ARVIND MAYARAM GETS THE TOP JOB

Former Joint Secretary of Rural Development and Ministry of Finance, Arvind Mayaram will be India’s next Finance Secretary and while to keep a check on the rising NPA levels, the finance ministry has set up a committee that will oversee the lending activity of public sector banks, particularly to big lenders.

Appointments Committee of the Cabinet (ACC) has approved the designation of Arvind Mayaram, Secretary, Department of Economic Affairs, Ministry of Finance as Finance Secretary of the country. Mayaram is a Rajasthan Cadre IAS officer of 1978 batch. During his career he served many important portfolios both in Rajasthan and at the central government level. Since 2005 he served in the ministry of Rural Development and Ministry of Finance as Joint Secretary, Additional secretary and Special secretary.

NEW GUIDELINES BY NSE FOR RISK MANAGEMENT IN F&O

National Stock Exchange (NSE) has issued new guidelines for strengthening risk management in the Future and Option (F&O) segment. The exchange is of the view that by these guidelines trading will be more orderly and proper. Through these guidelines, the exchange has suggested the methodology for deciding a reference price and range for executing the orders in F&O. NSE’s circular clearly says that orders shall be matched and trades will take place only if the trade price is within the reference price and execution range.

Also, if any incoming order is outside the reference price and execution range then exchange would automatically cancel it. “There would be no change to the existing applicable operating ranges for valid order entry and all orders that are within the operating range shall be accepted as is being done currently,” the circular clearly points out.

Important to note that the mechanism of trade execution range won’t be applicable to VIX future and NIFTY’s long term option contracts. F&O are the derivatives which allow trading into units of underlying security. These guidelines will come into force from 5th May and would initially be only applicable to mid and far month F&O contracts.

FINANCE MINISTRY WATCHDOG TO CHECK RISING NPAS IN BANKS

The government seems to be very serious about rising level of Non-Performing Assets (NPA) in PSU banks. In a bid to monitor the real time situation, finance ministry has set up a committee that will oversee the lending activity of public sector banks, particularly to big lenders. Idea behind this step is that it will provide government, real time information regarding the wilful defaulters and these institutions and corporate would then be barred from taking fresh loans and also more interest will be charged from these defaulters.

Representatives of RBI would also be there in this committee and it will take fast action in cases where loans become bad within months due to some kind of wrong doing on borrower’s part. Ministry is also monitoring the treasury operations of PSU banks as a measure of risk management. Important to note that gross NPA of PSU bans rose to whooping 5.17 per cent of their advances as on December 31, 2013 while it was at 4.18 per cent in 2012. On the other hand highest NPAs were recorded in SME sector at 7.21 per cent while it was at 5.99 per cent in agriculture. This move of government will certainly create some kind of caution among the banks and will also send some stern signal to wilful defaulters.

NRIS ARE MAKING INDIA RICH, TOPS GLOBAL REMITTANCES CHART

It has been proved yet again that Non Resident Indians (NRI) have great love for their country, more than any other country. As per the World Bank’s latest brief on migration and development, India tops the chart for global remittances from overseas workers. During 2013, overseas Indians remitted USD 70 billion to India, which clearly makes it number one ahead of China, whose workers remitted USD 60 billion during the same time. Other major country in terms of foreign remittance includes Philippines with USD 24 billion. Though India topped the chart this year but if we compare the remittance with last year figure, then it seems to be stagnant as overseas remittances were at the level of USD 69 billion in 2012.

Total global remittances during 2013 stood at USD 542 billion. During 2013 total remittance to developing countries was at USD 404 billion while it is expected to reach USD 436 billion in 2014 and expected to touch USD 516 billion in 2016. As per World Bank brief, these remittances are now an important part of balance of payments of nations and these flows will positively augment the prosperity of the countries. IIP Shrinks Further, Becomes Negative Index of Industrial production (IIP) in February 2014 nosedived further to become negative at -1.9 per cent, while it has expanded by 0.8 per cent a month ago. This the lowest level in last 9 months. If we take a cue at the individual performance of different sector then manufacturing proved to be the biggest drag showing a complete de-growth of -3.7 per cent as against 0.7 per cent in January. More importantly it is the lowest level of manu- facturing since November 2011.

On the other hand mining has shown some kind of improve- ment from 0.7 per cent to 1.4 per cent month on month basis while power sector grew by 11.5 per cent as against 6.5 per cent. Positivity also has been seen in capital goods category which spurted by 17.4 per cent while consumer durable saw a shrinkage of -9.3 per cent as against -8.3 per cent in January. On the cumulative basis also during 11 month period ending February 2013, IIP shrunk by -0.1 per cent as against previous year period.