RBI allows banks to borrow from international and multilateral financial institutions

Central bank sasy such borrowings shall be eligible for concessional swap facility of RBI
Mumbai: The Reserve Bank of India (RBI) has granted permission to banks to borrow from international/multilateral financial institutions for a limited period of up to November 30, said RBI on Thursday.

RBI also said such borrowings should be for the purpose of general banking business and not for capital augmentation.

According to the central bank, such borrowings shall be eligible for the concessional swap facility of RBI.

Earlier, RBI had allowed banks to borrow from their head office of overseas branches or correspondents outside India up to hundred per cent of its unimpaired Tier-I capital or $10 million, whichever is higher.

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Venezuelan oil firm signs agreements with RIL, OVL

PDVSA will supply between 3,00,000 and 4,00,000 barrels per day of heavy crude to Reliance's two refineries in Jamnagar under 15-year contract

New Delhi: In a sign of increasing Indian involvement in Venezuela, the South American country’s state oil company, Petroleos de Venezuela (PdVSA), has signed two agreements with state-run ONGC Videsh Ltd (OVL) and private sector giant Reliance Industries Ltd (RIL).

Mukesh Ambani-led RIL and PdVSA have signed a joint study agreement for Ayacucho block 8 in the Orinoco oil belt of that country. According to the study agreement, both parties will jointly evaluate the development plan of the block. RIL and PdVSA have also extended the term of the memorandum of understanding (MoU) signed between the parties last year by one year for continued cooperation.

Meanwhile, an MoU was signed by D K Sarraf, managing director, OVL, and Ruben iguera, director of new development, PdVSA on Thursday. The pact encompasses strategic cooperation and participation in the exploration and production of hydrocarbon resources in the oil-rich Faja area of Venezuela. This would facilitate OVL and PdVSA to explore available opportunities through joint collaboration and hence, enhance OVL's interest in Venezuela.

Sudhir Vasudeva, chairman, ONGC group of companies, said: “This MoU underlines the spirit of collaboration between two exploration and production giants in India and Venezuela. Venezuela has the world’s largest reserves and we have a huge market. We intend to use this opportunity to further our interests in this oil rich country.” OVL currently has stakes in two producing projects in Venezuela--Petro-Carabobo and Petro-Indovenezolana--with investments of about $341 million.

RIL and PdVSA had signed a 15-year heavy crude oil supply contract and an MoU to develop Venezuelan heavy oil fields last year. According to that, PdVSA will supply between 300,000 and 400,000 barrels a day of Venezuelan heavy crude oil to RIL’s two refineries in Jamnagar under a 15-year contract.

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India to strengthen cooperation with ASEAN: PM

New Delhi: In order to increase cooperation with South East Asian countries on economic and security issues, Dr Manmohan Singh, the Prime Minister of India, announced a separate Mission for Association of South East Asian Nations (ASEAN) region to be set up in Jakarta, Indonesia. The mission will be assigned a full-time resident Ambassador.

Dr Manmohan Singh also represented India’s willingness to sign the Free Trade Agreement (FTA) with ASEAN on services and investment by the end of this year and its early implementation, while addressing the 11th ASEAN-India Summit. The agreement will also boost bilateral trade among the regions from US$ 76 billion last year to US$ 100 billion by 2015.

India and ASEAN have established a comprehensive agenda of cooperation and a wide-ranging framework to pursue it over the last two decades.

“Today, we stand on the threshold of the third decade of our engagement. In keeping with our substantial achievements, the recent elevation of our ties to a strategic partnership and the rich potential of our cooperation, I feel it would be appropriate for me to take this opportunity to announce that India will soon set up a separate Mission to the ASEAN in Jakarta with a full-time resident Ambassador,” Dr Singh added.

He further highlighted that all the countries have equal stakes in the security and prosperity of our shared Asian neighbourhood. The scope of India’s engagement with East and Southeast Asia has grown steadily in the last two decades.

“We seek to promote not only mutually beneficial bilateral relations, but also to work institutionally with regional partners and foster a climate that is conducive to stability, security and economic development in our region,” said Dr Singh.

The Prime Minister emphasised that ASEAN has paved the way for a great level of cooperation and integration, not only among themselves, but also in the broader region.

“For India, it is an article of faith of our Look-East policy that ASEAN must remain central to the future evolution of regional mechanisms, which must be open and inclusive. We share your vision and aspirations for the region and we applaud your march towards an ASEAN Economic Community in 2015,” pointed out Dr Singh.

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L & T gets two EPC orders in UAE, Qatar

Mumbai: Larsen & Toubro has secured two engineering, procurement and construction (EPC) projects worth around Rs.1,100 crore in the hydrocarbon segment in UAE and Qatar. The Indian major has also won the contract for the fuel depot expansion of the Abu Dhabi International Airport.

The depot expansion project aims to upgrade the facility to meet the increased demand for jet fuel over the next 20 years. L&T is to take over the EPC of the Abu Dhabi Oil Refining Company refining, which will raise the storage capacity of aviation fuel depot to 80 million litres.

Viral Shah, analyst at Angel Broking noted, ``The project involves EPC work of a new aviation fuel terminal for developing storage and deliver of Jet A-1 fuel at the Abu Dhabi International Airport. The project is awarded by Takreer, a subsidiary of state owned Abu Dhabi National Oil Company, and is expected to be completed in 30 months. In Qatar, L&T has bagged an EPC contract for third party gas interconnecting facilities in Ras Laffan from Dolphin Energy. The project has a construction period of 20 months.''

L&T is already executing another export gas upgrade facilities project for Dolphin Energy to increase the capacity of the export gas compressors facilities by adding three new compression trains.

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Tata Power to set up coal-fired plant in Myanmar

New Delhi: Tata Power has forayed into Myanmar and has begun feasibility studies to set up a coal-fired power station there. The project is expected to be commissioned in 2019-20. This would be the first project by the Tata Group Company in the South-East Asian nation.

“Yes, Tata Power has executed a memorandum of understanding (MoU) with the Government of Myanmar for setting up an imported coal-based power plant,” a senior company official told Business Line.

The Rs 19,399-crore Tata Power is aggressively looking to expand its portfolio overseas. At present, it is building hydro electric projects in Bhutan, Georgia and Zambia. The firm is also developing two wind power projects in South Africa.

In Myanmar, the power plant is proposed to be located in Ngayok Kaung, Ayeyarwaddy region, and would have captive coal berthing arrangements. The Tata Power official did not divulge the capacity of the power station. “The capacity would be finalised based on the feasibility studies. The power plant is estimated to be commissioned in 2019-20,” the official said.

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JSW Steel acquires Heidelberg Cement's grinding unit at Raigad

Kolkata: JSW SteelBSE 1.61 % has acquired Heidelberg Cement India's 0.6 million tonne per annum (mtpa) cement grinding facility in Raigad, Maharashtra, "as a going concern on slump sale basis." The transaction which was carried out for an undisclosed sum.

The two companies signed the Business Transfer Agreements for the acquisition on October 5, according to filings made by bot Hidelberg and JSW Steel with the BSE on Monday.

"The transaction will be consummated only after obtaining all relevant approvals required under applicable laws," JSW Steel said. However, it did not disclose the value of the deal. The board of the two companies had decided to enter into a deal on May 21, 2013.

JSW Steel had acquired the company through the erstwhile JSW Ispat SteelBSE 0.40 %, which is now its merged associate firm. Announcing the deal, JSW Ispat had then said the acquisition would enable it develop a stable outlet for evacuation of slag.

Heidelberg Cement had termed the deal as part of company's philosophy of "divesting less strategic assets with lower margins", which would enable it to "focus on more strategic and key operations in central India where the company had recently expanded its cement capacity from 2 to 5 million tonne per annum."

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Foreign portfolio investors to get tax benefits similar to FIIs

New Delhi: Foreign Portfolio Investors (FPIs) will get all the tax benefits available to foreign institutional investors (FIIs). They will also not have to fulfil the Know Your Customer norms separately for opening bank accounts, the Finance Ministry said.

On October 5, the Securities and Exchange Board of India had announced a new category of investors, called the FPI, by merging the existing FIIs, sub-accounts and qualified foreign investors. The decision was taken on the basis of recommendations by the K.M. Chandrasekhar Committee, which suggested that the Government could consider bringing more clarity and certainty while prescribing tax provisions for FPIs.

“Taxation benefits available to FIIs would be transferred to FPIs,” a senior Finance Ministry official told Business Line, outlining the Ministry’s effort to bring clarity in the new tax regime.

Withholding tax
Earlier on May 21, the Finance Ministry had said that foreign investors would have to pay only 5 per cent withholding tax (against 20 per cent earlier) on interest earned through investment made in rupee-denominated long-term infrastructure bonds issued by Indian companies and Government securities.

Withholding tax is similar to tax deducted at source, but is meant for non-resident investors.

Foreign investors are also not required to have permanent account numbers to claim lower withholding tax.

Similarly, foreigners investing in the equity market get tax benefits on long-term (investments of more than a year) profit earned, as prescribed by the Double Taxation Avoidance Agreements with various countries.

For example, like India, Mauritius, too, prescribes zero duty on profit earned on selling equities after one year. FIIs using the Mauritius route will not have to pay any tax on long-term profits here.

Vasudha Sundararaman, MD and CEO of SBISG Custodial Services, feel that the Revenue Department needs to give a go-ahead to legislative changes proposed by the Chandrasekhar Committee to give FPIs at par treatment with FIIs. She said, for the successful execution of the regime, it would be vital that KYC requirements of SEBI and the RBI to be on the same page.

According to the Finance Ministry official, RBI’s KYC norms were for opening bank accounts and were, therefore, simpler. “If the two are aligned, it would cause inconvenience to millions of new bank account holders, but not vice versa. In other words, KYC done by SEBI should be adequate for opening bank accounts,” he added.

On the overall structure of FPIs, Sundararaman said, the guidelines by SEBI were clear and had covered all the aspects of FII entry into India. “Approval in flat 10 days is a remarkable step for the success of the FPI regime,” she said. The SBI SG was a member of the committee.

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