Loans to become cheaper as RBI cuts policy rate

For the first time in nine months, the Reserve Bank of India on Tuesday cut the indicative policy rate (repo) by 25 percentage points, from 8 per cent to 7.75 per cent, and the Cash Reserve Ratio (CRR) by 25 percentage points, from 4.25 per cent 4 per cent.

The step is likely to benefit retail borrowers, as lending rates are likely to come down. After meeting RBI Governor D. Subbarao, bankers said they would pass on the benefit to borrowers.

The RBI first cut the repo rate in the current fiscal in April 2012, with a reduction of 50 percentage points, from 8.5 per cent to 8 per cent. It reduced the CRR from a peak of 6 per cent to 4.25 till mid-December 2012.

Repo is the rate at which banks borrow funds from the central bank. CRR is the portion of deposits banks must keep with the RBI.

In its third quarter review, Dr. Subbarao said: “While the series of recent policy initiatives by the government has boosted market sentiment, it will take some time to reverse the investment slowdown and reinvigorate growth.”

The RBI has scaled down the projection for GDP growth for the current year, from 5.8 per cent to 5.5 per cent, and for the wholesale price inflation in March 2013, from 7.5 per cent to 6.8 per cent.

“This provides space, albeit limited, for monetary policy to give greater emphasis to growth risks,”

Dr. Subbarao said.

However, the RBI has warned that retail inflation is still at a higher level.

RBI Asks Banks to Issue Debit Cards with Photographs to Check Misuse of Cards

Reserve Bank of India asked the banks to observe the possibility of issuing debit cards with the photos of customers to prevent misuse of them. RBI has suggested in its new guidelines that banks should consider taking various steps to prevent the misuse of debit cards by having the customer’s photo on the card of through other latest technology methods.

In India there are around 31 crore debit cards. Reserve Bank of India issued guidelines after analyzing the present rules and regulations in the issuing of debit cards in India.

• Bank should take the responsibility of any loss to the customers of the bank due to system malfunction.
• Banks should provide full security to the debit cards.
• Banks should always be ready to take the complaint/information from customer regarding the loss of theft of debit card and take immediate action to prevent the misuse of card.
• Debit cards must be issued to customers having savings account or current account in the bank but not to those who are having credit account.
• Banks should review the debit card issue procedure for every six months.
• Debit cards should not be issued offline. If any bank is issuing debit cards in offline method, they should stop the process within six months from the day this circular is issued. In the offline debit card issue method customer only requires to sign during the payment but in online payment method, customers will have to enter their payment also.
• RBI has given approval for issue of co-branded pre-paid cards.
• Reserve Bank of India further said that there should be a system in which customer complaints are acknowledged. The banks should give a complaint number of docket number for every compliant they receive for making it convenient for the customers to follow-up.

Axis Bank, ICICI Bank, State Bank of India, HDFC Bank and Indian Overseas Bank launched the saral Money Bank account. This account can be opened based on Aadhar card. Recently, Reserve Bank of India ordered banks to consider Aadhar card as identity proof if the address mentioned by the applicant and the address on the Aadhar card of the customer is same. Saral Money account facility will be introduced in Delhi and surround areas presently and will be expanded to other areas by the end of 2014, it is informed.

Related articles

• Reserve Bank tightens norms for issue of debit cards (thehindu.com)

Major Overseas Acquisitions by Indian Companies

Indian companies have certainly become more ambitious and certainly adventurous. Most companies are no more the ‘frogs in the well of the license-raj era’. In today’s world, Indian companies are not only setting up their own bases overseas, they have become quite ambitious to fly out of the Indian business boundaries to find new companies and potential markets for acquisition and company investment. Even though it might take some years for them to start showing the big time profit evaluations from the acquisitions made so far.

However, this shows that Indian companies have certainly become confident about expanding their operations overseas successfully.

In the last decade itself, many Indian companies have been on a big time acquisition spree, and that has definitely added a huge value to Brand India. Indian companies (listed and unlisted) announced 1995 overseas acquisitions from the last two which involves an investment of nearly $ 116 billion – as reported by The Economics Times.

India has also come out as the world’s 21st largest overseas and foreign investor, with more than 75 billion dollars in foreign investment, just in the past 10 years. And during the financial year 2009-2010, the investment by the native companies in foreign joint ventures and self-owned subsidiaries alone come up to around 10.3 billion dollars, as per The Reserve Bank of India’s report.

1. Corus Group (U.K.)

Acquired by – Tata Group

Tata Steel, one of the leading steel producers in India, acquired Corus Group for U.S. $12.11 billion (€ 8.5 billion) on January 31, 2007. But only after nine rounds of bidding, the acquisition process was completed. The only other competitive bidder was Companhia Siderurgica Nacional (CSN), Brazil.

This acquisition is considered to be one of the biggest foreign acquisitions by an Indian company, and after this only TATA Steel came out to be the fifth largest steel producer in the whole world.

2. Zain Africa

Acquired by – Bharti Airtel

India’s largest mobile services company, Bharti Airtel’s ambition to expand into the markets outside India was completed after this complete acquisition of the African operations of Mobile Telecommunications Company (known as Zain).

Bharti Airtel had acquired Zain Africa for a value of U.S. $10.7 billion. The acquisition gives Bharti Airtel a total customer base of 180 million, including 131 million subscribers it had in India at the end of April.

“By expanding its business outside the country, Bharti Airtel can in the long term benefit from economies of scale, including getting better deals from suppliers” says, Kamlesh Bhatia, Principal Research Analyst at Gartner.

3. Novelis (U.S.)

Acquired by – Hindalco Industries

Aditya Birla Group, one of India’s leading MNCs, acquired the entire stake in the Atlanta based aluminium company Novelis for U.S. $6 billion. This company had separated from Alcan, a global aluminium company. This deal was announced on Feb 11, 2007 by Kumar Mangalam Birla, Chairman of the AV Birla group.

The deal, in a way recapitulates India’s new appetite for international acquisitions, as it comes barely a fortnight after the Tata-Corus deal, which made Ratan Tata the toast of Indian industry.

4. Imperial Energy (U.K.) 

Acquired by – ONGC

Oil and Natural Gas Corp (ONGC) has acquired Imperial Energy. This deal was for 1.3 billion pounds (U.S. $1.9 billion). 96.8 percent of London-listed firm’s shareholders had top accept this takeover offer, for the acquisition deal to take effect.

“The company owed the acquisition to government support, which has seen OVL in the past seven years increase its number of projects to 39 in 17 countries, from just a single project in Vietnam,” says ONGC Chairman R S Sharma

5. Jaguar Cars and Land Rover (U.K.)

Acquired by – Tata Motors

Tata Motors, one of the leading automobile MNCs in India, has acquired both Jaguar and Land Rover, which are two iconic British brands with worldwide growth prospects. This deal was for a whooping U.S. $ 2.3 billion with Ford, the previous American owners.

The deal was effective from May 2008. The deal is seen as yet another endeavor of the fast growing Indian industries, also the latest in a string of foreign acquisitions by Tata.

6. Honiton Energy Holdings (China)

Acquired by – Tanti group

Tanti group of companies jointly with Bahrain-based Arcapita Bank, has acquired Honiton Energy Holdings, a Chinese wind energy firm. The joint venture partners invested around U.S. $2 billion which help to develop a 1,650-MW portfolio of wind farms in China.

Tulsi R. Tanti, Chairman Tanti Group felt that the acquisition would reinforce their commitment towards the renewable energy sector. And also would have a potential growth of wind energy in developing countries like India and China.

7. Abbot Point Coal Terminal (Australia)

Acquired by – Adani Enterprises

Adani Enterprises completed a $2-billion deal which acquired Abbot Point Coal Terminal in Australia on the month of May, 2011.This acquisition marked the third overseas acquisition in nine months by Adani Enterprises, the country’s biggest private port and is India’s largest coal importer.

This deal one of the largest port acquisitions in the world. There have also been many Indian companies which have acquired many mines in foreign countries to secure coal supplies for Indian projects.

8. Algoma Steel (Canada)

Acquired by – Essar Steel Global

Ruias owned Essar Steel Global acquires the Canadian steel company Algoma Steel at a valuation of Canadian $1.85 billion. The arrangement must be approved by Algoma’s shareholders by the affirmative vote of at least 66 per cent (2/3rd) of the votes cast. Algoma Steel is an integrated steel producer based in Sault Ste Marie, Ontario.

Essar Steel Holding, Essar Group’s overseas investment arm made the investment possible and easy. Algoma would definitely provide Essar an excellent platform for the Canadian and North American market.

9. Marcellus Shale (U.S.)

Acquired by – Reliance Industries

India’s Reliance Industries bought a $1.7 billion stake in natural-gas properties Marcellus Shale, from Atlas Energy Inc. This acquisition made Reliance in becoming the latest international energy company to bet on growing fuel output in U.S. shale formations.

Reliance, led by Indian billionaire Mukesh Ambani, got the right to buy 40 percent of all new Marcellus Shale leases that Atlas acquires, after this purchase acquisition and agreement was completed. And this was one of the most lucrative deals which have been seen in the Marcellus.

10. Minnesota Steel (U.S.)

Acquired by – Essar Steel Holdings

Ruias owned Essar Steel Holdings, part of Essar Global, has acquired Minnesota Steel, a U.S. based steel company with estimated reserves of over 1.4 billion tones. Essar Global invested a sum of $1.65 billion which was used to set up a steel plant in Minnesota Steel company’s facilities.

The Essar Global chairman felt that the investment in Minnesota Steel was very benefiting as they would get good exposure in the North American market. He added that Minnesota’s iron ore reserves will help the company to be one of the low cost producers of steel in the world.

It’s SRILANKAN TURN

Sri Lanka govt issues advisory to its citizens against visiting Tamil Nadu

As Cheif Minister Jayalalithaa toughens her anti-Sri Lanka stance, the Sri Lankan government has now issued a travel advisory to all its citizens cautioning them from visiting Tamil Nadu.

The travel advisory comes in the backdrop of an attack on Sri Lankan pilgrims who were assaulted while on a trip to a church in Thanjavur in Tamil Nadu. Following the incident about 180 Sri Lankan pilgrims have returned home.

The move by the Sri Lnakan government comes barely a day after reinforcing her anti-Sri Lankan stance, Tamil Nadu Chief Minister J. Jayalalithaa ordered the return of two football teams from the island nation that are in the city to play friendly matches.

Jayalalithaa also cancelled all football matches involving Sri Lankan players in the state.

She also ordered the suspension of the stadium officer at the Nehru Stadium here for allowing the football team from Royal College of Colombo to play a friendly match against the Chennai Customs football team Friday.

Condemning the central government for permitting Sri Lankan football teams to come to India to enhance their skills, Jayalalithaa said: “Such an action is an insult to the people of Tamil Nadu.”

According to her, the management of Royal College of Colombo (RCC) contacted an official of Reserve Bank of India (RBI) here to organise a friendly football match with the teams here.

The RBI official facilitated such a match and the Sri Lankan team came here Thursday and played the match Friday at the Nehru stadium.

She said the stadium officer permitted the match on an oral request from the RBI official.

“The stadium officer has no power to permit any match at the Nehru Stadium. Only the Sports Development Authority of Tamil Nadu has such a power. The stadium officer has demeaned the sentiments of the Tamil people by exercising an authority that he does not have,” Jayalaltihaa said.

The other football team from Sri Lanka is from Hilborn International School comprising of eight players and a coach who are here to play a match against Velammal International School.

The Sri Lankan government has advised its citizens not to travel to Tamil Nadu after Lankan pilgrims, visiting a church in Thanjavur in the state, were allegedly harassed. Around 180 pilgrims have returned to Sri Lanka.

– With IANS inputs

 

 

We should abolish Rs 500 and Rs 1,000 notes completely

The white paper on black money produced by the ministry of Finance and presented to parliament during the last session has evoked a mixed response.

One of the major criticisms it has faced is that it has mixed up domestic black money and illicit money kept in tax havens abroad by Indians. These two need to be dealt with in different ways. Some part of the domestic black money is used in productive activities like real estate, trade, construction, mining, transport, restaurants and other businesses. The illicit money kept in tax havens abroad is, by and large, not used for domestic purposes unless it is round-tripped through share markets or foreign direct investment (FDI) to domestic operations.

Domestic black money is a no-confidence motion on the government of India while illicit money kept abroad is a no-confidence vote on India itself – its stability and its people.

Domestic black money is primarily dependent on the cash economy and tries to avoid formal transactions through banks due to fear of being captured by electronic systems and the tax authorities. So the holding of black money is usually in the form of cash and transactions undertaken in cash. This implies that substantial portions have to be kept in high denominational currency, since storing or carrying huge quantities of cash in small denominations is relatively difficult.

In India, if we take only currency notes (and coins), we have the lowest denomination at Re 1 (of course, the Rs 1 currency note has been replaced with coins) and the highest at Rs 1,000 – which implies that the differential is 1,000 times between lowest and highest pieces if currency. In the US, the most popular highest denomination is $100 – and the differential is 100 only.

Not only that, we find from Table 1 below that the Reserve Bank of India (RBI) seems to favour printing higher denominations currency even though the mass of poor people may transact only in lower denominations. We find that in 2005-06, around 57 percent of the total amount of Rs 43 lakh crore of coins and notes introduced in circulation comprised Rs 500 and Rs 1,000 notes. But by 2010-11, the share of the higher notes had become 79 percent of the total value of Rs 95 lakh crore.

This implies that more and more of the denominations in circulation are skewed to higher value notes when the mass of people may need lower value denominations. The very high denominations also facilitate transactions in black money.

If the government wants to reduce domestic black money, it should withdraw Rs 500 and Rs 1,000 notes from circulation, and replace them with lower denominations such as Rs 100 and Rs 50. This can be undertaken in an orderly fashion over a period of say three to four months and all those who possess the higher denominations can exchange it with banking channels for lower denominations. It will automatically bring a huge amount of the funds kept in these denominations into the banking channels.

When this happens, the government can decide the nature of penalties to be levied if the amount has not been declared earlier for tax purposes. For instance, for the year 2010-11, nearly Rs 75 lakh crore would be converted from Rs 500-1,000 notes to new Rs 100s, etc. Of course, an adequate number of new Rs 50-100 notes should be made available from the operational point of view for this conversion.

Another issue about holding cash in our context is this. The black money report says: “As of now there are no legal restrictions to keeping very large amounts of cash with oneself or transporting it from one place to another. One is neither required to report it nor provide any explanation for it. There have been suggestions that the government may consider amending existing laws, including the Coinage Act, 2011, the Reserve Bank of India Act, 1934, FEMA, and the Indian Penal Code, or enacting an entirely new statute aimed at regulating the possession and transportation of cash above a particular threshold limit. This may include creating a limitation on cash holdings for private use, as well as provisions for confiscation of cash held beyond such prescribed limits. However, such laws need a broader political consensus to emerge for their acceptance in Parliament.”

We find that political parties do disburse cash to voters prior to elections and for which a huge amount of cash is held and transported from one location to another. For instance, one report suggests that in the recent Andhra Pradesh byelections cash valued at as high as Rs 32 crore was seized prior to the polls. These were presumably meant for distribution to voters.

An earlier report pertaining to last year’s elections in Tamil Nadu suggested that Rs 24 crore in cash was seized by election officials.

There are many other reports which give us a clue that cash is held and transported in huge quantities not only for bribery at elections, but for other black money transactions. It is important that we bring in the necessary changes in the Coinage Act, 2011, and other relevant acts to make holding of cash above a threshold level, say Rs 10 lakh, punishable. This threshold can be arrived at by the Reserve Bank after taking into account the requirements for genuine cash transactions in the economy like marriage and religious ceremonies, wage disbursals in construction activities, etc. This limit should not be applicable to obviously banking institutions and corporates having construction/project activities where substantial amounts of cash disbursals take place.

In developed economies like the US, there are no restrictions per se in terms of holding or transporting cash domestically, unless it is suspected to be drug money. Even there, transactions beyond $10,000 in cash are expected to be notified to the Internal Revenue Service (IRS) by shops and establishments. Of course, there are restrictions on the amount of dollars one can transport during immigration/emigration. But since the US is a well developed economy, most of the transactions are conducted through plastic cards or banking channels.

In our country, cash transactions are more to avoid taxes and generate black money. The higher the denomination, the easier it is to transact and transport. Taking into account our situation, we should evolve laws to prohibit the holding of cash beyond a threshold level and this will go a long way in preventing disbursals for black transactions.

These two steps – demonetising Rs 500 and Rs 1,000 currency notes and creating a threshold limit for cash holdings – will facilitate a reduction in domestic black money transactions. These decisions will not eliminate domestic black money, but will help reduce it to some extent. Probity in public life comes in an incremental fashion since we have reached the nadir. Are our parliamentarians and other opinion makers ready for at least incremental steps to reduce domestic black money?

By R Vaidyanathan

R Vaidyanathan is professor of finance at the Indian Institute of Management, Bangalore. These views are personal                   

 

 

 

Only One Indian Bank among Top 17 BRIC Banks

State Bank of India (SBI) is the only Indian bank in the Top 17 BRIC banks, as listed by Global Finance, an international finance magazine. This list gives details of the Top 50 banks in the emerging markets, especially the BRIC nations. Top 20 of this list comprises banks from the BRIC nations and South Korea, with South Korea occupying the last 3 slots. This list is generated based on the total assets of the banks. Public sector banks dominate the market right now in terms of their sizes. Government owned banks make up about 70 percent of the banks in India, 50 percent in China and 40 percent in Russia and Brazil. It is surprising to see 10 banks from China in the Top 17 BRIC banks. Moreover, it is surprising that despite 70 percent of our banks being government run, only one Indian bank is present on the Top 20 list. Other Indian banks that are present in the list of Top 50 emerging markets banks are – ICICI 35^th, Punjab National Bank 39^th, Bank of Baroda 42^nd, Bank of India 43^rd and Canara Bank 47^th.   

India -

State Bank of India (SBI) is the largest government owned bank in India. It is also the oldest bank in the country. Established during British Raj, SBI has flourished tremendously in the last two centuries. It has more than 13,500 branches in the country and has the most rural reach. It also has nearly 155 branches in about 30 countries all over the world, including – Nigeria, Canada and U.S. SBI also has the most number of ATMs in the country. It provides various services like – car loans, home loans, fund management, commercial and factoring services and the like. SBI is the only bank which has various tie-ups with NGOs. SBI is at the 14^th position of the Top 17 BRIC banks, with an asset value of $274,411. Chairman of SBI is Pratip Chaudhuri said “One reason that SBI is doing so well presently may be its reach in the interiors of the country, which expands the customer base to a great extent. SBI also pays great attention to the instructions of Reserve Bank of India (RBI).

China –

China has the most number of banks in the Top 17 BRIC banks list. It has 10 banks which are present in the list. These banks are positioned based on their asset values. The top  banks are as follows – Industrial & Commercial Bank of China – $2,032,134; President – Yang Kaisheng, China Construction Bank Corporation – $1,632,263; Chairman – Wang Hongzhang, Bank of China – $1,579,348; Chairman – XIAO Gang, Agricultural Bank of China – $1,568,722; Chairman –  Xiang Junbo, China Development Bank – $771,729; President – Jiang Chaoliang and Bank of Communications – $596,656; Chairman – Hu Huaibang. Though surprising, China’s growth in the banking sector has been tremendous mostly because of tight governmental control. Since, majority of the Chinese banks on the list are controlled by the government, there is better management and administration.

Other Chinese banks present on the list are – China Merchants Bank with an asset of $362,758, China CITIC Bank with an asset of $314,260, China Minsheng Banking Corporation with an asset of $275,368 and China Everbright Bank; with an asset of $224,064. Other Chinese banks on the list are – Hua Xia Bank with an asset of $157,081, China Guangfa Bank with an asset of $123,585 and Bank of Beijing with an asset of $110,708. According to RNCOS, a market research and information analysis company Compound Annual Growth Rate (CAGR) of the banking industry in China will be nearly 14 percent by 2014. The banking sector is doing very well in spite of economic slowdown in the country. A few reasons behind this trend can be – improved demand for financing, both among corporates and households. Also, economic status of China is improving, with lesser currency depreciation than India. Still, China needs to improve its transparency and risk management in the banking sector.

Brazil –

Brazil has faced its share of social, political and economic turmoil. Despite the hardships, it has made great progress over the years and currently has 5 of its banks in the Top 17 BRIC banks. The banks present on the list are – Banco do Brasil – 7^th; with an asset of $481,179, Itaú Unibanco – 8^th; with an asset of $447,925, Banco Bradesco Brazil – 9^th; with an asset of $378,150, Caixa Economica Federal – 15^th; with an asset of $237,640 and Banco Santander-Brasil – 16^th; with an asset of $229,690. According to Thomas White, a global investing firm, the banks of Brazil are examples of optimism. Since, unemployment has almost halved from 2003, there is more spending power in the hands of the working and middle-class people. Also, the mortgage lending section of the banking sector of the country is expected to grow in the coming years. Moreover, it has a good credit rating, according to Serasa Experian, a financial rating company. Brazil is also aiming at creating a positive credit registry. Despite the ups and downs witnessed by Brazil

Russia –

Russia does not seem to be performing very well in the banking sector because only one Russian bank has made its way in the Top 50 banks in the emerging markets. The only Russian bank on the list is – JSC VTB Bank – 25^th; with an asset of $140,792. This is a rather dismal performance considering the size of the country. The reason behind this may be because of 2008-09 world economic crisis, when the oil prices decreased and the foreign reserves of Russia hit almost rock-bottom. The Central Bank of Russia provided $200 billion to help its economy but it couldn’t redeem the whole situation. Despite the money provided by the government, the stability in the country did not last long. So, the banking sector is still suffering. Russia will have to brace itself for tough competition from other BRIC nations, especially in the banking sector, in order to improve its situation.

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Inflation Above Comfort Level, Govt Concerned: Pranab

The government said inflation, which is above comfort level, is a matter of concern and steps are being taken to address the price situation.

“…inflation has been above comfort level and is a matter of concern,” Finance Minister Pranab Mukherjee told the Rajya Sabha in a written reply.

He, however, expressed satisfaction that inflation has started to decline. The headline inflation declined to 9.11 per cent in November against 9.73 per cent in the previous month. Similarly, food inflation eased to a nearly four-year low of 4.35 per cent for the week ended December 3.

Mukherjee said both the government and Reserve Bank were taking steps to contain inflation. Steps taken by government include, reducing import duties on pulses and edible oil to zero and banning export of certain edible oil and pulses. Besides, the government has reduced customs duty on crude oil.

The RBI on its part has adopted a tight monetary policy since March 2010 in its bid to tame inflation. When asked if increasing interest rates was the only option in the monetary policy to contain inflation, Mukherjee said RBI has multiple monetary policy instruments at its command. However “the use of each instrument is situation specific”.

Mukherjee further said high inflation and some of the efforts to control liquidity “has detrimental” effect on growth in the short term.

Since March 2010, the RBI has cumulatively raised the cash reserve ratio (CRR) by 100 basis points, and hiked the policy rate (repo rate) 13 times by 375 basis points. However, in its latest mid-quarter review, the RBI refrained from raising interest rates.

Related articles

• RBI rate hike to bring down inflation to comfortable level: Pranab (thehindu.com)
• RBI to adjust rates in tune with price situation: Pranab (thehindu.com)
• Need innovative remedies to fight slowdown, inflation: Pranab (thehindu.com)

RBI to Issue Rs.100 Notes With Re Symbol

The Reserve Bank will shortly issue 100 notes which will have the rupee symbol.

The Rs 100 notes will be of the Mahatma Gandhi-2005 Series bearing the signature of Reserve Bank of India (RBI) Governor D Subbarao and with the year of printing mentioned on the back of the banknote, the apex bank said in a statement.

The design of the notes to be issued is similar in all respects to the existing 100 in Mahatma Gandhi Series-2005 issued earlier except for the rupee symbol.

However, all the Banknotes in the denomination of 100 issued by the RBI in the past will continue to be legal tender.

Last week, the RBI had announced that it will soon introduce notes of 1,000 and 10 denomination featuring the rupee symbol.

The Indian rupee got an unique symbol a blend of the Devanagri ”Ra” and Roman ”R” last year joining currencies like the US dollar, euro, British pound and Japanese yen in having a distinct identity.
The new symbol, designed by Bombay IIT post-graduate D Udaya Kumar, was approved in July 2010.

Indian Rupee Getting Cheaper: Opportunity or Curse?

The day has come where the Indian rupee bagged the title “Asia’s worst performing currency” when it hit rock bottom of 52.73, a 16.8 percent weaker than its 2011 high reached in late July. Probably India is showing consistency in only two things- inflation and currency decline. Question arises who is actually in crisis. Is it U.S. or India? Is it some gain and just lots of pain? Let’s take an areal view of the situation. The rupee suffered its second biggest fall in history.

The opportunities if rupee gets cheaper:

1. More rupees for dollars:

Families of those working overseas will get more rupees for the dollars remitted by them. If you have been working for long time away from India and want to come back and settle down the make hay while the sun Chinese. The Indian rupee will fetch you fortunes if you have someone from abroad sending you lucky charm notes. For example, One euro can get you 70 now, which is 16.5 percent more than what it did at the beginning of this year. The British pound brings 81.40 rupees now, up nearly 17 percent, and the Australian dollar can get you 51.47 rupees, 12.5 percent higher than the start of this year. The Kuwaiti dinar is worth nearly 17 percent more at 187 for every dinar. On an individual level, however, the rupee’s losses can be good for some and bad for others depending on the situation.

2. Medical Tourism in India will get a boost:

Fall in Indian currency value has created an opportunity for Medical Tourism to India as overseas patients have benefits of already low cost of treatment in India compared to U.S. and falling Indian Rupee is giving extra edge to Dollar paying patients. Calculation of packages in Rupee value has given a double bonanza to the overseas visitors visiting India for Plastic Surgery and Cosmetic Surgery, as Indian packages were already 60-70 percent less than those in US and on top of that a further 20 percent reduction due to Indian currency depreciation is an icing on cake for patients from USA and Europe.

3. Exporters will have renewed opportunity:

A cheaper rupee at a time when the Chinese yuan has been trending up against the dollar should provide exporters with renewed opportunity. The massive cost advantages that Chinese exporters seemed to enjoy will be under pressure. In any case, Chinese incomes are now much higher than India’s, and as the yuan strengthens China will be forced to exit export sectors marked by low value-addition. This presents an opportunity for Indian exporters to step into the vacuum. There should be new opportunity in everything from textiles to shipbuilding, if government policies can help producers in these sectors.

4. Diamonds and Gems makers look to capitalize:

For the diamonds and gems industry, the falling rupee coincides with the peaking demand during the Christmas-New Year season. Diamantaires in Surat, the world’s biggest diamond cutting and polishing centre, are hoping to cash in on the weakening rupee. Diamond companies import rough diamonds, paying cash and the rupee depreciation helps the industry pay out lower on imports than what it earns through export.

 ”The dipping rupee helps the industry in all the merchandize and non-merchandize jewellery export as it hedges its risk against raw material well in advance,” said Rajiv Jain, chairman of Gems and Jewellery Export Promotion Council (GJEPC).

5. Workers:

If you are an Indian working in India for a foreign company that pays you in dollars, rejoice! You get an unexpected windfall. What kind of jobs are we talking about? Well, offshore outsourcing is one example. For example, you could be writing articles for a foreign company. If you were paid $1,000 a month, for instance, you would have received about Rs 44,000 in July. Now, your income will jump to Rs 52,000, simply because of the currency fluctuation.

The biggest losers if rupee gets cheaper:

6. High food prices:

India imports a slew of food items, such as pulses and edible oil, to meet domestic demand. A falling rupee simply makes imports costlier since India now has to pay more, in terms of rupees, for the same goods and services it imports. India imports 21 percent of world’s pulses to meet domestic prices, according to Pravin Dongre, president of the Mumbai-based Indian Pulses & Grains Association. “Prices of commonly consumed pulses, which have been so far stable, will go up somewhat on the back of a weaker rupee,” Dongre said.

7. Affects Students and Overseas Travel:

The students will have to pay higher fee and living charges in rupee terms. As dollar grows stronger, students will have to pay double of what they used to pay and the cost of living will be very expensive. Overseas travel to get more expensive as you will have to shell out more rupees for the same amount of dollars while it is vice versa back home for foreigners. Even if you are planning a trip in exotic South East Asia, you will be disappointed. The rupee has slipped even against Asian currencies like the Thai baht and Singapore dollar.One Thai baht could be bought with Rs 1.52 three months ago, now you need to spend Rs 1.66. Ditto for the Singapore dollar: it was worth about Rs 38 three months ago, now it is up to Rs 40.

8. Consumers:

Bad news if you have a craving for imported goods. They are all going to get more expensive. Better buy them now before they get even more expensive later. From cars to mobiles and LCD televisions, consumers will be shelling out more for imported products. Your fuel bills could also go higher. While international crude prices have remained more or less steady at high levels, the fall in the rupee means that the country still pays more for its oil imports, which account for one-third of India’s total imports.

9. Investors:

Typically, the rupee’s slide is bad news for equity investors, because it worsens sentiment in the markets. A falling currency increases the cost of imported inputs for companies and that weighs on margins, dragging profitability lower. While, in general, a depreciating rupee helps exporters like software service providers, too much volatility in the currency’s value can also cause problems.

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• Indian Rupee Nears Record Low Vs. U.S. Dollar (online.wsj.com)
• The Indian Rupee Just Hit An All-Time Low Against The Dollar, Intervention Possible (businessinsider.com)
• India’s Rupee: Asia’s Worst-Performing Currency (online.wsj.com)