Dr.

Manmohan Singh: A 'Reformist' or a Debile Politician

Way back in the early nineties, Dr. Singh emerged as a saviour for our rather weak economy with his reforms and measures taken towards liberalization. He in real sense could be considered our very own knight in the shining armour- the lead architect in bringing India from despair to prosperity. Since then a lot has happened, many governments and alliances fell and resurrected subsequently. Zoom back to the present and a first class reformist has turned into a not so impressive politician. As things have started to fall back in place gradually, one can't help but wonder if at all it's fair to credit Dr. Singh for the Economic reforms of '91. And this in no way should be regarded as any attempt to discredit the genius of an economist Dr. Manmohan singh is. Let's first try to picture the economic situation of India in the early nineties. India was on the verge of bankruptcy and a near economic collapse was seemingly inevitable. The IMF appeared as a last respite, but for its assistance it sought a baggage of concessions. Left with no better choice the govt finally had to do away with the license raj and declared the gates of Indian market open. History was already made by then and there has been no looking back since then. The question that comes in mind here is, was Dr. Singhs efforts a byproduct of his ideological acumen or was it as simple as need of the hour? A serious and thorough examination would reveal that reforms were the only choice we had then. If not Dr. Singh somebody else would have been its flag bearer. It was nothing more than an act of self preservation by the economists of a vitiated economy. More than a reformist Dr. Singh could actually be termed as a pragmatist. - AMIT ASHWINI BHAGAT PGDGBO,SRCC

01
ISSUE

FINSOC TIMES
C O N T E N T S

SEPTEMBER,2011

Banking.1 Corporate.2 Capital Market...3 Mutual Funds..4 Economy..5 Commodities5 International.6 Opinion..7 News from GBO..8

Shri Ram College of Commerce has been

offering a two-year, postgraduate programme in Global Business Operations (GBO) since 1999. It is an intensive course in international business management that focuses on the understanding of business realities in a global context. The course is meant to enhance the potentialities of management professionals to work both within and across national boundaries, cultures and organisational structures.

GBO ROUND-UP
UPCOMING EVENTS(SEPTEMBER) HR SUMMIT 2011
Keeping in mind the pressing HR Challenges in contemporary business scenario, HR Summit, 2011 is based on: HR Metrics. (10TH SEPTEMBER AT LE MERIDIAN, NEW DELHI)

BANKING
RBI ISSUED DRAFT NORMS ON NEW BANKING LICENCES:
After years of intense lobbying business houses who wish to set up banks are spotting a ray of hope. RBI is slowly opening the doors for corporate to enter the highly regulated banking industry. RBI issued draft guidelines on Monday which reads Finance companies can be converted into banks and promoter groups with sound credentials and integrity and a 10yr record of successfully running their businesses can set a bank. Such banks should have a minimum paid up capital of Rs500Cr and should run 25% of their branches in rural unbanked regions, list within 2yrs, and be owned by a separate holding company that cannot borrow money to float the bank. Total foreign in the bank cannot cross 49%. No foreign entity/NRI can hold over 5% shares. Corporate may find it easy to meet most of the conditions but RBI said that it is very selective. Since it may not be possible to issue licenses to all the applicants meeting the eligibility criteria. TATAs, Aditya Birla GROUP. L&T, LIC HOUSING, SHRIRAM RELIANCE ADAG, RELIGARE, PFC, ADAG , IFCL, SREI may be interested to venture into banking industry.

RBI panel suggested stricter rules for NBFCs

Higher capital norm of 12% for NBFCs. Asset classification and provisioning on the lines of banks. Minimum asset size of over 50 crore for registering a new NBFC. Steeper provisioning for lending to real estate and capital market. The Indian central bank wish to close the regulatory gap between banks and NBFCs.

ACTIVITIES
HELPING UNCLE SAM!
Would you solve a question of $14.2 trillions for Rs. 1000??? send in your suggestions to solve worlds biggest financial problem the U.S. debt and the best entry gets Rs.1000 cash! Mail your entries to financesocietygbo@yahoo.com Last date for sending your suggestions is 20th September,2011.

NOTE: The Data contained in the newsletter is

taken from various business Newspapers and Websites.Views expressed by students in the opinion column are truly personal and doesnt reflect the views of the Institution. If there is any discrepancy in the news items then please bring it to our notice. For communication, Mail at financesocietygbo@yahoo.com Contact Details: KUNAL KR.(9654115904) rd GBO 3 sem. -FINANCE SOCIETY GBO,SRCC.

This is the inaugural edition of FINSOC TIMES-finance newsletter of GBOs finance society. This is a medium to keep finance thread of GLOBALITES strong and going. With this we introduce the finance conclave, FINIESTA 2011,a finance festival with a host of related events and a summit of finance experts -FINANCE SOCIETY, GBO SRCC

SBI merger with Associates banks

Mergers with other Associate banks will be look into next year-said Chaudhuri. "At present none because we are in the process of digesting and absorbing State Bank of Indore,We will start looking at the new one in mid 2012," he said. SBI undertook first ever amalgamation of its associate State Bank of Saurashtra in 2008, followed by State Bank of Indore in August last year. There are five associate banks of SBI. Two of them are fully-owned -- State Bank of Patiala and State Bank of Hyderabad -- while remaining three, State Bank of Mysore, State Bank of Travancore and State Bank of Bikaner and Jaipur (SBBJ), are not 100 per cent owned.

CORPORATE
RIGHTS ISSUE ON TRACK:PRATIP CHAUDHARY
State Bank India said its Rs 20,000 crore rights issue proposal is on track and the bank is not looking at any other options to raise capital. "Government of India, Department of Financial Services is very much looking into it (rights issue proposal). As of now, there is no interim response (from the government) but it is receiving attention," SBI Chairman Pratip Chaudhuri told media. Currently, the government has a 59.4 per cent stake in the bank. In case a rights issue is approved and the government wants to retain its holding at the current level, it would need to subscribe to 59.4 per cent of the total rights being issued.SBI had raised over Rs 16,000 crore through a rights issue in 2008. In the last SBI rights issue, the government contribution was in the form of bonds to the bank instead of cash.

MTNL raises Rs500 crore from banks to repay debts

BP COMPLETES $7.2b DEAL WITH RELIANCE:

British oil major has completed the acquisition of 30% stake in oil and gas production sharing contracts operated by Reliance Industries. Stake sale in two more blocks is still awaiting Govt. approval but the valuation will not be adjusted and will amount to $7.2billion.

MTNL has raised Rs 500 crore from various banks that will be used to repay debts and meet operational expenses."Out of the total loan amount of Rs1,500 crore,we have raised Rs500 crore from various banks and for the rest of the amount, we are still in talks with them (banks)," MTNL CMD Kuldip Singh said.

01

FINSOC TIMES
Sensex gained 568 points in a single day on 29th August . The jump was due to positive global cues and also Anna Hazare ending his fast and abating political uncertainty. Investors were relieved that US did not launch the 3rd Quantitative Easing programme. RBI unveiling draft norms on new banking licenses helped NBFCs share prices to jump.

SENSEX JUMPED 568 POINTS, HIGHEST ONE DAY % RISE SINCE MAY09:

MARKET ROUNDUP:
DAX 5246.18 5.28% DJIA 12516 .00 1.36% NIKKEI 8784.46 -1.86% SHANGHAI 2478.74 -1.96% COMPOSITE HANG SENG 19616.4 -2.95% SENSEX 16713.33 -0.64% KOSPI 1785.83 -4.39% NASDAQ 11240.26 -2.2% FTSE 100 5102.58 -3.58%
*till 23:00.IST 5th sept,2011

ESSAR STEEL PRICE HIKE:

Worries for automobile sector continues as the slow down on sales this year got compounded with Essar Steel, one of the largest suppliers of steel to the sector, with increase in price by 3%. In the coming festive season Auto makers may find it difficult to raise the price of its models because of the increased competition.

CAPITAL MARKET
US STOCK MARKET INDICES MADE DEBUT ON NSE:
Indian investors can now trade in top two indices of American Bourses right here on NSE from 29th August, 2011. S&P 500 and Dow Jones Industrial Average (DJIA) started trading on NSE, Indias biggest bourse. This is the first time that derivative contracts on global indices are being launched in India. Also futures contracts on S&P 500 are being introduced and launched outside US (home country). To encourage participation NSE decided not to levy any transaction charges on trades done till 29th Feb 2012.

MCX-SX ANNOUNCES CHARGES FOR CURRENCY DERIVATIVE SEGMENT:

Within days of the National Stock Exchange (NSE) deciding to levy transaction charges for currency derivatives market, rival MCX-SX (MCX Stock Exchange) on Thursday followed suit and announced its charges for this segment. Currency derivatives trading began in India in August 2009, with NSE being the first player, followed by MCX-SX and United Stock Exchange (USE) thereafter entering the segment. However, no charges were being levied so far, which led to MCX-SX complaining to the Competition Commission of India (CCI) that it was not being able to charge for currency derivatives because of NSEs zero-pricing regime.In late June, CCI found NSE guilty of abusing its market dominance and asked it to stop unfair trade practices like subsidising of services.Thereafter, NSE on 12th August announced levying of charges for the segment.MCX-SX would levy a charge of up to Rs1.10 per Rs1 lakh of average daily traded value (ADTV).

LATEST FROM RBI:

POLICY RATES
Repo rate8.00% Reverse Repo rate7.00% Bank Rate..6.00%

GOVT TO EJECT NON-SERIOUS PLAYERS FROM SEZs:

The Govt. has decided to eject non-serious players from SEZs. As a result the board of approval for SEZs has started rejecting demands of SEZ developers seeking time Tech Times Issue 00 Month Year that they had to execute their project on finding not done any work on their ground.

MARUTI STARTS PRODUCTION AT 2nd MANESAR PLANT:

Despite shortage of workforce, Maruti Suzuki commenced production from its second plant at Manesar. The new plant (Plant B) commenced partial production of vehicles, mainly in weld operations. The news came amidst the ongoing tussle between company management and workers at the first plant of Maruti at Manesar.

RESERVE RATIOS
CRR..6.00% SLR.24.00%

GOVERNMENT APPROVES 5% STAKE SALE IN BHEL:

FACTS FILE:
BIGGEST IPOs OF WORLD TILL DATE:
1.Agricultural Bank of China, 2010, Proceeds: $22.121 billion 2. Industrial and Commercial Bank of China, 2006, Proceeds:21.969 billion 3. General Motors, 2010, Proceeds: $20.1 billion 4. Asian Life Insurance Group 2010, proceeds: $20.500 billion 5. Visa inc, 2008, Proceeds: $19.650 billion

Stories through facts and figures:

Govt. has approved a proposal to disinvest 5% paid-up equity; out of its share holding of 67.72% through the book building process in the domestic market. The stake sale is expected to mop up over Rs 4500Cr for the Govt., going by the current market price.

ONGC PUBLIC ISSUE MAY OPEN BY SEPT. END:

The graph showing the difference between interest rate and inflation rate in absolute percentage terms for BRIC nations supports rate hike by Central Bank of India.

ONGCs follow on public offer may open on 20th or 27th Sept. The red herring prospectus could be filled on 5th Sept. The Govt. is offloading 5% of its stake in ONGC and plans to raise about Rs12,000Cr through the issue. With the FPO Govt.s stake in the company will come down to 69.14% from 74.14%.

Source :equitymaster.com

MUTUAL FUNDS
MUTUAL FUNDS TO GET FOREIGN BOOST:
GOI has allowed foreigners to invest up to $13 billions in equity and debt schemes of mutual funds.Where investments in equity schemes of mutual funds by QFIs(qualified foreign investors) aggregating to $10 billions and another $3 billions in schemes that invests in corporate bonds and infrastructure companies.However as per notification issued by SEBI says QFIs can buy equity and debt fund units in primary markets but cannot trade in secondary market.

ECONOMY
UTI MUTUAL FUNDS TIES UP WITH CANARA BANK SECURITIES:
UTI MF said that it has tied up with Canara Bank securities for distribution of its schemes. Canara Bank securities offers online trading facilities through its portal CanMoney and also offers online investment facilities in IPOs/FPOs and various schemes of several MFs. With this tie-up, customers of Canara Bank securities will be able to invest online in various schemes of UTI Mutual Fund.

CABINET APPROVES LAND REFORM BILL:

The cabinet on 5th September approved a bill to reform land acquisition, aimed at giving farmers a better deal while helping fast-track industrialisation in Asia's third-largest economy. The land bill is important for the ruling Congress party to cement support among farmers, ahead of next year's polls in Uttar Pradesh -- which has seen several flare-ups over land acquisitions and general elections in 2014.

DISSAPOINTMENT OVER GDP GROWTH DATA:

Pranab Mukherjee expressed his disappointment over the slowdown in the countrys GDP Growth Rate and said hard work is required by all the sectors. Uncertainty in global economy and monsoon is the task to tackle, he added. The first quarter of FY 2011-12 recorded 7.7% growth, whereas it was 8.8% in the corresponding period last year. FM encouraged the fact investments increased to 7.9% YoY during the first quarter in this fiscal. Referring to growth in employment generation Mr. Mukherjee said those propagating the view that this was jobless growth are wrong. However there should be more growth in the employment generation, he added.

If 60% of investors in a country, like India, where the level of financial literacy is not very high , are participating in derivatives,then SEBI should look at the way sales are happening -U.K. SINHA(CHAIRMAN,SEBI)

MUTUAL FUND HOUSES WITH HIGHEST AUMs

(April-June quarter)
1.Reliance 2.HDFC 3.ICICI pru 4.UTI 5.Birla Sunlife (in Rs. Cr) 102049.43 92032.91 79758.71 69105.09 67509.57
Source:AMFI

SBI MUTUAL FUND LAUNCHES GOLD FUND:

With prices of yellow metal touching the moon, it has become increasingly difficult for investors to buy gold, but still they got one option i.e Gold Fund schemes launched by Mutual Fund houses. SBI MF is the latest one to launch a gold fund, called SBI Gold Fund. SCHEME DETAILS: NFO Tech Times Issue 00 Month Year Aug and closed (New Fund Offer) is open since 22nd TH on 5 September. The NFO price for the scheme is Rs 10 per unit. The minimum amount is Rs 5000 under the lumpsum investment options. There is no entry load but an exit load of 1% , if you redeem your investments within a year from the date of allotment.

DEBT FUNDS TO PENALISE INVESTORS FOR EARLY EXIT:

Investors in various fixed income schemes will be penalised for early redemptions from these products. Many mutual funds have increased exit loads on fixed income schemes, with uncertainty about interest rate outlook prompting investors to move in and out of these products in a shorter period. Fund houses are hoping this step would encourage investors to remain invested in them for a longer period."Many funds have raised exposure to securities with higher maturity. Higher exit load is the best deterrent for rapid exits and this will allow the fund manager to commit money, as there could be high volatility in rates in the interim," said a senior official with a private mutual fund.

COMMODITIES:
CRISIL LAUNCHES GOLD INDEX:
CRISIL research launched the Crisil gold index on 29th august which will track the performance of gold prices in domestic ETF market. The gold index has a base date of 2nd Jan,1997 and was based on landed price of 10 grams of gold in Mumbai. This is a first public index launched by a company. Currently 11 AMCs offer 11 gold ETFs and 3 Gold Fund of funds in India.

FOOD INFLATION TO COME DOWN SOON FROM 10%:

Finance Minister Pranab Mukherjee hoped that the double digit food inflation of 10 percent would come down soon after passing of seasonal factors of commodities. India's food price index rose to 10.05 percent, its highest in nearly six months, and the fuel price index climbed to 12.55 percent in the year to August 20, government data on Thursday showed.

MOST VALUED FIRMS IN INDIAN MARKET (MARKET CAPITALISATION)

(Rs. Cr) Reliance Inds 2,71,103.57 Coal India Ltd. 2,43,369.35 ONGC 2,25,010.18 Tata Consultancy 2,03,059.50 ITC Ltd. 1,55,767.95 *till 6th sept,2011

Stories through facts and figures:

CII TO PUSH FOR DECONTROL OF SUGAR:

The Confederation of Indian Industries (CII) demanded that the government should give freedom to the sugar industry to sell sugar in the market and also stop taking the sweetener from mills at a subsidised price for running ration shops. The government asks mills to contribute 10% of their production at a cheaper rate to run public distribution system. Through monthly release mechanism, the Centre fixes the monthly sugar quota that mills can sell in the open market and ration shops.

ADB TO EXTEND $500 MILLION TO INDIAN RAILWAYS:

Asian Development Bank agreed to extend $500 million to Indian Railways. The loan would help Indian Railways to improve its services along some of the busiest freight and passenger transport routes. The loan is intended to finance additional lines and the electrification of hundreds of kilometers of existing track, along with installing new signalling.

CREDIT DEFAULT SWAPS!

The graph shows the projected trend of investments and savings for India which is a push for govt. and private players also to work more harder on financial inclusion and market peneteration.
.

Source :equitymaster.com

The government should remove levy obligation on sugar industry and instead it should buy sugar from open market for supply through PDS, CII national committee advocated.The industry supplies levy sugar at 60% of the cost of production, resulting in a loss of about Rs2,500Rs3,000 crore every year.

INTERNATIONAL
DEVEN SHARMA TO QUIT S&P:
S&P said its president, Deven Sharma, stepping down, capping 2weeks of controversy, following the rating agencies downgrade of US Govt debt on 5th August, 2011 that sparked a row with the treasury. S&Ps parent McGraw-Hill Companies Inc. said Deven Sharma will be succeeded by City Bank COO Douglas Peterson on 12th September.

Coming months than it did during the past year.the exchange rate was actually frozen during the financial crisis ,but has been allowed to increase since the summer of 2010.iin the past 12 months ,the yuan strengthened by 6% against the dollar. There are two fundamental reasons Chinese government might choose such a policy: reducing its portfolio risk and containing domestic inflation.

THE NEXT JAPNESE FINANCE MINISTER HOLDS THE KEY TO THE YEN:
Japnese industrial production increased by 0.6% in july but the number came below market expectations of 1.6%.The devastating effects of the march 2011 earthquake are still being felt in the industrial sector.the inventory to shipment ratio increased by 3.9%.The July shipments rose by 0.2% and inventories declined by 0.2%.the firms are expecting production to fall by 2.4% in September due to slowdown in the global economy .The Japnese industrial sector has made good progress in recovering from the earthquake.however continuous strengthening of the Yen has eaten into profits of exports based industries.

Germanys statistics office earlier released several pieces of key data which, together, suggest that the German economy is in danger of flagging, and bringing down with it, the Eurozone as a whole. First, the rate of change for Julys seasonally adjusted retail sales was reported at 0.0%, essentially unchanged on a percentile basis from June. Slightly less disappointing, the statistics office reported that the unemployment rate in Germany held steady at 7% in July.

INDIAN FOREX RESERVES: INDIAN FOREX th RESERVES: (as on 26 Aug) (in US 26billion) (as on $ th Aug) Total Reserves (in US $ 319.175 billion)

Do you want your name to be in the next newsletter??? send your articles to financesocietygbo@yahoo.com The best entry gets a place in the opinion column of the newsletter and will be suitably rewarded as well.(word limit-500)

Total Reserves a)Foreign Currency Assets a)Foreign Currency Assets b)Gold b)Gold c)SDRs c)SDRs d)Reserve Position in IMF d)Reserve Position in IMF

319.175 286.195 286.195 25.349 25.349 4.640 4.640 2.991 2.991

OPINION
RBIs Benevolent License Raj
RBI released its much-awaited draft guidelines for new banking licenses, with the basic message that it is looking for companies with diversified ownership and less exposure to risky business such as broking and real estate. Broking and real estate right now are probably excluded from this list of potentials, because, these are subject to substantial volatility in the market and hence, depositors or holders of their banks will view it with a sense of caution. It recommended a minimum capital of Rs500cr ($109 million) and a capital adequacy of 12% for at least three years for new banks. Indian banks currently need to maintain a capital adequacy of 9%. New banks' total exposure to their founding groups should be limited to 20%, with the exposure to a single entity capped at 10%. These conditions may make it difficult for keen aspirants such as Religare Enterprises Ltd., Indiabulls Financial Services Ltd. and Reliance Capital Ltd. to qualify. Companies like Larsen & Toubro Ltd., Mahindra & Mahindra Financial Services Ltd., with a reasonably diversified shareholding, have a fair chance to gain banking licenses. Moreover, a new bank has to open at least 25% of its branches in unbanked rural centres with population upto 9,999 as per 2001 census. This reflects the governments continued focus on financial inclusion. The guidelines are a step forward; the RBI has clearly articulated all that is there on his mind,but The draft guidelines put new banks at disadvantageous position as compared to private banks which got the license earlier, as new banks will have to model their business so as to address financial inclusion. This will drive up the cost for new banks, as branches in these regions will take longer to turn profitable. Also, new banks would have to meet the priority sector targets and sub-targets which will drive up the cost in the initial stage without supporting revenues. - DEEPESH RATHORE PGDGBO,SRCC

Out of four broad categories of Markets viz. Equity, Debt, Commodities and currency Equity is the least traded and currency is the most heavily traded.

U.S. BUDGET DEFICIT AT $1. 3 TRILLION-SAYS BUDGET CHIEF:

White house budget director Jack Lew said on 1st September,2011,that the U.S. deficit will be around $1.316 Trillion In the current 2011 fiscal year,adding this is $329 billion below the estimate the administration made in February . Lew said a budget deficit of $1.3 trillion in FY11 represents 8.8 % of Gross Domestic Product.

TERMINOLOGY:
1)Intraday TurnoverTotal value of buy and sell trades executed on an exchange in a single day session is called as intraday turnover.

MORE DISAPPOINTMENT FOR GERMANY :

It seems that July has been a tough month for the German economy, with the most recent data reporting slowing growth, and a downturn in confidence levels among industry, consumers and investors alike. On this, the last day of August comes still more disappointing economic news.

2)Alpha It is the coefficient measuring the risk-adjusted performance,considering the risks that are specificto the security,rather than the overall market. A large Alpha indicates that the stock has performed better than what would be predicted given its volatility, sometimes it is referred as value added by fund manager . 3)Dollex-30 BSE also calculates a dollarlinked version of SENSEX called DOLLEX.

CHINAS NEW CURRENCY POLICY:

CHINAS government may be about to let the renminbidollar exchange rate rise more rapidly in the

Stories through facts and figures:

How much does Mr Market How much does Mr Mark dislike Greeces sovereign dislike Greeces sovereign debt? The chart , which debt? The chart , which shows the ten countries shows the ten countries with the highest-yielding with the highest-yielding two-year paper, puts two-year paper, puts Athens in in the kind of Athens the kind of company that Greeks are company that Greeks are unused to to keeping. unused keeping.

Financial crisis requires governments -Timothy Geithner