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QBiz: India To Give $5 Billion Line Of Credit To Bangladesh & More

The Quint’s compilation of business news from dailies across India.

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1. India to Offer $5 Billion Line of Credit to Bangladesh, Highest for Any Country So Far

India hopes to fund 17 projects in Bangladesh through a proposed $5-billion line of credit, the highest offered by it to any country so far, which is likely to be finalised when Prime Minister Sheikh Hasina arrives later this week on her maiden state visit to India since the Narendra Modi government took office.

The bulk of the funds are expected to be used for connectivity projects - railway projects, road construction and maintenance - as India eyes transit to the northeast and Southeast Asia via Bangladesh. Bangladesh finance minister AMM Muhith is currently visiting Delhi to fine-tune modalities of the line of credit.

The loan has a 20-year repayment term, including a grace period of five years and a 1% annual interest rate along with a 0.5 percent commitment fee.

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2. RBI Clears Proposal to Introduce Rs 200 Notes

The board of the Reserve Bank of India (RBI) has cleared a proposal to introduce banknotes of Rs 200 denomination, two people aware of the development said.

The decision was taken at the RBI board meeting in March, these people said. They didn’t want to be identified as they aren’t authorised to speak to the media.

The process of printing the new Rs 200 notes is likely to begin after June, once the government officially approves this new denomination, said one of the two people cited earlier. An RBI spokesperson declined to comment.

The move to introduce lower denomination notes comes against the backdrop of the government’s move to rework the currency mix.

(Source: Livemint)

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3. US Tightens H-1B Visa Rules For Computer Programmers

The United States government’s intent to bring about changes to the existing H-1B visa regime became clearer through a policy memorandum it released over the weekend, which says computer programmers will not be eligible for H-1B visas by default.

The agency that oversees lawful immigration to the United States, the US Citizenship and Immigration Services (USCIS) on 31 March, released a policy memorandum titled “Rescission of the 22 December 2000 ‘Guidance memo on H-1B computer related positions’”.

The document essentially says that a previous guiding policy document for H-1B visa petitions, from the year 2000, will no longer hold.

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4. BS III Ban Estimated to Cost Truck Makers Rs 2500 Crore: CRISIL

The Supreme Court mandated ban on sale and registration of BS III vehicles post 1 April 2017 is estimated to cost commercial vehicle manufacturers Rs 2500 crore according to Research.

Commercial vehicle (CV) makers disposed of over half their stock of 96,700 BS-III vehicles valued at around Rs 11600 crore before the Supreme Court-set 1 April 2017, deadline.

As per CRISIL Research the discounts and incentives on vehicles sold till 31 March 2017, are expected to have cost them about Rs 1,200 crore. Additionally, Rs 1,300 crore would be incurred to dispose of the unsold inventory.

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5. Government Seeks to Revive CDR Mechanism to Resolve Bad Loans

As the government looks for new ways to resolve more than Rs 7 lakh crore in bad loans on the books of Indian banks, it may look to breathe fresh life into a mechanism used actively in previous bad loan cycles.

The corporate debt restructuring (CDR) process may be revived as a way to speed up the resolution of stressed assets, said a senior government official familiar with the matter on the condition of anonymity.

The CDR mechanism may prove to be more effective than the joint lenders’ forum (JLF) due to the centralised decision-making built into it, said this person, while admitting that rules would need to be changed to allow restructuring of current cases under the CDR mechanism.

(Source: BloombergQuint)

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6. SBI Begins Life in the Top 50 with a 15 Bps Base Rate Cut

After the merger of five associate banks and the Bharatiya Mahila Bank with itself, State Bank of India began a new chapter on Monday with 50 crore customers, total business worth Rs 44.77 lakh crore and 43.55 crore savings bank accounts.

One of the first things the banking behemoth did was to cut its base rate by 15 basis points to 9.10 per cent, easing the equated monthly installment (EMI) of existing borrowers, especially in the retail loan segment.

The merger of five associate banks and the Bharatiya Mahila Bank with SBI took effect on 1 April. This catapulted India’s largest bank into the global league of top 50 banks.

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7. Govt Plans New Equity Savings Scheme with Bigger Tax Benefits, Easier Norms

The government is considering a new and potentially more attractive equity savings scheme to replace one that was scrapped this year following a tepid investor response.

The new scheme will offer more flexibility and greater limits than the Rajiv Gandhi Equity Savings Scheme (RGESS), said two people with direct knowledge of the development.

For one, the government is looking to enhance the investment limit eligible for tax benefits under this scheme to Rs 2 lakh, four times the RGESS limit. Secondly, the stringent entry norms prescribed by RGESS may be done away with, these people said on condition of anonymity.

(Source: Livemint)

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8. Corporate Credit Quality Improves but Still on Shaky Ground, Say Rating Agencies

Credit quality of Indian corporates is improving albeit at a slow pace, said rating agencies CRISIL and ICRA in separate releases on Monday. Both felt that while there is gradual improvement in the level of indebtedness among Indian firms, corporate balance sheets remain stretched. This, in turn, will mean that bad loans in the banking sector will remain elevated.

In its semi-annual rating summary, CRISIL said that the debt-weighted credit ratio improved to a five-year high of 0.88 times in fiscal 2017 compared to 0.31 times in fiscal 2016. The debt weighted credit ratio reflects the ratio of debt upgraded versus that downgraded.

(Source: BloombergQuint)

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9. Essar Sells Aegis, Exits BPO Biz

In a deal that underlines the declining valuations of Indian business processing outsourcing companies, Essar group has sold its BPO arm Aegis to Capital Square Partners (CSP). Though the companies did not disclose the deal size, industry estimates peg it at close to $300 million.

In 2012, Essar was in discussions to sell Aegis for as much as $1 billion but did not go through with the deal.

Subsequently, the company was broken up, and in 2014, Aegis USA Inc (comprising Aegis’ operations in the US, the Philippines and Costa Rica) was sold to Teleperformance for $610 million. After Monday’s deal, Essar has now made close to 1$ billion from Aegis, five years after the initial discussion began.

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Topics:  Reserve Bank of India   QBiz   SBI 

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