Tuesday, 25 September 2012

[www.keralites.net] Fixed Income â€“ Risk with NBFCs

RBI seems to be ignoring the massive systemic risks of non-banking financial companies. Retail investors must stay away from them

The Reserve Bank of India (RBI) seems to have developed a marked preference for non-banking financial companies (NBFCs). There are laws that allow NBFCs to borrow money easily without worrying about repaying it.

NBFCs are back in the market to make the retail guys part with their money. I find the whole business of NBFCs raising debt very opaque and worrying. Today, financial conglomerates have a slew of subsidiaries and associates, all formed with strategies to meet regulatory compliances that vary from one business to another. There are terms & conditions that retail investors find difficult to comprehend and are, therefore, not equipped to take a call with a suitable degree of comfort.

More disturbing is RBI's belief that NBFCs are immortal. They have permitted NBFCs to issue 'perpetual bonds' to investors, with a 10-year option that enables NBFCs to repay but prevents the investors from demanding repayment. It is akin to writing off your wealth for a fixed rate of interest. RBI works in favour of NBFCs by just letting them increase the interest rate by a mere one percent at the end of the 10th year. So, if at the end of 10 years India faces high inflation and interest rates, there is no recourse for the investor. If interest rates decline dramatically in 10 years, then the NBFC is likely to repay the investor and raise new money, if it is still around. After the first 10 years, if the NBFC does not repay, it cannot repay ever. Clearly, RBI seems to have worked overtime to give free money to NBFCs. The only safeguard provided is that a single investment has to be at least five lakh rupees which keeps the small investor away from such dangerous instruments.

I also have an issue with 'subordinated debt' being allowed to be raised by NBFCs from retail investors, with a minimum ticket size of just Rs5,000. These debenture-holders—who hold the subordinate debt—will be paid only after senior creditors are repaid in full. This is a very high-risk instrument that should not have been allowed to enter the retail domain. It is funny and ironic that bankers give loans on 'secured' terms and the RBI expects the public to lend money with no conditions for repayment! Clearly, RBI seems to think that the retail public can assess credit far better than bankers!

NBFCs are clearly witnessing a period of turmoil. The world over, excessive and unregulated credit has created problems that cannot be ever resolved by anyone, let alone central bankers. They have been wanton in their creation of problems that have no solutions—only everlasting misery. The other worry is their unholy nexus with capital markets in the form of lending money against shares. They provide parking bays for promoters who manipulate share prices of their companies. Most of the loans go to operators and promoter proxies who use the leverage from NBFCs to manipulate share prices. Whilst I agree that NBFCs play an important role in credit delivery, the excesses will bring the whole industry to its knees.

I also see a slew of issues that come from financial conglomerates that hide more than they tell. For instance, a trusted brand of the group is used to sell issues of associates and subsidiaries. There is no bond or assurance about whether the parent entity would be in existence at the time of maturity. SEBI actively aids and abets the charade by letting companies open issues with two to three days' notice, giving no time to read anything about the issuer. With so many swift changes in the industry, should the regulator allow them to raise non-repayable debt? Our regulators appear more like the cops in Hindi movies who turn up after the deed is done.

Imagine how it would feel not get your money back. I do not think the long-term risks are adequately compensated by the marginally higher interest rates.

Author R Balakrishnan Soruce - MLF

Best Regards

Prakash Nair

www.keralites.net

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Re: [www.keralites.net] Religion for what?{please read}

Mogan,

Your idea is great...

But religion and politics are like identical twins - both are business, crave for money and power, both give immense protection and cover up ( do whatever you fantasize and assert you did it in the name of religion or God... you are okay ! )

As Velupillai put it 'touching the inner self ' is tedious, selfless and worse still anti-propagandist . Hence it is not a sell out among exhibitionist religiosity; most important no power attached to it ( " what do I benefit ?" ). My humble experience ( and rule of thumb) is 'you can completely trust and rely on a person who never talks about religion - he will be down-to-earth honest; never want to hurt you; absolutely never think about hurting you or killing you.
And I admit my brain is too small to engulf the magnanimity incorporated in the concept of God - just human.

DMS
Canada

From: mogan mariappan <homogannoraini@yahoo.com>
To: Keralites <Keralites@YahooGroups.com>
Sent: Tuesday, September 25, 2012 9:44:24 AM
Subject: Fw: [www.keralites.net] Religion for what?{please read}

The comments so far seems universal, to which I and alot others would subscribe to. That said, my reply to ICS Menon about the " great painter " M F Hussain would be this, why did he choose to paint about the " GODS " of one particular community? He would have been a great painter if he had gone on to paint the " GODS " & the prophets of all the other religions and communities in the way he did for the " GODS " of this particular one community. Q - Why did he not do so ? & and equally important why only a small minority protested. Yes, " we are all human beings. We cannot think and do like animals with no judging powers ". Now, which takes precedent being a Human Being or Religion and its GOD(S)? The problem starts when Religion and GOD(S) is placed in the forefront and humanity is lost to the people. My GOD says this, my religion preaches this and therefore I would do so accordingly, without for once reasoning out whether it is right to do so as a Human Being.

If as Abraham PC quotes the bishop " We all represent as people from the world. There is no religion, no nation or any such.". Would it not be beautiful if there had been no preaching , no need for conversion, no need to highlighting my "GOD" is greater or better than your "GOD". (do not the religions of India follow this, and they are at peace at least religiously ). GOD of what ever faith cannot be more than ONE. Individual need to analyse his GOD within oneself and move from religion on to the path of spirituality, which is a thougher path. I believe it is only on the path of spirituality would there be acceptance that we are all Human Beings born into this world with a destiny to seek and reach the ONE GOD that has placed us all in this world. Only on this path would we see the acceptance that each religion is equal to and not inferior to the other and that all these religious path are towards spirituality. It cannot be said that there would be no movies, no cartoons, no paintings, and no infidel labelling etc. This will continue so long as Human Beings are caught in the circle of ego and superiority of one's religion and are not able to move out of its hold.

Added comments with thanks from Mr Rajen &

From: Jeyasingam Veluppillai <vjeya001@gmail.com>
Subject: Re: [www.keralites.net] Religion for what?{please read}

" AN interesting debate as it seems to project their views as the eyes sees only what it knows. Like wise, religion is outbound requiring an external force seeking for salvation by mercy which is unknown and spirituality is inbound to know who you are within through subtle will experiencing inner bliss. Once you know or touched the inner being, the rest is secondary because the soul is eternal, omnipresent and in wisdom its infinity...Aum "

Rgds

Mogan

From: Abraham P.c. <pc_abraham1944@yahoo.in>
To: Keralites <Keralites@YahooGroups.com>
Sent: Monday, September 24, 2012 1:57 AM
Subject: Re: [www.keralites.net] Religion for what?{please read}

I remember this incident of the past with full respect. When we first reached Moon, our Bishop said, Now we all represent as people from the world. There is no religion, no nation or any such. How great this view is. We are just human being. We cannot think or do like animals with no judging power. One side we try to break the world records and achievements and other side we are beating the worst crime records. What a contrast?

From: musthafa sa <musthafasa2002@yahoo.com>
To: "Keralites@yahoogroups.com" <Keralites@yahoogroups.com>
Sent: Sunday, 23 September 2012 9:45 PM
Subject: [www.keralites.net] Religion for what?{please read}
dear sir this is very informative article what you wrote here,i am really appreciated you sir,i would like to request you here with that you may try to write always this platform for the people sir.!!!! with due respect.>>>>>>>>>

Regards,& love.
MUSTHAFA. K.M.

From: ICS MENON <ics_menon@yahoo.com>
To: Keralites <Keralites@yahoogroups.com>
Sent: Sunday, September 23, 2012 2:22 PM
Subject: [www.keralites.net] Religion for what?

It is very saad to note that Religion is mixed with politics and art. Politics is politics and art is ART. It can not be mixed up to confuse people. One can see from the history of man that religions came into existance to make people more cultured and decent in their behavior.

Our late Great Painter M. F. Hussain had some artistic ideas and he put it into paintings, unfortunately it was about some GODS OF A PARTICULAR COMMUNITY and they drove him away from his mother land. very saad. Let him paint any thing that is art and has nothing to do with religion.

Now all over the world violence is going on because somebody made a film on some religion. First of all the person who made it should not have attempted because the world is already disturbed of many unsocial incidents like attack on different sectors of society.

Now what ever happened is happened - why people resort to violence killing each other. Life is precious no? Why cant we live together peacefully forgetting all religions and geographical barriers. Vasudhaiva Kudumbakam i.e. universal family should be put into practice.

www.keralites.net

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[www.keralites.net] Herbal cure for arthritis on anvil from India

Herbal cure for arthritis on anvil

Kalyan Ray, New Delhi, September 25, 2012, DHNS:

Hope at last

Scientists from the North-East have come out with a herbal balm made out of edible plants found in the region, which can cure the two most common type of arthritis.

Among those who have benefited from the ointment – to be formally released here on Wednesday – is Uma Dutta, the 96-year-old paternal aunt of Nobel laureate Amartya Sen, who was unable to walk freely due to arthritis. "Fed up with the existing treatment, she tried the new ointment, which acted miraculously," claimed Samir Bhattacharaya, a scientist at Viswa Bharati University in Santiniketan. Bhattacharaya was associated with the development of the ointment.

Developed by scientists at the North-East Institute of Science and Technology, Jorhat, the balm was found safe and efficacious during animal and human trials. A common ailment for middle aged and old persons, arthritis is caused by inflammation of connective tissues in joints, resulting in pain, swelling and stiffness.

In India, close to 15 per cent of the population suffer from one or the other form of arthritis, two most common forms being osteoarthritis and rheumatoid arthritis. Despite extensive research, there is still no cure. "Topical application of the ointment reduces inflammation and bring down the level of cytokines which cause arthritis. It is a joint pain reliever that works better than other commercial products," Bhattacharaya told Deccan Herald.

"Trials on 45 people have shown positive results. Scientists from the biodiversity rich North-East made it using locally available plants. It will also be produced in the North-East," said Samir K Brahmachari, Director-General of the Council of Scientific and Industrial Research, the parent body of NEIST.

Initially, the Jorhat institute plans to manufacture the ointment on a no-profit-no-loss basis and has set up a production unit with a capacity to manufacture one lakh tubes of the ointment daily. The production plant is ready. Talks are on with some companies for marketing and distribution of the ointment. "The product will be in the market by December," said NEIST director P G Rao.

Rao said the ointment can cure both rheumatoid and osteoarthritis. While the ointment may be applied on joints two to three times a day, trials showed it was more effective if applied before going to bed.

"It shows substantial decrease in the level of pro-inflammatory cytokines," said Bhattacharaya.