Indian Economy News & Discussion - Nov 27 2017

The Technology & Economic Forum is a venue to discuss issues pertaining to Technological and Economic developments in India. We request members to kindly stay within the mandate of this forum and keep their exchanges of views, on a civilised level, however vehemently any disagreement may be felt. All feedback regarding forum usage may be sent to the moderators using the Feedback Form or by clicking the Report Post Icon in any objectionable post for proper action. Please note that the views expressed by the Members and Moderators on these discussion boards are that of the individuals only and do not reflect the official policy or view of the Bharat-Rakshak.com Website. Copyright Violation is strictly prohibited and may result in revocation of your posting rights - please read the FAQ for full details. Users must also abide by the Forum Guidelines at all times.
kvraghav
BRFite
Posts: 967
Joined: 17 Apr 2008 11:47
Location: Some where near the equator

Re: Indian Economy News & Discussion - Nov 27 2017

Postby kvraghav » 19 Nov 2020 18:13

One more thing is why should we have NBFC and then bail them out? The overall theme of the NBFC is risk based lending with high returns. The same with co operative banks. If govt is bailing out risk based high return investments, i even suggest them to reimburse share market losses. The debt investments like FD are considered safe because the banks does lot of due diligence and lends to less risky businesses or individual. If they are lending to highly leveraged business with huge DE ratio or they are providing to NBFC which means indirectly funding high risk investments. What's the point of debt based investments then? You can very well invest in share market instead of FD then since there at least, i can partially withdraw money during losses.

Suraj
Forum Moderator
Posts: 13754
Joined: 20 Jan 2002 12:31

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 20 Nov 2020 00:30

India's economy to return to normal faster than expected: Barclays
Barclays lifted its fiscal 2022 growth forecast for the Indian economy to 8.5% from an earlier projection of 7%, saying the country would "return to normal" faster than expected as the COVID-19 curve in the world's second-most populous nation starts flattening.

The brokerage, however, revised down its GDP forecast for the current fiscal year to negative 6.4% from negative 6%. It expects GDP to fall by 8.5% in the second quarter of the current fiscal year, almost in line with the Indian central bank's forecast.

Last week, the Reserve Bank of India (RBI) projected GDP to contract by 8.6% in the July-September quarter, implying the country was likely to have entered a technical recession in the first half of the year for the first time in its history.

Barclays said on Thursday it expects growth in GDP will resume in the third quarter of the current financial year, a quarter earlier than the RBI's projection.

Last month, a Reuters poll showed the Indian economy would rebound by 9.0% in fiscal 2022, after suffering its deepest contraction on record this fiscal year.


Vamsee
BRFite
Posts: 650
Joined: 16 Mar 2001 12:31

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Vamsee » 20 Nov 2020 21:46

Link

Indian Forex reserves have reached a fresh lifetime high of $572B. With this we are now just $11.1B behind Russia. We will probably go ahead of Russia in next 1-2 weeks and have 4th largest Forex reserve in the world.

After that we have the only 3 countries that have ever crossed $1T in reserves.

Sicanta
BRFite
Posts: 1220
Joined: 15 Aug 2016 11:16

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Sicanta » 20 Nov 2020 22:21

kvraghav wrote:One more thing is why should we have NBFC and then bail them out? The overall theme of the NBFC is risk based lending with high returns. The same with co operative banks. If govt is bailing out risk based high return investments, i even suggest them to reimburse share market losses. The debt investments like FD are considered safe because the banks does lot of due diligence and lends to less risky businesses or individual. If they are lending to highly leveraged business with huge DE ratio or they are providing to NBFC which means indirectly funding high risk investments. What's the point of debt based investments then? You can very well invest in share market instead of FD then since there at least, i can partially withdraw money during losses.


As per RBI report, NBFCs were the largest net borrowers of funds from the financial system with gross payables of around Rs 8,29,468 crore and gross receivables of around Rs 66,635 crore as at end-September 2019.

A further breakup of payables showed that 48.4 per cent of the funds were obtained from banks, followed by 26 per cent from mutual fund companies and 21.3 per cent from insurance firms, it said.


Their failure will have chain effect on entire financial industry. As to why banks lend to these NBFC's heavily, its because before ILFS scam, it was seen as a venue of high returns as banks themselves could not/do not lend to high risk indiviuals/ firms due to regulatory concerns. After ILFS, banks were vary of lending even to high rated NBFC's which impacted credit offtake. Therefore the gov specifically did the following -

PSBs buy ₹14,667 cr. in NBFC bonds and paper

https://www.thehindu.com/business/psbs- ... 095638.ece

tandav
BRFite
Posts: 633
Joined: 26 Aug 2016 08:24

Re: Indian Economy News & Discussion - Nov 27 2017

Postby tandav » 21 Nov 2020 01:45

Sicanta wrote:
kvraghav wrote:One more thing is why should we have NBFC and then bail them out? The overall theme of the NBFC is risk based lending with high returns. The same with co operative banks. If govt is bailing out risk based high return investments, i even suggest them to reimburse share market losses. The debt investments like FD are considered safe because the banks does lot of due diligence and lends to less risky businesses or individual. If they are lending to highly leveraged business with huge DE ratio or they are providing to NBFC which means indirectly funding high risk investments. What's the point of debt based investments then? You can very well invest in share market instead of FD then since there at least, i can partially withdraw money during losses.


As per RBI report, NBFCs were the largest net borrowers of funds from the financial system with gross payables of around Rs 8,29,468 crore and gross receivables of around Rs 66,635 crore as at end-September 2019.

A further breakup of payables showed that 48.4 per cent of the funds were obtained from banks, followed by 26 per cent from mutual fund companies and 21.3 per cent from insurance firms, it said.


Their failure will have chain effect on entire financial industry. As to why banks lend to these NBFC's heavily, its because before ILFS scam, it was seen as a venue of high returns as banks themselves could not/do not lend to high risk indiviuals/ firms due to regulatory concerns. After ILFS, banks were vary of lending even to high rated NBFC's which impacted credit offtake. Therefore the gov specifically did the following -

PSBs buy ₹14,667 cr. in NBFC bonds and paper

https://www.thehindu.com/business/psbs- ... 095638.ece


We are beneficiaries of the NBFC lending. Their loans helped us grow when no bank was willing to lend to us. In the last 2 years as an MSME if any institution has been useful I would argue it is the NBFCs. Our bank refused to give us loans and we had been banking with them for 15 years. We literally fell on their feet and rolled left and right but no dice. The NBFC guys came and got us loans sitting in our offices and we did not move a finger. Yes the interest rates were high (about 18% or more for unsecured loans but there was no other option). I did feel that the NBFC loans were risky (to the lender) and was worried about unscrupulous people using the NBFC route to take loans, cash out, default and runaway to foreign lands.

But to a very large number of business folks NBFCs were a lifesaver

kvraghav
BRFite
Posts: 967
Joined: 17 Apr 2008 11:47
Location: Some where near the equator

Re: Indian Economy News & Discussion - Nov 27 2017

Postby kvraghav » 21 Nov 2020 03:26

That is what I was suggesting. If the banks lend to nbfc and nbfc lends to high risk business, dosent it mean banks themselfs are lending to the high risk business? The NBFC are just making cool profit like comission agents. The capital they invest themselves is far less than their borrowed investments. I don't know why banks refused to lend to you but any bank will lend if a good collateral is provided. I think we should move away from the NBFC model to a VC funding model for people who cannot provide collateral. Most of the VC funding comes from their own capital.

V_Raman
BRFite
Posts: 828
Joined: 04 Sep 2008 22:25

Re: Indian Economy News & Discussion - Nov 27 2017

Postby V_Raman » 21 Nov 2020 04:20

VC funding model in India is mimicing whats in the west. Commoners are not sophisticated enough avail that. NBFCs are Indian common man's VCs.

Suraj
Forum Moderator
Posts: 13754
Joined: 20 Jan 2002 12:31

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Suraj » 21 Nov 2020 07:16

Vamsee wrote:Link

Indian Forex reserves have reached a fresh lifetime high of $572B. With this we are now just $11.1B behind Russia. We will probably go ahead of Russia in next 1-2 weeks and have 4th largest Forex reserve in the world.

After that we have the only 3 countries that have ever crossed $1T in reserves.

Yes, inflows continue to be strong through the Hindu festival season. Good chance we'll make it to close to $600B by year end.

Only three countries have ever had >$1 trillion in forex reserves. Only 7 have ever had over $500B in reserves - the current top 6 plus Saudi Arabia in the past. India were the 6th to make it, and Taiwan just became the 7th.

Mollick.R
BRFite
Posts: 808
Joined: 15 Aug 2016 10:26

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mollick.R » 21 Nov 2020 11:43

Does India’s PLI Scheme Put The Cart Before The Horse?
Bloomberg Quint Opinion Rajeev Kher
Published On :- November 20 2020, 2:29 PM

https://www.bloombergquint.com/opinion/does-indias-pli-scheme-for-manufacturing-put-the-cart-before-the-horse


Some good points, some rants...........

Karan M
Forum Moderator
Posts: 19839
Joined: 19 Mar 2010 00:58

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 22 Nov 2020 12:25

kvraghav wrote:That is what I was suggesting. If the banks lend to nbfc and nbfc lends to high risk business, dosent it mean banks themselfs are lending to the high risk business? The NBFC are just making cool profit like comission agents. The capital they invest themselves is far less than their borrowed investments. I don't know why banks refused to lend to you but any bank will lend if a good collateral is provided. I think we should move away from the NBFC model to a VC funding model for people who cannot provide collateral. Most of the VC funding comes from their own capital.


The NBFC are taking risk with a better understanding of a high risk market than the PSBs. The PSBs by investing in this segment, arguably with GOI approval are shoring up a critical sector. They are also spreading their risk across NBFCs. The NBFCs by lending to a segment that is underserved, earn their risk premium. VC funding t the scale we require typically, typically occurs in a HNI flush society, we are a long ways from that. Thry also look for disproportionate success as versus steady, solid businesses.

Karan M
Forum Moderator
Posts: 19839
Joined: 19 Mar 2010 00:58

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Karan M » 22 Nov 2020 12:39

Mollick.R wrote:Does India’s PLI Scheme Put The Cart Before The Horse?
Bloomberg Quint Opinion Rajeev Kher
Published On :- November 20 2020, 2:29 PM

https://www.bloombergquint.com/opinion/does-indias-pli-scheme-for-manufacturing-put-the-cart-before-the-horse


Some good points, some rants...........


A lot of rants. There are no perfect policies- you iterate as you go along.

nandakumar
BRFite
Posts: 1253
Joined: 10 May 2010 13:37

Re: Indian Economy News & Discussion - Nov 27 2017

Postby nandakumar » 22 Nov 2020 14:54

Mollick.R wrote:Does India’s PLI Scheme Put The Cart Before The Horse?
Bloomberg Quint Opinion Rajeev Kher
Published On :- November 20 2020, 2:29 PM

https://www.bloombergquint.com/opinion/does-indias-pli-scheme-for-manufacturing-put-the-cart-before-the-horse


Some good points, some rants...........

It seems to be behind a paywall. Can you post some highlights? Thanks.

vijayk
BRF Oldie
Posts: 4917
Joined: 22 Jun 1999 11:31

Re: Indian Economy News & Discussion - Nov 27 2017

Postby vijayk » 22 Nov 2020 20:02


Paul
BRF Oldie
Posts: 3609
Joined: 25 Jun 1999 11:31
Contact:

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Paul » 23 Nov 2020 13:11

Deleted
Last edited by Suraj on 23 Nov 2020 21:36, edited 1 time in total.
Reason: We don’t do such comparisons here

Mollick.R
BRFite
Posts: 808
Joined: 15 Aug 2016 10:26

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mollick.R » 26 Nov 2020 11:46

nandakumar wrote:
Mollick.R wrote:Does India’s PLI Scheme Put The Cart Before The Horse?
Bloomberg Quint Opinion Rajeev Kher
Published On :- November 20 2020, 2:29 PM

https://www.bloombergquint.com/opinion/does-indias-pli-scheme-for-manufacturing-put-the-cart-before-the-horse

Some good points, some rants...........

It seems to be behind a paywall. Can you post some highlights? Thanks.


Saar, its open access. I suggest you try after cleaning your browser history or open with an alternate browser which you don't use regularly.

Mollick.R
BRFite
Posts: 808
Joined: 15 Aug 2016 10:26

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Mollick.R » 26 Nov 2020 12:17

India risks losing to a China-backed trade bloc defeating very reason it exited last year
By Shruti Srivastava, Bloomberg Last Updated: Nov 26, 2020, 10:57 AM IST

https://economictimes.indiatimes.com/news/economy/foreign-trade/india-risks-losing-to-a-china-backed-trade-bloc-defeating-very-reason-it-exited-last-year/articleshow/79419629.cms

Seems like RECP lobbyist article, we don't have proper access to those markets and neither they are main market for our engineering goods exports...........................

Yagnasri
BRF Oldie
Posts: 9863
Joined: 29 May 2007 18:03

Re: Indian Economy News & Discussion - Nov 27 2017

Postby Yagnasri » 26 Nov 2020 14:29

Such dramas are only going to increase now.


Return to “Technology & Economic Forum”

Who is online

Users browsing this forum: No registered users and 11 guests