Qualified Institutional Placement

Qualified institutional placement (QIP) is simply the means whereby a listed company can issue equity shares, fully and partly convertible debentures, or any securities other than warrants which are convertible to equity shares to a Qualified Institutional Buyer (QIB).

Apart from preferential allotment, this is the only other method of private placement. However, it scores over other methods, as it does not involve many of the common procedural requirements such as the submission of pre-issue filings to the market regulator. 

Why was it introduced? 

The Securities and Exchange Board of India (Sebi) introduced the QIP process in 2006, to prevent listed companies in India from developing an excessive dependence on foreign capital. 

The complications associated with raising capital in the domestic markets had led many companies to look at tapping the overseas markets via Foreign Currency Convertible Bonds (FCCB) and Global Depository Receipts (GDR) to fulfil their needs. To keep a check on this process and to give a push to the domestic markets, QIPs were launched. 

QIP in the news lately 

The latest company which adopted the QIP route to raising capital is the cash-strapped real estate major Unitech. While Unitech has managed to garner Rs 1620 crore through QIP, the promoter holding has now come down to 51%.

There are also reports that LIC Housing Finance is mulling over a QIP where it is expected to issue shares of the value of up to 10% of its total paid up capital.

 

 

Brain Drain

A slang term for a significant emigration of educated or talented individuals.It is also referred as human capital flight

This cause countries to lose valuable professionals i.e. departure of doctors, scientists, engineers or financial professionals who seek a better standard of living or who gets a better professioal opportunity outside their home country. When the intellect capital leaves, the home country is harmed in two ways. 

• First, expertise is lost with each emigrant, diminishing the supply of that profession. 
  
• Second, the  economy is effected as each  professional represents surplus spending units.
  

 As they earn large salaries, so their departure results in  significant decline in consumer spending in the nation.Counteracting the emigration of highly skilled personnel remains a key pursuit. But while some countries suffer the consequences of the so-called "brain drain", others are beginning to reap its potential benefits

An opposite situation, in which many trained and talented individuals seek entrance into a country, is called a brain gain; this may create a brain drain in the nations that the individuals are leaving.This is sometimes referred to as a 'brain transplant'.It  occurs when there is a large-scale immigration of technically qualified persons.

Swine flu and sectors to get HIT or LIFT

There’s a lot of uncertainty around the swine flu situation.Again, these are just some of the possible short-term effects we could see resulting from the swine flu epidemic news. Further, it’s worth remembering that at this point, even the authorities have limited information on and predictive power over the swine flu situation. Lets see the sectors which will be effected by the spread of swine flu.(Source:etfdb.com)

Sectors That Could Be Hit Hard

• Transportation sector: Travel advisories and recommendations to stay home won’t help transportation stocks.

• Energy: Fewer people flying and traveling in general could cause weaker overall demand for energy and crude oil funds.

• Equities in general: As we’ve seen in the past six months, a little bit of uncertainty can go a long way towards causing equities to tank.

Sectors That Could Get a Lift

• Pharma and Healthcare sectors: In anticipation of demand for vaccines and health services, shares of pharmaceutical and healthcare companies could appreciate.

• Gold and Commodities: In the last year precious metal ETFs have been popular buys on days when panic seemed to set in.

• Treasuries: Similarly, a flight to safety away from equities could make for inflows in bond funds thought to be very secure.

Swine Flu depresses the market

The stock market had to absorb a number of unsettling headlines on financial and economic matters over the past several months. But it was news of an event outside the realm of finance—an outbreak of swine flu in Mexico and other countries—that rattled the market on Apr. 27.The outbreak of swine flu in Mexico and its spread to other countries has inevitably raised questions about the broader economic and market implications.The worst-case scenario is the sort of global flu pandemic that the World Bank estimated last year might eventually cost up to 4.8% of world gross domestic product (more than $3 trillion).

The positive sentiment in the market has been badly hit by this flu scare. Mexico is the epicentre of the crisis and the Mexican Peso has fallen in thin Asian trading, with the threat of bigger falls ahead.While the White House down plays swine flu as to not disrupt the financial system which has been seen as stabilizing over the last month it could back fire with dramatic consequences. A weak banking system who just underwent a stress test never anticipated an epidemic much less a pandemic.  A sheer drop off in spending by consumers might spell doom for retailers that have struggled to survive until now.

In a reprise of what happened with the SARS panic, airline and tourism stocks are under pressure in early European trading on fears that the swine flu pandemic will curtail travel.

This will deepen the global recession and will probably have a contagion effect on export-led economies in Asia such as South Korea, Thailand, Indonesia, Malaysia, China. All of them depend on the U.S. economy to recover. The stock market will suffer, but the bond market will not be affected that much.The swine flu is undermining confidence and contributing to risk aversion in an array of assets,This is going to hurt at a time when we've had a pickup in stock markets. On the other hand, it could just be an excuse for people to take money off the table.Hence,the market rises or falls according to its own cycle of fear and greed, not the history books.

Aspirin Count Theory

This is one of the interesting thoeries which I came across.I found it fascinating as it directly relates to human behaviour. It is a market theory that states stock prices and aspirin production are inversely related. The term arises from the belief that as stock prices fall people are more likely to consume medication such as Aspirin. Investopedia explains Aspirin Count Theory :As stock prices fall, more and more people need pain relievers to get through the day.

For example the Aspirin count theory would predict that as aspirin sales increase, the stock market's value decreases and vice versa. The Aspirin count theory is a lagging indicator and actually hasn't been formally tested, so it is more a humorous hypothesis than a theory.

Recession :Impact on unemployment

As we know,the economic downturn has brought to the fore some stark realities, at least on the jobs front. 'Cost cutting' and 'downsizing' have become the new buzzwords.The eruption of the crisis has caused companies to compel underperformers to either pull up their socks or leave.
A recession is defined as a period of general economic decline; specifically, a decline in the country's GDP for two or more consecutive quarters.During a recession the company would either:

1. reduce unnecessary expenditure (cost optimization) and/or

2. reduce unnecessary work force (resource optimization).

Both the situations would ultimately result in unemployment. Similarly, the company would not be in a position to expand its operations. Hence the number of fresh employment positions that would be created by the company would also take a hit. This would also cause unemployment.

Recessions are often associated with downturns in the gross domestic product (GDP) of countries. The current recession, which affects most of the world, was sparked by events in Asia, but has since included many other nations in its effects. Many companies are finding that they are caught between the benefits of the recession (lower prices for components) and the problems associated with the recession (lower prices for competing products).Certainly, a sufficient proportion of the world's economies are current in recession to warrant an assessment of the potential of this situation to affect future employment levels.

Just as there are different types of employment - with their various impacts on the economy - so, too, does unemployment vary. So, do the economic theories differ in their interpretations of the character of unemployment and, more importantly, in their responses to unemployment.
There are three basic forms of unemployment:

• Frictional unemployment arises from the "normal" process of turnover in the labor market: as new workers enter the market , and as existing workers quit the jobs.
• Cyclical unemployment is that which varies with business conditions; for example, workers are laid off when business is bad - then rehired when conditions improve.
• Structural unemployment caused by imperfect labor-market adjustment, i.e. workers and resources do not move freely to places where they are needed.

A recession in 2008 would raise the national unemployment rate by between 2.1 and 3.8 percentage points. According to Cepr, the unemployment rate and the number of unemployed - based on the historical pattern - would continue to increase through 2010 (to 6.7 percent in the case of a mild-to-moderate recession) or 2011 (to 8.4 percent in the case of a more severe economic downturn).

The last few weeks have seen a remarkable degree of consensus across most of the economics profession around the need for a sharp short-term stimulus to the economy. The goal is to avoid a recession or, in the likely event that that isn’t possible, to make the recession shorter and more shallow. By one rule of thumb, the unemployment rate has now risen enough to send a reliable signal of recession.

The nations are held at the binary decision of are we or aren’t we in recession which is a meaningless exercise, as they are not in a position to realise the fact that the unemployment rate has risen meaningfully and is apt to continue going up which implies that the economic environment is weak.All the industries irrespective of its quarter performance have rung the bells for the unemployment rate to increase significantly and the same would continue to rise in the coming 2 years ahead.

Best Employer in India-2009

According to a recent study by Hewitt Associates, its sixth 'Best Employer in India Study 2009' in partnership with magazine Outlook Business, has enlisted the top 10 companies which provide the best working environment for employees. 

The study states that despite wide variance in industries and company profiles, the firms share some common winning traits.

Here we take a look at the nation’s 10 best employers

1)HCL Technologies

2)Hindustan Zinc Limited

3)Taj Hotels Resorts and Palaces

4)Cisco Systems

5)ITC -- Welcomgroup

6)Intuit Technology Services Pvt Ltd 

7)Eureka Forbes Ltd  

8)LG Electronics India Pvt Ltd 

9)Domino's Pizza India Ltd  

10)Marriott Hotels India Pvt Ltd 

To know more, Continue reading..

 

 

New 10 rupee coin with Unity-In-Diversity theme

The 10 Rupee coins which were supposed to be released three years ago, but were delayed due to some technical issues are all set to surface in the year 2009. The Reserve Bank of India (RBI) has launched 10 Rupee coins in 2009. The 10 Rupee bimetallic coins will be available in the market soon. There is no official word yet but this is the latest buzz in the nation. It is a great idea to avoid and get purge of the old half torn ten rupee notes circulating in the market. Undeniably a coin will be trouble-free to use.

Rumours’ subsisting reflects that a limited number will be introduced and the coins will be offered in some auction websites. The 10 Rupee coin was designed by National Institute of Design (NID), Ahmedabad with the theme of Unity in Diversity. The coins are being prepared at Noida and Mumbai mints.

 The new 10 Rupee coin has the lion capitol, the numeric 10 and the year of manufacturing on one side. The value of the coin is indicated on both Hindi and English.On the reverse side, is a symbolic representation of "Unity in Diversity" - Four head sharing a common body. 

RBI says: Four headed symbol shall be thought of as people from all four parts of the country coming together under one banner and identifying with one nation. 

Since the press release is out the year inscribed in the new Ten Rupee coin will be apparently 2009.But the issue lies in the fact that the coin may still face impediments, as the  defect which existed 3 years ago  still persists. Reports are that some of the coins’ outer rings may break away from their inner center piece  -the outer rings are composed of Aluminum Bronze (95% copper, 6% aluminum and 2% nickel). The inner is struck from Cupro Nickel (75% copper and 25% nickel).I hope the defects get repaired by the institute so that we have the 10 rupee coin floated in the market in the same year.

S.Africa set to earn a billion rand

The Indian Premier League (IPL)cricket tournament will bring an expected investment of about 1 billion rand (100 million U.S dollars) to South Africa, as said by the South African President Kgalema Motlanthe  at the tournament’s opening ceremony in Cape Town. IPL is providing 10 million rand (1 million U.S. dollars) in scholarship funds for 300 students and 32 schools.

“Together, we formed the greatest partnership so that India, Brazil and South Africa could stand together and navigate a path through the unpredictable waters of globalization.”Motlanthe said choosing South Africa to host the tournament was a “tremendous vote of confidence”, but also inspired serious reflection.Nevertheless, he said choosing SA as a host showed confidence in its ability to host the IPL, the Confederations Cup and the 2010 FIFA World Cup.“It is a vote of confidence in our facilities, our telecommunications capability and our cricket-loving fans who have already snapped up all the tickets for the IPL matches.

Motlanthe said the unique aspect of the IPL tournament was that it meant some opponents now became teammates and vice versa.“In entertaining us, the IPL teaches us this important lesson in life: no task is too big, no problem is insurmountable, no disagreement or rivalry is permanent, and every challenge is an opportunity to demonstrate our character and resilience,he added.

Indian Women Entrepreneurs in limelight

The country's largest private-sector banking conglomerate, ICICI Bank,is in for a major top-management shake-up with two business heads private equity arm's Renuka Ramnath and life insurance unit's Shikha Sharma likely to put in their papers soon.

Sharma is reportedly looking to join Axis Bank as its chief, while Ramnath could look at starting her own private equity venture. These developments come days ahead of Chanda Kochhar taking over as CEO and MD of ICICI Bank from K V Kamath, who would then be an non-executive chairman.

On the other end,HSBC names Naina Lal Kidwai as India head elevated from the chief executive post of Indian operations.Kidwai has been at helm of HSBC in India for the last five years.Kidwai’s responsibility as group chairperson will be to prepare a strategy to integrate its diverse businesses.

Banks image

"A bank is a place that will lend you money if you can prove that you don't need it. " 

-by Bob Hope

The best ETF's for now

The editor of Forbes ETF Advisor Jim Lowell had presented a report on 3 Best-Buy ETFs for the Current Market.Following are the exchange-traded funds that offer you the best combination of growth and protection in these critical times:

My Favorite Mega-Cap ETF: According to the report,this ETF is likely to benefit as recession-wary investors flee to quality. It holds stocks of huge multinational companies that will benefit from the weak dollar.

Top ETF for Income: This income ETF offers the safest way which protects your money and keep it growing in recessionary times.

Great Play on Shifting Interest Rates: This ETF has a unique way to make big profits from the wildly volatile currency markets that usually accompany recessions.

Loan Poem

Are you desp’rate — in need of a loan?

Friends and fam’ly won’t throw you a bone?

Don’t go on a bender.

Just use a good lender

And safeguard the stuff that you own.

-By Madeleine Begun Kane

Economic Turnaround

Overused Business Buzzword-Subprime

Subprime--This buzzword isn’t exactly new. But the sheer number of stories in the media about subprime mortgages has changed the word from adjective to verb status — loosely defined as the ability to completely dig one’s self into a hole and then expect a bailout.

Used in a sentence: "I completely subprimed my Algebra test yesterday. Instead of studying, I drank beer and played Xbox, and just hoped the answers would come to me. Can I still have an 'A'?"

 

Chances that we’ll be using this buzzword in the year 2017: Slim to none. 

 

But you’ll definitely be using it in 2008.

Pillars of Success

There are some unique traits of portfolio which makes it better and more attractive than others . A good and strong portfolio has some strong elements which it must adhere and fulfill to provide higher returns .Each investor's portfolio should be strong on all the areas , it should pass  all the parameters for different requirements . These are the Pillars for a strong Portfolio or Investments.

Important Elements are :

1. Capital Appreciation

2. Liquidity

3. Risk Management 

4. Goal Oriented

To know more about each element..Read here..

Cramer: Investing in Gold a Win-Win

Tech Mahindra's new owner of Satyam

Tech Mahindra, an Indian IT firm part owned by BT, has won the bidding to buy a 51% stake in fraud-hit Satyam Computer Services for around $579 million.Having won the auction, Pune-based Tech Mahindra will buy 31% in Stayam at 58 rupees per share, valuing the stake at around $351 million. The buyer is then required to make a mandatory cash tender offer to buy another 20% from investors at the same price.

The deal comes three months after Satyam's founder and chairman B Ramalinga Raju resigned after admitting the company's profits have been falsely inflated for several years, leading to a $1 billion hole in the balance sheet.


Tech Mahindra beat engineering firm Larsen & Toubro and private equity outfit WL Ross & Co in the auction. BT, which holds a 31% stake in the company, has backed the deal. The acquisition will boost Tech Mahindra's workforce by around 48,000 to nearly 75,000, as it looks to compete with India's biggest IT outsourcing companies Infosys, Tata Consultancy Services and Wipro.

It also gains some blue chip clients, including Citi, although Satyam has reportedly lost dozens of customers in the wake of the scandal.The bid is subject to approval from the Company Law Board.

Goldman Sachs and Avendus Capital advised Satyam on the deal. Tech Mahindra was advised by Kotak Investment Banking and UBS.

The ABCs Of Option Volatility

Most options traders - from beginner to expert - are familiar with the Black-Scholes model of option pricing developed by Fisher Black and Myron Scholes in 1973. To calculate what is deemed a fair market value for any option, the model incorporates a number of variables, which include time to expiration, historical volatility and strike price. Many option traders, however, rarely assess the market value of an option before establishing a position.

This has always been a curious phenomenon, because these same traders would hardly approach buying a home or a car without looking at the fair market price of these assets. This behavior seems to result from the trader's perception that an option can explode in value if the underlying makes the intended move. Unfortunately, this kind of perception overlooks the need for value analysis.

Too often, greed and haste prevent traders from making a more careful assessment. Unfortunately for many option buyers, the expected move of the underlying may already be priced into the option's value. Indeed, many traders sorely discover that when the underlying makes the anticipated move, the option's price might decline rather than increase. This mystery of options pricing can often be explained by a look at implied volatility (IV). Let's take a look at the role that IV plays in option pricing and how traders can best take advantage of it.

Read the details..

How do companies like Moody's rate bonds?

Rating the creditworthiness of a bond issuer, despite the number crunching, is as much an art form as it is a science. While companies like Moody’s and A.M. Best gather and analyze mountains of data, the rating itself comes down to the informed opinion of an analyst or a rating committee.

Not unlike your individual credit score, the organizations that rate bonds look at an issuer’s assets, debts, income, expenses and broad financial history. In addition, special attention is given to the trustworthiness of a company to repay previous bond issues on time and in full.

The major bond rating agencies each use a form of scholastic grading scale, with some variation of an "A+" denoting the best rating. In the case of Moody’s, ratings range from "Aaa" to "C". Typically, only bonds issued with a "Baa" rating or above are considered "investment grade", or appropriate for more conservative accounts and investors.

Bond ratings are reviewed every six to 12 months. However, a bond may be reviewed at any time the agency deems necessary for reasons including: missed or delayed payments to investors, issuance of new bonds, changes to an issuer’s underlying financial fundamentals, or other broad economic developments.

A good news packed within a bad one

The US economy is set to emerge from recession in the second half of this year as consumer spending and the housing sector recover, but 2008 turned financial heroes to zeroes unemployment will rise well into 2010, according to a survey.

The Blue Chip Economic Indicators survey of private economists released showed that 86 percent of respondents believed that the economic downturn would be declared to have ended in the second half.

"Real GDP contracted very sharply during the first quarter of this year and will continue to shrink, albeit more slowly in the second quarter before turning very modestly higher in the third and fourth quarters," the survey said.

Much of the anticipated turnaround in the economy, now in its 16th month of recession, would be driven by some improvement in consumer spending, housing, business inventories and exports. Yet, above-trend growth was not expected until the second half of 2010.

Gross domestic product plunged at a 6.3 percent annualized rate in the fourth quarter of 2008, the steepest quarterly decline since 1982. The economic downturn will next month become the longest U.S. recession since the Great Depression.

Continue reading...

Japan's Foreign reserves rise above $1 trillion

Japan's foreign reserves exceeded $1 trillion in March, thanks to gains in the appraisal values of its US Treasury bond holdings and euro-denominated assets.The nation's foreign reserves totalled $1.02 trillion, up from $9.2 billion in the previous month.Japan held $905.53 billion in foreign securities as of March 31 while its foreign currency deposits amounted to $84.2 billion.

The nation had $7.43 billion of those deposits in foreign central banks and the Basel-based Bank for International Settlements, $20.9 billion in Japanese banks and $55.88 billion in foreign financial institutions.Gold reserves totalled $22.55 billion.

Japan was the world's second-largest holder of foreign reserves after China, according to IMF data. Japan's foreign exchange reserves consist mainly of securities and deposits denominated in foreign currencies, gold, and reserve positions and special drawing rights at the IMF.

Worst stocks become the best

The recent stock market rally which has delivered close to 20% returns in just one month, has surprised many market watchers. A quick look into the stock returns reveals that laggards over the past year delivering best returns.According to BSE 500 data, which constitutes 90% of the market capitalisation on Indian bourses, the best returns came from those stocks which lost heavily in the preceding 365 days.

Dividing all the stocks in the BSE-500 in groups of fifty, showed that the top 50 stocks delivered 52% gains (on an average ) in the last 30 days and also boasted of 57% losses in the last 365 days — the worst returns.

ET reports:a stock like Financial Technologies, part of the top 50 group, definitely gained 61% in just 30 days but has incurred 58% loss in the last one-year period. This analysis not only holds true for the top 50 stocks but progressively for the next 400 stocks: As the average 30-day gains reduce, so do the average 365-day losses.

The second 50 stocks recorded 36% gains in the 30-day period but also clocked 56% losses in the one-year period .This continues for third, fourth, fifth and sixth fifty stocks.

One needs to bear in mind that India's bear markets have historically lasted 30 months on average and longer than India's bull markets. The market is more likely to crawl rather than spike out of its current trading band that is getting a bit wide," said the head of equity of a foreign brokerage.

Balloon Payment

The phrase balloon payment or bullet payment refers to one of two ways for repaying a loan; the other type is called amortizing payment or Amortization (business).

With a balloon loan, a balloon payment is paid back when the loan comes to its contractual maturity – e.g., reaches the deadline set to repayment at the time the loan was granted – representing the full loan amount (also called principal). Periodic interest payments are generally made throughout the life of the loan.

Balloon payments or bullet payments are common for certain types of debt. Most bonds, for example, are non-amortizing instruments where the coupon payments cover interest only, and the full amount of the bond's face value is paid at final maturity.
Bullet payments introduce a certain amount of risk for the borrower and the lender. In many cases, the intention of the borrower is to refinance the amount of the balloon payment at the final maturity date. Refinancing risk exists at this point, since it is possible that at the time of payment, the borrower will not be able to refinance the loan; the borrower faces the risk of having insufficient liquid funds, and the lender faces the risk that the payment may be delayed.

Numbers aren't everything

Steve Farber says:I have nothing against numbers. I believe in the bottom line as much as the next business person. (And, fundamentally, that’s what I am–a business person. Except maybe without the silly, stereotypical baggage).

But these days, when numbers–like profits, for example–are harder to hit, we’re tempted to focus on them even more. Obsess on them, even. Sometimes to the exclusion of the stuff that, ironically, is the precursor to the very numbers we’re trying to create. Of course, when numbers are good we get paid and rewarded accordingly.

If you focus solely on the so-called “bottom line,” however, you’ll miss something vital–call it soul, call it meaning, call it impact. Call it your legacy–that which you leave behind that means something to people, that will enable your influence and assistance to continue even after you’re gone. You know.

The good stuff of the human experience. Tom Peters once said his nightmare is to have his tombstone read, “He made budget,” a nightmare we should all share. Instead, push yourself and your company to do good work, to do important work. If you can do that, the numbers will follow. And as a bonus, your tombstone will be a whole lot more inspiring, too.

Source: stevefarber.com

Note:Steve Farber is the president of Extreme Leadership and the author of The Radical Leap: A Personal Lesson in Extreme Leadership and the recently released Greater Than Yourself: The Ultimate Lesson of True Leadership

Private Sector cuts on Ads

Industry chamber Assocham said that the private sector will spend up to 35 per cent less on advertising and entertainment remuneration this fiscal due to the global financial meltdown putting severe pressure on demand and production.

"India Inc's advertisement expenses for brand promotion and entertainment remunerations for its executives to cement liaison with their clients will witness a decline of nearly 32-35 per cent in the current fiscal," Assocham President D S Rawat said, adding that the situation would be similar in the public sector.

According to the Assocham survey, corporates in automobile and FMCG sectors, during boom time, would spend 10-12 per cent of their total earnings on advertisements through electronics, print and periodicals.

Despite the electronic and print media having curtailed advertisement cost by nearly 25-30 per cent, corporate earnings have declined so much in 2008-09 that majority of them are still dithering to fix allocations for advertisement, it said.However, promotion activities and enhancement in entertainment and other allowances would pick up after the turmoil in the economy gets over, which will consume nearly 10-12 months, it added.

It sounds sensible considering the present condition as advertisement as a medium to attract consumers cannot magnetize its role as it used to.The key reason being the "money".When people dont have jobs, from where will they earn and how will they spend.Advertisement does play a role but considering the cut in its cost is a logical move by the association.

Consumer Finance in India-Part 2

To complement its grand retail plans, Reliance Retail is setting up an NBFC with focus on credit cards and loans in a JV withCitigroup. Citi is likely to hold the major stake and total investment pegged is Rs. 450 crore.The NBFC would provide retail loans to customers are sale point and would ease consumer buying process by offering finance to buy goods on interest-free EMIs.

Consumer finance is a high-growth industry in India but it is doubtful whether the JV would be expanded outside the scope of Reliance Retail as due to no-compete clause with Anil Ambani, Mukesh Ambani could not enter into financial services biz as ADAG already runs Reliance Capital.

For Citigroup, it would mean joining hands with India’s largest business group and getting access to the biggest future retailer in India. While for Reliance, it would get the expertise of world’s best known financial giant and use their knowledge and experience to expand its consumer base.

Kishore Biyani’s Future group already has its consumer finance business called Future Money which provide loans for purchases made at its retail stores.

Consumer Finance in India-Part 1

Consumer finance in the most basic sense of the word refers to any kind of lending to consumers. In United States it refers to the branch that is lending the amount which is actually very low than the perfect credit. It is the part of retail banking. One of the best ways to get the unsecured loans is through the consumer finance. Through consumer financing one can easily get the loans and can meet the demands and the desires. The term includes the following mentioned activities and these are as follows:
• Loans
• Indirect Finance
A RECENT poll by Asia Money has ranked HDFC Bank as the number one bank in India in categories such as customer service, back-office or post trade finance, competitive and prompt spot pricing, forex options provider for non-Asian currencies, currency strategy provider and technical analysis. The latest issue of the Asian Bankers Journal ranks HDFC Bank at No 7 in the list of strongest banks.

Consumer finance opportunity in India is one of the best available anywhere in the world. Sixty-four per cent of our GDP is domestic consumption-based. We have the youngest population in the world, demographics are changing, types of jobs are changing, and reforms are turning up which will lead to further impetus to consumer dynamics.

In addition, our loan to GDP for consumer loan is 6 per cent; in most developed countries it is 100 per cent and in marginally developed countries it is 40 per cent. So consumer finance will continue to be a major growth area.

What Now

The Tobin Tax :An international tax on foreign currency transfers

A Tobin tax is the suggested tax on all trade of currency across borders. Named after the economist James Tobin, the tax is intended to put a penalty on short-term speculation in currencies. The original tax rate he proposed was 1%, which was subsequently lowered to between 0.1% and 0.25%.

Tobin Taxes are excise taxes on cross-border currency transactions. They can be enacted by national legislatures, followed by multilateral cooperation for effective enforcement. The revenue should go to global priorities: basic environmental and human needs. Such taxes will help tame currency market volatility and restore national economic sovereignty.

Opinions are divided between anti-globalizationists who applaud that the Tobin tax could protect countries from spillovers of financial crises, and pro-globalizationists who stress that the tax would also constrain globalization and dry up world liquidity.

A tax to curb speculation in foreign currency exchange is an innovative and fair proposal that will contribute to restoring democratic control over national economies. We should continue to pressure our government and the UN, IMF and World Bank to take steps to implement this measure as soon as possible. The tax should be administered by an accountable democratic structure such as could be found within the UN system, with the revenue collected used for genuine social development.

Unexpected, though qualified, support for the Tobin tax has come from the multi-billionaire speculator George Soros, who stated that, while the tax goes against his personal interests, he thinks that its introduction could have positive effects on the world economy. However, he advocates a variation to the Tobin tax: Special Drawing Rights or SDRs that the rich countries would pledge for the purpose of providing international assistance

RBI extends date for liquidity to fin companies

The Reserve Bank of India (RBI) said that a fund run by lender IDBI would continue to provide liquidity support to non-deposit-taking finance companies until June 30.

Earlier, the central bank had said that this funding to finance firms would be provided until March 31.

In February, the central bank had appointed Industrial Development Bank of India Stressed Asset Stabilisation Fund (IDBI-SASF) to provide liquidity support to non-deposit-taking finance companies.

IDBI-SASF, which is a special purpose vehicle, would stop making fresh purchases after Sept. 30 and recover all dues by Dec. 31, the central bank said in a statement.

Invest in consumer research to make the most

In recessionary times like these, it is wise for companies’ to invest in CRM and consumer research to know what the customer really wants. No doubt the prime focus would still be to attract maximum number of people to the store, but one cannot take customers for granted. In order to induce them to actually buy, it is advisable to sell the right product at the right price.

A recent report on retail realised by consultancy firm KPMG states that the current slowdown is expected to last 12 – 18 months. Discretionary spend has taken a beating and people are spending on the basic necessities. As it is evident from the sales breakup of the large retailers, value retail is paving way for lifestyle goods. Food retailing and FMCG would be the trendsetters for the coming season. In fact private label will be the leader, be it food or grocery or apparel as margins in these are very high. Private label penetration for emerging markets continues to be at 6% as against Europe’s 23% which has the highest penetration. This is precisely the reason why private label is growing the fastest (at 17%) in these emerging markets. Back home, Trent has the highest share of private label at 90%. Retailers have been offering discounts to liquidate slow moving goods and reduce inventory.

However all hope is still not lost. Attractiveness of India’s demographic and economic environment will continue to add momentum and the future prospects for retail expansion are still very attractive. Infact this period of uncertainty is seen as an important consolidation imperative for the industry.

Source: Images Retail report,2009