Thursday, 9 February 2017

US Labor Department Hire Could Presage Collision Between Trump and Construction Unions-The Total Investment & Insurance Solutions

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9 February 2017
 
The Total Investment & Insurance Solutions
Last month, President Donald Trump hosted the chiefs of several building trades unions at the White House in a meeting notable for how friendly it was given that they had endorsed Hillary Clinton in the campaign. The Total Investment & Insurance Solutions

In a particularly glowing statement after the meeting, Terry O'Sullivan, president of the Laborers' International Union of North America, said Trump "has shown that he respects laborers who build our great nation, and that they will be abandoned no more." That was in response to the administration's effort to restart two controversial pipeline projects.

But the recent hiring at the Department of Labor of Geoffrey Burr, the former chief lobbyist of the construction industry's trade group, has worker advocates alarmed.

It also highlights the dilemma of the building trades unions, the segment of organized labor that has been most friendly to Trump: They largely support his agenda on infrastructure and trade even as he is assembling a Department of Labor team that is hostile to unions and cherished wage standards on government contracts. The Total Investment & Insurance Solutions

"What does it mean that we are putting people in charge of the Department of Labor, which is meant to be the strongest advocate for workers within the administration, who built their careers around advocating dismantling protections for workers?" asked Karla Walter, director of the American Worker Project at the Center for American Progress, a liberal think tank.

Burr, now a member of the Trump beachhead team at the Department of Labor, spent seven years as the vice president for government affairs at the Associated Builders and Contractors.

The group is a fierce opponent of the law that gives workers on government construction contracts the right to be paid in line with local prevailing wages — a rate determined by the Department of Labor. The idea of the Depression-era law, called the Davis-Bacon Act, is to protect workers from being undercut by lower-paid, less-skilled workers from other areas of the country. The Total Investment & Insurance Solutions

Republicans and companies have argued the law inflates government spending and other costs. Rep. Steve King, R-Iowa, introduced a bill last month to repeal it. Unions champion the law on the grounds that it protects good jobs and incentivizes higher productivity.

Disclosure records show that in 2015 Burr and his colleagues lobbied the House on a bill to repeal Davis-Bacon as well as on an amendment to "prohibit use of funds to implement, administer, or enforce the prevailing wage requirements under what is commonly known as the Davis-Bacon Act." The Total Investment & Insurance Solutions

Burr and his colleagues also lobbied the Department of Labor itself on Davis-Bacon-related surveys that set prevailing wage levels for jobs in different regions of the country.

As a member of the Trump beachhead team, Burr is now engaged on Davis-Bacon matters at the department, according to a staffer familiar with his work.

A Department of Labor spokeswoman declined to elaborate on Burr's role and the future of Davis-Bacon. "It would be premature to speculate any policy decisions till the secretary is confirmed," Jillian Rogers said. The Total Investment & Insurance Solutions

(There is still no hearing date for Trump's nominee to run the department, Andrew Puzder, who recently revealed he hired an undocumented household employee. Burr is in line to be Puzder's chief of staff, Politico reported Tuesday.)

Another member of the Department of Labor beachhead team, Nathan Mehrens, has publicly blasted Davis-Bacon. Mehrens previously was president of the group Americans for Limited Government. The Total Investment & Insurance Solutions

Ross Eisenbrey of the Economic Policy Institute, who has testified in support of the law before Congress, says Burr's hiring is unsettling because the Department of Labor has some discretion in the setting of prevailing wages. The Total Investment & Insurance Solutions

"They have latitude about what they survey and how often they survey," Eisenbrey said. "It wouldn't take a genius to identify areas and work hard to get nonunion employers to answer the survey, and that could lower the prevailing wage."

The Department of Labor is also tasked with enforcement: Contractors that violate the law can be barred from getting future contracts. Bloomberg BNA reported in December that some management-side lawyers are already expecting the Trump Labor Department to ease up on enforcement. The Total Investment & Insurance Solutions

The unions who met the president last month do not seem eager to pick a public fight with the Trump administration. Spokespeople for North America's Building Trades Unions and the United Association of Plumbers and Fitters declined to comment on Burr's hiring at the department. The Laborers' International Union of North America and the United Brotherhood of Carpenters did not respond to requests for comment. The Total Investment & Insurance Solutions



It's not clear where the president himself stands on Davis-Bacon. One union leader told The New York Times after the meeting last month that the issue had been raised with Trump, but that the president had avoided taking a position.The Total Investment & Insurance Solutions

Demonetisation: A pause for sustainable growth of microfinance industry?-The Total Investment & Insurance Solutions

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9 February 2017
 
Demonetisation(The Total Investment & Insurance Solutions)
Post demonetisation, the profitability of domestic microfinance institutes (MFIs) is expected to be negatively impacted in the near term. However, as a positive outcome of the demonetisation, most of the MFIs are further strengthening their risk management system by checking the overleveraging of borrowers and disbursing funds on a more prudent basis, says a research report. The Total Investment & Insurance Solutions


In the note, Credit Analysis and Research Ltd (Care Ratings), says, "In the near-term, the profitability of the Indian MFI Industry is expected to be negatively impacted mainly due to reversal of income due to creation of non-performing asset (NPA), increase in cost-to-income ratio on the back of lower income as a result of expected decline in loan portfolio per employee, and increase in provisioning expense due to deterioration in the asset quality. As a result, the credit profile of the entities with concentrated portfolio (especially in affected states), high leverage and weak asset liability management is expected to remain under pressure over the next six to 12 month period." The Total Investment & Insurance Solutions
 
Demonetisation1(The Total Investment & Insurance Solutions)
According to the report, the Microfinance Institutions Network (MFIN) is also putting in place an initiative where all the industry players have voluntarily agreed to cap the number to three lenders per borrower, as against only two non-banking finance companies (NBFC)-MFI per borrower but with no cap on other lenders, by increasing the universe from NBFC-MFIs to cover the entire industry like banks, small finance banks (SFBs), NBFCs, NBFC-MFIS, Section 8 or Section 25 companies as defined in the Companies Act. This would help in better management of overall indebtedness of the borrowers from the industry perspective, Care Ratings added.

Care Ratings interacted with a few major MFIs, which felt that collection efficiency was expected to improve in the month of January 2017 due to improved supply of new currency, general improvement in economic activity and important role played by self-regulatory organisation (SRO) in creating awareness among the borrowers directly or indirectly through bureaucrats and sustained media engagements. 

It says, "While the industry expects collection efficiency to reach to normal level by June 2017, continued interference of local influential individuals with mala fide intention remains a major risk to the sector in the near-term. However, the collection efficiency is expected to reach to normal levels over the medium-term period due to increased credit disciple among the borrowers as a result of presence of credit bureaus." The Total Investment & Insurance Solutions


Demonetisation has also given a sudden push to the MFI sector to move towards cashless mode of operation. While Care Ratings says it believes that a good proportion of MFI transaction would continue to be dependent upon cash mode due to low penetration of banks/ATM in rural areas, most of the borrowers are at the bottom of the pyramid, which are dealing only in cash and low proportion of smartphone users in India, especially women. However, the intention of most of the MFI’s to shift the business to cashless mode would bring in greater transparency and enhance the risk management system over the medium-term perspective, it added.
Demonetisation2(The Total Investment & Insurance Solutions)

To assess the near-term impact of demonetization on Indian MFIs, Care Ratings conducted a survey with 32 MFI entities and one SRO (Sa-dhan). The MFI entities has been categorized as large MFIs (10 with gross loan portfolio-GLP of more than Rs500 crore), mid-size MFIs (11 with GLP of Rs100-Rs500 crore) and small-size MFI (11 with GLP lower than Rs100 crore). The participants in the survey include top-level executives. The combined asset under management (AUM) of the surveyed participants was estimated to be around Rs34,000 crore, accounting for roughly 42% of total MFI industry.

Care Ratings says, a majority of the respondents were of the view that the demonetisation would have a negative impact on the Indian MFI industry in the short term, but the magnitude of the impact would not be as severe as witnessed during the Andhra Pradesh crisis period mainly due to increased regulatory intervention of Reserve Bank of India (RBI), presence of credit bureaus and SROs and self-imposition of stricter code of conduct by MFIN on members than required by RBI. MFIN members account for about 80% of Indian Microfinance industry.
Demonetisation3(The Total Investment & Insurance Solutions)

Roughly, 88% of the respondents expect collection rate to improve to more than 90% by March 2017, which indicates a sharp improvement in collection compared to the level achieved in the past two months at around 80%. Further, all the participants are of the view that the collection efficiency is expected to reach to the level of pre-demonetisation period, or around 99% by June 2017, it added. The Total Investment & Insurance Solutions


According to the Survey, roughly 72% of the respondents will avail the relaxation benefit provided by RBI for asset classification norms by additional period of 90 days for the loan instalments falling due from 1 November 2016 to 31 December 2016. Further, almost all the respondents are of the view that the projected growth of loan portfolio in FY18 has been revised down due to slowdown in disbursement after demonetisation. 

Based on interaction with major MFI entities, Care Ratings says it believes that the decline in AUM growth is mainly due to lower disbursement from banks, NBFCs and financial institutes (FI)’s on the back of cautious stance on the sector, delay or disruption in equity raising plan of the company due to investors becoming cautious on the sector and higher focus of the MFI entities to improve collection efficiency and maintenance of higher liquidity cushion in the system. The Total Investment & Insurance Solutions



Around 66% of the respondents are of the view that the demonetization would have structurally positive impact on the Indian MFI industry over the medium-term as most of the entities would gradually shift their business from cash mode to cashless mode, Care Ratings concluded.The Total Investment & Insurance Solutions

Wednesday, 8 February 2017

HDFC Bank increases cash transactions charges by 50% to minimum of Rs150-The Total Investment & Insurance Solutions

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8 February 2017

Private sector lender HDFC Bank has decided to levy a minimum of Rs150 for cash transactions from 1 March 2017 for all savings and salary accounts. While first four transactions (including deposits and withdrawals) in cash would be free, the Bank customers will have to pay Rs150, excluding taxes and cess, for fifth transaction onwards. With the increase in cash transaction charges, HDFC Bank has withdrawn cash handling charges from March 2017. The Total Investment & Insurance Solutions

The private sector lender has also put restrictions on value for cash transactions. For home branch, the customer would be allowed to withdraw or deposit using cash of Rs2 lakh per month. Above this limit, the bank customer will have to Rs5 per thousand, but minimum of Rs150 plus taxes and cess. For cash transactions in non-home branch, for an amount up to Rs25,000 per day, there would be no charges. For cash above Rs25,000, the customer will have to pay Rs5 per thousand or minimum Rs150, excluding taxes and cess. The Total Investment & Insurance Solutions 


This value restriction is application for third party cash transaction as well, except that a transaction of over Rs25,000 will not be allowed. For senior citizens and minor account holders, the limit of Rs25,000 would be there, but no charges would be levied, HDFC Bank said in a notification on its website.The Total Investment & Insurance Solutions

Centre issues advisory to states on service charges by hotels-The Total Investment & Insurance Solutions

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8 February 2017

The Department of Consumer Affairs has issued an advisory to the state governments to sensitise companies, hotels and restaurants within their jurisdiction regarding the provisions of the Consumer Protection Act on unfair trade practices. The Total Investment & Insurance Solutions

It also told the states to advise them to disseminate proper information through display boards at appropriate places, said C.R. Chaudhary, Minister of State for Consumer Affairs, Food and Public Distribution, in a written reply to a Lok Sabha question on Tuesday.

According to the ministry, the government has received a number of complaints from consumers through the National Consumer Helpline that some hotels and restaurants have been levying service charge at the rate of 5-20 per cent on the bills of food and beverages in lieu of tips which a consumer is forced to pay irrespective of the kind of service provided to him.

"The Department of Consumer Affairs has examined the matter and issued advisory to the state governments to sensitise the companies, hotels and restaurants in the states regarding the provisions of the Consumer Protection Act, 1986 on unfair trade practices," said a ministry statement. The Total Investment & Insurance Solutions

"It was also told advise the hotels/ restaurants to disseminate information through display at appropriate places in hotels/ restaurants that the 'service charges' are discretionary/ voluntary and that a consumer dissatisfied with the services can have it waived off," it added. The Total Investment & Insurance Solutions


The Consumer Protection Act, 1986 provides that a trade practice, which for the purpose of promoting sale, use or supply of goods or for the provision of any service, adopts any unfair method or deceptive practice, is to be treated as an unfair trade practice.The Total Investment & Insurance Solutions

Cash withdrawal limit to be Rs50,000 from February 20; no limit from March 13-The Total Investment & Insurance Solutions

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8 February 2017

The limits on savings bank cash withdrawals post-demonetisation are to be withdrawn in two stages, the Reserve Bank of India announced on Wednesday, with the limit slated to go up to Rs,50,000 per account from February 20 and to cease from March 13.

The announcement was made by RBI Deputy Governor R. Gandhi following the fiscal's last monetary policy review announcement by the central bank at which it kept its key interest rate unchanged at 6.25 per cent, saying it awaited data on the full impact of the government's demonetisation drive three months ago. The Total Investment & Insurance Solutions

On January 30, the RBI had ended all curbs on withdrawals from Current Accounts, Cash Credit Accounts and Overdraft Accounts. The Total Investment & Insurance Solutions

The limits were placed following the November 8 demonetisation of Rs1,000 and Rs500 notes. The upper limit at ATMs was just Rs2,500 initially and was later raised to Rs4,500.

In January, the RBI had hiked the daily ATM withdrawal limit to Rs10,000 and doubled the weekly Current Account withdrawal limit to Rs1 lakh.

The upper limit for weekly withdrawal from bank accounts had been raised to Rs24,000 from Rs20,000 in November. The Total Investment & Insurance Solutions


While lifting of ATM withdrawal limits from March 13 will represent coming full circle for these machines in respect of demonetisation, it is to be seen whether the amount of cash supplied by RBI will be able to satisfy the demand of citizens in future.The Total Investment & Insurance Solutions

RBI maintains status quo on key lending rat-The Total Investment & Insurance Solutions

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8 February 2017
 
RBI (The Total Investment & Insurance Solutions) 
India's central bank on Wednesday kept key lending rates unchanged, as it shifted its monetary policy stand from accommodative to neutral citing inflationary fears and global uncertainties.

The Reserve Bank of India's (RBI) Monetary Policy Committee (MPC), during its third bi-monthly monetary policy review -- the sixth and the final one for the fiscal 2016-17, kept the repurchase rate, or the short-term lending rate it charges on borrowings by commercial banks, unchanged at 6.25 per cent. The Total Investment & Insurance Solutions

The reverse repurchase rate automatically remained unchanged at 5.75 per cent. 

According to RBI, all six members of the MPC panel, chaired by the RBI Governor Urjit Patel, voted in favour of the monetary policy decisions -- the minutes of which will be released on February 22, 2017. The Total Investment & Insurance Solutions

"On the basis of an assessment of the current and evolving macroeconomic situation at its meeting today, the MPC decided to keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 6.25 per cent," RBI said in its sixth bi-monthly monetary policy statement. The Total Investment & Insurance Solutions

"Consequently, the reverse repo rate under the LAF remains unchanged at 5.75 per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 6.75 per cent."

"The decision of the MPC is consistent with a neutral stance of monetary policy in consonance with the objective of achieving consumer price index (CPI) inflation at 5 per cent by Q4 of 2016-17 and the medium-term target of 4 per cent within a band of +/- 2 per cent, while supporting growth." The Total Investment & Insurance Solutions

However, the RBI projected a 7.4 per cent GVA (gross value added) growth for 2017-18 on the back of higher capital expenditure earmarked in the Union Budget for boosting the rural economy and affordable housing sectors.

The central bank has estimated the GVA growth at 6.9 per cent for 2016-17.

Nevertheless, investors showed their disappointment over the RBI decision to maintain status quo on its key lending rates. The Total Investment & Insurance Solutions

The Indian equities provisionally closed on a flat note with the wider 51-scrip Nifty of the National Stock Exchange (NSE) inching up by 0.75 points or 0.01 per cent to 8,769.05 points.

However, the barometer 30-scrip sensitive index (Sensex) of the BSE, which opened at 28,386.08 points, provisionally closed at 28,289.92 points (at 3.30 p.m.) -- down 45.24 points, or 0.16 per cent, from the previous close at 28,335.16 points.The Total Investment & Insurance Solutions

Nifty, Sensex may be at the start of a fresh rally – Wednesday closing report-The Total Investment & Insurance Solutions

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8 February 2017

I had mentioned in Tuesday’s closing report that Nifty, Sensex were subdued ahead of Reserve Bank of India meeting. The major indices of the Indian stock markets were range-bound and ended flat on Wednesday. The trends of the major indices are given in the table below: The Total Investment & Insurance Solutions
 
Major Indices (The Total Investment & Insurance Solutions)

Indian equities markets on Wednesday remained flat even after the Reserve Bank of India (RBI) decided to keep its key lending rate unchanged at 6.25% in its sixth and final monetary policy review for 2016-17. The Sensex fell 186 points intraday on profit booking, especially after the Monetary Policy Committee kept repo rate steady at 6.25% The 30 share BSE Sensex was down 45.24 points at 28289.92 and the 50 share NSE Nifty rose 0.01% points to 8769.05. The Monetary Policy Committee decided to hold repo rate, at which banks borrow money from RBI, at 6.25% and cash reserve ratio at 4%, while keeping its commitment to ensure an efficient and appropriate liquidity management. However, it changed policy stance to neutral from accommodative, citing concerns about rising commodity prices and global uncertainty and feels there is scope for banks to cut lending rates. The Total Investment & Insurance Solutions

The barometer 30 scrip sensitive index, which opened at 28,386.08 points, traded at 28,268.94 points down 66.22 points or 0.23% from the previous close at 28,335.16 points.

The top gainers and top losers of the major indices are given in the table below:
 
Top Gainer (The Total Investment & Insurance Solutions)
The BSE market breadth was marginally tilted in favour of the bears with 1,433 declines and 1,392 advances. The Total Investment & Insurance Solutions

The closing values of the major Asian indices are given in the table below:
 
Asian Indices (The Total Investment & Insurance Solutions)
The broader markets outperformed benchmarks, with the BSE Midcap index rising 0.5% on positive breadth. Nifty Bank index was down 0.4% percent as ICICI Bank and Axis Bank fell 0.7-1%. SBI and HDFC Bank closed flat with a negative bias. Infosys shares were down 0.88% after sources told CNBC-TV18 that founders NR Narayana Murthy, Kris Gopalakrishnan, and Nandan Nilekani among others are learnt to have raised concerns over the governance of the company. Titan Company rallied 8% on the back of healthy growth in third quarter despite demonetisation. The Total Investment & Insurance Solutions