MCX to advise FTIL to cut stake in bourse to 2%

Mumbai: The board of Multi Commodity Exchange (MCX) on Thursday has decided to write to Financial Technologies (FTIL), its main promoter, to reduce the latter's stake in the commodity bourse to 2% or even less within the next one month to comply with an order by Forward Markets Commission (FMC), that found FTIL failing to meet the 'fit & proper' criteria to be a promoter of an exchange. The decision by the MCX board was taken after the Bombay high court last week did not put a stay on the FMC directive of December 17. 

    In a communication to BSE, MCX said its board of directors has decided to advise FTIL "to implement FMC order dated December 17 by reducing its stake in the company (MCX) from 26% to 2% or below, within a period of one month." The commodity bourse also withdrew the representation of Miten Mehta on MCX board in view of the FMC letter. Mehta was designated as FTIL's nominee on MCX board after the group's main promoter, Jignesh Shah resigned from MCX board last month. 
    Earlier this month, FMC had found that FTIL, along with Shah and two other former executives at the group, Joseph Massey and Shreekant Javalgekar, not 'fit & proper' to hold more than 2% stake in MCX for their role in the Rs 5,600-crore NSEL scam. The order also implies that Shah, Massey and Javalgekar can neither run nor be on the board of any commodities exchange. 
    In its order, FMC said several shortcomings were noticed in the functioning of NSEL, which included problems with warehousing, risk management, corporate governance and related party transactions. 
    The regulator also said that because of the huge profit of about Rs 125 crore earned by NSEL during fiscal 2013, the value of the shares of Shah in FTIL shot up manifold, which gave him the benefit of a spectacular market capitalization of his investments in FTIL running into thousands of crores of rupees.In an unrelated development, a group of NSEL investors have written to the Economic Offences Wing of city police, pointing out the role of brokers in the NSEL scam.

Price rise has hit school fees the most since 2004 Up 433% In 9 Years Of UPA Rule

 The fact that inflation has been an area of concern for some years now is well known, but exactly what goods and services have seen prices rise most sharply? School fees, a CSO study shows, have seen the most dramatic spike over the tenure of the UPA, up 433% between March 2004 and March 2013. 

    The chart topper is quite ironic given the much-talked about Right to Education law enacted by the UPA. The CSO study tracks rural retail prices and shows school fees were Rs 48.7 per student on average in March 2004 and had risen to Rs 259.6 by March 2013. 
    Mango prices recorded the second highest increase, up 320% from about Rs 16 per kg to just over Rs 67 per kg on average over this nine-year period. Oranges (275%), black pepper (232%), beef (229%), and buffalo meat (228%) were the others at the top of the list. 
    Among more widely consumed items, mutton (210%), salt (182%) and moong dal unwashed (190%) have been others that have really burnt holes in pockets. Cigarettes too have on average become dearer by 188%. These are, of course, rural retail prices, so the actual prices and increases that the average urban Indian faces are likely to be different, in most cases higher. However, the broad trend is clearly unlikely to be very different between rural and urban areas. Rail fares down 7% in 9 yrs of UPA O n the positive side, some goods and services have seen prices stagnate or even decline over these nine years. Among them are postcards, inland letters and local railway fares. 
    The minimum rail fare for an adult has reduced from Rs 8.8 to Rs 8.1 in these last nine years, areduction of 7%. There has been no hike in inland letter cards, which cost Rs 2.50 in March 2004 and were priced at the same level in March 2013. Postcards too have seen their price remaining unchanged at 50 paise each. 
    The average price of a transistor radio was Rs 421 then and has risen to 481 – a modest rise of just under 10% in nine years.

Gold premiums hit another peak on scarce supplies Local prices were USD 150-160 an ounce higher than London prices, compared with USD 125 earlier this week, traders said. Read more at: http://www.moneycontrol.com/news/commodities/gold-premiums-hit-another-peakscarce-supplies_1002968.html?utm_source=executive-briefing

ndian gold premiums hit another record on Thursday, driven by lower supplies to meet firm demand for weddings, which will continue till May. Local prices were USD 150-160 an ounce higher than London prices, compared with USD 125 earlier this week, traders said. "Only Scotia Bank, State Bank of India  and some trading agencies like MMTC etc are importing and most of it is going to exporters. There is no other option for domestic jewellers but to pay high premiums," said Harshad Ajmera, proprietor of JJ Gold House, a wholesaler in the eastern city of Kolkata. Most of the wedding demand is being met through recycling old jewellery or through smuggling, traders said. Gold is often gifted to brides in India, which is vying with China for the world's number one consumer. India, struggling with a record high trade deficit, has made it difficult and expensive to get supplies of gold by imposing a record 10 percent import duty on the metal, and stipulating that 20 percent of imports should be used for exports. "Imports have reduced to 25 percent of the normal average imports... domestic jewellers are facing the brunt of this in the wedding season," said an official with a private bank importing bullion. The government would wait till the first quarter of the next fiscal year and may not relax rules now after implementing a policy which has faced so much opposition, the official added. Imports plunged to 23.5 tonnes in October from a peak of 162 tonnes in May. Demand in the rest of Asia picked up after prices fell below USD 1,220 an ounce, dealers said. Premiums in Hong Kong and Singapore remained stable this week.

Re gains 29p to hit 5-week high of 61.77

Mumbai: The rupee rose to a five-week high against the dollar as the foreign exchange markets moved in line with sentiment in the equity markets after exit polls forecast a strong performance by the BJP. 

    The domestic currency touched a high of 61.52 against the dollar before closing at 61.77, up 29 paise from its previous close of 62.06 against the dollar. 
    What is also boosting the rupee is the $34 billion mobilized by RBI by swapping dollars raised by banks through non-resident deposits and ECBs. The dollar mop-up by RBI is expected to increase the foreign exchange reserves by $18-19 billion, according to Yes Bank.

CAD shrinks to $5bn on gold curbs Deficit At 1.2% Of GDP In Q2 RBI Advances Release Of Data To Reassure Mkts

Mumbai: The country's current account deficit shrunk to $5.2 billion (1.2% of gross domestic product) for the quarter ended September 2013, which is nearly 76% less than the deficit of $21.8 billion for the quarter ended June 2013.      The reduction in CAD is attributed to curbs on gold imports coupled with a smart recovery in exports following the depreciation of the rupee.      The current account deficit – which reflects the shortfall of export earning over import income – has dropped because merchandise exports have risen by nearly 10% over the first quarter of FY13 even as exports shrunk 8%.      The Reserve Bank of India (RBI) on Monday advanced its release of trade data, which was due toward the monthend, ostensibly to reassure markets as it withdrew most of the support measures introduced in the previous quarter to bolster the rupee. The rupee rose to a near twoweek high on Monday before settling down at 62.32 against the greenback.      The measures that were withdrawn include a facility whereby RBI lent dollars to oil marketing companies, which was discontinued last week.      "Given the backdrop of broad stability returning to the forex market, on the basis of an ongoing review of the demand conditions in the market, OMCs have been allowed to source dollars even beyond their normal daily requirements," RBI said in a statement. The central bank also discontinued a facility where it subsidized banks for mobilizing foreign deposits and converting them into rupees. RBI said that it raised $34 billion by exchanging dollars mobilized by banks – through NRI deposits and ECBs – for rupees through a swap facility. To encourage banks raise dollars through NRI deposits and foreign borrowings, RBI had subsidized the cost of converting these deposits into dollars and hedging currency risk.      The announcement came on a day when Morgan Stanley raised its 2013 and 2014 GDP growth estimates to 4.7% and 5.1%, respectively, from 4.4% and 4.6% based on improving macro numbers and reduced chances of the US Fed withdrawing its stimulus package.      While the trade deficit showed a marked improvement, the overall balance of payments (which factors in capital flows in addition to trade flows) showed a worsening of the deficit. The BoP deficit stood at $10.4 billion of the second quarter compared to a $200 million deficit in the same period last year. The BoP deficit, despite the improvement in trade numbers, was on account of foreign institutional investors pulling out money from the country on fears of US Fed tapering.

CNG prices may rise by up to 50%

Mumbai: Prices of Compressed Natural Gas (CNG) could go up by anything between Rs 15 and Rs 20 in Mumbai from Sunday.      The hike, which could be as high as 50%, taking rates from the current Rs 38.95 per kg to a maximum of Rs 59 per kg, could directly affect fares of taxis, autos, buses and fleet cabs.      The price of piped natural gas (PNG) is also likely to go up by 40% to 60%, from the existing Rs 24 per standard cubic meter (scm) to anywhere between Rs 34 and Rs 39 per scm early next month, a move that may force many households to go back to subsidised cooking gas cylinders.      Vipin Chandra Chittoda, MD of Mahanagar Gas Ltd, which supplies CNG across the city, confirmed "the price of CNG will go up by Rs 15-20 akg and PNG by Rs 15 per kg".      An MGL official said the rates would be increased because the Supreme Court had recently upheld a Gujarat high court order saying prices should be uniform across the country.      CNG prices are not uniform across India due to short supply of gas. While some firms get subsidised APM (administered price mechanism) gas, others have to rely on expensive imported LNG. CNG price hike will be fourth in 13 months  Mumbai: Mahanagar Gas Ltd managing director V C Chittoda told TOI: "Our APM gassupply at$4.2 per mmBtuislikely tobe cut by 30%, and we have imported that gas paying $19 per mmBtu or four times the price. We operate on very thin margins, so we can't absorb the price hike and will have to pass it [the cost] on to the consumers."      Union petroleum secretary Vivek Rae said, "MGL will be the worst hit because they werecompletely dependentupon subsidised APM gas. We can't help it because of the Gujarat HC order and have asked GAIL India, the national gas carrier, to divert APM gas to utilities in Gujarat [in keeping withtheorder]."      This will be the fourth hike in 13 months.CNG priceswerehikedby 85 paise in Mumbai in November 2012, followed by aRs2hikein July this year and a thirdhike of Rs3on September 1.      Post-hike,CNG priceswillbe almoston a par with diesel prices, and PNG prices will be on a par with subsidized cooking gascylinder rates.      Citizens are worried about the impact the hike will have on public transport, with unions likely to demand a fareincrease.  The auto andtaxifarehike matter is already in the high court, and despite three CNG hikes in the past one year, the state  transport department has not hiked fares of taxis, autos and fleet cabs. In fact, transportofficialshavebeen saying they willonly "abide by court directives and not take any decision on farehikeson their own." State-run buseswill notbe affecteddue  totheCNGhike asthey ply on diesel. THE PAST THREE HIKES SEPT 1 2013  The price was hiked by 3, taking the CNG rate per kg  in Mumbai up from 35.95 to 38.95. The reason given for the hike: to recover part of increase in input costs, especially towards sudden and rapid depreciation of rupee against the US$. While the transport department did not hike fares of autos and taxis, BEST has got an approval for hiking fares by 1-5 for various stages from April 2014. JUL 2013  CNG prices went up in  Mumbai region by 2. The reason cited was increase in input costs. PNG prices went up by 2.19 per scm.NOV 2012  CNG rates went up by 85  paise, but it had an impact on public transport. Bus fares were hiked by one rupee from April 2013. Fares of autos and taxis remained unchanged.

Rupee touches Everest! It’s a canine first

Kathmandu: Slumdog mountaineer! A homeless eightmonth-old Indian dog named 'Rupee' has scripted history by becoming the first canine to reach Mount Everest Base Camp. Rupee, the first dog ever officially recorded at the Everest Base Camp at 5,364 metres, undertook the gruelling challenge against all odds after being rescued by Joanne Lefson from a dump site in Leh.      The puppy was dying of dehydration and starvation when he was adopted by Lefson from South Africa last September, media reports said. Lefson previously hit the headlines after travelling the world with Oscar, the famous globe-trotting dog. The pair visited hundreds of famous landmarks raising awareness for needy dogs until Oscar sadly passed away in January this year following a car accident.      Lefson found Rupee and adopted the canine, thus began their travels and now Rupee has become the first dog to reach the Everest Base Camp.      "This dog came running for me and collapsed at my feet, a puppy on his last legs," Lefson was quoted as saying by South Africa's Independent Online news portal.      "The puppy couldn't have been in a lower place. The little fellow had heart, I could tell that, but he was so weak having no food or water for days, if not weeks," Lefson said.      After eight-and-a-half days, facing snow delays, rainstorms, mudslides and a yak attack en route, Rupee and Lefson reached the Base Camp, before a galloping three-and-ahalf-days back down. The team summited Base Camp on October 26 and a pair of embroidered prayer flags were tied, "with the wish that the gods above will bestow a home on all the homeless dogs below". "The trek to the top of the world was done in Oscar's honour," an emotional Lefson said. PTI HOT DOG: Rupee, an Indian stray dog, at the Everest base camp

MEN & MORALS Our bullion-dollar troubles can end if India goes for gold

It was a subdued Diwali this year. Gold trading on Dhanteras was down by 50%. Traders blamed it on mostly on the lack of gold supply which was 83% lower than last year. But policy makers cheered. Their draconian policy of restricting gold imports was working. India's trade deficit had declined and the rupee had calmed. But it is a temporary victory. Gold smuggling is on the rise and will eventually triumph, undermining a great victory of the 1991 reforms, which was to kill the havala market. There is breathing room, however, as gold forecasters expect world prices to fall. Western and Chinese investors are losing interest in gold as their economies pick up, which should also dampen Indian investor interest. 

    India absorbs about a quarter of the world's gold, and the finance minister is quite right in wanting to limit its import. A recurring theme of world history is the constant loss of Western gold and silver to India. Two thousand years ago Roman senators grumbled that their women used too many Indian spices, silks and fine cottons, and India was draining the Roman empire of bullion. Pliny the Elder called India the 'sink of the world's precious metal' when he heard that a Roman ship touched an Indian port daily. 
    The Portuguese similarly complained in the 16th century that their hard won gold and silver from South America was being lost to India. The British Parliament echoed this refrain in the 17th century. But India kept sucking Western bullion because Western consumers hankered after Indian luxuries and Indians were not interested in Western goods. As books had to be balanced, they were balanced with bullion. Only Britain's Industrial Revolution reversed the flow in the 19th century when Indians finally found something they wanted from the West—cheap, durable cottons from the mills of Lancashire — as handlooms worldwide gave way to machine-made cloth. 
    Soon after Independence, India's leaders forgot their grand trading heritage and closed our economy in the mistaken belief that trade had impoverished India. Touting the false mantra of 'self-reliance', they adopted an import-substituting path, and India lost out in the great trading boom after World War II. India's share of world trade declined from 2.2% in 1947 to 0.5% in 1990. It was only after 1991 that India regained its historic pre-eminence in the world economy. 
    Given the one-way flow of gold over the centuries, a staggering amount has accumulated in India. The World Gold Council estimates it to be over 20,000 tonnes, worth $1.1 trillion or half of India's GDP. For years economists have wanted to use this unproductive asset for pro ductive investment. And happily, the process has begun. Gold loans, bonds, and deposit schemes are all steps in the right direction. In these schemes owners of gold earn interest by depositing it with banks, which in turn releas es part of it in the market, thus reducing India's demand for imported gold. 
    The bigger prize is to convince temples to do the right thing and deposit their vast gold stocks in banks and earn interest. Jamal Mecklai, the currency expert, had suggested earlier this year that if Tirupati temple were to deposit a third of its holdings at two per cent interest, it could earn Rs 3,000 crore a year. Tirupati did just that in May, beginning with a 2,250-kg deposit with the State Bank of India. This is a triumph! If major temples follow suit, gold will soon flood the domestic market, imports will stop, the global gold price will fall and the rupee will strengthen. 
    But this government is shy to go for an all out public campaign. It worries about people's sentiments and of the opposition playing the religious card. Gold is, after all stridhana, 'woman's wealth'. Although a daughter now legally inherits her share of family property, families still insist on giving her inheritance at marriage as gold jewellery. But young Indians today are sensible and they will buy the idea that an inflation-proof gold linked certificate exchangeable for gold is the hip thing to receive at marriage rather than a bunch of clunky sets. So go for it, Reserve Bank. The road to India's economic future may well be paved with gold.

GLIMMER OF HOPE: Temple gold deposited in banks can bail us out of the economic crisis

Jignesh Shah resigns from MCX board Says FMC Can’t Draw Adverse View About Fit & Proper Tag Till Probe Is Completed

Mumbai: Jignesh Shah, founder, vice-chairman and a director of Multi-Commodity Exchange (MCX), resigned from the bourse's board on Thursday even as he replied to a show-cause notice to by Forward Markets Commission (FMC) about why he should not be disqualified from being a 'fit & proper person' to be on the board of an exchange. 

    FMC had slapped the notice on Shah for his alleged role in the Rs 5,600-crore payment crisis at the National Spot Exchange (NSEL), a group company of MCX, the only listed exchange in the country. 
    The 'fit & proper person' test for a person to be on an exchange's board requires that he/she should be honest, with high integrity, a good reputation and solvent. Regulators in India take into account all these factors before allowing a person to be either a shareholder-director or an independent director on an exchange's board. 
    Shah's resignation came exactly three months after the NSEL scam came to light. Shah, along with some others, set up MCX from the scratch over the last decade — it is now one of the largest commodity bourses in the world. Shah was on the board of MCX as a nominee of Financial Technologies (FTIL), the main promoter of the commodities bourse. 
    Shah has already resigned from the MCX Stock Exchange (MCX-SX). He, however, continues to be a director on the boards of FTIL and NSEL. 
    The resignation came at a time when the economic offences wing of the Mumbai Police has taken some of the former top NSEL officials into custody, and also Nilesh Patel, the promoter of N K Proteins, one of the biggest borrowers of the exchange which owes investors about Rs 970 crore. 
    On Wednesday, Mohan India, another large borrower in NSEL, agreed to pay Rs 600 crore to settle its dues that totalled about Rs 770 crore. There are talks that Patel is also on the verge of paying up Rs 600 crore to settle his dues with the commodity bourse. 
    In his reply to FMC's showcause notice, Shah pointed out that proceedings initiated by various agencies into the NSEL fiasco were pending and, hence, it would be premature to draw any adverse inference either against him or FTIL on account of such proceedings, sources said. Shah also defended his position as a qualified board member of the bourse on the basis that neither him, nor FTIL has been found to have played any role in the NSEL scam.

Jignesh Shah

Fwd: NOOSE TIGHTENS AROUND FT GROUP OWNER

FMC Show-Cause to MCX Promoter FT

Lookout notices against Jignesh Shah, Anjani Sinha and NSEL defaulters

The Forward Markets Commission (FMC) has issued a notice to Financial Technologies (FT), the promoter of commodity exchange MCX, FT Group owner Jignesh Shah and other officials, asking them to show cause why they should not be declared not 'fit and proper' to be shareholders and directors on MCX. 
Besides Shah, who is the chairman & CEO of FT Group, notices have also been issued to Joseph Massey, MD & CEO of MCX Stock Exchange, and Shreekant Javalgekar, MD & CEO of MCX. 
"The show-cause notice has been issued on Friday," said two government officials privy to the development. "Financial Technologies and the three officials have been given two weeks to reply to the notice." 
In a potentially significant finding, the officials added, the notice found the board of National Spot Exchange (NSEL) was aware of the happenings that led to the . 5,500-crore payments crisis. 
"The board approved the paired contracts in 2009, which were not allowed as they were a financing activity. Bye-laws on warehousing too were not followed. FMC has found there were 2,000 payment defaults in two years through 2012," one of the officials said. 'Board can't Absolve Itself' 
Despite the payment defaults on NSEL, "the borrowers were not barred from trading. On the contrary, they were given margin exemption and allowed to do more trading on NSEL, resulting in their outstanding exposure rising from . 2,009 crore in March 2011 to . 6,800 crore by June this year", one of the officials said. While Shah continues to be a director on NSEL, Javalgekar and Massey were past directors on the board. Shah and Javalgekar are also on the MCX board while Massey resigned as a director on September 30. 
The show cause notice also says that trading by group company Indian Bullion Market Association on NSEL and MCX was against rules. Further, former MD & CEO of NSEL, Anjani Sinha, was a key management personnel on the exchange and according to Accounting Standard 18, such a person's role is defined and approved by the board. Thus, the board cannot absolve itself of any responsibility for the fiasco, the officials added. Another potentially significant finding, according to them, was that the NSEL board gave corporate guarantees to banks against which some of the defaulting members could borrow. 
LOOKOUT NOTICE AGAINST 
SHAH, OTHERS 
In a related development, the Maharashtra Police unit investigating the NSEL defaults case issued a lookout notice against Jignesh Shah, who will now not be allowed to leave India without permission. 
"We have issued such notices against 22-24 persons, including the promoters, office-bearers and certain defaulters on NSEL," said Rajvardhan Sinha, additional police commissioner, Economic Offences 
Wing (EOW), Maharashtra Police. "This is a normal legal procedure whereby a criminal case is filed and it is (feared) that a person with financial standing could possibly leave the country to evade the consequences. It is done as a matter of abundant caution." 
The so-called lookout notices have been issued by EOW against Shah, Anjani Sinha, other office-bearers of NSEL and key personnel of some of the biggest defaulters, including Mohan India, NK Proteins and Lotus Refineries. 
The lookout notices have been sent to all immigration check posts in the country. 
NSEL and its promoter Financial Technologies are among entities facing police investigation following a complaint filed by an investor with EOW. Around two dozen members have defaulted on payments amounting to Rs 5,500 crore to more than 13,000 investors. 
The money was borrowed on NSEL through paired contracts. First, an investor bought commodities from a borrower on the second day of placing a trade. In the second part, the investor undertook to sell the commodity back to the borrower after 25-36 days. In the bargain, the investor earned an annualised return of more than 13%. The crisis erupted when it was found that most exchange-accredited warehouses had inadequate or non-existent stocks against which borrowers had raised funds. 
Apart from EOW, other agencies examining the matter include FMC, the ministry of corporate affairs and the income-tax department.

India, Japan in $50bn currency swap

The rupee surged 87 paise on Friday after Japan extended support to India's fight against currency volatility by agreeing to more than treble the scope of the bilateral swap arrangement to $50 billion. 

    The facility between the Reserve Bank of India and the Bank of Japan enables both countries to swap Japanese yen or the Indian rupee for US dollars in an unforeseen situation. It is essentially an arrangement to tide over short-term foreign exchange crunch. The deal was first signed in 2008 and was limited to $3 billion, but the size was increased to $15 billion when the arrangement was renewed in 2011. 
    The rupee opened at 66 up from its previous close of 66.12 against the dollar and gained during the day to close at 65.25 against the dollar. "The swap arrangement with Japan was a positive factor for the rupee. This supplements RBI's earlier measures 
whereby it has agreed to swap dollars raised by banks through long-term non-resident deposits and borrowings at 350 basis points," said Ashish Vaidya, head of fixed income, currencies and commodities, at UBS India. He added that these measures under which RBI borrows dollars will complement its swap facility with oil companies where it lends dollars. 
    "The two governments expect that this will contribute to the stability of global financial markets, including emerging economies," India and Japan said in a joint statement after a meeting between Prime Minister Manmohan Singh and Japanese deputy PM Taro Aso on the sidelines of the G-20 summit. 
    Forex dealers said that the tide appears to have turned for the rupee and this could result in unwinding of long dollar positions. But uncertainty continues to hang over the market in respect of the situation in Syria and the outcome of the meeting of the US Federal Reserve on September 17. "A reduction in the Fed's bond buyback has already been factored in. The question now is how much?" said a dealer.

Re’s lost over 20% this year Re Plunges 188 Paise To 66.19/$,

The Sharpest-Ever Fall In Absolute & Percentage Terms. Rattled By 1.3 Lakh Cr Food Bill, Stock Market Loses 2 Lakh Cr In A Day. And Gold Hits All-Time High 

Fear Of US Strike On Syria Roils Emerging Mkts

Mumbai:The rupee on Tuesday hit a record low of 66.30 before closing at 66.19, down 188 paise from Monday's close of 64.31, over concerns that the food security bill would throw government finances into disarray and fears of a US strike against Syria. 
    The rupee is emerging as a front-runner in a race to the bottom among emerging market currencies. In both absolute and percentage terms, Tuesday's drop is the highest ever. The rupee has fallen by around 20% 
since the beginning of the year. The only currency that has done worse is the South African rand which has fallen nearly 23%. Turkey's lira has dropped 14% while Brazil's real has fallen over 17%. The Chinese yuan has been the outlier, having gained nearly 2% in 2013. 
    Given the uncertainty over the rupee, gold, seen as a safe haven investment, soared to a new high of Rs 32,585/10 grams. Silver also rose, to a sixmonth high to retrace the Rs 56,000-per kg level. India faces risk of ratings downgrade, warn bankers 
Mumbai: The concerns over the food security bill and a possible US strike on Syria that caused the rupee to fall also dragged the sensex down 590 points to 17,968 on Tuesday. Bankers said with the government living beyond its means, India faced the risk of a downgrade by rating agencies. This would accelerate the outflow of foreign capital. 
    The general slowdown in the economy is also impacting the real estate market. Data released by National Housing Bank showed that property prices in 22 of the 26 cities covered, including Mumbai, Delhi, Bangalore and Chennai, have recorded a decline in prices during the quarter ended June as compared to the preceding quarter. 
    However, finance minister P Chidambaram said that the government would not exceed the fiscal deficit target projected for the year. He also said that the cabinet had approved infrastructure projects amounting to Rs 1,83,000 crore—including power projects. 
    "While the rising dollar is hurting all emerging markets, a lot of our pain is self-inflicted," said Ashish Vaidya, head of fixed income commodities and currency trading at UBS India. "The current crisis clearly threatens corporate balance sheets which usually have a reasonable line of overseas funding, which is going to take a hit," said Vaidya. He added that while depreciation leads to imported inflation, the food security bill will add to demand-led inflation as it will increase disposable income of the beneficiaries. 
    "The food security bill is expected to add to the fiscal burden. We believe crude oil has emerged as a key risk in the nearterm, which is not a good sign for the INR. Thus, the macroeconomic outlook has weakened and risks have clearly strengthened," said Sanjeev Zarbade, vice president, Kotak Securities. 
    "We estimate that the total cost of NFSB in its first full year could be Rs 1,17,000 crore, which amounts to an additional Rs 27,000 crore (0.25% of GDP) over the budgeted amount for FY14," said A Prasanna of ICICI Securities PD.

5 defaulters traded on NSEL without stock

Mumbai: Five of the nine defaulting members on the troubled commodity bourse NSEL did not have adequate commodity stocks in their warehouses even as they traded in hundreds of crores worth of contracts, which led to a crisis worth about Rs 5,600 crore.      NSEL said on Monday it is investigating the matter relating to Ark Imports, Lotus Refineries, N K Proteins, Vimladevi Agrotech and Yathuri Associates.      Similar investigations are expected to start on the other four defaulters: Loil Overseas Foods, NCS Sugars, Spin Cot Textiles and Tavishi Enterprises. These nine defaulting companies together owe about Rs 83 crore to NSEL investors, which they failed to pay last week.      In a related development, FMC chairman Ramesh Abhishek told the NSEL Investors Forum that the regulator was considering declaring the promoter of NSEL, Jignesh Shah, not fit and proper to operate exchanges.

Re hits record low of 64.54

Mumbai: The rupee closed below the 64-level for the first time on Wednesday with the currency ending the day at 64.04, 81 paise below its previous close of Rs 63.23 against the dollar. The British pound also created a new record closing above the 100 mark at 100.42 as against 99.03 on Tuesday. 

    With most bankers feeling that the 65-level may be taken anytime now, economists are now talking about the rupee touching 70. On Wednesday, Deutsche Bank said that the rupee could fall to 70 in around a month's time. On Tuesday, UBS had forecast the 70 level for the rupee this year. 
    The rupee fell to an intraday low of Rs 64.54 as the dollar strengthened ahead of the release of minutes of the US Federal Reserves July meeting. If the meeting reveals that a US recovery is seen to be underway by Fed committee members the rupee may fall further on expectation that the Fed may start to withdraw its monetary stimulus. 
    Dealers said that markets were confused over RBI measures to bring downlong-term rates through buyback of bonds even as it sought to keep rates high at the shorter end. 
    "The RBI took steps on Tuesday to contain longterm yields and ensure that credit flows were not unduly disrupted by the recent currency stabilization measures. Juggling currency and growth concerns at the same time is not easy and if not done carefully it risks sending mixed messages about policy intentions. That would neither help the currency or growth," said Leif Lybecker Esksen, chief economist for India & ASEAN, HSBC Global Research. 
    The day started on a positive note for the equity markets as bonds staged the best recovery in four years with yields falling by 50 basis points. However, the fall in the rupee spread panic in equity markets with indices closing lower.

NSEL to liquidate defaulters’ assets FMC Asks Exchange To Recover 83Cr Payment Dues From 9 Entities

Mumbai: The Forward Markets Commission (FMC), the regulator for the futures trading in commodities in the country, on Wednesday asked the crisis-ridden National Spot Exchange (NSEL) to take possession of the assets of all those nine defaulters to liquidate and recover the Rs 83 crore that they have jointly failed to pay to the exchange.      The nine defaulters now stand to lose some of their assets to auction for meeting their pay-in obligation to NSEL. These nine entities include Ark Imports, Loil Overseas, Lotus Refineries, N K Protiens, NCS Sugars, Spin Cot Textiles, Tavishi Enterprises, Vimladevi Agrotech and Yathuri Associates.      In its payout on Tuesday, compared to a total outstanding liability of Rs 174.7 crore, the exchange could pay to its investors only about Rs 92 crore. This was the first of its 30 such weekly payouts scheduled to take place every Tuesday till March 2014, and the total amount involved is close to Rs 5,600 crore. However, with the exchange defaulting nearly 50% of the amount in its first payout itself, investors are now skeptical about how much of the total liability the exchange will be able to meet.      In a letter to the NSEL board, FMC pointed out that under the rules of trading on the commodity bourse, the exchange should ask all the defaulters to hand over their "books, documents, papers, assets, cheque books and other documents, as may be specified by the exchange and the same should vest with the exchange for the benefit of the creditors". It instructed NSEL to move to liquidate all realizable assets of the defaulter members to meet their pay-in obligations, which in turn should be passed on to the investors who are to receive money from the exchange.      FMC told NSEL that the proceeds of commodities auctioned and money realized from the defaulter should be done in the shortest possible time. The money received by auctioning the assets of the defaulters should be deposited in the escrow account opened for this purpose. In turn this money should be paid to those who are to receive pay-ins from the exchange, but the same should be done with the approval of the regulator.      On Wednesday, NSEL investors who were to receive money from the exchange, received part of their money into their bank accounts. Each investor got about 1.64% of the total receivable after 5% of the net receivable being deducted as value added tax (VAT), one of the investors said. According to the earlier plan published by NSEL, each investor was to receive about 3% of their net receivable every week for the next 20 weeks, and then about 1.5% every week till March 2014. They are also entitled to get interest at the rate of 8% per annum for the delay in payment.  Govt won't take over NSEL board  New Delhi:The government is unlikely to take over the board of NSEL, arguing that it does not have the technical wherewithal to deal with the crisis. "Taking over the NSEL board is not a big issue but the problem is managing it since we do not have the expertise," atop source in the ministry of consumer affairs said. Government officials said the move was also not being pursued as the promoters would be able to get away without ensuring pay outs that add up to nearly Rs 5,600 crore. The ministry said it wanted the finance ministry and Sebi to take charge of the commodities market. TNN GETTING INTO A SPOT  May 2005 | NSEL is incorporated as a company  2006 & 2007 | Signs MoUs with various state governments  June 2007 | Receives govt exemption to launch contracts that allow delivery of goods after several days  Oct 2008 | Commences live trading, providing deliverybased spot trading in 52 commodities  March 2010 | Launches first contract under e-series that uses demat accounts for traders and investors  Apr-Aug 2012 | FMC seeks data, suspects norm violation July 31, 2013 | NSEL suspends trading in most contracts after a ministerial directive to change the structure of contracts; the move affects volumes and leads to a payment crisis  Aug 14 | NSEL seeks eight months to settle dues  Aug 19 | NSEL giving wrong info, says FMC as govt mulls stock audit  Aug 20 | NSEL defaults on dues; top brass, including its chief executive, is sacked  Aug 21 | FMC tells NSEL to take possession of the assets of nine defaulters who failed to pay the exchange an aggregate amount of Rs 83 crore

Economy stares at crisis as rupee suffers worst single-day fall of 142p At 63.13 To $, Worsens Fears About Growth And Inflation

Mumbai: Policymakers may still be in denial but the Indian economy is clearly staring at a crisis, with the rupee on Monday recording its sharpest drop ever in absolute terms to close at 63.13—1.42 paise down from its previous close against the dollar. 

    Economists are now forecasting an exchange rate of 65 in the short-term. The rush of capital out of India, which has triggered the fall, has raised the prospects of inflation, growth falling below 5% and higher interest rates. 
    The rupee fell nearly 2.25% in a day, making all imports that much more expensive. Stock prices too crashed on Monday. The sensex fell 291 points to 18,308. 
    The rupee's fall was the sharpest among all currencies as rising interest rates in the US pushed up the greenback against all emerging currencies. As a result, investment funds from the West are pulling money out of emerging markets and back into US treasuries. Besides the rupee, the Indonesian rupiah touched a four-year low, while the South African rand fell below 1%. 
    The RBI's fire-fighting measure of keeping rupee funds in short supply to rein in the dollar have not helped much but have caused immense collateral damage. 
    The yield on 10-year government bonds has risen past 9%. This has compelled banks to raise interest rates on deposits and loans. Consumers buy less and businesses pull back on investments as rates rise, dragging down growth. 
10-YR GILT YIELD AT 5-YR HIGH 
Yield on 10-year government security is taken as the best risk-free return possible. Banks and other lenders take this yield as the benchmark rate for fixing lending rates. Any major change in this rate impacts all rates, including housing, auto, consumer. It also pushes up FD rates. 
    Since May 24, the benchmark yield has risen by 2.11 percentage points to Monday's close of 9.22%. This is the highest 10-year yield in almost five years 
SENSEX DIVES 291 POINTS 
    Sensex lost another 291 points on Monday, taking the total loss in last two sessions to 1,060 points 
    Investors were left 3.2 lakh crore poorer with BSE's market cap now at 59.3 lakh crore 
    FIIs were net sellers of 680cr on Monday, adding to their 520cr net selling on Friday

Govt agencies didn’t act against NSEL Finmin, Consumer Affairs Min Had Informed Parliament About Probes In Dec 2012

New Delhi: The National Spot Exchange (NSEL) fiasco, which has led to a delay in the settlement of payment worth over Rs 5,500 crore, is turning out to be a multi-agency failure with even the finance ministry and the Reserve Bank of India (RBI), apart from the ministry of consumer affairs, failing to act against alleged irregularities.      In fact, both the finance and consumer affairs ministries had told Parliament last December that they were probing the issue.      In December 2012, Trinamool Congress's Rajya Sabha member Sukhendu Sekhar Roy had raised the issue of contravention of Forward Contracts (Regulation) Act or FCRA and also asked the government if there were "illegal NBFC (nonbanking finance company) transactions. In identical replies on December 3 and 6, junior minister for finance Namo Narain Meena and the consumer affairs ministry had said: "After analyzing the trading data submitted by NSEL, Forward Markets Commission (FMC)… had intimated the department regarding the non-compliance of certain stipulated conditions… for one-day duration forward contracts. FMC has found that the exchange allows trading on the exchange platform without verifying whether the seller has the stocks with him or not, thus in effect, allowing short sale by the members. FMC has also found that thecontracts traded on the exchange platform for which settlement period exceed 11 days are Non-Transferable Specific Delivery (NTSD) contracts, which is in violation of the provisions of FCRA."      On the issue of NFBCs, both ministers had said "the issue is being examined by FMC in consultation with the ministry of finance".      Between the two questions by Roy, consumer affairs minister K V Thomas told his party colleague Sai Prathap Annayyagari in the Lok Sabha on December 4 that NSEL's reply to a show-cause issued by his ministry and a compliance report were "under examination". On August 5, TOI had highlighted how the consumer affairs ministry slept over FMC's report.      Both the ministries are yet to publicly disclose the details of the action taken by them. Government sources told TOI that even RBI, which deals with the issue of NBFCs, was in the picture but the regulator could not be contacted for comments. In the past, RBI has, however, said it does not regulate all NBFCs but only a handful. Sources, however,said that in this case only a complaint about financing transactions was received and NSEL was not registered as an NBFC.      Even Sebi's role has come under the scanner given that the depositories — NSDL and CDSL — are regulated by it and were participating in e-series contracts related to gold and silver, which were suspended after the NSEL fiasco turned into a full-blown crisis. Sebi officials have maintained that they did not have to do anything with NSEL, which was regulated by the ministry of consumer affairs. REGULATORY LAPSES?  Consumer Affairs Ministry | Told Parliament it was examining NSEL related reports, did not act on FMC report for over 15 months  Finance Ministry | Told Parliament it was examining issues related to "illegal NBFC transactions"  Sebi | Depositories such as NSDL and CDSL, which were dealing with NSEL's e-gold and e-silver contracts, regulated by it  RBI | NBFC issue dealt by the regulator

Govt set to hike import duties, clear PSU $ bonds Bids To Bolster , Raise Inflows, Rein In Deficit

New Delhi: In an attempt to shore up the sliding rupee, the government on Monday unveiled a multi-pronged strategy to increase inflow of dollars and check outflows. The measures include a planned increase in import duty on several red-hot imports like gold and silver, allowing three public sector financial institutions to raise dollar funds through bonds, making NRI deposits more attractive and easing foreign loan norms. Taken together, these steps are expected to bridge the forex gap by $18 billion.      Through the measures announced on Monday, finance minister P Chidambaram is hoping to pare imports by $7 billion, while increasing dollar inflows by around $11 billion. This, he said, would help contain the current account deficit (CAD) at $70 billion or 3.7% of the gross domestic product, lower than last year's 4.8%. CAD has been blamed as the key factor behind the sharp volatility of the rupee against the US dollar.      CAD has widened as exports have remained sluggish, while gold and silver imports have spurted. India needs more dollar flows, through foreign investment, to fill the gap. BRIDGING FOREX GAP BY $18bn  Govt hopes to prune annual import bill by $7bn  MOVE | Compression in import of gold & silver via duty hikes IMPACT | Hopes to tame demand, save $4bn outflow  M | Compression in oil demand I | Govt looks to cut import bill by $1.5bn  M | Higher import duty on nonessential imports I | Lower demand expected to pare import bill by another $4bn  Announces measures expected to increase inflows by $11bn  M | PFC, IIFCL, IRFC to raise dollars in bonds with implicit govt guarantee I |Expected to mop up $4bn  M | Easing foreign loan norms I | MNC subsidiaries can tap dollar resources from parent  M | PSUs to tap dollar window I | $4bn can be raised in over- seas loans, trade finance. Will cut reliance on local currency market, reduce rupee volatility  Industrial output declined by 2.2% in June Exports rose 11.64% to $25.83bn in July; imports down 6.2% CPI inflation eased  to 9.64% in July from 9.87% in June Govt's renewed efforts fail to lift rupee      The slew of measures indicates the government's urgency to avert a possible crisis on the balance of payments front if the situation is left unchecked. "While we have a problem, there is no room for panic…I expect the volatility to decrease and also expect the rupee to stabilize (following the measures)," Chidambaram told a press conference. Although he did not elaborate on the products where customs duty is proposed to be increased, sources said some electronic goods top the list with measures expected to cut import of certain varieties of coal, crude palm oil and copper also on the anvil.      The urgency can be gauged from the government resorting to a quasi-sovereign bond issue by the Power Finance Corporation, Indian Railway Finance Corporation and India Infrastructure Finance Co Ltd. Such a bond issue was last used in 2001 when State Bank of India raised over $5 billion through the Indian Millennium Deposits in the aftermath of the dotcom bust and the 9/11 attacks. This time, SBI declined to be used as the vehicle to raise dollar debt.      The renewed effort from the government failed to lift the rupee. Despite the measures being announced first in Parliament in the afternoon, the rupee slid to 61.30 a dollar, a little short of last week's lifetime low of 61.80.      "These measures were in the pipeline. Despite that, the rupee seems to be under pressure. The rupee has been affected by growth worries on the domestic front and the quantitative easing tapering on the external front," said Moses Harding, executive director at Lakshmi Vilas Bank.      Most bankers and economists were unusually shy of commenting on the measures after RBI announced a clampdown recently.      "Till the structural issues are resolved the currency will behave in a similar pattern. That can be changed if we have more regular flow of FDI, which is the preferred form of foreign capital," said Devendra Kumar Pant, chief economist, India Ratings.

Rupee loses 107 paise on RBI’s mixed signals

Mumbai: The rupee fell by 107 paise (1.8%) to 60.49 on Tuesday, its third-lowest close ever, after RBI maintained the status quo on interest rates and failed to come up with any new measures to support the currency. 

    Contradictory signals from the central bank on the possible duration of its liquidity tightening measures announced earlier this month led to its resolve on the rupee being tested by the foreign exchange market. 
    The stock markets also gave a thumbs down to the policy with a 250-point drop in the sensex. The rupee fell soon after RBI's policy statement said that its liquidity tightening measures would be rolled back in a calibrated manner as stability is restored to the foreign exchange market. The statement surprised markets since the rupee was steadily weakening and inching toward 60 levels despite two rounds of liquidity tightening aimed at buffering the rupee. 
    The fall of rupee below the psychological mark of 60 on Tuesday, the steepest in past three weeks, erased all gains it made since the RBI first announced the measures to defend the rupee on July 15. It is now close to the all-time low of 61.21 hit early this month. 
    In what could be his last monetary policy review, RBI governor D Subbarao, also came out with a strong opposition to a sovereign bond issue and rubbished any need to approach the IMF. RBI firm on stemming rupee slide, says guv 
Mumbai: Taming the exchange rate is RBI's top priority as by its own admission a 10% weakening of the rupee adds over 1.2% to inflation due to higher cost of imports. The two rounds of measures capped bank borrowings from RBI to 0.5% of their deposits. The norms also forced banks to maintain 95% of their cash reserve requirements on a daily basis as against a quarterly average earlier. These short-term measures have pushed up short-term rates above 10% and yields on 10-year bonds have crossed 8%. If these conditions persist till Septemberend, banks stand to make big losses through provisions for depreciation on bonds. 
    Subbarao, however, denied that RBI could be seen to be vacillating on its resolve to stabilize the exchange rate. "We have not used the word temporary very advisedly because RBI does not want to get locked into a timeframe on how long these measures might be necessary. We are determined to control volatility in the exchange rate. There will be consequences for this; there will be pain in the economy. Somebody will have to bear these costs which are inevitable and unavoidable. But we will persist with these measures and implement them consistently in order to achieve the intended results," said Subbarao, whose term as governor ends on September 4, 2013. 
    "In our view the government could increase import duty on select commodities, such as electronic goods, to reduce the import bill," said Samiran Chakraborty, head of regional research, South Asia in a research report. 
    RBI left the policy repo rate at 7.25% and retained cash reserve ratio requirement at 4%. It also cut its growth forecast for the year to 5.5% from 5.7% earlier. Bankers, under pressure from the finance ministry, have committed to hold rates. However, if the rates persist for 6-8 weeks, most will be forced to review their rates.

THE REAL FACE OF A GLITTERING ENIGMA

Reclusive Bullion King Lands in the Taxman's Glare P Kothari, the pioneer of online gold trading, may be paying for his aggressive ways   The walk up to the 20,000-square feet Bullion House, headquarters of Prithviraj Shermal Kothari's RiddiSiddhi Bullion (RSBL), is remarkably unimpressive. A few ramshackle buildings, jewellery shops and sweet-meat stores dot both sides of the road. One has to dodge handcart pullers, twowheelers and an unrelenting stream of people on the street to enter Bullion House. Yet, it is from this street that Kothari, or PK, as he is known in Zaveri Bazaar, has revved up a cumulative turnover of . 1.2 lakh crore over the past six years, earning the title of India's 'bullion king'.  Jignesh Shah, a pioneer in commodity trading in India, has also walked this very street for a lesson or two in bullion trading from Kothari. So has Rajan Mehta, former head of Benchmark Asset Management Company, credited with the launch of India's first gold exchange-traded fund (ETF). "Kothari understands the bullion market better than most suited-booted professionals," Mehta swears.  They are not the only ones to come to this street looking for Kothari. An intimidating force of about 100 income-tax officials also pounded this street as they raided RSBL's offices last month. Speaking to ET on the condition of anonymity, I-T officials claim they have some evidence suggesting that payments have been allegedly made by the company for bogus exports and imports. Kothari rejects the claim and has since written to the I-T department demanding proof of wrongdoing. The I-T officials did seize . 8-10 crore in cash at Kothari's offices. This was part of the collection for the day's gold sales and would have been deposited in the bank the next day, Kothari claims. "I will shut down all my trade if the I-T department finds a single bogus entry in RSBL's accounts," dares Kothari. "We, gold traders, are businessmen and not mafia. We operate within the system." Several Unconfirmed Rumours  This past month, a vicious swirl of unconfirmed rumours has surrounded him — hawala connections, underworld links, even IPL betting. Kothari is a glittering enigma. Till two years ago, he lived in a 625-square feet, 2-bedroom apartment near Tardeo's AC market. His wife still cooks his meals. And he is happy driving a Toyota Etios, a functional . 8-lakh sedan.  Yet, he runs a company with an annual turnover of . 25,000 crore.  Industry leaders credit him with shaping the bullion market and seek him out often for advice. He was in the committee advising MCX and NCDEX, two of the largest commodity futures bourses in India. "Anything to do with bullion trading in the country has shades of Kothari's idea," says a veteran commodity exchange professional. Yet, most industry people refused to go on record for this story, afraid to be linked to him after the raids. What is the real face of India's bullion king?  HUMBLE BEGINNING  Kothari, a Marwari, started off in the early '80s doing simple tasks at his father's 180-square feet shop selling customs notified goods. Situated at Mumbai's Cursetji Shuklaji Street, the shop was among the few licensed agents that sold everything from gold to Pashmina shawls seized by the customs.  Today, he buys truckloads of gold and silver bars and sells them to over 2,200 jewellers through his online spot bullion trading platform, the only such in the country. He set it up in March 2008. Ninety-seven per cent of all trades on the platform result in delivery. The trading platform accounts for around 15% of bullion trading in India. At its peak, RSBL, India's top gold and silver trading company, was selling gold and silver worth . 100 crore daily.  The transparency and aggressive pricing offered by the spot platform has wooed many jewellers who used to buy bullion from conventional channels.  Earlier, people used to call every broker and dealer for quotes locally and deal with them — this lacked transparency and price benchmarks. The rates on the RSBL Spot platform have now become the benchmarks.  "Competitors have failed to sustain if their prices are way too different from the RSBL online platform," says Rajiv Popley, MD of Mumbai-based jewellery retail chain Popley and Sons. Popley has been dealing with RSBL for over two years now, but has never met Kothari personally.  "Traders were exited about RSBL, and I too wanted to try dealing with it. Today, 30-40% of our purchases are through the spot trading platform of RSBL," he says. RSBL earned a net profit of . 85-100 crore in the six years launching its spot platform. Margins in this business are wafer-thin.  "Kothari's pricing game may have made him a market leader, but his aggressive personality has also earned him many foes," says another bullion dealer, who is a close friend of Kothari and also competes with him. "Kothari rubbed many people on the wrong way when he was heading the Bombay Bullion Association (BBA)."  Mohit Khamboj, who was recently elected the president of BBA, has levelled several allegations against Kothari, including illegal possession of a BBA premise by his associate. Kothari responded with a defamation suit. But the matter was resolved last week after Kothari withdrew the suit and Khamboj made way for him in BBA as a director on the board.  Kothari says there is a lack of understanding of the current business model of the bullion trade and the stigma of smuggling in gold and silver, prevalent in the '80s, has stuck to the industry.  "The I-T scrutinised RSBL accounts for several months last year and conducted 100% client verification. But they found nothing untoward, and the recent raids may be due to difference of opinion on interpretation of a few transactions," says Kothari. I-T officials carried out the last raid on RSBL on June 11. They are yet to conclude the investigation. "We are still making inquiries," is all a senior I-T official will say.  "There is no scope of illegal dealings if trades are booked on the online platform of RSBL. Ease of transaction, quick delivery and price transparency has been Kothari's USP," Popley claims.  THE EARLY YEARS  Kothari began his bullion trade in the days when Dawood Ibrahim ruled the roost, selling smuggled gold to small Marwari jewellers. Customs raids were a common feature at Zaveri Bazaar. This pushed the business to a dismal state. But Kothari saw an opportunity and tied up with overseas banks to import gold, which was later sold in India. To attract more dealers and their business, he distributed around 50 VSAT terminals (satellite antennas) to help them track international bullion prices, which also allowed jewellers to price their products better. His understanding of technology and sophisticated market mechanisms — both uncharacteristic for a home-grown bullion trader — have held him in good stead.  His comfort with technology led him to promote Contakt Tech Solution, a mobile value-added service provider. Financial market experts who have worked with Kothari say he has a sharp mind. "He provided crucial support in market-making for our gold ETF," says Mehta.  Only now is Kothari permitting himself the first taste of luxury. Last year, he left his 625-sq ft home for a 2,500-sq ft, 4-bedroom flat at Imperial Twin Towers, the ultra-luxury apartments at Tardeo built by Shapoorji Pallonji. The furniture at his house is modern, but not ostentatious. His wife dislikes chunky jewellery. PK himself is content wearing simple, but crisp white clothes. He occasionally slips on a suit or blazer. Unlike his personal lifestyle, he does nothing to hide his business ambitions. Kothari monitors international bullion prices on his tablet for up to 16 hours a day. Someday, he would like to buy gold mines in Australia, Canada or Africa. "Some such mines — they are also listed companies — have approached RSBL," he claims.  He would also like to build a gold refinery close to Mumbai for making gold coins and bars. His plan is to build one in Navi Mumbai or Panvel. This will make delivery of gold coins and bars to various jewellers in Mumbai and Gujarat easier and less risky, he says.  India's bullion king isn't finished yet. His ambitions will take him higher…if the income-tax investigators will give him a clean chit.  (With inputs from M Padmakshan) RICH PICKINGS: Prithviraj Kothari

Gold jewellery set to cost more on RBI’s import norms

New Delhi: Gold jewellery prices are set to go up with RBI mandating 20% of every lot of imported gold to be set aside for the purpose of exports. With the move likely to generate a shortage of the yellow metal for consumers, jewellers and retailers said this will push up domestic prices as traders will be compelled to export even at low prices to meet the norms. 

    "The government can discourage consumption of gold only by increasing the price of the metal. This is another step in that direction. The increased local premium will be factored in the end price, making it costlier for the consumer," said Jayant Manglik, president, retail distribution, Religare Securities. 
    For retailers, the move has spelt greater discomfort as it will require them to set aside one fifth of every import shipment for exports. According to the policy, 20% of the imported quantity of gold will be retained in customs-bonded warehouses. Fresh imports of gold will be permitted only after 75% of the retained gold is exported. 
    "It is a complicated policy. It is not possible for us to ensure a specified amount of exports with every shipment of gold imported. It will make it very cumbersome for retailers. We would not mind paying a penalty, but this is not a welcome move for the manufacturing industry," said Mehul Choksi, CMD, Gitanjali. 
    According to industry estimates, as against an average of 900 tonnes of consumption of gold in the country annually, exports stand at 60-65 tonnes per year. REINING IN DEMAND 
    According to the RBI policy, 20% of the imported quantity of gold will be retained in the customs bonded warehouses. Fresh imports of gold will be permitted only after 75% of retained gold is exported 
    The move may lead to shortage of the yellow metal for consumers 
at home, leading to hike in prices 
While the RBI move may discourage the consumption of gold to some extent, experts believe it will not be possible to push exports significantly

Rupee follows global slide, hits all-time low against $ FIIs Dumping Indian Bonds Triggers Fall

Mumbai: The rupee weakened 90 paise against the dollar to close at a record low of 58.77 on Tuesday, moving in tandem with a slide in the value of most emerging market currencies, with the domestic currency and the Russian rouble leading the fall.
    The sharp fall in the value of the rupee will spur inflation and force the government to hike fuel prices. It also increases prices of local gold vis-à-vis international prices which will make the yellow metal appear like a sound investment despite efforts by the government to dissuade gold purchases. Besides making all imports expensive the weak rupee will make overseas travel and education more expensive.
    The present fall has been triggered by a massive selloff by foreign institutional investors in Indian bonds. In 18 sessions FIIs have sold bonds worth $4.7 billion.
    Though all emerging market currencies have weakened against the dollar, India will suffer the most because it has the largest current account deficit of $80bn after the US. Around $15bn inflow could be affected
    With QE (quantitative easing, through which the US government pumped in huge money into the financial system at low rates) being terminated earlier or on schedule, the implication will definitely mean fewer FII funds coming in, though there would still be positive flows. Around $15 billion could be affected—only affirmative policies within the economy can retain such flows, or else the balance of payments will be under pressure as this cushion will be less supportive," said Madan Sabnavis, chief economist, Care.
    Dealers said that there was a demand for dollars from public sector banks which appeared to be on behalf of defence purchases or oil refiners.
    "The depreciation of emerging market currencies is a global phenomenon. South Korea has also depreciated against the dollar and so have the Brazilian real and South African rand," said Ashish Vaidya, head of fixed income, currencies and commodities trading at UBS India. He added that RBI intervention has been mild because it sees this as a part of a global phenomenon. "The central bank is following a strategy of containing volatility and going with the trend," he added.
    Although there is no word from the Federal Reserve on withdrawal of stimulus, global funds appear to be bracing themselves to a possible early withdrawal of quantitative easing ahead of schedule. The three phases of quantitative easing (or QE1 to QE3) refer to the unconventional monetary measures adopted by the US Federal to inundate money markets with dollars by purchase of debt of up to $85bn every month. Signs of a recovery in US have raised expectations that the Fed would bring an early end to this practice.
    In the currency futures market, near-month dollar/ rupee contracts on the National Stock Exchange, MCXSX and the United Stock Exchange all closed around 58.88.