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India celebrates it’s 69th Republic Day this year, a commemoration of the adoption of our constitution in 1950. The constitution that outlines our rights and duties as citizens of this proud nation and is the blueprint on which this nation is defined. We celebrate this occasion with much fanfare and pageantry on Rajpath where every year we showcase our military, social, cultural, ecological and financial expertise to the world. This year we set a new precedent by hosting 10 heads of state belonging to the ASEAN group of nations, a telling indicator of India’s growing stature as a leader in the south-east Asian region. But while we look to expand outside and develop strategic cooperation with other nations, we must also look within. Today we are threatened by the menace of damaging polarization of our culture. The media is being muzzled and the judges of the apex court of the country are forced to air their views in a press conference. India’s uniqueness lies in its diversity, tolerance and plurality. Take it away, wrap it in a saffron cloth, and who are we? Ironically, the country which saw fit to accept a constitution drafted by an individual of the minority, today sees fit to stand by and see these same minorities being deprived of their constitutional rights. Have we deviated so much from the path in our thoughts and actions that the constitution now is just an abstract limited to dusty old volumes of the library and the tableaus of Rajpath? I am an optimist and like to believe that there is still hope for us yet. There are people yet in this nation who’ll distinguish between the thin line of patriotism and jingoism. There are people yet who’ll stand against the outrageous sedition charges and implied falsehoods on honest citizens of the country, and who won’t be afraid to speak their mind on matters of national importance. While India as a Republic has grown a lot over time, we here at FinNiche have also charted our own path of growth. From being a new group of juniors taking charge of the bi-monthly college finance magazine in July 2017, we have now become a team of seasoned article writers. With this corporate edition we attempt to expand our reach and grow in our aspiration to

inform, express and delight our readers. In this edition we bring you a plethora of articles on a wide range of topics impacting the world of finance. From Gaurav Sharma’s cover story on survival of businesses in a VUCA world to Snigdha Rao’s article on Government Measures to curb Fiscal Slippage, a lot is in store. As always, we welcome your brickbats or bouquets. Happy Reading!!! The Editorial Team. Facebook:










The Insolvency and Bankruptcy Code, 2016


Monetary Policy Analysis, 2017


Fiscal Slippage - Government Measures

FII Investments and their control of Indian Financial Markets


Blockchain and Bitcoin - A match made in Digital Heaven


IPO Report Card for the year 2017



Recapitalization of Indian Banks




It gives me immense pleasure to present before you this special edition of FinXpress. Written by the student members of FinNiche – the official finance committee, the magazine aims to highlight some of the most relevant topics in the finance area worldwide with special focus on the Indian scenario. With the financial services sector rapidly evolving in our country, there is a need for the industry as well as the academia to establish an efficient channel through which knowledge sharing is possible. It is necessary for the students as well to be updated and be ready to be absorbed in the industry at the appropriate time. The inaugural Finance conclave to be held on 7th February 2018 is a step in this direction. VUCA (Volatility, Uncertainty, Complexity and Ambiguity) principle is an appropriate term to

characterise the present economic conditions. With growing need of strategic shifts for a business in a volatile and uncertain conditions, the present day business leaders not only need to decide on the future strategy but also solve the complex business dilemmas brought out by the change. The complete lack of information in today’s business problems make them hard to be converted into simple yes or no solutions, this brings out the ambiguity part which also needs to be addressed well. In the domestic context, concrete structural reforms such as implementation of GST and the new IBC have been major factors which would affect the business environment. The FRDI bill also is a big step in transforming the financial structure of the country. These reforms have been pivotal in the ease of doing business ranking improvement. The booming share markets and equally buoyant IPO market and increased amount of foreign investment certainly add a lot to the changing landscape of business. This again calls for the business leaders and the CFO’s to act swiftly and ensure that the organisation reaps the benefit of growing opportunities. I hope the present issue helps to shed some light on the above mentioned areas and be a medium of communication between the industry and academia. Wishing the students well for their future plans regarding the magazine. Happy Reading!!

Ravikesh Srivastava Dean (Academics) IMT Ghaziabad


PREFACE VUCA (Volatility, Uncertainty, Complexity and Ambiguity) has become the new jargon in a management environment. It has been gaining attention over the past few years as a way of describing today’s business world. It was precisely for this reason that the National HRD Department, chose VUCA as the main theme for its 18th Annual Conference in Mumbai on 20th- 22nd November 2014, which saw many industrial leaders sharing their thoughts and views on how to grow a business in VUCA times. New challenges and changes in technology, globalisation and ever changing workforce demography, leaves more unknown than ever before, resulting in business strategies that are short lived, long term business models becoming obsolete, and financial risks increasing many fold. Hence it is important that organisations today can change, flex and adapt to the world around them to succeed, although many businesses feel uneasy at the prospect of change. The VUCA world is all about anticipating, learning, adapting and delivering in evolving new environment and we, at Finance Department of IMT Ghaziabad make sure that our students here are flexible, innovative and curious enough to learn and adapt themselves according to the need of the hour and make a mark for themselves. I sincerely hope that this Finance Conclave will help our students get a better insight and understanding on how this dynamic world is affecting the market and how the leaders are adapting and modifying their strategies to emerge triumphant.

Dr Ajay Kumar Chauhan Area Chair – Finance Area IMT Ghaziabad


The VUCA World -GAURAV SHARMA PGDM (Finance), 2017-2019

There has been a drastic change from the traditional way of doing business to the 21 st century way of doing business. The business leaders in the current market operate in a very different way than they used to do in the earlier times. The current economic challenges demand businesses to be more agile and business leaders to be more proactive. The characteristics that define the landscape of current business challenges are known as the VUCA or Volatility, Uncertainty, Complexity and Ambiguity. This term defines the increasingly unstable business environment one has to face in the today’s business world. As an overview, each term can be defined as follows: Volatility: The challenge in the business environment is unexpected or unstable and may be of unknown duration, but it’s not necessarily hard to understand, the knowledge about it is often available. Uncertainty: the information about a situation is unknown but the cause and effect of it is known. The change is possible but not a given. Complexity: the situation has many unknown variables and various interconnected parts. Some amount of information is available or can be predicted, but the volume or nature of the information can be overwhelming to process. Ambiguity: Nothing is black or white or a yes or no. Casual relationships are completely unclear. No precedents exist; you face “unknown unknowns”. However a VUCA world is not just mere words, it defines problems faced in a business world and challenges business leaders to dig deep for solutions. Now before micro analysing VUCA, it is important to create a bridge between its definition and its practicality through an example. Let’s enter the world of technology. Nokia gave a product to the market called a mobile phone. The world saw it as a replacement to a normal landline, but with an addition feature of portability. Later on it went on introducing a camera, coloured screen, touch screen and what not. It seemed a pretty decent growth era for Nokia, but, the ‘once upon a time’ market leader, is nowhere to be seen today. Now here enters Apple, which was just another hardware and software company at that time, saw a challenge to launch a disruptive technology which completely changed the mind set of people. The market changers at Apple saw that people wanted more than just a phone, they wanted a SMARTphone. Here Nokia took many years and a bad deal with Microsoft to actually understand the sentiments of the market. The market was completely volatile towards acceptance of technology. The uncertainty here was whether the world will accept what Apple was offering and even if it was accepted, will the product be able to sustain itself and the complexity rose when Apple went on marketing many products. It needed a strong business strategy to place its products correctly in the market. Now finally, the pressure of delivering the right product, at the right time and to the right audience is what created ambiguity for Apple. Now the question is: where is Nokia? I’d say it is still struggling in the VUCA world.


VUCA principle is not only focused to one sector but extends its self to all business sectors competing in a challenging economic environment. An IT company based in US trying to spread its operations in ten different countries will have to face ten different rules and regulations. The US elections after which Donal Trump became the president completely shook the IT world. The employability went down, many operations in various countries were shut down, and new policies went out in the market. This made the company leaders look for new business strategies in order to grow in this difficult environment. It is said that change is the only constant and this is how today’s business environment changes in the blink of eyes. You launch a new financial product say Bitcoin backed by a secured technology called blockchain. Now what comes with it is the sentiments of the investors investing in Bitcoin which makes up for the volatility in the price of this new product. The uncertainty here is the acceptance of this technology and its sustainability in the long run. Now as the product is gaining popularity, financial institution, governments and investors are becoming sceptical of its consequences. Each of them are trying to impose regulations and making policies in order insure a safe usage of this product which in turn is increasing the complexity in the situation. But the main question is, does the world need this technology? And this question comes up with a lot of whys which justifies its ambiguity. The examples are at infinity here defining the challenging economic environment for a business leader. There can be seen volatility in the share prices of a company, or for that matter any new financial product, which comes with its own uncertainty to predict market behaviour and volatility in its prices. The trade deals, each with different regulations makes a complex situation for a company doing business in various countries. The fluctuations of REPO rates, bond prices and interest rates, foreign exchange rates etc. are a few examples for the challenges in a VUCA world. What important is that a leader needs to keep all this in mind while steering towards growth. A smart businessman always has a solution to every problem, so the VUCA problem can also be tackled by joining bits and pieces of the puzzle. It is said that the best response to VUCA, quite interestingly, is also VUCA: Vision, Understanding, Clarity, and Agility, which is one way to look at it. A vision demands an action to be taken, to have a set goal in mind and then to work towards it in order to probe a change. One should have a wider understanding and different perspective to things in order to tackle uncertainty and ambiguity. Through clarity one becomes flexible in any given situation, to be able to clearly define the problem and then divert your complete focus towards it. Agility further broadens into sound decision making ability and innovativeness of a leaders. This VUCA (as a solution) provides a holistic solution to a challenging business world. However different situations demand different solutions, thus various companies have developed different tools and teams to tackle the problem of VUCA. They have invested heavily in man, machines and methods to make sustainable growth. Various IT companies have built smart tools to predict market sentiments, forecast the future and provide an approximate solution only to tackle the issue of VUCA. Human resource departments across various companies have developed rigorous training programs to equip the employees with fine understanding of the tasks at hand. To focus on building capabilities rather than building skills is need of the hour. It is important for a leader to reflect on its own and as well as others experiences in order to advance through a challenging environment.


FINSHORTS -ARUSHI BHAMBRI PGDM (Finance), 2017-2019 1)

Davos Diaries

Top world leaders from the fields of business, finance, science and arts were a part of World Economic Forum (WEF), in Davos, Switzerland this month. Theme for this year was “Creating a Shared Future in a Fractured World”. The #MeToo movement shall also be discussed.


The ONGC-HPCL Acquisition deal

Oil and Natural Gas Corporation (ONGC) is set to acquire Hindustan Petroleum Corp Ltd. (HPCL) for an amount of Rs. 36,915 crore. It has tied up Rs. 18,000 crore loan from 3 banks to part finance this deal, along with selling its stake in IOC and GAIL to complete the deal.


GST rate cuts, yet again

The GST council, chaired by Finance Minister Arun Jaitley, on 17 January, decided to cut tax rates on 29 more products- Pre-owned cars, precious stones etc. and over 50 services- admission to theme parks, legal assistance provided to government agencies- in its 25th meeting and also decided to ensure making the process of filing tax returns simpler.


SEBI online filing system w.e.f. 1st April

As a step forward to digitalisation, SEBI has now made it mandatory to file only through online medium records related to offer documents, takeovers, buybacks etc. SEBI had already adviced merchant bankers and other intermediaries to activate their online accounts.


Inflation: A 5 point something

Retail inflation and WPI showed opposite signs for the year ended 2017. WPI decreased from 3.93% to 3.58 %. On the other hand, Retail Inflation was on a 17 month high of 5.1% after November’s 4.88%. This has been the result of higher pay for government employees and increase in food prices.


Cypto currency gains - Taxable

Even though Bitcoin and other cryptocurrencies are not a legal tender, their cash inflow shall be taxable, cautioned the government. So if one has held as well as gained from a cryptocurrency given the fluctuating prices, the profit gained will be taxable.


IDFC Bank and Capital First to merge by share swaps

As announced by both the involved parties, IDFC and Capital First Board of Directors have agreed to merge the two 5

companies. After merger, the two companies will have prime focus on Retail , with assets of Rs 88,000 Cr.


India ranked 30th on WEF Global Manufacturing Index

India the 5th largest manufacturer in the world has been ranked 30th in WEF Global Manufacturing Index based on development of modern industrial strategies and urge to initiate collaborative action. It is behind Japan and China but is ahead of its BRICS peers.


Airtel profits plunge, Jio finally taking a toll

Telecom major Airtel, led by Bharti Mittal has reported an over 54% decline in net profits ( Rs. 1,108 crore ). This was the lowest profit of Airtel after December 2012 and is as a result of price war between Airtel and Mukesh Ambani’s Reliance Jio.


Why Finance Minister Always Carries a Briefcase on Budget Day

As the Budget presentation day is approaching , let us answer one Trivia question. The answer is that the Indian finance ministers are only following a trend that has been set in Colonial times by the Britishers to carry a leather bag carrying Financial papers, that presented India’s financial performance.


IPO News

The IPO momentum continued in 2018, with Amber Enterprise being subscribed 165 times on the last day. Also, Air Asia airline company is planning to go public and raise funds in the primary market. It is currently looking for a banker that will help it start the prelimnary process.


FPIs pour in ; 8,700 cr in 2018 so far

Year 2018 saw an amazing start in the capital markets with a whopping 8,700 Cr of FPI inflows so far due to expectation of recovery in corporate earnings and attractive deals. However it is believed that this may not continue as withdrawal of liquidity globally.


Sensex went past 36,000 ; Nifty over 11,050

Market has been on an upward trajectory since a long time now. But now these two Indian indexes have grown tremendously with IT stocks and Bank stocks leading the rally. However, this might be short lived as the oil price cushion or margin enjoyed by Indian government is almost over.


Tokyo Based cryptocurrency exchange hacked

Coincheck, one of the biggest cryptocurrency trading exchange reportedly lost about $530 million (58 billion Yen) worth virtual money after being hacked and has therefore suspended withdrawals of almost all cryptocurrencies. Earlier, another Tokyo based Bitcoin trader, Mr. Gox had filled for bankruptcy in 2014 after losing 850,000 bitcoins.


The Insolvency and Bankruptcy Code, 2016 -ARCHIT BASER PGDM (Finance), 2017-2019 The object clause of the Insolvency and Bankruptcy Code (IBC), 2016 defines the code as “An act to consolidate and amend the laws relating to reorganisation and insolvency resolution of corporate persons, partnership firms and individuals in a time bound manner for maximisation of value of assets of such persons, to promote entrepreneurship, availability of credit and balance the interests of all the stakeholders including alteration in the order of priority of payment of Government dues and to establish an Insolvency and Bankruptcy Board of India, and for matters connected therewith or incidental thereto.”

The Indian bankruptcy regime, for a prolonged period of time, had been highly fragmented having multiple judicial forums under various legislative frameworks. The various frameworks applicable were The Companies Act 2013, SARFAESI Act 2002, SICA Act 1985, The Presidency Towns Insolvency Act 1909, The Provincial Insolvency Act 1920, The LLP Act 2008 etc. just to name a few. This resulted in lack of clarity and uncertainty in decisions. Decisions were often appealed, stayed or overturned multiple times making the process much longer than required. This led to delays in the winding up of financially unviable businesses as the ‘pro-revival approach’ was being misused by corporate debtors. In addition to the woes were the secured and unsecured creditors, regulatory authorities, employees and other affected parties having competing rights with no common regulatory process to resolve the coinciding complexities. The lack of credibility and inadequacy of data regarding indebtedness, security situation and assets of the company, in many cases, further used to accentuate the problem. Fallouts of these issues have been adverse which have been justified by the numbers too. The average time in India regarding Insolvency resolution has been around 4.5 years. It is much higher as compared to London (1 year) and Singapore (approximately 10 months). The World Bank Report of 2014 claimed India had the lowest recovery rate across the globe at about 20% of the debt value. The Reserve Bank of India in its report for the year 2015 claimed 12% of the total advances to be either restructured of NPA having low recovery rates due to a dismal environment for enforcement of creditors’ rights.

The IBC, 2016 attempts to resolve these problems. It proposes a paradigm shift from the ‘Debtor in possession’ to ‘Creditors in control’ regime. It provides for a specialised forum to oversee all the liquidation and insolvency proceedings for corporates, SMEs as well as individuals. It empowers all the classes of creditors (secured as well as unsecured), employees, regulatory authorities etc. to trigger a resolution process through an ‘Insolvency Professional’ in the event of a single default in repayment of any interest, loan or any other valid claim. It offers a finite time limit within which a defaulter’s viability could be determined and a resolution process could be agreed upon. It tries to have a balanced approach to rehabilitation and recovery, and mandates a compulsory liquidation in the event of resolution not being agreed upon within 180 days of the resolution process. Also, as per IBC, the power of commercial decision to revive or wind up is with the creditors instead of the courts. We should also make a note of a recent amendment in the IBC that prevents the promoters of the stressed firms to bid for regaining the control unless they settle their dues first. This has added to the worries of the promoters as they are left with just two options i.e. either settle the dues or lose out on the control to a competitor.


Resolution Process & Timeline under the IBC, 2016

The outcome so far‌ According to the presentations made in the Lok Sabha in the month of November 2017, winding-up cases transferred from various High Courts were 2,304 while the new cases filed before the National Company Law Tribunal (NCLT) were 2,434 summing up to 4,738 cases. Of these cases, 2,750 cases had already been disposed of by the end of the month while 1,988 cases still awaited judgement. The introduction of the IBC, 2016 has provided a sigh of relief to the creditors of stressed firms especially those requiring a huge amount of capital investments such as Steel industry, Oil industry, Textile industry etc. Various big names in the steel industry like Essar Steel, Bhushan Steel, Monnet Ispat, Electrosteel Steel have come under the hammer after the introduction of the IBC. Similar is the story of other industries where players like Lanco Infratech (power industry), Alok Industries (textile industry), ABG Shipyard (shipbuilding industry), Jyoti Structures Ltd. (tower manufacturing) etc. are having a tough time after their creditors have been empowered by the IBC. It is imperative to note that the most affected industry appears to be the steel industry. Dominants of the industry such as the JSW group, Tata Steel, Mittal-Arcelor are looking out for opportunities to buy the assets of those going under liquidation or restructuring schemes such as Ispat group, Bhushan Steel which could lead to consolidation in the industry. However, at the same time it also provides the small players with an opportunity to strengthen their footing in the industry by expanding operations through buying of the distressed assets for a lower price and then trying to make them profitable through operational efficiencies. The 100% FDI via automatic route presents an equal opportunity for the foreign players as well. It would be interesting to see how the events take place in the future as the growth prospects are high due to rising demand for steel and steel components. Will the decision to introduce IBC prove to be a correct one? As India lies at the bottom of the World Bank's Index on resolving issues, IBC shall definitely make a difference in an overall ease of doing business in our country. It is exactly the opposite of earlier acts and laws as it aims to empower the creditors when a debtor defaults which is an appreciable move. The strict rules and regulations and shortened duration of resolution of cases are definitely expected to bring a wave of positivity among the corporates as well as individuals. It is also expected to attract more foreign capital as it assures a standardized and timely resolution. It also covers cross-border insolvency through various types of bilateral and reciprocal arrangements with governments of other countries. The standardized procedures and shortened deadlines should definitely improve debt recovery rates as well as revive the ailing industries. Ignoring the minute loopholes (which exist in almost every law and can always be filled through amendments), the IBC should definitely prove to be a successful regulation. 8

Monetary Policy Analysis, 2017 -ATUL RANJAN PGDM (Finance), 2017-2019 For a developing country like India, understanding the adopted monetary policy framework of the central bank (RBI in this case) provides a much required way to get familiarised with underlying economic conditions and projected future of the economy. The RBI decides the monetary policy with the objective of keeping the consumer price inflation in the medium term of 4percent with an allowance of +/- 2percent. The next round of the MPC (Monetary Policy Committee). Going by the current WPI data, the RBI seems to be doing its job well enough. The YoY inflation after touching a high of 5.99 percent in March’17 has come under control and currently hovering in the 3.5 to 4 percent range.

One of the most important contributors of the inflation is the petroleum prices, which have jumped considerably in the latter part of the past year. After cooling down to less than $50 per barrel level, the current price reached close to $68 per barrel on 25th January. This brings an obvious question in the mind of policy makers, that eased money accompanied by rise of oil prices in the overseas market would wreak havoc with the inflation estimates.

*Source: PPAC, Ministry of Petroleum and Natural Gas 9

Looking at other key indicators of the Indian economy, the IIP- index of industrial production, after keeping low throughout the year, the November’17 data showed some much anticipated jump at jump at 8.4 percent.

The growth in industrial output gauges the prevalent demand growth sentiment in the markets. With the latest doomsday prediction of recession still haunting the investors, the IIP data is an important indicator which energises the stock market and also the general confidence in the economy. Quantitative easing is in some way also perceived as good for IIP growth by investors. Some other emerging trends in the economy can be listed as – After five successive quarter of deceleration, the gross value added (GVA) accelerated in the second quarter of 2017-18.The improved demand after implementation of GST was a major factor behind this change. The RERA and GST effect on the construction sector hasn’t been fully understood. On the agricultural front there were mixed signals such as the Rabi sowing being slightly lagging behind, whereas the pulses showed promising growth in sowing. The merchandise trade also showed sustained increase till September ’17 while the imports continued to rise at a modest pace. The other factors that were considered were the global GDP growth and currency volatility in the exchange markets. Also the periodic surveys undertaken by RBI to gauge the market opinion about inflation were also considered. The culmination of these vast range of data was a continuation of policy rates in the December MPC meeting. Policy Repo Rate


Reverse Repo rate Marginal standing Facility Rate


Bank Rate



6.25% 4.00% 19.50%


Fiscal Slippage - Government Measures -SNIGDHA RAO PGDM (Finance), 2017-2019 GST was launched amidst much speculation by the Indian government with an objective to increase the tax inflows due to the reduction in rates and ease in maintenance of tax records. The government implemented the law initially in a relatively lenient fashion in terms of regulations. Consequently, the tax receipts have taken a hit in the first month of implementation. There was a 14% drop in the Tax Revenue in August, first month from the launch of GST on July 1 st. In December, total GST receipts of the central and state governments inclusive of taxes on inter-state supplies and the cess on certain items, came upto a total of Rs. 80,808 crore in December which compared to November was lower marginally by 3%. These figures have made the government re-evaluate its fiscal deficit target of 3.2% of the total GDP. Now, the government is seeking to expand its market borrowing programme by Rs.50,000 crore for this financial year. The estimated gross market borrowings were to be Rs. 5.8 million but with recalibration, it now stands at Rs. 6.3 million. The parliament had approved a net cash outflow of Rs. 33,380 crores earlier this month and this has further increased the pressure on the government in its attempt of maintaining the fiscal deficit at 3.2% of the GDP. On the other side, Government has also reduced the interest rate on small savings scheme such as Public provident fund, Sukanya Samriddhi and Kisan Vikas Patra by 0.2 per cent for the January to March quarter of 2018 as a part of social service schemes. This makes the upcoming budget announcement all the more important because budget and fiscal deficit are always invariably connected. These two factors are more often than not the basis on which the overseas investors and rating agencies place their judgement. Further with the current government’s agenda to lower the fiscal deficit gradually in line with its Fiscal Responsibility and Budget Management target, the percentage of fiscal deficit becomes extremely important. An overview of the fiscal deficit of India In the year 2000-01, the fiscal deficit of Government of India was Rs. 1,18,816 crores which increased to Rs. 5,55,649 crores during the year 2015-16 representing an increase of Rs. 4,36,833 crores during this interim period. In percentage terms, the annual growth rate was 24.51% between these two periods. This indicates that the fiscal deficit has only seen an increasing trend and could not be curtailed. Fiscal Slippage First let’s understand what fiscal slippage means, slippage as a term refers to the difference between the expected price of a trade and the actual price at which the trade happens. Slippage occurs when the market becomes highly volatile or when large orders are placed and the market is not ready to cater. The slippage may not always be negative for the market. It merely states the inability of the market to cater to the current volatility. Fiscal deficit is the difference between total expenditure and total revenue of the government, excluding borrowings. It means the total borrowings that the government has to resort to for meeting its annual expenditure. Therefore, fiscal slippage would mean that the government’s expected fiscal deficit would be different from the required fiscal deficit. The fiscal deficit should be such that it attends to the social sector needs as well as create stimulants for the economy to keep growing. However, any such slippage would attract the wrath of the rating agencies and overseas investors who would ultimately determine the amount of investment that flows into the domestic market. It may also crowd out private investment and 11

that can result in increased inflation levels. Along with the Central government facing the issue of increasing fiscal deficits, the State governments have also experienced the same but with more worrying numbers. This could be attributed largely to the UJWAL DISCOM Assurance Yojana, a financial and revival package offered to the state-owned electricity distribution companies to enable them to overcome the current financial mess they are in. On top of it, various states have also announced the waiver of farm loans with Uttar Pradesh standing at the highest spot with a loan waiver of close to Rs. 36,000 crores. These factors have resulted in the state deficit exceeding the centre’s deficit. The centre is in itself planning for various kinds of loan waivers as a populist measure and that might also effect the fiscal deficit adversely. The reasons for this fiscal slippage Increasing oil prices would result in higher imports and therefore higher outflow of currency. The faltering tax receipts due to the dual effect of GST and demonetization would again result in lower revenue. Share sales in government entities has picked up this year but with the outlook of the markets not being very positive, it remains ambiguous as to how much the government would be able to channelize from this avenue. It is still in the nascent stage and it remains to be seen how the government would benefit from this share sale. Further, Banks and financial institutions are burdened by the increasing NPAs and therefore they should be wary in extending high credit to the industry. High inflationary trend is also worrying because retails inflation has spiked to 5.21 which is higher than RBI’s comfort zone of 4 per cent. Along with the increasing commodity prices, the bond market is also quite sensitive at this point with the bond yields maintained on the upside. Sources to the government Information from finance ministry states that the government has thus far managed to raise around Rs. 72,000 crores through disinvestment. Net direct tax receipts have also grown by 14.4% to 4.8 trillion during April- November as compared to the previous year. Further, the decline due to GST is being regarded as a one-off thing that would not continue in the future. Faster economic growth could help boost revenue collection. Experts believe that once compliance increases and tax receipts pick up, the impact of tax cuts on revenue would only be a theoretical issue. Although GST is said to have an adverse effect of Rs.11,000 crore on the centre due to the tax sharing between the centre and states and also because of the tax cuts on many products of the 28 percent category, it is likely to improve going forward with higher tax return compliance.

Government can also improve its capital receipts through divestment alone, depending on ONGC acquiring government share of 51.11 percent in Hindustan petroleum corporation. This divestment could alone result in government raising close to Rs. 32,000 crores. Additionally, the front-load capital expenditure that government had undertaken is likely to slow down. The proposed bank recapitalization and the Bharat Mala scheme also will not require any budgetary allocation this year. Some experts argue that a fiscal deficit percentage cannot be so rigid that any slight change can disturb the markets. They should be flexible and inclusive of all environmental factors. The government has a limit of 6% for both State and Central under the FRBM act and it strives to maintain it within that range by taking corrective measures a few of which have already been discussed. 12

FII Investments and their control of Indian Financial Markets -ANANYA NATH PGDM (Finance), 2017-2019 - SUSWETA BANIK PGDM (Finance), 2017-2019 Foreign Institutional Investors (FII) are investors or investment funds which invest in one country but are registered in another country and include insurance companies, hedge finds, mutual funds and pension funds. A large number of foreign institutional investments are seen in developing countries as their growth potential is higher than mature economies. On the other hand, foreign direct investments or FDIs are investments made by an individual or a company of one country in businesses of another country, in form of either acquiring business assets or establishing business operations in the other country.

“In 2016, developing countries accounted for a growing share of global foreign direct investment (FDI) inflows and outflows, 40% and 20% respectively” World Bank

*Source: Kuwait Times However, unlike FDI, FII investments are not long term and is susceptible to domestic and international volatility. As FII is allowed to enter in India only through the stock exchanges in the form of equity or debt, the daily sale of FII increases the volatility in the stock markets. The inflows and outflows of FII may often reflect a nation’s economic and political stability. 13

The current government’s measures to implement liberal economic reforms and enable an investor friendly business environment has started paying off. The government has taken several measures to attract foreign investment like the dedicated Japan Plus Cell to speed up and facilitate investment proposals and economic ties between Japan and India. India has become the most attractive investment destination in the world with 18% growth in FDI in 2016 despite global rates falling by 7%. In 1992-93, FII inflow was a meagre $4.2 million. In comparison India received a net investments of US$ 17.412 million from FIIs between April-October 2017. According to Ernst & Young’s Global Capital Confidence Barometer Technology Report, India currently ranks third among the most attractive investment destinations for technology transitions in the world. The net investments in Indian equities and debt have broken records in the past financial year due to falling interest rates, expectations of recovery in the economy and improving earnings outlook.

*Source: IMF International institutional investors need to register with SEBI to be able to participate in the primary and secondary markets. FIIs invest in the markets through the portfolio investment scheme (PIS). Under this scheme, FIIs acquire shares of Indian companies through the stock exchanges in India. There are various regulations included in the scheme. Investment ceilings that states that the maximum investment that can be received by an Indian company is 24% of paid-up capital. However, this ceiling can be increased above 24% through board approval and passing of a special resolution. In case of public sector banks, this ceiling is 20% of the paid-up capital. However, to make Real Estate Investment Trusts (REITs) and Infrastructure Investment Trusts (InvITs) more attractive, since January 2018 SEBI has allowed strategic investors like international multilateral financial institutions to invest up to one forth of the total offer size of such trusts. RBI also revised the holding limits of foreign portfolio investors' (FPIs) in government securities by Rs 11,200 crore to Rs 3,01,500 crore for the current financial year. Domestic Institutional Investors include mutual funds, financial institutions, UTIs, insurance companies, banks and venture capital funds of the country. They play a major role in stabilizing the domestic market when FIIs turn net

*Source: NSE 14

Need for Foreign Capital The need of foreign investment/ foreign capital arises due to the following reasons: 1. Basic infrastructure development: Individuals do not come forward to invest in infrastructure industries given the long gestation period and the Government of India is not able to fund the entire projects. Hence, foreign capital fills the gap. 2. Rapid industrialization: Foreign capital is required to fulfill the initiatives of the government to intensify the process of industrialization. 3. To undertake the initial risk: Developing countries like India lack private investors as they are risk averse. Hence foreign investments will allow the higher risks to be transferred to them. 4. Global imperatives: The expansion of MNCs to many countries is one of the reasons for the foreign capital. The principles of WTO and other regional associations bind the member nations to allow foreign capital. 5. Comparative advantage: An important reason for foreign capital requirement is the fluctuations in the cost of capital like interest rate. For example; the interest rates in India are higher as compared to developed economies because of which companies look for foreign capital to reduce the cost of capital. 6. To eliminate the technological gap: The developed countries have very high level of technology as compared to the developing countries. So, the developing countries try to evade the low level equilibrium by allowing foreign capital.

*Source: NSE Foreign investors have been the prime Indian stock markets movers for the past many years because of their deep pockets. Domestic investors have also been followers of FIIs rather than leaders in the Indian market. The dominant position of FIIs affected the Indian markets and economy disproportionately till 2017. The domestic inflows, specifically through mutual funds have surpassed the Foreign Portfolio Investment by a huge margin. The leadership baton has moved on to the domestic investors from FIIs now. Hence, movements in FIIs are expected to depend on the economic performance, market momentum and corporate earnings. Global developments will certainly influence FII behavior which in turn will affect the domestic market too. Since many emerging markets are looking relatively cheaper, FIIs might press sales particularly in India assuming the growth and earnings recovery in India assuming the growth and earnings recovery in India will be steady but slow.


IPO Report Card for the year 2017 -ANIRUDH MITTAL PGDM (Finance), 2017-2019 The year 2017 has been the most successful, rewarding and vibrant year for both primary and secondary markets of India. The excitement in the primary market got fueled by the massive returns which investors made in the secondary markets with both Sensex and Nifty50 inching towards record highs. The S&P BSE Sensex climbed an Everest of 34K, while the Nifty50 broke past a resistance of 10,500 by December. Further discussing the IPO spectrum of India in 2017; let’s get an idea of what actually an IPO is. An initial public offering (IPO) is the first time when a privately owned company is offering its ownership, shares or equity to the public that’s why it is also referred to as a public offering. By doing so the company converts from a privately owned company to public company that gets listed on the share market. IPOs are often issued by smaller and younger companies seeking capital to grow their business, but they can also be offered by large privately owned companies looking to become publicly traded in the primary market. Issuing of an IPO is an exciting moment in the life of a company as it means it has become successful enough to have a need for much more capital to continue to expand. Though it is not the only way of generating capital, other way being the debt, sometimes it becomes the only way for the company to get required cash to fund a massive expansion. But there is a cost of raising capital through equity. The owners of the company lose the ownership control of the business and they even may not be able to get many shares for themselves. Not only for the Company but also to the investors, IPO’s offer an excellent opportunity to make money as IPO shares can often skyrocket in value as compared to when they are first sold on the stock market. The main categories of investors that participate in these public offerings include Qualified (FII & DII) Institutional Investors, Non-Institutional Investors (NII) and retail investors. There were 36 mainboard IPOs, from sectors like infrastructure, financial services, media, hospitals, and transports, which raised a cumulative amount of Rs. 67,147 crore as compared to 26 companies that raised Rs. 26,494 crore in 2016. Last year’s fundraising is 89% more than the previous record of Rs. 37,534 crore reported in 2010 and 2.5 times over the previous year. Despite a rollercoaster ride, our economy has gone through in the past year, because of several disruptions like demonetization and the GST rollout; it has remained resilient and has buoyed foreign and domestic investor sentiment. Primary market has seen a record high domestic inflow into the market as equity is seen as a preferred asset class because of the high returns it is providing.

*Source: Prime Database, SEBI 16

Further Indian markets have been outperforming their foreign counterparts. Both Sensex and Nifty 50 have given a return of almost 30% on a YoY basis which is much higher than global indices like Dow Jones, Nikkei, and even Germany's DAX.

*Source: Out of 36 IPO, 17 companies, almost half, were backed by private equity or venture capital investors. While offer for sale by these investors accounted for 15 percent of the total IPO capital raised, those by promoters formed 63 percent of the IPO amount as pointed out by the Prime Database. The year 2017 was a perfect example of demand for IPO’s meeting the supply side. There was a perfect mixture of the variety of public offers that were issued this year. On one side there were 133 SME IPOs, which raised Rs. 1,679 crores, also the highest ever and on the other side, there were a few big names like General Insurance Corporation of India Ltd. (raised Rs. 11,175 crores), The New India Assurance Co. Ltd (Rs. 9,466.9 crores), HDFC Standard Life Insurance Co. Ltd (Rs. 8,695 crores) and SBI Life Insurance Co. Ltd (Rs. 8,364 crores). However, many of these large size companies were not able to give the returns as expected despite listing with premium.

*Source: NSE India 1 17

Above was the scenario for FY17 and was in the past. Now, what does the future looks like? The future, i.e. FY18, looks really bright. In the light of Lok Sabha elections, which are scheduled in the year 2019, many companies, are expected to pre-pone their IPO plans, with their transactions in the first three quarters of 2018, resulting in pent-up IPO activity. Also, the market outlook, maturity of the Indian markets, government’s disinvestment programme as well as the presence of high-end private equity investors in attention-grabbing new age businesses which are ready for listing, all of these factors will continue to bring diversity to the primary market and offer investors fresh opportunities to invest in FY18. If the government reduces holdings in 18 listed public sector undertakings to 75 percent, which is according to SEBI guidelines, it can alone generate a contribute Rs. 27,520 crores. Further, it has planned to list profit-making unlisted PSUs and identified 34 PSUs for selling its stake in the primary market. Retail investors have started to actively participate in the stock markets due to subdued returns from other assets classes such as real estate, gold, bonds etc. which were conventionally the principal asset class. This coupled with augmented inflows from DIIs (domestic institutional investors), positive attitude of FIIs (foreign institutional investors) on Indian markets and the general positive sentiments in the market.

Given the top five IPOs were from the insurance sector, the year was majorly dominated by banking, financial services, and insurance (BFSI) sector. The BFSI sectors will still continue to dominate the 2018 IPO market; however, the mix might change. The market is expecting to see more traditional lenders coming to the scene as they require further capitalization, both for growth and provisions. More service providers such as asset managers, Wealth Managers, FinTech, and Registrars will also be part of the mix. BFSI is at the right place and at the right time, where there is a want for capital as well as healthy valuations and yet strong investor appetite. Outside of BFSI; telecom, auto, and real estate companies are expected to shine in the market for 2018 and incrementally new tech sector companies in 2019. The outlook for primary markets in 2018 looks even more promising and also, because of the secondary component, offering sizes can be large, while the number of IPOs may not increase as much, the quantum of the fundraising would remain large.


Blockchain and Bitcoin - A match made in Digital Heaven -AKSHIT GOYAL PGDM (Finance), 2017-2019 -SUNIL KUMAR BEHERA PGDM (Finance), 2017-2019

Blockchain Technology: Like the name suggests a blockchain is a chain of blocks that contains information. This technique was originally described by a group of researchers in 1991 and intended to timestamp digital documents so that it is not possible to backdate them or to tamper with them. However, it went by mostly unused till it was adapted by Satoshi Nakamoto in 2009 to create a digital cryptocurrency Bitcoin. A blockchain is a distributed ledger that is completely open to anyone. The interesting property about the blockchain is that once the transaction is recorded in the blockchain it’s very difficult to change or tamper with that transaction. Let’s try to understand the reason behind this interesting property of blockchain. In a blockchain each block contains some data, the hash of the block and the hash of the previous block. Now this enables a chain like feature where every block is connected to its previous block and used to validate the whole chain. The first block of the chain doesn’t contain hash of the previous block and it is called the genesis block. For example, in a Bitcoin blockchain the data stored inside a block is the transaction details and the hash are the special key of the block. The hash or the special key is always unique just like a fingerprint. Once the block is created, the hash is also get created and linked with the previous block. Now changing the data inside the block will cause the hash to change and in turn disconnecting it from its previous block making all following block invalid. Also, blockchain has another concept called the proof of work to mitigate any attack on its blocks. Proof of work is a mechanism to slow down the process of building new blocks. The proof of work protocol often amount to different puzzles and the properties of these puzzles are challenging to solve which means require serious computational power to solve while on the other hand can be easily verified i.e. can be verified in far less time than it actually took to solve the puzzle itself. For example, in case of bitcoin the puzzle is to create the new hash for the block which takes around 10 minutes of serious computational power. So, tampering with one block will lead you to recalculating the proof of work for all the following blocks. Thus, blockchain secure themselves by the creative use of hashing and the proof of work protocol. There is one more way in which blockchain secure themselves i.e. the distributed open ledger concept. To understand this first we have to understand what is open ledger? An open ledger is a chain of transaction or blocks which are open and visible to everyone. What it actually delivers is the information about all the transaction to everyone as well as the access to validate any transaction. For Example: if A is transferring 15$ to B, whereas he doesn’t have that amount with him. Any other user be it C can invalidate this transaction so that it will not be added to the chain. Now let’s talk about the second term that is the distributed open ledger. This means all the transactions are registered in an open ledger which is again distributed among all the users of the blockchain. All the users will have a copy of the ledger with themselves. This also creates another problem i.e. the syncing of all the ledger so that everyone views the same copy at all times. Now to understand the solution to this problem we need to understand the concept of the miners in the blockchain. We will try to understand this with the example of Bitcoin. Miners are special nodes in the Bitcoin blockchain. Miners are going to compete among themselves to be the first to validate a new transaction and to add it to the open ledger. The first miner to do this will receive some financial rewards. Let’s assume there is new transaction need to happen between A to B of 15$. Now this will create a broadcast that A wants to transact B the amount of 15$, which will be visible to everyone. Now this is an invalidated transaction which has not enter the ledger yet. Now for the miner to win the reward, the miner needs to first validate the transaction. This can be done easily through checking 19

the open ledger and calculating the existing fund of A. Now the second thing a miner needs to do is to find the special key or hash to connect the new transaction with the previous transaction. To do this the miner needs to invest huge computational power to find the specific key. The first mine to do that will receive the financial reward and will publish the validated transaction to other users of the blockchain. Now everyone will check this transaction as validated will add this to their respective ledger. This creates a consensus among the users whether the new block is valid or not and then it gets added to the official ledger. So, to successfully tamper with a blockchain, one needs to tamper with all the blocks of the chain, recalculate the proof of work of for the remaining blocks and then take control of the more than 50% of the users of the blockchain network. Now that is almost impossible to do. Apart from the use of blockchain in cryptocurrencies, the recent development of blockchain use in the form of smart contracts. Smart contracts are just like normal contract except they are all digital programs and stored inside of the blocks of a blockchain. This enables them to be immutable and distributed making them immune to any tampering by one person to the code of the contract. Smart contracts can be used by financial institutes like Banks, Insurance companies and by postal companies.

BITCOIN: Bitcoin is a digital currency which was created in 2009. A mysterious man named Satoshi Nakamoto is said to be behind concept of bitcoins. Although his identify has still not been verified. Unlike other securities bitcoin is operated by a decentralized authority. Bitcoins do not exist physically, their balances are kept on a public ledger in the cloud, that – along with all Bitcoin transactions – is verified by a massive amount of computing power. What makes bitcoins riskier is the fact that bitcoins are not backed by neither banks nor government. Individual Bitcoins are also not valuable as a commodity. It is believed that there can be only 21 million bitcoins. As of December 2017, this there are 16.78 million Bitcoins in circulation.



How did Bitcoin begin? August 18,2008 - The domain name was registered. Today, this domain is "WhoisGuard Protected," meaning the identity of the person who registered it is not public information. Oct. 31, 2008 - Someone named Satoshi Nakamoto made an announcement on The Cryptography Mailing list at Satoshi Nakamoto said that he has made a new electronic cash system that's fully peer-to-peer, with no trusted third party. The paper was available at" January 3,2009 - The First Bitcoin block was mined, Block 0. This is also known as the "genesis block" and contains the text: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks," perhaps as proof that the block was mined on or after that day, and also as a relevant political statement. January 8, 2009 - The first version of the Bitcoin software was announced on The Cryptography Mailing list. January 9, 2009 - Block 1 was mined, and Bitcoin mining commenced in earnest.

Before Satoshi It cannot be believed that Satoshi Nakamoto was a lone, exotic, genius person who created Bitcoin out of nowhere. Like all other scientific discoveries, bitcoin is also believed to be built on previously existing research. In 1997, Adam Back’s Hashcash and subsequently Wei Dai’s b-money, Nick Szabo’s bit-gold and Reusable Proof of Work by Hal Finney are some of the predecessor of bitcoin. Even the Bitcoin white paper cites Hashcash and b-money as several research fields.

Investing in Bitcoin There are many people who believe that digital currency is the future. People endorse it because they are of belief that it facilitates no-fee payment system, a much faster system for transactions across the globe. Although bitcoin is backed by neither banks nor governments, it can be exchanged for traditional currencies. The fact that they can act as an alternative to national fiat money and traditional commodities like gold has been primary reason for growth of digital currencies like Bitcoin. In 2014 IRS i.e. the internal revenue service of United states of America stated that all virtual currencies, would be taxed as property rather than currency.

Risks of investing in bitcoin Bitcoin was not designed as a medium of investment rather it was designed to be a medium of exchange. After Bitcoin appreciated rapidly in May 2011 and again in November 2013, some speculative investors were drawn to it. But their lack of guaranteed value and digital nature depicts the inherent risk involved with the purchase and use of bitcoins. Some of the risks associated with Bitcoins are:

Regulatory risk- Bitcoins are a rival to government currency and may be used for black market transactions, money laundering, illegal activities or tax evasion. Which may lead to governments seeking regulations, restrictions or ban the use and sale of bitcoins as some already have. Others are coming up with various rules.

Security Risk: Since Bitcoin exchanges are entirely digital they are at a risk from hackers, malware and operational glitches. Anyone can transfer the stolen bitcoins to another account with access to Bitcoin owner’s computer hard drive. This can be prevented by storing Bitcoins on a computer that is not connected to the internet, or by choosing to use a paper wallet.

Insurance Risk: Bitcoin exchanges and Bitcoin accounts are not insured by any type of federal or government

Fraud Risk: Pertaining to the uncertainty involved with Bitcoin, some fraudsters and scammers may attempt 21

to sell false bitcoins. For example, in July 2013, the US Security and Exchange Commission brought legal action against an operator involved in a Bitcoin-related Ponzi scheme. 

Market Risk: Bitcoin values can fluctuate Like in case of any investment. It has been seen that the price of the currency has shown great volatility. Subject to high volume selling and buying on exchanges, it has a high sensitivity to news. According to the CFPB, the price of bitcoins fell by 61% in a single day in 2013, while the one-day price drop in 2014 has been as big as 80%.

Tax Risk: Because of the inability of bitcoin to be included in any tax-advantaged retirement accounts, there are no good, legal options to shield investments in bitcoin from taxation

Finance Conclave: CFO’s role in VUCA world (VUCA: Volatile, Uncertain, Complex and Ambiguous) at Indian Habitat Centre, New Delhi on 7th February 2018


Recapitalization Of Indian Banks -ASHWIN BANSAL PGDM (Finance), 2017-2019

Finance Ministry emerged as the angel in calling for PSBs in India by announcing Rs.2.11 trillion recapitalization plan on 24th October ,2017. The big bank recapitalization or the bailout of public sector banks, Whatever we may call it ….It is a financial engineered way drafted by the government to solve the problem of Twin Balance Sheet .

What is Recapitalization ? Recapitalization is infusion of capital in a company’s debt and equity mixture to strengthen its ability to conduct business. Indian Government being a majority stakeholder in these banks, the onus of recapitalization comes on it. It is aimed at tackling the twin balance sheet problem along-with reviving growth in investments. As credit growth for the year 2016-17 is only 5.1% , GDP growth has fallen to around 6%.One of the primary reason for low credit growth has been rising non-performing assets (NPAs) in the Indian Banking sector. Strong and sustainable credit growth is almost synonymous with a healthy operating environment and strong economic growth.

Decoding “Twin Balance Sheet problem” Currently balance sheet of PSBs are in a terrible shape. This is acting as a major obstacle for growth revival in private investments. Low profits have forced corporates to cut down on future capital expenditures as they are unable to repay loans borrowed during boom years. Defaults on these loans necessitates banks to classify these loans as NPAs. A loan is classified as NPA if interests or any instalment on the loan remains unpaid for a period of more than 90 days. Banks have to make more provisioning for high NPAs, resulting in lower profits. As of June 2017, the NPAs of the banking system were as high as 10.2 % of the loans advanced by the banks which further limits their capacity to lend. This limited credit availability leads to further decline in private investment. This is the Twin Balance Sheet problem.

Why Do Banks Need To Recapitalize? Suppose HDFC Bank need to have 10% of the loans it make as it’s own capital. So if HDFC bank has Rs.100 it can make only Rs.1000 worth of loans. If the Bank losses Rs.50 on these loans because some fellow defaulted (5% NPA), then this loss hits HDFC’s capital bringing the dropped down capital to Rs.50 . Now HDFC Bank has only Rs.50 on Rs.950 worth of loans , or around 5% as capital. This is not good. To come back to 10% capital ratio it has to raise an additional Rs.45. Otherwise HDFC has to call in loans of Rs.450 which is really difficult, so they stop lending more. This is what has happened. Public Sector Banks have frozen up on lending as their capital ratios do not permit them to lend more.


CURRENT SCENARIO Banks have Rs.100 capital and have lend Rs.1,500 (6% capital ratios) They have losses of Rs.50 that they know about and are unwilling to take (Net NPAs). So the government gives them Rs.50 which increases their capital to Rs.150. So now they have Rs.100 capital (netting of Rs.50 as loss) on Rs.1,450 lent this increases their current capital ratios. Magically, things change. Because of better capital ratios, banks can now raise more capital – say another Rs.50 is raised. Now they have the ability to lend another 500 rupees, to maintain say a 8% capital ratio. This is a higher capital ratio than earlier. Credit increases. Some more leeway for losses also exists. Effectively, what the government wants to do is: Force banks to take losses by pushing NPAs to real losses, as the government replenishes the capital that is lost. The Recapitalization of banks worth 2.11 lakh crores has been proposed to be done in three ways: 

Budgetary allocations: 18,000 crore

Raised from the market through the issue of equity shares by banks: 58,000 crore

Issue of Recapitalization bonds by the Government: 1.35 lakh crore

The banking sector is flushed with liquidity after demonetization. They will use this excess liquidity to buy recapitalization bonds from the Government. The Government will then use the money raised through issue of bonds, to buy equity shares in the banks. So, the recapitalization bonds will be exchanged for equity shares. Recapitalization bonds are classified as below the line financing and not included in the fiscal deficit. Interest payments on these bonds would be around 8000 to 9000 crores which will marginally increase fiscal deficits.

Benefits of Recapitalization to the Indian Economy 1) 2) 3) 4)

Indian Banks operating at a leverage ratio of eight-nine times would have the capacity to lend Rs.5.8-6.5 trillion assuming Rs. 700-750 billion is available to banks as growth capital. Adequate capital will allow banks to fast track the resolution for assets recognized as NPAs, setting the stage for a capex cycle recovery. It would allow public sector banks to directly raise capital from capital markets making them self-reliant and efficient in the long run . Capital will help the banks to comply with Basel 3 norms that will come into force in 2018.

BASEL-3 norms are the international banking regulations that have to be followed by the banks in all countries. Banks need to maintain a capital adequacy ratio of at least of 8% under this norms .The capital-adequacy ratio is the ratio of capital to the risk-weighted assets (loans etc.).



Distribution of capital to public sector banks

The quantum of recapitalization is a positive surprise and matches estimates of capital requirements for public sector banks for both NPA provisioning and some growth. It will help Indian economy to take a more structural approach towards growth recovery. It will surely have positive medium and long term impacts on the economy.


Finxpress edition 11  
Finxpress edition 11