Category — Banking & Financial Services

The latest version of the 100 most powerful women in the world according to Forbes Magazine is published. Indian-American Indra Nooyi ranks sixth on the list which is quite creditable. But somehow the magazine neglected to rank Sonia Gandhi, the Italian-born president of India’s ruling Indian National Congress party. This is absurd. They also did not rank India’s President Pratibha Patil. While the President is a ceremonial post in India, Patil is clearly wields more influence than at least 25 women on the list.

Two Indian bankers are on the list, but ranked in the wrong order and too far down. India’s second largest bank is  run by Chanda Kocchar of ICICI and she is ranked #92. But she is running her bank better than most US bank leaders today! Ranked ahead of her at #89 is Shikha Sharma, head of Axis Bank.

I can probably think up another four to six women who are more powerful than many of the Forbes 100 list. But let me stop here.

This week, Infosys co-founder and billionaire Nandan Nilekani stood watch as the first step of the “Unique Identification Authority of India” database of every Indian citizen took its first step to reality in the field. Nilekani retired from Infosys to take on this role last year and the position has the rank of a Cabinet Minister.

Indian Prime Minister Manmohan Singh and Congress party leader Sonia Gandhi traveled to village of Tembhili (population 1,500) in Nandurbar district of western Maharashtra state and handed ID numbers to 10 people, including three children. Using including an iris scans, finderprints and other biometric methods, the system will log details of India’s population of 1.2 billion people into a central database. Every Indian will be issued a 12-digit ID number which they will use to receive welfare handouts, to apply for other documents like passports and even to open bank accounts. The whole process may take another four years.

India hopes that this will prevent corrupt officials from faking the names of people seeking welfare benefits or access to education – potentially saving billions of dollars. Corruption continues to be a significant problem in India and poor, rural citizens are often denied the benefits budgeted for them, such as the National Rural Employment Guarantee Scheme, which promises 100 days of work to any Indian.

India’s high rate of inflation is expected to reduce with the recent rainfall in what is turning out to be a good monsoon season.

India’s Prime Minister, Dr. Manmohan Singh, made a statement addressing a recent National Development Council (NDC) meeting, citing a bit more optimism about the inflation than projected by his advisory council’s statistics shared earlier this year. Dr. Singh said the high inflation is due to wholesale prices which are expected to come down soon. He noted that forecast conditions for continued good rains through August are sure signs that an economic upswing will take place in the agricultural sector.

To stem inflation, the Reserve Bank of India raised interest rates up to 5.75 percent on short-term loans to commercial banks in the continuing struggle against inflation.  The RBI predicts economic growth will now be at 8.5 percent, up a half percentage from the 8 percent April forecast. The inflation prediction for the year-ending March 2011 raised from 5.5 to 6 percent.

Furthermore, RBI Governor Divvuri Subbaro recently stated he would review the costs for borrowing every six weeks, a change form the previous one review per quarter.

The economic forecast comes in much closer to the goals set forth in the country’s 11th Five Year Plan (2007-12), according to Singh.

For executives in the west tracking development in India there are two points to note

• India’s growth must be taken seriously (who else is growing in 2010 to the point that they have to worry about inflation).
• While the current government enjoys a comfortable majority, its response to rising prices, could determine its fate in the next elections. Other important policies may be distracted or delayed while officials struggle with food prices rise. (Food is a much bigger part of the average Indian’s budget, compared to an American or European).

Deputy U.S. Trade Representative Demetrios Marantis spent Wednesday and Thursday last week in official talks in India.

Ambassador Marantis met Indian Commerce Secretary Rahul Khullar to discuss bilateral trade and investment issues, including U.S. agricultural and telecommunications equipment exports to India.  (A Secretary in India is not a cabinet position but the senior-most civil staff member , usually from the elite Indian Administrative Service). Secretary Khullar and Ambassador Marantis also discussed preparations for the U.S.-India Trade Policy Forum and high-level trade and investment dialogue scheduled for September in Washington, D.C. The TPF is aimed at further expanding job-creating opportunities in the U.S.-India relationship.

After meeting with Khullar, Ambassador Marantis met with Revenue Secretary Sunil Mitra to discuss Indian customs and tariff issues. Many American companies are eager to pressure India to lower import duties and to speed the passage of goods via customs.

I don’t expect any major announcements from USTR about progress with India at this time. Both the Indian and American sides are looking to line up a series of tangible but practical wins that they can announce when President Obama arrives in Delhi in early November.

The global financing storm hurt some more than others. According to Project Finance International he world’s  top Initial Mandated Lead Arranger of project financing in 2009 was the State Bank of India’s SBI Capital Markets which loaned almost $20 billion for domestic financing projects.  IDBI Bank of India  was ranked 5th at almost $4 billion.

No American of Chinese banks figured in the top 10 arrangers. French banks took the #2,3 and 4 spots.

SBI arranged 36 deals amounting or  35.2 per cent of the total volume for the Asia-Pacific region. This included some major deals such as financing for the Sasan ultra mega power station for Anil Ambani’s Reliance Infrastructure, projects for Adani Power and Sterlite Energy, and funds for Vodafone and Unitech in the telecom sector.  More than $22.3-billion loans in 53 transactions in the sector were signed globally during the year, accounting for almost 40 per cent of the entire PF market.  In India, a major contribution came from social infrastructure development schemes launched by the government recently.