme specifies an IBAN with sufficiently larger length of 26 digits (total length 26 = 2 for country code + 2 for check digits + 4 for bank code + 18 for account number). The idea is to have an IBAN that can be created readily by using the existing account numbers of banks, it said. IBAN is currently used by many countries.

Four options of IBAN format were considered longest, shortest, UIDAI based and pattern based IBAN. After evaluating these options on the basis of changes required at banks end and possible inconvenience to the customers, the committee felt that longest IBAN is most suitable.

Banks seeking higher credit scores for loans

New Delhi You need to score far higher to qualify for an auto loan than a couple of years ago. A panoramic survey of the average credit scores of people by CIBIL on Wednesday shows that Indian lenders now look for a much higher rating to offer loans ranging from housing to auto, than in the pre-crisis years. Earlier while the banks used to give loans to entities with score of 600 out of 900 in the CIBIL profile rating, they now prefer a higher rating of around 800, said Arun Thukral, managing director, Credit Information Bureau of India Ltd (CIBIL). CIBIL is Indias foremost provider of credit scores for individuals that banks put to use. The scores range between 300 to 900 for individual consumers generated by compiling their performance on bank accounts, loans and credit cards. The score is used as a gauge by lenders to assess an applicants risk profile while processing a loan or credit card application. Apart from banks and financial institutions, CIBIL has also tied up with telecom companies and insurers for the purpose. The company had been promoted by 14 public and private sector financial entities in 2000 but came into its own post the global meltdown of 2008. Thukral said private sector and foreign banks were the first movers in reviewing credit history for deciding on loan applications. Public sector banks too have begun to make such enquiries. In fact, the countrys largest lender, State Bank of India, also seeks credit information from CIBIL now, he added. Post 2008, banks have also become more careful and reduced their exposure to unsecured debt such as credit cards and personal loans. Data available with CIBIL reveals that credit enquiries have risen since the second quarter of 2009 and more than 20 per cent of these were by financial institutions while processing applications for auto loans. In fact, the number of auto loan enquiries made to CIBIL jumped by 28 per cent in the October to December quarter of 2012 as against a year ago.