Category — Banking & Financial Services

Air India Seeks Loan for Six Boeing Aircraft

Even as the Government of India is working on the final plans for a strategic disinvestment of its stake in loss-making national carrier Air India, the airline is ready with plans to fly to more overseas destinations. The airline seeks offers from banks and financial institutions to arrange bridge financing of up to $740 million for the purchase of six Boeing 787-8 planes, according to a tender document.

An Air India Aircraft

“In addition to the Government of India guarantee, Air India will offer the aircraft as a security. The facility should be a direct loan without the requirement for formation of a special purpose vehicle structure which requires title transfer,” the tender document said.

Air India has a fleet of 110 airplanes, including 33 Boeing aircraft, reports BusinessLine.

 

August 8, 2017   No Comments

Investor Outlines Macro Trends in India

Macro thinker and author of the institutional newsletter, Global Macro Investor, Raoul Pal, identifies big trends ahead of time and has 24,000 Twitter followers. He enunciates that the next big macro idea is India.

Pal says, “India has built the world’s first national digital infrastructure, leaping at least two generations of financial technologies and has built something as important as the railroad was to the U.K. or the interstate highways were to the U.S. India is now the most attractive major investment opportunity in the world.

Pal outlines 7 phases that has made India the biggest emerging market macro story in the world. Lightly edited excerpts follow:

Phase 1 – The Aadhaar Act

In 2009, India launched a project called Aadhaar, and began creating a biometric database based on a 12-digit digital identity, authenticated by finger prints and retina scans, to identify and document its population. As of 2016, 1.1 billion people  or 95% of the population now has a digital proof of identity.

Phase 2 – Banking Adoption

The Government of India  allowed the creation of eleven Payment Banks, which can hold money but don’t do any lending. To motivate people to open accounts, the government offered free life insurance, and linked bank accounts to social welfare benefits. Within three years, more than 270 million bank accounts were opened and $10bn in deposits flooded in. People who registered under the Aadhaar Act could open a bank account using just their Aadhaar number.

Phase 3 – Building Out a Mobile Infrastructure

Since people were able to instantly open a mobile phone account using their Aadhaar identification,  mobile phone penetration surged and went from 40% of the population to 79% within a few years.

The Unique Identification Authority of India, which administers Aadhaar, met with executives from Google, Microsoft, Samsung and Qualcomm, among others, to develop Aadhar-compliant devices which can integrate features such as secure cameras and iris authentication. Microsoft launched a lite version of Skype designed to work on an unstable 2G connection, and which is integrated with the Aadhaar database, so video calling can be used for authenticated calls.

Phase 4 – UPI – A New Transaction System

On December 30, 2016, the government launched Bharat Interface for Money, a digital payments platform using a Unified Payments Interface by which payments can be made by those with Unified Payments Interface accounts to those that do not have such accounts. Additionally, people can check their bank balances, and use QR codes for instant payments on this digital payments interface. Payments can now be made without using mobile phones — just using fingerprints and an Aadhaar number is required. This system works on a 2G network so it reaches even the most remote parts of India. It will revolutionize the agricultural economy, which employs 60% of the workforce and contributes 17% of GDP. Farmers will now have access to bank accounts and credit, along with crop insurance.

Phase 5 – India Stack – A Digital Life

India Stack is a framework that will make the new digital economy work seamlessly. It’s a set of APIs (Application Programming Interface) that allows governments, businesses, startups and developers to utilize a unique digital infrastructure via a presence-less, paperless and cashless service delivery.

Essentially, it is a secure Dropbox for a person’s entire official life and creates what is known as eKYC: Electronic Know Your Customer.

Using India Stack APIs, all that is required is a fingerprint or retina scan to open a bank account, mobile phone account, brokerage account, buy a mutual fund or share medical records at any hospital or clinic in India. It also creates the opportunity for getting instant loans and brings insurance to the masses, particularly life insurance.

India Stack is the largest open API in the world and will allow for massive fintech opportunities to be built around it. India is already the third largest fintech center but it will jump into first place in a few years. The country is already organizing hackathons to develop applications for the APIs.

Phase 6 – A Cash Ban

The cash ban of November 2016 forced everyone into the new digital economy. It has the hugely beneficial side-effect of reducing everyday corruption, recapitalizing the banking sector and increasing government tax take, thus allowing India to rebuild its crumbling infrastructure.

India was a cash society but once the dust settles, cash will account for less than 40% of total transactions in the next five years. It may eliminate cash altogether in the next ten years.

Phase 7 – The Investment Opportunity

The future for India is massive technological advancement, a higher trend rate of GDP and more tax revenues. Tax revenues will fund infrastructure – ports, roads, rail and healthcare. Technology will increase agricultural productivity, online services and manufacturing productivity.

Telecom, banking, insurance and online retailing will boom, as will the tech sector. FDI is already exploding and will rise massively in the years ahead as technology giants and others pour into India to take advantage of the opportunity.

Nothing in India will be the same again.

 

August 1, 2017   No Comments

India Holds $124 Billion in U.S. Securities

The most recent data available with the U.S. Treasury Department shows that India increased its holding of American government securities to $124.1 billion at the end of April, a $7 billion increase from the previous month.

Among the BRIC nations, India had the third largest exposure to the U.S. government securities after China and Brazil, while Russia‘s holding rose to $104.9 billion reports the Press Trust of India.

With the U.S. economy witnessing relatively better economic growth trends, India has hiked its exposure to the securities. According to the latest estimate from the Bureau of Economic Analysis released last month, “Real gross domestic product increased at an annual rate of 1.2 percent in the first quarter of 2017.”

picture depicting growth

June 27, 2017   No Comments

M&A Deals Surge in India

According to assurance, tax, and advisory firm Grant Thornton, during January-May 2017, there were 170 mergers and acquisition deals worth $35.45 billion in India, registering a significant jump over last year deals worth $13.37 billion.

“All eyes seem to be now on the Goods and Services Tax implementation and its impact on not only trade and economy, but more importantly on investor interest,” Grant Thornton India partner Prashant Mehra said. He added that since there is a clear visibility on this, one should see good traction in both M&A and PE.

A handshake

In May, the e-commerce sector led the deal activity by contributing over 53 percent of the total transaction value. The month also witnessed deals worth over $100 million in the banking and financial services, hospitality and leisure, and real estate sectors, Grant Thornton’s report added.

“Increasing consolidation is driving deal volumes in the start-up sector, capturing 25 percent of volumes with highest activity witnessed in the on-demand services space,” quotes BusinessLine from the report.

June 21, 2017   No Comments

Diebold Nixdorf Targets over 30 percent Revenue Growth in India

With 49 percent market share in the ATM segment, and a presence in 4,000 Tier I cities in India, Ohio-based Diebold Nixdorf plans to shift its focus to Tier 2 and Tier 3 cities. This is part of its strategy to grow its retail business in India the company’s managing director S. Asia, and vice-president, operations, Asia-Pacific, Jaivinder Singh Gill, told BusinessLine. “We have started work [entering Tier 2 and Tier 3 cities]. We should get returns in 2018-19. We need different solutions and products for that market,” he said.

Diebold Nixdorf PoS machine

Gill sees ample opportunities to grow the retail (ePoS) side of the business in India. The target is to grow retail revenues by 30-40 per cent this fiscal, he said. The company will also look to manufacture ePoS machines under the ‘Make in India’ program, Gill added.

 

June 16, 2017   No Comments