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We are seeing a fast V-shaped recovery post demonetisation: IndusInd Bank

We are seeing a fast V-shaped recovery post demonetisation: IndusInd Bank

Most opinion peddled about demonetisation is wrong, says IndusInd BankBSE -1.68 % chief executive Romesh Sobti. There may be short-term pain, but the benefits are more enduring, he tells ET’s MC Govardhana Rangan and Joel Rebello in an interview. Edited excerpts:

The hot topic in the country now is demonetisation on which the views are extreme.What do you think?
There are so many experts commenting on demonetisation, but our sense is that the pace at which the informal economy is converting into formal economy is surprising. The adaptability of people to switch to non-cash modes of living and creating livelihoods is very rapid. The trader has the option of shutting down or remodelling his business without tax evasion.People who are wailing the most are the ones whose businesses are predicated on tax evasion and that cannot be the viable proposition in the new scheme of things. Therefore, the remodelling of the informal economy is happening rapidly even in our businesses like microfinance and vehicle financing. After the initial few days when we saw some slowdown in disbursements and collections, we are seeing a pretty fast V shaped recovery and many of our partners also are saying the same thing. Microfinance recovery rates are now almost at normal levels in spite of the fact that the new notes many not be there. Disbursements of Aadhaar based direct transfers have also been fast-forwarded. Overall, the adaptability of people and willingness to do without cash is also surprising us.

But there is a hit to the economy. How bad is it going to be?

I think you are shooting in the dark trying to estimate the impact on GDP. There are many Cassandras who say the GDP will crash. I question their ability to forecast. The sensing on the ground is is that businesses are rapidly remodelling. There may be some impact on GDP, but it’s a gross exaggeration to say that we will lose many percentage points because we have no way to forecast it. Our people will adapt quickly to the new circumstances and discover that cash is not the only way of doing business. Paying taxes and, therefore, bringing a larger part of your informal business into formal businesses is the way to go. The pains we are seeing are the pains of remodelling businesses.
How long will the road to recovery be?

Recovery is happening much faster than people thought because the option is to lose livelihood or pay taxes and continue your business models. People will not choose to lose livelihood. To sympathise with those who evaded taxes is very difficult. If you do heavyweight exercises, your muscles pain, but that’s a sweet pain because you know your muscles are getting stronger. I think the economy is going to come out stronger. There may be loss of GDP, but the recovery is going to surprise everybody. ..

What has been the impact on your own business? There are some businesses that had elements of cash. Poor rural woman who used to pay back in small denomination notes and business correspondents stopped collecting those notes. But it took very little time to recover. In the first few days, collections went down 30% to 40% but within 15 days, the recovery percentages went back to the 90s. In some places, we have 98% recovery already, so in that sense, we don’t feel the need to use the regulatory dispensation at all.

Some say that even though the intention was justifiable, the way it was handled could have been better…

That’s typical of our country. If you didn’t do anything, you will be perpetually blamed for not doing anything and if you do anything, (they say) you could have done better. But the point is that there had to be an element of surprise in this. You couldn’t announce it in advance. The surprise element also goes into many other parts like printing of notes. My own feeling is that the need for remonetisation in terms of currency supply is not going to be the same as the demonetised inventory because you are not going to need the cash. I think the total amount of cash needed in the system is going to shrink, so why should you print the same amount?
Yes of course, you can say that the supply should have been uniform across the country, but the logistic including banks. Bankers have stood up to this cause as a national duty. That pain had to be there and I don’t think you can point fingers to say you could have done it better.

What about the benefits? Are they over stated?

There are many impacts. Take a small SME company. Banks always found it difficult to lend based on the balance sheet because there was not enough disclosure on the balance sheet, but we knew that there were other parts of the business that were not being disclosed and, therefore, surrogates were being used. Now you will bring that 40% or 50%, which was not being shown on the balance sheets, so my ability to lend to them will increase.These companies will have health ier balance sheets. These benefits will come in the next 12 months.

For the government and the masses?

Then there will be benefits on tax collection. It has been reckoned that whatever Rs 11-12 lakh crore that has been collected, a lot of that is undisclosed income, which has to be taxed and that should go into the revenue kitty and go back to the people whether through tax relief or justified subsidies. Those benefits should accrue in the next fiscal year. We should not have to wait five years for that. The widening of the tax net is the massive benefit. Paying taxes is going to be a way of life for a larger population, therefore, revenue collection should improve. Can it go back in the form of lower taxes like the minimum slab that can be taken up? That’s the immediate benefit and is a way of recirculating the money back and creating consumption demand. Those are the things we should watch in the budget closely.
There is also an argument that the entire money is coming back into the system, so where is the black money?

The first for all those people who had undisclosed income was to put it back into the system. The second point is to pay tax on it, which is yet to be experienced. People are saying that maybe Rs 3 lakh or Rs 4 lakh crore was to be buried and that would have gone as transfer of wealth. My point is that if that doesn’t happen, you will recover it in taxation. To that amount more has been disclosed, so now you recover and tax it, that’s the whole issue. You have taken the money into the formal system and you can now calculate taxation, impose penalties and raise revenues. Secondly, you won’t allow it to be recirculated back at the same speed. People are saying it’s gone away in Rs 1,000 notes, but it will come back as Rs 2,000 notes, but at what speed? You can only draw Rs 24,000 per week even if you put in Rs 50 crore. So the speed at which you draw cash has to be restricted.In Europe, for example, you cannot withdraw more than 500 euros. Our

ATMs allow Rs 2 lakh. Why should you allow that sort of money?

The need for reducing cash automatically eliminates the ability to give cash as graft. The flow of cash back into the system must be controlled and reduced. There were assumptions that the RBI’s saving from this demonetisation will give the government a bonanza…
The government never said that.These were all speculations. I have not heard anyone senior in the government say this was our expectation, that we should not receive the whole thing back. The question is that if that does not happen, so much more has been disclosed and now become taxable. The tax kitty has increased and, therefore, the ability to raise revenues from taxation also goes up by the same amount.
What does it mean for the banking system as a whole?

With the creation of payment banks and digitisation, this was going to happen, only that it has now been fast-forwarded because cash is not needed to the same extent. Banking system as a whole, therefore, has liquidity, but the question is whether the banking system has the ability to deploy these funds. As it is, credit growth was sluggish, so how quickly will banks deploy this money and how much demand for credit will there be, that’s the biggest issue. Under the MCLR system, there is automatic transmission. Banks can only make money by deploying liquidity. The cost of deposits and cost of credit both are plummeting.The MCLR system is working, which means the cost of borrowing goes down, which should translate into demand for credit after this blip we see. So you should see an increase in the credit offtake and the first point of call will be retail because, they are more agile.
How long will this situation continue? Is there a structural shift for the Indian economy?

I think it is here to stay. We are going to see very liquid circumstances.Low cost, benign interest rate scenario for quite a long time. You will have a longer period of benign low-ranged interest rate scenario, which is good for the system. All this is linked. You manage fiscal deficit because your tax revenues go up.Therefore, inflation remains under control, therefore, interest rates remain benign. So you have reversed that vicious cycle, which got us into trouble three years ago. To give subsidies, you raise deficit. Welfare funding in the previous regime caused fiscal deficit, which caused bouts of inflation, which used to come once in five years, then in two years, and became permanent. That cycle has been reversed. You control fiscal deficit by giving subsidies after creating the revenue, not by printing money. Low fiscal deficit, therefore, will bring inflation down, therefore, interest rates down, therefore long period of benign interest rates, and, therefore, demand should surge. To Know More:

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Currency ban: Will property prices fall?

Currency ban: Will property prices fall?

Demonetisation could bring down interest rates and force cuts in real estate prices.
Home buyers can look forward to better pricing in the secondary or resale market.
With many states likely to enforce the Real Estate Regulatory Act, homebuyers can expect more transparency.

For many, owning a home is a dis tant dream. However, events and trends taking shape now could soon turn that dream into reality.
The government’s move to clamp down on black money hoarders+ through the ban on Rs 500 and Rs 1,000 notes+ is expected to have a cooling effect on certain pockets of the residential market. Many developers, resellers and homebuyers insist on hard cash as a component of payment in real estate deals. Demonetisation is expected to deal a body blow to this practice. Another likely side effect is a downward pressure on the interest rate structure. This would come as a relief to people who can’t afford high EMIs.Many developers are also aggressively turning towards the affordable housing segment. This opens up another avenue for those priced out of the housing market. With many states likely to enforce the Real Estate Regulatory Act, homebuyers can expect more transparency . We outline the opportunities these developments present for homebuyers.
What awaits for housing?
Experts believe the housing market will experience a lull in the coming months. Homebuyers can expect property prices to come down in pockets. As CARE Ratings points out in its report, developers are already grappling with slow sales, which is leading to rising inventory. Given the growing uncertainty and negative impact on demand, people are likely to postpone plans to buy property, which would increase inventory levels.Developers and sellers could be compelled to cut down prices to drive sales.
Experts say the secondary market will be impacted, since it deals with a significant amount of cash. However, projects undertaken by reputed developers in the top eight Indian cities will remain more or less unaffected. This is because buyers who invest in such projects take the home loan route, and all transactions are carried out through legal channels. Home buyers can look forward to better pricing in the secondary or resale market. Excess inventory in this segment has already put a lid on prices, making possession-ready properties a more viable option for buyers.For those keen on buying directly from the developer, options might be limited. However, the demonetisation could be a boon for those looking for deals in the high-end or luxury housing segment.A large cash component is the norm in this segment. But with the government clampdown, sales are likely to dip, leading to price cuts.
Home loan rates will soften
Due to demonetisation, a large amount of cash in circulation will be brought within the purview of the formal banking system. Since this will reduce the dependence of banks on higher cost borrowings, they are likely to slash the marginal cost of funds based lending rate (MCLR). This will accelerate a fall in home loan interest rates, since CASA ratio is used in computing MCLR.
Taking older Rs 500 and Rs 1,000 notes out of circulation is expected to have a longer term deflationary impact as it will bring about a slowdown in high-ticket purchases. This coupled with the adverse impact on real estate and informal sectors, may lead to slowing of GDP growth.This will probably lead to a softening in inflation, which may prompt the RBI to carry out interest rate cuts and give more leeway for banks to lower lending rates.
Budget-friendly alternative
In real estate, there has been a shift in demand from big ticket purchases led by investors, to purchases by end-use customers, who now constitute almost 90% of aspiring home buyers. As a result, builders are increasingly shifting their attention to the affordable housing segment. Data from Cushman & Wakefield shows the number of launches in this segment in the first half of the year has doubled from the same period last year. Affordable housing is meant for middle-income families who can spend `30-50 lakh. These are mostly located on the peripheries of the bigger cities.
To keep costs under check and improve affordability, developers typically offer units in 1RK and 1BHK size, with a reduced saleable area of up to 350 square ft. for 1RKs and up to 500 square ft. for 1BHKs. The average size of affordable housing units launched in the first quarter of 2016 was reduced by 11% from those launched in the corresponding period in 2014. Many projects in this segment are coming up in the form of integrated townships, which attempt to provide maximum value for money to buyers. With more serious developers entering the segment, there has been a distinct improvement in product quality .

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Demonetization: Morgan Stanley has some good news for Indian economy

The impact of demonetization will only be short-term and India’s growth momentum is likely to get back on recovery path from April next year with support from consumption and exports, says a Morgan Stanley report.
According to the global financial services firm, the currency replacement programme is a roadblock in the short term and GDP growth for the quarters ending December and March is expected to slow down by around 50-75 bps. The broad growth outlook of the country however, remains unchanged, it said. “We maintain our overall constructive outlook on India. We expect growth to be back on the recovery track from 2Q17 after a short period of slowdown between November 2016 and March 2017, due to the currency replacement program,” Morgan Stanley said in a research note.
The report expects consumption, which accounts for 60 per cent of GDP, to recover from the quarter ending June ’17, and the recovery to broaden following the pick-up in public capex and FDI flows. Moreover, as global growth is expected to accelerate to 3.4 per cent in 2017 from 3 per cent in 2016, following which India’s exports is likely to support an overall recovery in 2017 after being a drag in 2016, the report noted.

On equity markets, the report said that the country will exit the low return environment of the past two years, thanks to better equity valuations. “In our view, equities are likely to deliver 14 per cent INR returns in 2017, compared with (-) 3 per cent in 2015 and 2016,” Morgan Stanley said.

Equity valuations relative to bonds are the best since 2013. India is one of our top emerging market picks, it added. On RBI’s policy stance, the report said that rising US rates mean that the RBI needs to maintain an adequate buffer on real rates and not cut rates aggressively in response to short-term weakness in growth arising from demonetization. Though in the base case, Morgan Stanley had expected one more rate cut of 25 bps in the current easing cycle, but indications in the December policy statement suggest that the Central Bank is not too concerned about the growth impact from the currency replacement program.

“Moreover, the rise in oil prices, US rates and stickiness in core inflation means that we appear to be nearing the end of the easing cycle,” the report said.

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How J. Jayalalithaa Made Chennai The Automotive Capital Of India

How J. Jayalalithaa Made Chennai The Automotive Capital Of India

The state of Tamil Nadu is under a trance as it mourns the loss of its Chief Minister and a dynamic personality, J. Jayalalithaa but there’s a lot she has done ever since her government first came to power in Tamil Nadu. It’s the most industrialised state in South India and it was at the forefront of this movement. Just about 55 km from the southern port town, an automobile hub was quietly taking form.
Tamil Nadu has always been known for its automobile industry and it traditionally boasts of a strong engineering and auto-parts industry, so this transformation, though an evident one, saw the presence of major number of automobile and auto components manufacturing companies in the state which earned it ‘Detroit of Asia’ moniker.
It was under the first Jayalalithaa regime that Ford Motor Company forayed into India in 1995. Ford’s decision to build a base in Chennai was a breakthrough for the automobile industry in Tamil Nadu. It was initially a 50:50 joint venture with Mahindra & Mahindra until Ford picked up majority stake in 1998 to be renamed Ford India. It was Ford’s first passenger car facility in India and in addition to making available 36.1 acres of land belonging to the Chennai Metropolitan Development Area (CMDA) to Ford India for its plant, the then Chief Minister J Jayalalithaa announced incentives such as providing infrastructural facilities, sales tax exempt for input, refund of output tax up to limit of investment, capital subsidy of ? 1.5 crore and power tariff discount during the first three years of operation of the plant. Ford has since expanded their operations and production capacity through investments and has also recently announced plans to build a new global engineering and technology centre in Chennai.
Under Jayalalithaa’s regime in 2012 the Tamil Nadu government signed a Memorandum of Understanding with five automobile majors with an investment of at least ? 5,700 crore to create 9,530 jobs. The MoUs were signed with Daimler India Commercial Vehicles Pvt Ltd, Yamaha Motor India Ltd, Ashok Leyland-Nissan Motor Company Ltd, Eicher Motors Ltd and Philips Carbon Black Ltd. In fact, her government also unveiled the first-of-its-kind automobile policy in 2014 called the Tamil Nadu Automobile and Auto Components Policy 2014. The policy aims at making Chennai one of the top five centres in the world in the automobile and components space. India’s total export of automobiles during 2007-09 was ? 8861.33 crore, Chennai exported over 53 per cent of those (? 4,733 crore). Tamil Nadu accounts for 35 per cent of India’s auto component production and three Chennai based industrial groups make up more than 22 per cent of India’s auto components production.

While Tamil Nadu has become a manufacturing and export hub, it’s obvious that more carmakers want to be based out of this state. The Government of Tamil Nadu has offered 390 acres of land to KIA Motors to set up a factory in India. KIA Motors, a subsidiary of Hyundai Motors, has been scouting for locations for a factory to make its entry into India and are looking to produce over 3 lakh units per annum.

But it doesn’t stop there the Jayalalithaa government also helped in adding critical infrastructure – a world-class ? 450 crore Global Automotive Research Centre unit run by the National Automotive Testing R&D Centre (NATRiP). It gives vehicle manufacturers a range of facilities including to design testing, safety emissions and performance standards.

Tamil Nadu then is turning out to be at the epicentre of the growth of the automotive industry and clearly is already the Detroit of Asia. It’s been an arduous task to get Tamil Nadu where it currently is but staying there seems equally challenging.

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Tamil Nadu Lost A Great Leader In Jayalalithaa: MRF Tyres CMD

Tamil Nadu Lost A Great Leader In Jayalalithaa: MRF Tyres CMD

Noted industrialist and Chairman and Managing Director of MRF Tyres KM Mammen condoled the death of J Jayalalithaa saying she has been a formidable Chief Minister and a role model to many leaders.

Chennai: Noted industrialist and Chairman and Managing Director of MRF Tyres KM Mammen on Tuesday condoled the death of J Jayalalithaa saying she has been a formidable Chief Minister and a role model to many leaders.

“The state has lost a great leader, a visionary and a beloved friend. She will always be remembered for her unwavering commitment to the development of the State of Tamil Nadu and its people, especially the under-privileged“, he said in a statement.

“On the many occasions, I had the privilege to meet her, concerns of the industry were sympathetically heard and initiatives taken to address them. Under her stewardship, Tamil Nadu remains one of the States were industry has flourished”, he said.

“We will miss her dynamic presence and leadership and pray that her soul may rest in peace”, he said.

Meanwhile, Tractors and Farm Equipment Ltd Chairman and CEO Mallika Srinivasan condoled the death of Jayalalithaa saying she left an “indelible mark” in the history of Tamil Nadu.

“Puratchithalaivi Jayalalithaa has been one of the most visionary and charismatic leaders of our State. With her compassion, courage and focus on the welfare of women and people of the State, she won millions of hearts and stood tall as a leader of the Tamil people”, she said.

“Her dynamism and far-sightedness drew industry and investment to the State. Jayalalithaa has left an indelible mark int he history of Tamil Nadu”, she said in a statement.

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Paytm’s new POS feature allows anyone to accept debit/credit cards

Paytm’s new POS feature allows anyone to accept debit/credit cards


With mobile wallet apps getting the boost post demonetization in India, new innovations are the way forward for any mobile wallet to gain market share, and in this regard, Paytm is surely at the thick of things. In a press conference today, Paytm unveiled its app-based POS to enable small merchants to accept debit and credit cards.

Patym has updated its app to include this new feature. There is an ‘Accept Payment’ icon now in the updated app where small businesses and shopkeepers can self-declare their bank account details to start receiving payments instantly.

The mobile wallet app is also offering an introductory 0 per cent fee for Rupay, Visa, Master and Maestro debit cards until December 31st.

“India needs a very innovating mobile pos machine and Paytm has already been accepted by many merchants. By extending our merchant network to all other payment networks, we are enabling digital payments to a very large number of Indians,” Paytm CEO and Founder Vijay Shekhar Sharma said at the launch event.

Paytm already enjoys a 150million user base and with the new app-based POS service, the mobile wallet app will look to add 15 million merchants across the country. Paytm already claims its India’s largest mobile payment and commerce platform with the service accepted by grocery shops, restaurants, coffee shops, multiplexes, hospitals and by taxi and auto drivers.

Currently, only 3.5 per cent of all retail outlets in India accepts debit and credit cards. There is nearly zero penetration of POS services in the mass retail segment which makes up for more than 90 per cent of all retail in India.

With the introduction of app-based POS, Vijay Shekhar Sharma added, “We are on a mission to democratise payments and empower even the smallest merchants to be able to accept credit and debit card payments from their customers. We are very proud that we are able to contribute to the digitisation of our economy.”

Paytm currently registers an average 5 million transactions on its app worth an annualized GMV of Rs 30,000 crores.

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What India’s New 500 and 2,000-Rupee Notes Will Look Like

What India’s New 500 and 2,000-Rupee Notes Will Look Like

India is to get new 500 and 2,000 rupee notes after Prime Minister Narendra Modi made a surprise announcement that the current largest denominations ceased to be legal tender from midnight early Wednesday. The new notes will be known as the Mahatma Gandhi (New) Series of bank notes after the leader of the country’s independence movement.
Samples of the notes show that both have an image of Gandhi on the front.
The new 500 rupee note has an image of New Delhi’s Red Fort, a more-than 400-year-old UNESCO World Heritage site, on the reverse side and is “stone gray” in color, according to the RBI.
On the reverse side of the magenta 2,000 rupee note, is an image of the Mangalyaan satellite, which India put into the orbit of Mars two years ago on a budget mission.
Both the notes will have raised print and lines on the left and right to help the visually impaired.
They also bear the “Swachh Bharat,” or “Clean India” logo with its slogan in Hindi that means “one step towards cleanliness,” promoting Mr. Modi’s flagship project to build toilets and improve sanitation, as well as a host of security features.


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Wishing each one of you a very happy and prosperous deepawali

Hi All,

Wishing each one of you a very happy and prosperous deepawali. May this year brings you lots and lots of happiness in life and fulfill all your dreams.
As the candlelight flame,
Ur life may always be happiness’ claim;
As the mountain high,
U move without sigh;
like the white linen flair,
Purity is always an affair;
As sunshine creates morning glory,
fragrance fills years as flory;
with the immaculate eternal smile,
attached to u mile after mile;
All darkness is far away,
As light is on its way;
Wish all of u a very happy diwali 2016

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Happy Navratri 2016

Happy Navratri

  • Navratri is bigest Nine Day Devotional celebration in India. Our Country celebrated this festival in many ways. Here Everyone Excited for Navratri Fast which is start form first day of navratra. and till to last Navratra.
  • Maa Durga aapko
    Bal, buddhi, sukh, aishwarya aur sampannta pradaan karen!
    Jai mata di!
    Navratri ki hardik shubhkamnayen!

Happy Navratri 2016-home search property consultant zirakpur chandigarh.

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