43% surge in Mutual Fund investments for Q1 2018-19 says AMFI.

Bombay Stock Exchange

There has been a historic rise in investments in Mutual Funds according to the data released by Association of Mutual Funds of India. According to the financial market expert, the surge in MF investments can be attributed to the strong performance of Indian market, low paying Fixed Deposit interest rates and the rising awareness among small investors through campaigns like 'Mutual Fund Sahi Hain'.

Investors have pumped Rs 1.4 lakh crore into mutual fund (MF) schemes in April-June quarter this fiscal, a surge of 43 per cent from the year-ago period, driven by strong participation from retail investors. 

According to Association of Mutual Funds of India (Amfi) data, the inflow has also helped in pushing the assets base of the 42-player MF industry to Rs 23.40 lakh crore at the end of June this year, an increase of 20 per cent from Rs 20.40 lakh crore in June-end 2017.

According to the data, investors poured in a net of Rs 1,33,903 crore in MF schemes in the first quarter of the ongoing fiscal, as compared to Rs 93,400 crore in the April-June period of 2017-18. The latest inflow has been mainly driven by contributions from liquid funds and equity schemes. Individually, liquid funds or money market category -- investments in cash assets such as treasury bills, certificates of deposit and commercial paper for shorter horizon -- witnessed an inflow of Rs 1.22 lakh crore. Besides, equity schemes attracted close to Rs 33,000 crore.

The rise in the Mutual Fund market despite the volatility and weaker Rupee suggests that investors are looking for long-term horizon view. The trend is expected to rise further as investors are starting to acknowledge the long-term wealth-creation potential of equities.

Source - IBEF.

Numaligarh Refinery sets up bio-ethanol plant with Finnish, Dutch firms

State-run PSU Numaligarh Refinery Limited has taken a giant step forward by establishing a joint venture, Assam Bio-Refinery Pvt. Limited (ABRPL) with equity participation of M/s Chempolis Oy of Finland and M/s Fortum 3 B.V. of Netherland to build and operate the first of its kind Bio-Refinery in India which would generate renewable green fuel-bioethanol, other valuable chemicals and green power from bamboo biomass.

The joint venture company incorporated on 04th June 2018 has 3 partners with major equity holding of 50% by NRL, 28% by Fortum 3.B.V. Netherland and 22% by Chempolis Oy, Finland.

“NRL’s new venture shall produce 62 million litres of bio-ethanol by using around 0.5 million MT bamboo per annum which is going to be a game changer in terms of additional revenue generation for the bamboo farmers through sustainable cultivation, extraction and transportation of bamboo. It is indeed a historic moment for India’s North East to garner first major foreign direct investment for setting up its first bamboo based Biorefinery” said Mr S.K. Barua, Managing Director, NRL

Bioethanol shall be produced from bamboo as feedstock by using pioneering 3G Formicobio technology by a Finnish technology provider M/s Chempolis Oy with other valuable chemicals and bio-coal. Bio-coal will be used for the production of steam and green power to the bio-refinery.

According to a statement from NRL, the company is implementing India’s first bio-refinery in Assam at an estimated cost of Rs 950 crore which would produce bio-ethanol with co-production of furfural and acetic acid from the locally available non-food biomass feedstock. Bamboo is one of the major non-food biomass resources available abundantly in North East India and is among the fastest growing plants. 49,000 tonnes of BioEthanol produced annually would primarily be used to blend NRL petrol as mandated by the National Policy on Biofuel, with the surplus to be sold to other oil marketing companies. The company added that NRL has already inked MoUs with Nagaland Bamboo Development Agency (NBDA) and Arunachal Pradesh Bamboo Resources Development Agency (APBRDA) last year for sourcing of bamboo for the Bio-Refinery.

The government of India recently stepped up its support for the production of bio-ethanol, most prominently by means of the new bio-ethanol policy for mandatory blending of Ethanol with gasoline up to 10%. The new bio-ethanol policy aims to spur investments for setting up projects with a total production capacity of 1 billion litres of fuel ethanol every year. The policy is also aimed at cutting down the country’s significant energy import dependence as well as meet Nationally Determined Contributions (NDCs) committed to the Paris Agreement on Climate Change.

This project has a clear role in the fight against climate change. It can also have a big positive impact on local communities. It will provide employment opportunities for thousands of people and in the long run, it will help local communities from Assam and Arunachal Pradesh to become self-sustainable and enhance their living standards.

– Chaitanya Kulkarni

Also published on CSRBulletin.com

State Bank of India plans to raise $750 million via maiden green bonds

India's largest lender, the State Bank of India has announced plans to issue an inaugural USD benchmark green bond in the Reg S market. Green Banking and Sustainability have long been areas of priority for the lender and in an early delineation of this approach, SBI had enunciated its Green Banking Policy a decade back.

Through its inaugural green bonds launch from its London branch, SBI is seeking to raise between USD 500 million (EUR 426m) and USD 750 million.

The transaction will likely consist of two tranches and could open for subscription in the next few days, people aware of the development told the newspaper. The raised funds will be used to support investment in sustainable and climate-friendly projects.

The bank has appointed Bank of America Merrill Lynch, BNP Paribas, Citigroup, Credit Agricole CIB, HSBC, SBICAP and Standard Chartered Bank to manage the issuance. According to Business Standard, bankers will meet with investors this week. As per the Green Bond Framework, the proceeds from the bonds will be invested in research and development of ecological solutions to make this world a better place for our future generations.

The Green Bonds market as per July 2018 stands at $80 billion against $170 billion against the full year of 2017. The estimated investments in Green Bonds stand at $250 billion.

- Chaitanya Kulkarni

Bank of China to open office in Mumbai

Bank of China office in New York.

Reserve Bank of India has issued scheduled commercial bank license to the Bank of China. Bank of China is one of China's largest banks which is set to open its first branch in Mumbai.

Prime Minister Narendra Modi had made a commitment to Chinese President Xi Jinping to allow Bank of China to set up branches in India when they met on the sidelines of the SCO summit in Chinese city of Qingdao last month. Bank of China will be the second Chinese bank to enter India after Industrial and Commercial Bank of China.

As China’s most internationalised and diversified bank, Bank of China provides a comprehensive range of financial services to customers across the Chinese mainland as well as 51 countries and regions. The Bank’s core business is commercial banking, including corporate banking, personal banking and financial markets services.

"By the end of 2017, Chinese investments into India added up to more than $8 billion, as India has become an important market for infrastructure cooperation among Chinese companies and a major investment destination," Gao Feng, Ministry of Commerce, People's Republic of China.

China had permitted Indian banks to open seven branches in China since 2006. The State Bank of India was the first to start operations in China where it has two branches. The Bank of India, the Bank of Baroda, Canara Bank, ICICI Bank and Axis Bank have one branch each.

- Chaitanya Kulkarni

Turnaround Strategy? LIC likely to acquire 51% stake in IDBI Bank.

In a bid to achieve targets in Operation Clean-up, the Ministry of Finance is keen to finalise the acquisition of state-owned IDBI Bank by Life Insurance Corporation of India in three-four months to ensure the lender’s balance-sheet shows an improvement by next fiscal.

The Insurance Regulatory and Development Authority of India (IRDAI) had, on June 29, given a one-time exemption to LIC to acquire a 40 per cent stake in debt-ridden IDBI Bank, taking its total holding in the lender to over 51 per cent. The acquisition will help infuse ₹10,000-13,000 crore in the bank, which had non-performing loans totalling ₹55,588 crore as of March 2018 and is under the RBI’s Prompt Corrective Action.

“IRDAI has already cleared the transaction and other approvals are also in the pipeline. The idea is that before the end of 2018, the transaction should be finalised and it should start showing results by the end of the financial year,” as reported in a corporate announcement page of BSE. The Finance Ministry is already in discussions with IDBI Bank and LIC on the timelines and proposed valuation for the acquisition.

As IDBI Bank is a listed entity, the deal is likely to take place at market value. The boards of IDBI Bank and LIC are, however, expected to come up with a final proposal on the valuation and timeline by the end of this month.

The next step is LIC has to go to its board and inform the board about the conditions under which the approval is given. What we have asked for is: what is going to be their plan for reducing the stake to 15% over a period. The government, which is the promoter of the bank, holds almost 81%. The deal, which will trigger takeover regulations, will also require an approval from the Securities and Exchange Board of India.

Interestingly, as per capital market regulations, any company that acquires 25% stake in a listed entity has to make an open offer to acquire 26% additional stake from public shareholders. SEBI is likely to waive off this requirement as it has previously done before in case for government companies.

The IRDA rules don't permit a single entity to run two separate insurance companies. With this acquisition, IDBI Bank will be a subsidy of LIC. LIC's ambition of getting into banking business may come true as LIC Housing Finance had applied for the banking license in 2014 but failed to receive RBI nod. No clear information regarding the business of IDBI Federal Life Insurance has been decided yet.

Several financial experts have opposed this deal as it needs to bypass Insurance law. The infusion of capital by LIC is a bet on NPA struck IDBI Bank as it is very unlikely to turn around the bank's books in near term.

- Chaitanya Kulkarni