RBI plans largest corporate debt recast
Mumbai: The Reserve Bank of India (RBI) has embarked on its largest-ever corporate debt restructuring exercise in consultation with the union finance ministry. The proposed guidelines on loan restructuring are likely to be ready by next month after clearance from the board for financial supervision.

The RBI has extensively reviewed the rules of the Bank for International Settlement and Financial Supervisory Authority of the UK in formulating the guidelines. Banks and institutions will be allowed to restructure loans within two years of commercial production of any project. They will not be required to classify the recast loans as substandard assets.

The impact of the restructuring exercise will be two fold: it will bring down the level of non-performing assets (NPA) of the system by at least a percentage point, besides bringing down the provisioning requirement on fresh NPAs. This would help corporate sector to access fresh loans from the system, as the restructured loans will not be classified as a substandard asset anymore.

Under the new proposal, a corporate and a lender will have to enter into a fresh loan agreement as part of the restructuring exercise. When put in place, the new norms will also make the BIFR quite superfluous, as companies en route can be revived through this debt restructuring exercise.
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Inflation dips marginally to 8.21 per cent
New Delhi: The annual inflation rate fell by a mere 0.08 percentage points to 8.21 per cent during the week ended January 27, despite costlier manufactured products. The inflation rate based on wholesale price index for all commodities (base year: 1993-94 = 100) hovering over 8 per cent for the fifth consecutive week was 8.29 per cent a week before and 3.62 per cent a year ago.

The WPI, however, was up by 0.1 per cent to a provisional figure of 158.1 during the week against 158 in the previous week. The index was 146.1 during the same period last year. The final inflation rate was considerably higher at 8.33 per cent than the provisional level of 7.45 per cent during week ended December two last year.

The final WPI during the week stood at 158.6, against the provisional figure of 157.3. Fall in primary items by 0.2 per cent reduced the inflation rate marginally although manufactured items became costlier by 0.2 per cent, while fuel prices remained firm at the previous week's level.
The index for the primary articles group fell to 161.4 from 161.7 in the previous week due to decline in prices of food articles by 0.2 per cent and non-food articles by 0.3 per cent. The index was only 156 a year ago.
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Chemical industry reeling under high input costs
Kolkata: The Indian chemical industry is reeling under high costs of capital compared to international standards and has become uncompetitive in the global market, despite over 40 year old presence in the country. The industry’s share in world production is believed to a miniscule 2 per cent. Even relatively new entrants in the field, like Middle East and China are ahead of India. Mr. R M Pandia, president, Indian Chemical Manufacturers Association stated these facts while addressing the members of the association last Friday.
He said the industry needs an annual investment of Rs 5,000-8,000 crore to sustain the existing rates of growth. However, costs of capital are extremely high (14-15 per cent) in comparison to Japan (1-2 per cent), in China (4 per cent) and in Middle East ( 0 per cent). Similarly fuel costs are about 50 per cent higher and power costs nearly 60 per cent higher than the international standards.
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