The next big NPA warning could come from the MUDRA loans to small businesses as per the latest warning given by the RBI to the government. In fact, RBI has cautioned the government that the MUDRA scheme, envisaged to finance the micro enterprises, could see rising delinquencies in the coming months. The government has disbursed Rs.246,000 crore in the last fiscal and the NPAs stood at Rs.11,000 crore. RBI is of the view that most of the micro enterprises were already vulnerable in the light of note ban and GST launch. The idea is to forewarn the government accordingly.
It looks like IDBI Bank shareholders continue to remain confident under the new LIC management, which now holds over 44% stake in IDBI Bank. In fact, only 22% shareholders exited IDBI Bank in LIC open offer.
In what could be seen as an affirmation of their faith in the LIC management, majority of the shareholders in IDBI Bank have opted to continue holding their IDBI Bank shares. LIC already holds over 44% stakes in IDBI Bank and was looking to raise its stake through an open offer. In the deal, LIC gets nearly 2000 branches of IDBI to sell insurance products and IDBI gets a really strong balance sheet.
Now, economists are raising some serious doubts over the government’s 3.3% fiscal deficit target for the fiscal year 2018-19. According to a report, the government may find it hard to meet the 3.3% FRBM target considering the shortfall in GST revenues, slowing factory output and the rising expenditure. The government is also expected to announce a $35 billion package for farmers and rural India ahead of the elections. However, low oil prices are expected to provide some relief. The challenge for the government will be that most of their commitments at this point are non-negotiable.
In what could be good news for the Indian technology companies, Donald Trump has promised positive changes to the H1-B visa regime. Hinting at possible favourable changes in the issue of visas to highly skilled workers under the H1-B regime, Trump also hinted at the potential grant of citizenship to these individuals. H1-B works are currently eligible to be sponsored by their employers for legal permanent residency in the US. A favourable visa climate is expected to be an encouragement for Indian tech companies, chief among them being TCS, Infosys, Wipro and HCL Technologies.
The sell off by the foreign investors continued in January too. FPIs pulled out Rs.3600 crore from Indian equities in first 9 days of January. This comes on top of an overall FPI selling of Rs.83,000 crore in the full year 2018. During these 9 days, the FPIs did infuse nearly Rs.1872 crore into Indian bonds. According to a report, the FPIs may prefer to watch the trajectory of the fiscal deficit after the budget announcements before making any long term financial commitments to Indian equities. FPI investments in India are driven by a number of factors like domestic macros, earnings growth, company valuations and relative attractiveness in the EM universe. Fed rates will also be closely watched. FPIs have generally been over invested in India even at higher valuations considering its growth potential.
US officials have confirmed that further oil waivers on Iran were unlikely. The waiver to select countries was granted on November 05th when the sanctions actually took effect, but the waiver was for a stipulated period of 6 months only. In a push to choke Iran’s revenue flows, the US had indicated that it may not renew the waivers granted to countries like India, China, South Korea and Japan to continue to import oil from Iran. Most importers are already scaling down their Iran basket. The move is likely to hit Iran as it derives nearly 80% of its revenues from oil exports and that is being choked.
