IndusLaw recently spoke in Singapore on the subject of Projects & Project Financing in India, highlighting the broad regulatory and document structures encountered and key risks to consider
Seminario sobre financiación de startups preparado para los participantes del Concurso de Ideas de Negocio de la Universidad de Sevilla:
-Estrategia de financiación
-Control de la caja
-Fuentes de financiación
-Valoración de empresas
Prepared by the students of corporate finance at the MBA program of IE Business School, this presentation provides an introduction to project finance and analyzes two case studies involving project finance.
The Export-Import Bank of India was established in 1981 by an act of Parliament to provide financial assistance to Indian exporters and importers. It is wholly owned by the Government of India and commenced operations in 1982. The bank's objectives are to promote India's international trade by providing financing and coordinating institutions engaged in export/import financing. It offers a comprehensive range of products and services to support businesses through all stages of the export/import cycle. These include pre-shipment and post-shipment financing, lines of credit, advisory services, and more. The bank aims to enhance export capabilities in India.
Support has never been stronger for startups and the opportunities for finding finance are vast. Although each method has its benefits, many drawbacks also exist. As a result, it is essential to research the funding possibilities in order to find the perfect match (or matches) for your startup.
The presentation talks about why is it necessary to carry out Financial appraisal and the different methods to analyse it. It also discusses the steps involved in a financial appraisal of a project.
This document provides an overview of various project financing methods, including equity methods like common stock and preferred stock, debt methods like bonds and loans, and discusses their advantages and disadvantages. It also categorizes the major worldwide segments of project financing as infrastructure like power, transportation, oil and gas. Motivations for project financing include reducing risks, making use of tax benefits, and ensuring projects are completed on time. The document discusses the definitions of projects and project financing and provides a history of project financing dating back to the 13th century.
This document provides an overview of Rohit Tuli's upcoming course on project and infrastructure financing. Rohit has 9 years of experience financing large projects in renewable energy, roads, and other industries. The course will cover what project finance is, the parties involved in project finance deals, contractual structures, security structures, issues that can arise, and current trends in the industry. It is aimed at helping participants understand how to structure financing for infrastructure projects and evaluate such investments.
Green finance refers to financial products and services that promote environmentally sustainable investments and stimulate low-carbon technologies. It includes loans, debt mechanisms, and investments used to encourage green projects or minimize climate impacts. Government policies can significantly influence green finance markets by shaping them around sustainability agendas. Investors see opportunities in national green recovery efforts but also risks of a market bubble without sufficient investment opportunities. Various bond types like green bonds, social bonds, and sustainability-linked bonds are emerging to direct funding to green and social projects. Blockchain and cryptocurrencies also show potential to enable more sustainable financing models if technical and environmental issues can be addressed. Significant investment is still needed to achieve countries' renewables and decarbonization goals.
Seminario sobre financiación de startups preparado para los participantes del Concurso de Ideas de Negocio de la Universidad de Sevilla:
-Estrategia de financiación
-Control de la caja
-Fuentes de financiación
-Valoración de empresas
Prepared by the students of corporate finance at the MBA program of IE Business School, this presentation provides an introduction to project finance and analyzes two case studies involving project finance.
The Export-Import Bank of India was established in 1981 by an act of Parliament to provide financial assistance to Indian exporters and importers. It is wholly owned by the Government of India and commenced operations in 1982. The bank's objectives are to promote India's international trade by providing financing and coordinating institutions engaged in export/import financing. It offers a comprehensive range of products and services to support businesses through all stages of the export/import cycle. These include pre-shipment and post-shipment financing, lines of credit, advisory services, and more. The bank aims to enhance export capabilities in India.
Support has never been stronger for startups and the opportunities for finding finance are vast. Although each method has its benefits, many drawbacks also exist. As a result, it is essential to research the funding possibilities in order to find the perfect match (or matches) for your startup.
The presentation talks about why is it necessary to carry out Financial appraisal and the different methods to analyse it. It also discusses the steps involved in a financial appraisal of a project.
This document provides an overview of various project financing methods, including equity methods like common stock and preferred stock, debt methods like bonds and loans, and discusses their advantages and disadvantages. It also categorizes the major worldwide segments of project financing as infrastructure like power, transportation, oil and gas. Motivations for project financing include reducing risks, making use of tax benefits, and ensuring projects are completed on time. The document discusses the definitions of projects and project financing and provides a history of project financing dating back to the 13th century.
This document provides an overview of Rohit Tuli's upcoming course on project and infrastructure financing. Rohit has 9 years of experience financing large projects in renewable energy, roads, and other industries. The course will cover what project finance is, the parties involved in project finance deals, contractual structures, security structures, issues that can arise, and current trends in the industry. It is aimed at helping participants understand how to structure financing for infrastructure projects and evaluate such investments.
Green finance refers to financial products and services that promote environmentally sustainable investments and stimulate low-carbon technologies. It includes loans, debt mechanisms, and investments used to encourage green projects or minimize climate impacts. Government policies can significantly influence green finance markets by shaping them around sustainability agendas. Investors see opportunities in national green recovery efforts but also risks of a market bubble without sufficient investment opportunities. Various bond types like green bonds, social bonds, and sustainability-linked bonds are emerging to direct funding to green and social projects. Blockchain and cryptocurrencies also show potential to enable more sustainable financing models if technical and environmental issues can be addressed. Significant investment is still needed to achieve countries' renewables and decarbonization goals.
Investment Management Financial Market and InstitutionsDr. John V. Padua
This document provides an overview of financial markets and institutions. It defines key terms like financial system, markets, institutions and regulations. It describes the main components and functions of the financial system including borrowing/lending, price determination and risk sharing. It also outlines the major types of financial institutions like commercial banks, investment funds, insurance companies and their risk-reducing roles. Finally, it discusses reasons for financial regulation including increasing information transparency and ensuring system stability.
This document discusses investment management. It defines investment as committing funds with an expectation of positive return. The two main forms of investment are real investments in assets like land and machinery, and financial investments in contracts. Investment management aims to meet clients' investment goals through activities like asset allocation, portfolio strategy, and monitoring holdings. It also coordinates investments with other financial planning. Risk and return are important considerations in investment decisions, as there is generally a tradeoff between higher risk and higher potential returns.
The document provides an overview of IFRS 17, the new accounting standard for insurance contracts. It discusses the key impacts of IFRS 17, including new financial reporting requirements. It also examines some of the challenges insurers may face in implementing IFRS 17 and potential solutions, such as the use of data, analytics and digital technologies from IBM.
Securitization involves pooling financial assets like loans and converting them into marketable securities. This allows the originator to access funding and improve liquidity. In India, securitization grew out of similar developments in the US housing market in the 1970s. It involves an originator transferring assets to a special purpose vehicle which then issues bonds backed by the assets' cash flows. This benefits originators through lower funding costs, improved liquidity and balance sheet management.
Private equity and venture capital fundsLinel Dias
Private equity fundraising involves private equity firms seeking capital from investors for their funds. Investors become limited partners in the funds and benefit from investments made using the capital in that specific fund. Private equity firms also invest in their own funds, typically 1-5% of the total capital. The time it takes to raise capital depends on market conditions and the firm's past performance. There are different types of private equity funds such as leveraged buyouts and venture capital. In India, major private equity firms include ICICI Ventures, UTI Ventures, and Carlyle. Venture capital is high-risk financing provided to new businesses in exchange for equity. Venture capital funds pool money from investors to invest in risky startups
IAS 32 provides guidance on classifying financial instruments as either financial liabilities or equity. A financial liability is a contractual obligation to deliver cash or another financial asset. An equity instrument is a contract that provides residual interest in the assets of an entity after deducting all liabilities.
The standard establishes several criteria for classifying financial instruments as equity rather than financial liabilities, including having no contractual obligation to deliver cash or another financial asset (except for settlement in the issuer's own equity instruments) and providing pro rata shares of net assets upon liquidation.
Treasury shares (an entity's own shares it acquires) are deducted from equity. No gains or losses arise on treasury share transactions and related
The document discusses strategic financial planning. It defines strategic financial planning as determining how a business will afford its strategic goals and objectives. The financial planning process generally involves 5 steps: forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and evaluating performance and monitoring developments. The focus of strategic financial planning is on 7 areas: retirement planning, tax planning, estate planning, risk management, cash management, education planning, and investment planning.
This document outlines 16 journal entries related to altering share capital. It includes entries for increasing or decreasing share capital through actions like share consolidation, subdivision, conversion to stock, reducing uncalled capital, reducing surplus capital, reducing capital with or without changing shareholder rights, payments related to reconstruction schemes, surrendering shares, reissuing surrendered shares, canceling unissued surrendered shares, and writing off losses and assets as part of a reconstruction scheme.
This document provides an overview of venture capital and private equity, including:
1. Venture capital refers to equity investments made for launching or expanding businesses, while private equity provides funding to non-public companies.
2. Growing companies often need external financing for activities like product development, market expansion, and maintaining liquidity until cash flow turns positive.
3. Acquiring venture capital involves investors thoroughly assessing business plans and management teams before potentially providing funding after 3-4 years of due diligence.
This standard outlines the accounting treatment and disclosure requirements for investment property. It defines investment property as property held to earn rentals or for capital appreciation rather than for short-term sale or use in production. The standard specifies that investment property is initially recognized at cost and can be subsequently measured using either the cost or fair value model. It also provides guidance on transfers to or from investment property, disposal of investment property, and impairment of investment property. Extensive disclosure requirements are specified regarding investment property balances, fair values, rental income and expenses, and restrictions.
Global and local Implementation
Timeline for early adopters
Integration of CRS into the Cyprus Tax National Law
Entity Classification
Reporting/Non-reporting Financial Institutions (FI)
Defining FI
Depository Institutions
Specified Insurance Company
Custodial Institution
Investment Entities
Defining Non-Financial Institutions (NFEs)
Active NFEs
Criteria of being considered a NFE
Based on Income and Assets
‘Substantially all ’ - Holding Company
‘Treasury Centre’ – Financing Company
Under CRS definitions & examples
Non-profit Organisations
Reporting and Timing
Sanctions for non-Compliance
This document summarizes key differences between IFRS and US GAAP regarding accounting for intangible assets. Some of the main points covered include:
- IFRS permits periodic revaluation of intangible assets to fair value, while US GAAP does not allow revaluation.
- IFRS requires capitalization of development costs when technical and economic feasibility can be demonstrated, while most development costs are expensed under US GAAP.
- There have been efforts to converge the standards but projects to fully eliminate differences have not been undertaken.
This document discusses RegTech and the regulatory landscape for digital finance. It defines RegTech as technologies that help financial institutions meet regulatory requirements more efficiently. RegTech applications include regulatory compliance, risk management, financial crime prevention, and know-your-customer processes. The document also examines the EU's Payment Services Directive 2 (PSD2), which aims to increase competition by regulating new market players like account information and payment initiation service providers. PSD2 establishes rules for bank data access and sharing liability for fraudulent transactions.
The document provides an introduction to project finance modeling. It defines a project as a temporary, one-time activity intended to create a unique product or service. Project finance involves using both debt and equity to finance long-term infrastructure projects, with debt repaid through cash flows generated by the project's operations. Project finance modeling develops analytical models to assess the risk and return of lending to or investing in a project by forecasting its expected future cash flows.
Red clause letters of credit originated as a means of providing sellers financing for purchases or production of goods. They allowed sellers to receive advances from the issuing or confirming bank before shipment using the letter of credit as collateral. While once common, red clause credits are now rarely used, being largely replaced by other forms of financing. Recent cases discuss liability and remedies under these historical letters of credit, but they remain mostly a thing of the past, confined now to only occasional or niche uses.
The document discusses dividend policies and theories. It defines dividends and describes different types of dividends. It then explains relevance theories including Walter's model and Gordon's model that consider dividends relevant to firm value. Irrelevance theories like Modigliani-Miller's model are also summarized. The document analyzes Aditya Birla Nuvo's dividend policy, noting it declared a 50% equity dividend of Rs. 5 per share for the year ending March 2016.
The document discusses financial services. Financial services refer to services provided by the finance industry, which encompasses organizations that deal with money management like banks, credit card companies, insurance companies, brokerages, and investment funds. Financial services involve at least two parties, the service provider and user. They are intangible and require innovation. Financial services can be broadly classified into traditional and modern activities. Traditional activities include fund-based activities like lending and non-fund based activities. Modern services include mergers and acquisitions advising, capital restructuring guidance, and acting as trustees. Financial services are also classified as fund-based, involving acquiring assets/funds for customers, or fee-based, where institutions earn income through fees. Financial
The document provides an introduction to financial management. It discusses that the goal of financial management is to maximize shareholder wealth by increasing the firm's market value. This is achieved by improving competitiveness and creating value for stakeholders. The key activities of financial management include financial planning, managing assets and liabilities, and making investment, financing, and dividend decisions. Financial decisions involve tradeoffs between risk and return. The accounting and finance functions are related but have different objectives, with accounting focusing on past performance and finance on future decision-making.
The Indian financial system consists of organized and unorganized sectors. The organized sector includes financial institutions, financial markets, and financial instruments that are regulated. It involves banks, capital markets, insurance companies, non-banking financial corporations, and cooperative banks. The unorganized sector consists of indigenous bankers, money lenders, pawn brokers, and chit funds that operate locally and informally. The financial system channels funds from savers to borrowers and allows for maturity transformation through various financial assets and intermediaries.
This document discusses various methods for valuing pre-revenue startups, including the Venture Capital Method, Berkus Method, Scorecard Valuation Method, and Risk Factor Summation Method. It also mentions the Comparable Transactions Method and Discounted Cash Flow method. Key factors that affect valuation are described such as the strength of the management team, size of the market opportunity, product/technology, and competitive environment. Valuation amounts are provided for different funding stages.
Capital Market: Components & Functions of Capital Markets, Primary & Secondary Market Operations, Capital
Market Instruments - Preference Shares, Equity Shares, Non-voting Shares, Convertible Cumulative Debentures (CCD),
Fixed Deposits, Debentures and Bonds, Global Depository receipts, American Depository receipts, Global Debt
Instruments, Role of SEBI in Capital Market.
CBLO is a money market instrument that allows entities access to borrow and lend funds against securities for short periods of 1 day to 1 year. It involves CCIL acting as an intermediary between the borrower and lender. Capital employed represents the total long-term funds from shareholders and creditors used in a business. It is used to calculate return on capital employed (ROCE). A qualified institutional buyer (QIB) is an institution that can privately purchase securities from listed companies to help companies raise funds within India's domestic market. The statutory liquidity ratio (SLR) is the minimum fraction of deposits that banks must maintain as liquid assets like government securities and cash.
Investment Management Financial Market and InstitutionsDr. John V. Padua
This document provides an overview of financial markets and institutions. It defines key terms like financial system, markets, institutions and regulations. It describes the main components and functions of the financial system including borrowing/lending, price determination and risk sharing. It also outlines the major types of financial institutions like commercial banks, investment funds, insurance companies and their risk-reducing roles. Finally, it discusses reasons for financial regulation including increasing information transparency and ensuring system stability.
This document discusses investment management. It defines investment as committing funds with an expectation of positive return. The two main forms of investment are real investments in assets like land and machinery, and financial investments in contracts. Investment management aims to meet clients' investment goals through activities like asset allocation, portfolio strategy, and monitoring holdings. It also coordinates investments with other financial planning. Risk and return are important considerations in investment decisions, as there is generally a tradeoff between higher risk and higher potential returns.
The document provides an overview of IFRS 17, the new accounting standard for insurance contracts. It discusses the key impacts of IFRS 17, including new financial reporting requirements. It also examines some of the challenges insurers may face in implementing IFRS 17 and potential solutions, such as the use of data, analytics and digital technologies from IBM.
Securitization involves pooling financial assets like loans and converting them into marketable securities. This allows the originator to access funding and improve liquidity. In India, securitization grew out of similar developments in the US housing market in the 1970s. It involves an originator transferring assets to a special purpose vehicle which then issues bonds backed by the assets' cash flows. This benefits originators through lower funding costs, improved liquidity and balance sheet management.
Private equity and venture capital fundsLinel Dias
Private equity fundraising involves private equity firms seeking capital from investors for their funds. Investors become limited partners in the funds and benefit from investments made using the capital in that specific fund. Private equity firms also invest in their own funds, typically 1-5% of the total capital. The time it takes to raise capital depends on market conditions and the firm's past performance. There are different types of private equity funds such as leveraged buyouts and venture capital. In India, major private equity firms include ICICI Ventures, UTI Ventures, and Carlyle. Venture capital is high-risk financing provided to new businesses in exchange for equity. Venture capital funds pool money from investors to invest in risky startups
IAS 32 provides guidance on classifying financial instruments as either financial liabilities or equity. A financial liability is a contractual obligation to deliver cash or another financial asset. An equity instrument is a contract that provides residual interest in the assets of an entity after deducting all liabilities.
The standard establishes several criteria for classifying financial instruments as equity rather than financial liabilities, including having no contractual obligation to deliver cash or another financial asset (except for settlement in the issuer's own equity instruments) and providing pro rata shares of net assets upon liquidation.
Treasury shares (an entity's own shares it acquires) are deducted from equity. No gains or losses arise on treasury share transactions and related
The document discusses strategic financial planning. It defines strategic financial planning as determining how a business will afford its strategic goals and objectives. The financial planning process generally involves 5 steps: forming a strategic vision, setting objectives, crafting a strategy, implementing and executing the strategy, and evaluating performance and monitoring developments. The focus of strategic financial planning is on 7 areas: retirement planning, tax planning, estate planning, risk management, cash management, education planning, and investment planning.
This document outlines 16 journal entries related to altering share capital. It includes entries for increasing or decreasing share capital through actions like share consolidation, subdivision, conversion to stock, reducing uncalled capital, reducing surplus capital, reducing capital with or without changing shareholder rights, payments related to reconstruction schemes, surrendering shares, reissuing surrendered shares, canceling unissued surrendered shares, and writing off losses and assets as part of a reconstruction scheme.
This document provides an overview of venture capital and private equity, including:
1. Venture capital refers to equity investments made for launching or expanding businesses, while private equity provides funding to non-public companies.
2. Growing companies often need external financing for activities like product development, market expansion, and maintaining liquidity until cash flow turns positive.
3. Acquiring venture capital involves investors thoroughly assessing business plans and management teams before potentially providing funding after 3-4 years of due diligence.
This standard outlines the accounting treatment and disclosure requirements for investment property. It defines investment property as property held to earn rentals or for capital appreciation rather than for short-term sale or use in production. The standard specifies that investment property is initially recognized at cost and can be subsequently measured using either the cost or fair value model. It also provides guidance on transfers to or from investment property, disposal of investment property, and impairment of investment property. Extensive disclosure requirements are specified regarding investment property balances, fair values, rental income and expenses, and restrictions.
Global and local Implementation
Timeline for early adopters
Integration of CRS into the Cyprus Tax National Law
Entity Classification
Reporting/Non-reporting Financial Institutions (FI)
Defining FI
Depository Institutions
Specified Insurance Company
Custodial Institution
Investment Entities
Defining Non-Financial Institutions (NFEs)
Active NFEs
Criteria of being considered a NFE
Based on Income and Assets
‘Substantially all ’ - Holding Company
‘Treasury Centre’ – Financing Company
Under CRS definitions & examples
Non-profit Organisations
Reporting and Timing
Sanctions for non-Compliance
This document summarizes key differences between IFRS and US GAAP regarding accounting for intangible assets. Some of the main points covered include:
- IFRS permits periodic revaluation of intangible assets to fair value, while US GAAP does not allow revaluation.
- IFRS requires capitalization of development costs when technical and economic feasibility can be demonstrated, while most development costs are expensed under US GAAP.
- There have been efforts to converge the standards but projects to fully eliminate differences have not been undertaken.
This document discusses RegTech and the regulatory landscape for digital finance. It defines RegTech as technologies that help financial institutions meet regulatory requirements more efficiently. RegTech applications include regulatory compliance, risk management, financial crime prevention, and know-your-customer processes. The document also examines the EU's Payment Services Directive 2 (PSD2), which aims to increase competition by regulating new market players like account information and payment initiation service providers. PSD2 establishes rules for bank data access and sharing liability for fraudulent transactions.
The document provides an introduction to project finance modeling. It defines a project as a temporary, one-time activity intended to create a unique product or service. Project finance involves using both debt and equity to finance long-term infrastructure projects, with debt repaid through cash flows generated by the project's operations. Project finance modeling develops analytical models to assess the risk and return of lending to or investing in a project by forecasting its expected future cash flows.
Red clause letters of credit originated as a means of providing sellers financing for purchases or production of goods. They allowed sellers to receive advances from the issuing or confirming bank before shipment using the letter of credit as collateral. While once common, red clause credits are now rarely used, being largely replaced by other forms of financing. Recent cases discuss liability and remedies under these historical letters of credit, but they remain mostly a thing of the past, confined now to only occasional or niche uses.
The document discusses dividend policies and theories. It defines dividends and describes different types of dividends. It then explains relevance theories including Walter's model and Gordon's model that consider dividends relevant to firm value. Irrelevance theories like Modigliani-Miller's model are also summarized. The document analyzes Aditya Birla Nuvo's dividend policy, noting it declared a 50% equity dividend of Rs. 5 per share for the year ending March 2016.
The document discusses financial services. Financial services refer to services provided by the finance industry, which encompasses organizations that deal with money management like banks, credit card companies, insurance companies, brokerages, and investment funds. Financial services involve at least two parties, the service provider and user. They are intangible and require innovation. Financial services can be broadly classified into traditional and modern activities. Traditional activities include fund-based activities like lending and non-fund based activities. Modern services include mergers and acquisitions advising, capital restructuring guidance, and acting as trustees. Financial services are also classified as fund-based, involving acquiring assets/funds for customers, or fee-based, where institutions earn income through fees. Financial
The document provides an introduction to financial management. It discusses that the goal of financial management is to maximize shareholder wealth by increasing the firm's market value. This is achieved by improving competitiveness and creating value for stakeholders. The key activities of financial management include financial planning, managing assets and liabilities, and making investment, financing, and dividend decisions. Financial decisions involve tradeoffs between risk and return. The accounting and finance functions are related but have different objectives, with accounting focusing on past performance and finance on future decision-making.
The Indian financial system consists of organized and unorganized sectors. The organized sector includes financial institutions, financial markets, and financial instruments that are regulated. It involves banks, capital markets, insurance companies, non-banking financial corporations, and cooperative banks. The unorganized sector consists of indigenous bankers, money lenders, pawn brokers, and chit funds that operate locally and informally. The financial system channels funds from savers to borrowers and allows for maturity transformation through various financial assets and intermediaries.
This document discusses various methods for valuing pre-revenue startups, including the Venture Capital Method, Berkus Method, Scorecard Valuation Method, and Risk Factor Summation Method. It also mentions the Comparable Transactions Method and Discounted Cash Flow method. Key factors that affect valuation are described such as the strength of the management team, size of the market opportunity, product/technology, and competitive environment. Valuation amounts are provided for different funding stages.
Capital Market: Components & Functions of Capital Markets, Primary & Secondary Market Operations, Capital
Market Instruments - Preference Shares, Equity Shares, Non-voting Shares, Convertible Cumulative Debentures (CCD),
Fixed Deposits, Debentures and Bonds, Global Depository receipts, American Depository receipts, Global Debt
Instruments, Role of SEBI in Capital Market.
CBLO is a money market instrument that allows entities access to borrow and lend funds against securities for short periods of 1 day to 1 year. It involves CCIL acting as an intermediary between the borrower and lender. Capital employed represents the total long-term funds from shareholders and creditors used in a business. It is used to calculate return on capital employed (ROCE). A qualified institutional buyer (QIB) is an institution that can privately purchase securities from listed companies to help companies raise funds within India's domestic market. The statutory liquidity ratio (SLR) is the minimum fraction of deposits that banks must maintain as liquid assets like government securities and cash.
financial intermediation business (1).pptSumit717679
Financial intermediaries collect savings from depositors and use these funds to purchase assets and issue claims against themselves. The key intermediaries are commercial banks, lease financing, hire purchase, venture capital, and securitization. Commercial banks are the largest and fastest growing financial intermediaries in India. They provide various services like bank accounts, loans, money transfers, credit/debit cards, and lockers. Reforms in the banking sector include interest rate deregulation, adoption of prudential norms, reduction in preemptions, and allowing new private banks. Asset liability management (ALM) matches bank assets and liabilities across various maturity periods to manage liquidity risk. Lease financing involves the owner of an asset providing it to a user
financial intermediation business (2).pptSumit717679
1. Financial intermediaries collect savings from others and issue claims against themselves, using the funds raised to purchase ownership or debt claims. Major intermediaries include commercial banks, lease financing, hire purchase, venture capital, and securitization.
2. Commercial banks are the oldest and largest financial intermediaries in India. They provide services like bank accounts, loans, money transfers, credit/debit cards, and lockers.
3. Lease financing and hire purchase are modes of financing that allow for the purchase of assets over time through periodic rental or installment payments, with ownership transferring at the end of the agreement. Both play an important role in providing access to capital.
Masala bonds allow Indian entities to raise money from overseas markets denominated in Indian rupees rather than foreign currency. This shields issuers from currency risk while transferring that risk to offshore investors. Eligible issuers include Indian companies, REITs, InvITs, and NBFCs. Investors must be from jurisdictions meeting certain FATF criteria. Minimum bond maturity is 3 years. Individual issuers are limited to raising $750 million equivalent per year through masala bonds. Indian regulators provide certain exemptions from prospectus requirements and other regulations for masala bond issuances. Key considerations for offshore investors include access limitations, settlement risk, potential arbitrage opportunities from currency movements, and liquidity concerns.
Corporate banking, financial advisory and merchant banking servicesKalpesh Arvind Shah
The document discusses syndicated loans, which involve multiple lenders jointly providing loans to one or more borrowers under the same terms. One bank is appointed as the lead bank to manage the loan process. Syndicated loans account for around half of India's investment banking revenue. They provide large sums of money for projects and allow risk spreading among lenders. The roles of different players like the arranger, lead bank, manager, participants and agency bank in syndicated loans are also outlined.
The document provides updates on legal and business issues in Vietnam, including:
1) Advised on two M&A deals in Vietnam's pharmaceutical and software industries totaling over $45 million.
2) Proposed changes to Vietnam's law on cooperatives including allowing capital contributions to be transferred and introducing "undivided pools" of retained funds.
3) An upcoming decree on personal data protection in Vietnam that will impose more stringent requirements on data processors and cross-border data transfers.
The document discusses the difference between asset-based and fee-based financial services. [1] Asset-based services help raise funds and open investment opportunities through products like leasing, hire purchase, and consumer credit. [2] Fee-based services charge commissions for advisory work like arranging capital issues, mergers and acquisitions, and project advice. [3] While fee-based services do not directly create assets/liabilities, they can become asset-based if guarantees or letters of credit are invoked, with payment liability falling on the bank.
History of Non-Banking Financial Companies Classification of Non-Banking Co...Mohammed Jasir PV
History of Non-Banking Financial Companies
Classification of Non-Banking Companies
Classification of Activities of NBFC
Fund Based Activities
Fee Based Activities
Concepts, Growth and Trends of Fee Based And Fund Based Activities.
This document provides information on non-banking finance companies (NBFCs) in India, including their classification and types. It discusses how NBFCs are classified into different categories based on whether they accept public deposits and their principal business activities. Some key NBFC categories mentioned include asset finance companies, investment companies, loan companies, infrastructure finance companies, and microfinance institutions. The document also briefly outlines the regulations for mutual benefit finance companies and the leasing and hire purchase services that can be provided by NBFCs.
This document provides information on non-banking finance companies (NBFCs) in India, including their classification and types. It discusses that NBFCs are divided into three categories based on whether they accept public deposits. It also outlines several types of NBFCs such as asset finance companies, investment companies, loan companies, infrastructure finance companies, and microfinance institutions. The key roles and qualifying criteria for each type are summarized.
MBFI PROJECT_ GROUP 4 - ARC's in India.pptxHimanshuRalhan
The document discusses Asset Reconstruction Companies (ARCs) in India. It provides details on the members of ARC Group 4, key attributes of ARCs such as RBI approval and net owned funds required. ARCs help banks by purchasing their non-performing assets (NPAs) so banks can focus on normal activities. The regulatory framework and role of ARCs in acquiring bad loans from banks, raising funds by issuing security receipts, and using legal powers to recover dues from borrowers is also summarized. Finally, it discusses the future of ARCs in addressing expected increased NPAs from COVID-19 pandemic.
The State Bank of Hyderabad follows a 10 step process to provide loans: 1) locate borrowers, 2) determine loan requirements, 3) conduct KYC verification, 4) evaluate applications, 5) check CIBIL scores, 6) obtain encumbrance certificates, 7) value properties, 8) update data on software, 9) calculate marks to determine approval, and 10) disburse loans. The bank must adhere to various laws including those governing capital adequacy, collateral seizure, and credit reporting. It has made alterations like online applications and transparency to improve the efficiency of its lending process.
Financing through Global Depository Route by Indian Companies ( Authors : Par...ParitoshDhondiyal
Abstract: Capital financing through depository receipts route by Indian Corporates has seen different trends due to various pros and cons, government policies in India. The study is done to understand the basic concepts of depository receipts like depository receipts mechanism, history, advantages and disadvantages, DR ratio, types of depository receipts roles and responsibilities of different entities during a GDR program, definition of significant beneficial owner in case of GDR etc. Basic analysis of different sectors of Indian economy is done by using basic statistical tools and tables and the conclusion of study reveals decline of depository receipts in India since 2008, dependence on UK, US and German Economy for depository receipts. Sector specific conclusion of Indian economy utilizing depository receipts as a financing tool is also drawn by this study.
NPA in Indian Banking Industry, Analysis of Bankruptcy Code, Resolution mechanism through Asset Reconstruction Company (including Valuation Techniques)
Kingfisher Airlines owes Rs 260 crore to Airports Authority of India for airport infrastructure usage. KFA will pay through an inter-corporate deposit from UB Group. [ICDs are short-term loans between corporations, often at higher interest rates than banks due to risk. They lack collateral but help cash-strapped firms access funds.] Kingfisher will receive an ICD from UB Group to pay its debt to AAI. ICDs are an unsecured source of short-term funds for companies in need, bearing higher interest than bank loans. They are an alternative to bank loans, especially for less creditworthy companies. However, their reliance on corporate relationships limits their availability compared to formal bank financing.
The document discusses management of non-performing assets (NPAs) in banks. It defines NPAs and categories them as substandard, doubtful or loss assets depending on the period for which they have remained unpaid. It outlines provisioning norms for different NPA categories. Factors contributing to NPAs include poor credit discipline, inadequate risk management, diversion of funds by promoters and funding non-viable projects. Methods for managing NPAs discussed include preventive measures, resolution through compromise settlements, restructuring, debt recovery tribunals and sale of NPAs.
Indian Depository Receipts (IDRs) allow foreign companies to raise capital from the Indian market. IDRs represent shares of a non-Indian company and are issued by a domestic depository in India. The first IDR issuance was in 2010 by Standard Chartered Bank, which raised Rs. 2490 crore. While IDRs provide benefits like access to the Indian market, there are also challenges like tax treatment and lack of fungibility between IDRs and underlying shares. The legal framework for IDRs needs further improvements to realize their full potential.
Legal Remedies Available for Housing finance recoveryVinod Mukunthan
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Projects & Project Financing in india
1. Projects & Project Finance in India
An Overview
Ran Chakrabarti
Partner
23 November 2017
2. Overview
The Current Market
Key Regulatory Issues
Typical Document Structures
Common Project Risks
The Bankruptcy & Insolvency Code
Enforceability of Arbitration Awards
2
3. The Current Market
In 2016, project financing in India amounted to USD 8.5 billion, just over 3.5 per cent of the global
market (PFI International (2016))
In a sharp contrast to this is the Australian project finance market, which stood at USD 24.3 billion in
2016, almost three times the size of the Indian market
In India, during 2016, approximately 50 deals accounted for the USD 8.5 billion spend
Out of this figure, State Bank of India did 12 deals, totaling just under USD 5.3 billion
GMR’s Delhi International Airport raised USD 522 million through the only Indian project bond in
2016 (Singapore listed) refinancing high cost domestic debt
ADB financed Mytrah Energy with a USD 175 million loan to develop wind and solar projects
Flurry of INR denominated Masala Bonds listed on foreign markets in 2017: investors take the risk
July 2017 SEBI circular temporarily put a halt to Masala Bonds; though they are now carved out of
the combined corporate debt limit
3
4. The Current Market
Recent big ticket project financing deals include
– Adani Power Maharashtra Limited’s 3,300 MW thermal power project for USD 1.59 billion
– Masala Bonds worth INR 5 billion issued by Adani Transmission Limited
– ONGC Petro Addition Limited’s 1.1 MMTPA petrochemicals complex worth USD 2.184 billion
In October 2017, the Asian Development Bank and the Government of India signed a USD 65.5
million loan agreement to continue interventions to check coastal erosion on the western coast in
Karnataka
In November 2017, Adani Power signed a PPA with Bangladesh to supply power from its 1,600 MW
plant being constructed in Jharkhand
Masala Bonds are back: HDFC recently raised INR 1,300 Crore (approximately USD 200 million)
from the IFC
Data from Bloomberg suggests that Indian corporates have raised over USD 3 billion from Masala
Bonds between July 2016 and October 2017
4
5. Key Regulatory Issues
No umbrella legislation
Local Lenders – The Banking Regulation Act and the notifications of the Reserve Bank of India (the
“RBI”) from time to time
Foreign Lenders – The Foreign Exchange Management Act (1999) read with the:
- Foreign Exchange Management (Borrowing or Lending in Rupees) Regulations (2000);
- Foreign Exchange Management (Borrowing or Lending in Foreign Exchange) Regulations
(2000);
- Master Direction on External Commercial Borrowings, Trade Credit, Borrowing and Lending in
Foreign Currency (the “ECB Regulations”)
SEBI (Debenture Trustee) Regulations (1993)
The Bankruptcy & Insolvency Code (2016)
5
6. Key Regulatory Issues
ECB Regulations
- Obtain a loan registration number from the RBI
- ECBs must have a minimum average maturity of at least 3 years
- Pre-payment requires a prior no-objection certificate from the Authorised Dealer Bank
- mandatory prepayments triggered by change in law?
- insurance or liquidated damages payments?
- The current ECB framework consists of 3 Tracks based on the Minimum Average Maturity and
currency denomination
- Infrastructure companies cannot access shorter term foreign currency denominated ECBs
under Track I but only long term foreign currency denominated ECBs under Track II and INR
denominated ECBs under Track III
6
7. Key Regulatory Issues
Non Convertible Debentures
- Financing through debt instruments such as non convertible debentures (“NCDs”)
- Issued by companies through private placement or public issue to domestic or foreign
portfolio investors (“FPIs”)
- Recently, regulations amended to allow Indian corporates to issue unlisted NCDs to FPIs
- Secured NCDs are governed by the provisions of (Indian) Companies Act, 2013 and other
regulations issued by the Securities and Exchange Board of India (“SEBI”)
- Subject to the RBI’s combined corporate debt limit, which was recently restructured,
introducing a temporary auction process
- Secured NCDs require a Security Trustee
- Minimum maturity period of 3 years
7
8. Key Regulatory Issues
Masala Bonds
- Indian Rupee denominated listed on foreign stock exchanges
- In September 2017, Masala Bonds were removed from the corporate bond investment limit
for FPIs and effective October, 2017 constitute a part of the ECB regime
- Unlike ECBs, the currency risk lies with the investor and not the issuer
- No optionality clause for prepayment before the completion of the applicable maturity period
- Mandatory prepayment arising out of change in law?
- Mandatory prepayments from insurance proceeds or liquidated damages receipts?
8
9. Typical Document Structures
Project Structures
- Non recourse or limited recourse financing is rare
- Shareholder Guarantees and Sponsor Support
- Not uncommon to see a single legal entity develop two or more projects
- General lack of off-take support from off-takers (6 months letter of credit support)
- Sometimes EPC Contractors try to get away with corporate guarantees instead of third party
support
Domestic Lending & ECB
- Generally has the same documentation structure as foreign project financings
- Indian loan agreements generally have hair-pin triggers when compared to foreign loan
agreements
- Difficult to procure inter-creditor agreements with other, existing lenders for other projects
- Security Trustee holds secured assets for Beneficiaries
9
10. Typical Document Structures
Domestic Lending & ECB
- In syndicated lending, practical difficulty in conforming covenants, representations and events
of default with a common terms agreement, with each Lender often retaining mismatching
terms
NCDs
- Subscription Agreement, Debenture Trust Deed, Debenture Trustee Agreements, Offer Letter,
Application Forms, Security Documents
- SEBI (Debenture Trustee) Regulations (1993) specify the particular requirements for the Trust
Deed (mostly information covenants relating to the Issuer)
- Issuer appoints the Debenture Trustee (to act on behalf of the Subscribers)
- Security Trustee holds secured assets for Beneficiaries
10
11. Typical Document Structures
Security Documents
- Generally, similar to English law and held by a Security Trustee for the beneficiaries
Stamp Duty
- Stamp duty payable on transaction documents according to applicable state Stamp Act
- The Supreme Court in Chief Controlling Revenue Authority vs. Coastal Gujarat Power Ltd &
Others held that a mortgage deed executed between a borrower and a security trustee in a
consortium lending transaction, would not be treated as a single document
- The Supreme Court said that the document encompassed 'distinct transactions’ with each of
the lending banks and therefore, stamp duty was charged for each distinct mortgage in
relation to each particular beneficiary
Conditions Precedent
- No objection certificates from third parties are generally time consuming to procure and are
often caveated
11
12. Common Project Risks
Project risks depend on the sector, though delay due to land acquisition or licensing and permitting
are common, resulting in cost overrun
Concession agreements should clearly specify authority actions as conditions precedent to
financing
Often difficult to re-negotiate standard form project documentation tendered by a state authority
Project documentation often executed before the financing documentation - risk mismatch is
common and pass through is rarely structured
Projects often stall for failure to procure land acquisition, local agitation and site risks
Consequences of delay are generally not well structured in project documentation
Project developers are reluctant to formally trigger suspension
Contractors at risk with supply chain costs relating to storage, warehousing and equipment
degradation
12
13. The Bankruptcy & Insolvency Code
Key Provisions of the Code
- Default should be at least INR 100,000 (USD 1,495)
- Two-stage process: Insolvency Resolution Process (“IRP”) and liquidation
- During the IRP, Financial Creditors assess whether the debtor’s business is viable and options
for its revival.
- If the IRP fails, Financial Creditors may liquidate and distribute the debtor’s assets
- The National Company Law Tribunal (the “NCLT”) appoints an insolvency professional to
administer the IRP
- Management of the debtor is taken over by the insolvency professional
- Financial Creditors constitute a Creditors Committee and Operational Creditors may attend
- The Creditors Committee consider proposals for revival within 180 days (or within 270 days
with a one-time extension of 90 days) before triggering liquidation
- The adjudicating authority is the NCLT, with appeal to the National Company Law Appellate
Tribunal and thereafter to the Supreme Court of India
13
14. The Bankruptcy & Insolvency Code
Moratorium and Waterfall Distribution
- A moratorium period of 180 days (can be extended up to 270 days) on the corporate debtor's
operations and standstill for creditors
- During the Insolvency Resolution Process, no judicial proceedings for recovery of debt,
enforcement of security interest or sale or transfer of assets of the corporate debtor can be
pursued by a creditor
- If the Creditors Committee choose to liquidate the company (75 per cent) or no plan is
adopted after 270 days, the proceeds are distributed to pay:
- the costs of the insolency process
- workmen’s dues of 24 months
- secured creditors
- Employees’ dues of 12 months
- Unsecured creditors
- Government dues and claims made by preference and equity shareholders
14
15. Enforceability & Arbitration Awards
Arbitration Awards and Interim Measures
- The Arbitration and Conciliation Act, 1996 was amended on 23 October 2015
- Pursuant to the amendment, Indian courts may grant interim measures (such as injunctions)
in relation to arbitrations outside India
- Parties are now free to choose arbitration to be conducted in London, Singapore or elsewhere
and still apply to Indian courts for interim protection should the need arise
- However, once an arbitral tribunal is constituted, the courts cannot entertain an application
for interim measures. In such cases, the courts can grant interim measures only where the
circumstances point that the interim measures ordered by the arbitral tribunal would not be
‘efficacious’
- Applications arising out of an international commercial arbitration and applications to enforce
foreign awards must now be made to a High Court only
- An interim measure granted by an arbitral tribunal can be enforced in the same manner as a
court order
- Other relevant amendments include the requirement of issuance of an award by Indian
arbitrators within 12 months (extendable to a further period of 6 months either before or
after expiry on application to a court) from the date of their appointment
15
16. Enforceability & Arbitration Awards
Arbitration Awards and Interim Measures
- The dilemma created by the BALCO judgment has been addressed
- Previously, in accordance with BALCO, the parties could either choose foreign arbitration
without interim measures in India or arbitration in India without the element of neutrality of
a foreign seat of arbitration
- Public Policy can no longer be invoked as a wide ground to resist enforcement of an
international arbitration award or a foreign award
- Only limited circumstances involving fraud, corruption or contravention of ”the fundamental
policy of Indian law” or “the most basic notions of morality or justice”
- Essentially, a foreign lender should now be able to enforce an interim award (such as an
injunction) by an offshore arbitration tribunal (or otherwise go to court in India, seeking an
injunction) protecting assets from being syphoned off
16
17. Enforceability & Arbitration Awards
Recent Decisions
NTT DoCoMo Inc. vs. Tata Sons Limited (Delhi High Court, April 2017)
- Concerned the validity of a pre-determined put option price and whether it was consistent
with FEMA and the RBI guidelines on pricing
- Consequently, NTT DoCoMo initiated arbitration proceedings at the LCIA, which ordered Tata
to pay $1.18 billion as damages for failing to adhere to the terms of the Shareholders’
Agreement
- “RBI’s refusal of special permission did not render performance impossible. There were
other methods of performance which were unaffected by refusal.”
- “The Tribunal rejects the argument that an award of damages for breach of clause 5.7.2
would amount to a circumvention of the relevant FEMA regulations”
- The RBI sought to intervene to prevent the enforcement of the award in India, pursuant to
terms of consent reached between the parties
17
18. Enforceability & Arbitration Awards
NTT DoCoMo Inc. vs. Tata Sons Limited (Delhi High Court, April 2017)
- RBI argue that the terms of consent were void or voidable pursuant to Indian law and
therefore opposed to the public policy of India
- Court ruled that the award made was in the nature of a damages payment (and not a
payment made in relation to the valuation of the shares)
IDBI Trusteeship Services Limited vs. Hubtown Limited (Supreme Court of India, December 2016)
- FMO subscribed to 10% equity shares and 3 compulsorily convertible debentures (“CCDs”) in
Vinca Developers Private Limited “(Vinca”)
- The rest of Vinca’s equity was owned by its promoters and Hubtown, an Indian company and
upon conversion, the CCDs would result in FMO holding 99% equity in Vinca
- FMO’s subscription money was intended to be invested in Vinca’s subsidiaries and Vinca
invested in optionally fully convertible debentures (“OPCDs”) issued by its subsidiaries
- Hubtown issued a guarantee in favor of IDBI (the debenture trustee) in order to guarantee
repayments under the OPCDs
18
19. Enforceability & Arbitration Awards
IDBI Trusteeship Services Limited vs. Hubtown Limited (Supreme Court of India, December 2016)
- IDBI enforced the corporate guarantee issued by Hubtown, following payment defaults by the
subsidiaries under the OPCDs
- Following Hubtown’s failure to pay, IDBI filed a summary suit before the Bombay High Court
to enforce the corporate guarantee
- The Bombay High Court held that the corporate guarantee was a part of an illegal structure,
which was aimed at circumventing Indian foreign exchange regulations, and therefore
unenforceable
- The Supreme Court analyzed the transaction structure and observed that the corporate
guarantee did not violate the foreign exchange regulations
- The overall transaction structure was also held to be valid. Hubtown was asked to deposit the
principal amount of the OPCDs before being allowed to dispute its guarantee obligations
These judgments should deter Indian issuers and obligors from wriggling out of their payment
obligations and should provide a considerable degree of comfort to investors looking at
investments through multi-layered structures
19
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