Tides of 2.07.2015
1 1. Rating firm Moody's Investors Service on 29.06.2015,
downgraded state-owned Bank of India (BoI) and Canara Bank a notch down in
terms of Baseline Credit Assessments (BCAs), an indication of intrinsic or
standalone financial strength of the company. It has downgraded the BCA of Bank
of India and Canara Bank to ba3 from ba2 on account of rise in NPA.Canara's BCA
could be upgraded if there are substantial improvements in the bank's asset
quality metrics, Moody's said in a statement. There could be upward pressure on
its BCA if the bank is able to demonstrate access to equity capital markets as
well, it added. The rating agency said that the downward pressure on BOI's BCA
could develop from a continued deterioration in impaired loans. "A
material decline in the combination of profits, loan-loss reserves and capital,
relative to impaired assets would also put pressure on its ratings," it
said. "Additionally, any indications that support from the Government of
India (Baa3 Positive) had diminished or that additional capital requirements
may arise beyond government's budgeted amount could put the bank's deposit and
senior unsecured debt ratings under pressure," it added. Moody's has also
affirmed the BCA and adjusted BCA of ICICI , Axis and BOB at baa3, baa3 and
ba2, respectively. It has also affirmed the deposit ratings of five Indian
banks - Axis Bank, ICICI Bank, Bank of Baroda, BoI and Canara Bank.
2. The finance ministry is working on a comprehensive package
to help state-run banks, which are saddled with huge bad loans, according to
Minister of State for Finance Jayant Sinha. Rising bad loans at Indian banks
over the past three years amid an economic slowdown has prevented banks from
lending more, despite three interest rate cuts by the central bank this year
totalling three-quarters of a percentage point. This has affected the
government's plan to spur a revival in credit to key sectors such as
infrastructure.
3. Infibeam
has filed a draft prospectus for an initial public offering to raise Rs 450
crore ($70.69 million), becoming the first of India's ecommerce companies to
list its shares on the domestic market. Infibeam's IPO comes at a time of
intense competition in India's e-commerce sector, with high cash burn rates at
industry leaders Flipkart, Snapdeal and Amazon.com's India unit raising
concerns among investors. Launched in 2007, Infibeam runs the infibeam.com and BuildaBazaar.com
websites. Last year, Sony Music bought a 26 per cent stake in Indent, the
company's digital entertainment arm. The company will use the IPO proceeds for
expanding business, including setting up a cloud data unit and 75 logistics
centres.
4. A
top Flipkart executive told Reuters in May it was not yet ready for the stock
market and the resulting investor scrutiny.
5. The
boom in e-commerce has led the Central Govt.to consider amending the Consumer
Protection Act, 1986. Pointing out that India’s e-commerce market is expected
to grow by more than 50 per cent in the next five years, the Survey said the
Centre proposes to include sufficient provisions for consumer safeguards in the
ongoing amendments. The Survey also said that migration from traditional stores
to modern retail is continuing in the country but still modern retail accounts
for only 8 per cent of the total market.
6.
“However,
India remains an attractive long-term retail destination for several reasons,
including its large population, 58.3% of which is below 30 years and
31.1% of which lives in urban areas with rising disposable incomes,”
the Survey added.
