Moody's upgrades SBI, HDFC Bank ratings to Baa2 from Baa3

In the case of HDFC Bank, Moody's has also upgraded the bank's baseline credit assessment (BCA) and adjusted BCA to Baa2 from Baa3.

Moody's Investors Service has upgraded the long-term ratings of four Indian financial institutions to Baa2 from Baa3. The four are Export-Import Bank of India, HDFC Bank, Indian Railway Finance Corporation Ltd, and State Bank of India.

In the case of HDFC Bank, Moody's has also upgraded the bank's baseline credit assessment (BCA) and adjusted BCA to Baa2 from Baa3.

Moody's has upgraded the Counterpart Risk Assessment (CR Assessment) of HDFC Bank and its Hong Kong branch to Baa1(cr) from Baa2(cr); and of SBI, its Hong Kong, London and Nassau branches to Baa2(cr)/P-2(cr) from Baa3(cr)/P-3(cr). In addition, Moody's has assigned a CR Assessment of Baa2(cr)/P-2(cr) to State Bank of India, DIFC branch.

In addition, Moody's has changed to stable from positive the ratings outlook for IRFC; EXIM India and its London branch; HDFC Bank, its Bahrain and Hong Kong branches; as well as SBI and its Hong Kong, London, and Nassau branches. Moody's has assigned a stable outlook to SBI's DIFC branch.

Moody's continues to assess India's Macro Profile (operating environment for the banks) as Moderate. The assessment incorporates the weak, but stable credit conditions in the country, with such a situation representing the key risk to the banks' balance sheets. Corporate leverage has started to fall and asset quality deterioration for the banks has peaked.

Furthermore, the clean-up of balance sheets is underway, with the latest effort being the asset quality review conducted by the Reserve Bank of India in December 2015 and the promulgation of the Insolvency and Bankruptcy Code 2016.

The capitalization profile of the public sector banks - a segment which accounts for nearly 70% of total banking system assets remains far below that of their private sector peers. To a large extent, the capital shortfall has been addressed by the government's announcement on October 24, 2017 of a recapitalization plan for public sector banks, which should help facilitate these banks in writing down bad loans.

However, the credit implication will depend on the hair-cuts that the banks will need to take in the resolution process and the developments in their other credit metrics after the process is complete.

Funding remains credit strength for Indian banks. The banks' funding and liquidity profiles which are largely funded by customer deposits with limited reliance on confidence sensitive market funding have remained stable.

CDSL surges over 6%

Central Depository Services (India) (CDSL) is catching the attention of market participants as the stock was trading at Rs 340.65 per share, with the gains of Rs 19.3 per share or 6.01% as of 1017 hours on Monday.
 
The total traded volume attracted by the stock stands at 22,84,746 shares and traded value of Rs 76.77 crore. The stock touched its intraday high of Rs 343.45 per share, up by Rs 22.1 per share or 6.87%.
 
The only listed company in depositories services, CDSL had listed at Rs 250 per share on June 30, 2017, at a premium of 67.7% as against its issue price of Rs 149 per share. Its IPO issue was oversubscribed by 170 times, which makes it the most subscribed IPO issue of 2017.
 
Meanwhile, Nifty was trading at 9,868 level, up by 31 points while Sensex was trading at 31,581 level, up by 56 points on Monday. There were 1,005 advances, 542 declines and 418 unchanged stocks on NSE reflecting positive undertone in the market.

Bharat Forge gains 5% post Q1 results

The company posted a net profit of Rs. 1220.60 million for the quarter ended June 30, 2016 as compared to Rs. 1959.70 million for the quarter ended June 30, 2015.

Bharat Forge gained 5.1% to Rs.760.5 on Friday. The company posted a net profit of Rs. 1220.60 million for the quarter ended June 30, 2016 as compared to Rs. 1959.70 million for the quarter ended June 30, 2015.

Total Income has decreased from Rs. 12159.70 million for the quarter ended June 30, 2015 to Rs. 9826.70 million for the quarter ended June 30, 2016.

The scrip opened at Rs. 724 and has touched a high and low of Rs. 773.2 and Rs. 719 respectively. So far 3241049(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 16843.08 crore.

The BSE group 'A' stock of face value Rs. 2 has touched a 52 week high of Rs. 1292.5 on 20-Aug-2015 and a 52 week low of Rs. 686.8 on 24-Jun-2016. Last one week high and low of the scrip stood at Rs. 771.3 and Rs. 716.7 respectively.

The promoters holding in the company stood at 46.74 % while Institutions and Non-Institutions held 33.02 % and 20.23 % respectively.

The stock is currently trading above its 200 DMA.

GST: How much of the Glitter will actually be Gold?

Considering a plethora of taxes, tearfully tedious processes and a whopping amount of mandatory paperwork, India’s system of taxation is enough to irk its population. With the GST wheels to be set in motion on April 1, 2017, promising a single and simplified tax, efficiency logistics, distribution and compliance will be fortified, hopefully.

The much awaited Goods and Services Tax (GST) Bill, a propitious vehicle of growth for the economy, has eventually managed to receive a green signal from the major opposition party, Congress, and is all set to perch upon India’s indirect tax structure, next year. The Bill which remained in suspension for quite a while would now see the light of the day, post key concessions made by the government. The government hopes that at least 16 states endorse the legislation over the next 30 days for rolling out GST from April. 

While the GST has sparked countrywide hopes for a single national tax that will come in place of an intricate mesh of levies, India Inc is keenly awaiting its passage, elated. Major industry players are hailing GST as a reform that would effectively usher in an era of liberalization; something which the country has not seen in decades. Taxes, logistics and operational costs will get tempered, which will play out in favor of businesses as well as consumers and producers. Whether, this would result in the moderation of the prices of their products, would get determined post the Bill being passed.

In anticipation of the passage of GST, the market has already been rallying. That said, finalized tax rate, product exemption list and the time of implementation will determine a large chunk of the extent of short-term benefits, since much of the benefits are in the long-term as per market reports.

Hindustan Unilever Ltd (HUL), Maruti Suzuki, PVR, Century Plyboard, Pidilite Industries and others are among stocks that would gain the most, from GST implementation. The rallying stocks promise a minimum investment horizon of 12 months to investors, as per an ET report.

Given its ability to realign warehousing and supply chain requirements of companies, GST will be a harbinger of upbeat news for port logistics players such as CONCOR, Gateway Distriparks and Allcargo Logistics, thereby buoying demand for ICDs, CFSs, Multi modal logistics parks and container trains. Despite the likelihood of a rising service tax, the industry should be able to shield its margins, by passing on the tax to trade, as per Mr. K. Ravichandran, Sr. VP, Co-Head, Corporate Sector ratings, ICRA Ltd.

With effective tax allaying to 18 per cent from 26%-28%, Asian Paints, Berger Paints and Kansai Nerolac, will be major beneficiaries of the GST roll out. With competition from unorganized players gradually easing out given the shrinking pricing gap, these companies could be at an advantage. Further, share of the huge unorganized market (35%) in the paints industry, should dip owing to the plummeting pricing gap when put across the organized players of the sector. As a result, room will be created for established paint companies to augment volumes, Ravichandran added.

In the midst of mixed reactions, GST, having Rajya Sabha’s unanimity to pass the same, may have crossed the bumpier and thornier parts of the journey. However a long road still lies ahead of it, which can be traversed via certain factors. On passage by both Houses of the Parliament, GST will have to be ratified by States. Thereafter, there will be need for supporting legislations to come into play. Additionally, the "functional modalities" between the States and the Centre are also required to be worked out, says Finance Minister, Arun Jaitley, as per published data.

In addition to eradicating the multiple tax woes vexing the real estate sector, both at the Centre and State level, GST implementation will hopefully drive more transparency into the sector, with its comprehensive and uniform tax structure. Timely delivery of building material across India will be ensured, given the unfaltering distribution network it will enable in the country. However, caution is warranted over firming up the final rate of GST, so as to keep the Bill’s purpose intact. The final rate will be a germane influence on the sector. Should the rate be at par with the existing cumulative taxes, it will most definitely, water down sentiment, since the final cost for buying an under construction flat will hit the roof. Implementation of the Bill by all States together, is a requisite for the same to be successful, stated Neha Hiranandani, Director, House of Hiranandani.

On the other hand, credit chain in the system will gain strength, with restrictions on credit utilization, easing off. However, total costing of the project will be directly impacted since GST will be applicable on the materials purchased by the developer for construction. Given that the Bill has not yet laid guidelines on land valuation and has also kept the sector at bay from input tax credit, increased cost could be in store for the end consumer. Moreover, costs for the buyers could be shoved upwards as implementation of the Bill will not subsume the stamp duty levied by the States. The latter, in order to meet revenue targets, may increase it from time to time, she said.

GST will hopefully alleviate looming inefficiencies in the Indian taxation system. Inefficiencies, that are the repercussions of a cumbersome regime entailing an array of taxes on goods and services, have long tethered the country’s GDP from growing meatier. Considering a plethora of taxes, tearfully tedious processes and a whopping amount of mandatory paperwork, India’s system of taxation is enough to irk its population. With the GST wheels to be set in motion on April 1, 2017, promising a single and simplified tax, efficiency logistics, distribution and compliance will be fortified, hopefully.

Prime Minister, Narendra Modi’s ease of doing business and creating a business-conducive environment in India, forms an essential part of his exuberant India-makeover plans. That whether GST, with its glittering promises of driving monumental growth will make way for its forward momentum, is something which remains to be seen.

Cummins India Q1 net profit at Rs 1811.80 mn

Total Income has decreased from Rs. 13695.70 mn for the quarter ended June 30, 2015 to Rs. 13005.80 million for the quarter ended June 30, 2016.

Cummins India Ltd posted a net profit of Rs. 1811.80 mn for the quarter ended June 30, 2016 as compared to Rs. 2113.50 mn for the quarter ended June 30, 2015.

 Total Income has decreased from Rs. 13695.70 mn for the quarter ended June 30, 2015 to Rs. 13005.80 million for the quarter ended June 30, 2016.

TCS platform helps Ampleon use cloud to drive business agility

Ampleon has selected TCS’ ERP on Cloud Platform to run its complex and critical business processes globally to benefit from scale, efficiency as well as optimize its capital investments.

Tata Consultancy Services announced that Ampleon, a leading RF power company and spinoff from NXP Semiconductors, has engaged TCS to increase business agility by moving its operations to the Cloud.

Ampleon has selected TCS’ ERP on Cloud Platform to run its complex and critical business processes globally to benefit from scale, efficiency as well as optimize its capital investments.  The TCS’ ERP on Cloud Platform enables Ampleon to standardize operations to increase efficiency across the enterprise including finance and accounting, sales and distribution, procurement, production planning, quality, projects and product life cycle management processes.

The Chief Executive Officer (CEO) of Ampleon, Mr. Reinier Beltman said, “Post our spinoff from NXP in December 2015, we needed an ERP system that would address the complex requirements of semiconductor industry and can be deployed rapidly with minimal investments. With TCS’ ERP on Cloud Platform we have found a perfect match that provides standardized best-in-class business processes, offers scalability and flexibility to adapt to changing business needs. Moreover, TCS provides single point of accountability thereby freeing up our resources to focus on core business, new product introduction and gaining market share.“

Speaking about the strategic importance of this partnership, Mr. V Rajanna, Vice President & Global Head of Technology Business Unit, TCS said, “We are delighted to partner with Ampleon as they embark upon their journey as an independent entity. TCS’ expertise in the Semiconductor industry coupled with its best in class ERP Cloud solution delivers immense business value to our customers. This partnership will enable Ampleon to significantly boost its business agility and ensure superior user experience. We look forward to work closely with Ampleon to deliver business benefits in-line with their strategic objectives.”

Raj Agrawal, Vice President & Global Head, TCS Platform Solutions, said, “Today cloud is emerging as the preferred deployment model for core enterprise functions by providing scalable, secure yet flexible platform. TCS is uniquely positioned to address this shift because of our ability to combine services with infrastructure and application while taking primary responsibility for both deployment and ongoing service delivery. Our expertise in ERP Transformation with large repository of assets, best practices and frameworks makes us the partner of choice to deliver significant business value to our customers”.

TCS ERP on Cloud Platform helps customers achieve unified, standardized and streamlined processes and operations on a proven and trusted technology platform. The platform is offered on a flexible pay-per-use pricing model that is aligned with customers changing business needs. The Platform helps customers improve business outcomes such as revenue performance, operating margins and customer satisfaction, it also helps them improve KPI’s like collection time for receivables, employee productivity, time to close financial books, inventory costs and planning cycle time.

Cadila Healthcare gains 5%

The company posted a net profit after taxes, minority interest and share of profit of associates and joint ventures of Rs. 3562 million for the quarter ended June 30, 2016 as compared to Rs. 4602 million for the quarter ended June 30, 2015.

Cadila Healthcare Ltd stock was higher by 5% at Rs.365.The company posted a net profit after taxes, minority interest and share of profit of associates and joint ventures of Rs. 3562 million for the quarter ended June 30, 2016 as compared to Rs. 4602 million for the quarter ended June 30, 2015. Total Income has decreased from Rs. 24066 million for the quarter ended June 30, 2015 to Rs. 23024 million for the quarter ended June 30, 2016.

The scrip opened at Rs. 349.8 and has touched a high and low of Rs. 366.8 and Rs. 349.8 respectively. So far 922386(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 35523.87 crore.

The BSE group 'A' stock of face value Rs. 1 has touched a 52 week high of Rs. 454.4 on 23-Oct-2015 and a 52 week low of Rs. 295.5 on 18-Jan-2016. Last one week high and low of the scrip stood at Rs. 371.4 and Rs. 342 respectively.

The promoters holding in the company stood at 74.79 % while Institutions and Non-Institutions held 16.87 % and 8.33 % respectively.

The stock is currently trading above its 200 DMA.

Motherson Sumi Systems plans to raise Rs. 3,500 crore

The company will seek the resolution for preferential allotment of up to 17.80 million equity shares of issues of FCCB of an amount of upto Rs 562.5 crore to Sumitomo Wiring System, Japan.

Motherson Sumi Systems announced that the board is seeking shareholders approval to raise over Rs. 3,500 crore to enhance long term resources. 

"The board decided with an objective to enhance long term resources to support the growth potential and to have the ability to raise capital at an appropriate time that an enabling resolution would be sought from shareholders in the ensuing AGM to be held on August 31," the company said.

The company will seek the resolution for preferential allotment of up to 17.80 million equity shares of issues of FCCB of an amount of upto Rs 562.5 crore to Sumitomo Wiring System, Japan.

Further the resolution seeks to raise an amount up to Rs 3,000 crore via qualified institutional placement. 

Punj Llyod surges 7%

The company has announced that M/s Pt Engineering Limited, subsidiary of the Company has sold its entire shareholding in its wholly owned subsidiary registered in United Kingdom viz Simon Carves Engineering Limited to Engineers and Constructors International, Inc.

Punj Llyod stock was higher by 7% at Rs.21.The company has announced that M/s Pt Engineering Limited, subsidiary of the Company has sold its entire shareholding in its wholly owned subsidiary registered in United Kingdom viz Simon Carves Engineering Limited to Engineers and Constructors International, Inc.

The scrip opened at Rs. 0 and touched a high and low of Rs. 0 and Rs. 0 respectively. A total of 453958(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 654.24 crore.

The BSE group 'A' stock of face value Rs. 2 touched a 52 week high of Rs. 35.8 on 06-Aug-2015 and a 52 week low of Rs. 17.65 on 07-Jun-2016. Last one week high and low of the scrip stood at Rs. 21.4 and Rs. 19.4 respectively.

The promoters holding in the company stood at 36.72 % while Institutions and Non-Institutions held 10.17 % and 53.1 % respectively.

The stock traded above its 200 DMA.

Neyveli Lignite initiates actions to acquire power assets

The Ministry of Coal, the Administrative Ministry, in consultation with the other Ministries, is in the process of submitting the proposal to the Cabinet Committee on Economic Affairs for sanction of investment decision.

Neyveli Lignite Corporation annual report of earlier year stated that as part of its Corporate Plan, NLC had initiated actions to acquire power assets and in this regard one of the proposals under consideration is the acquisition of 1200 MW Raghunathpur Thermal Power Project (RTPP) of Damaodar Valley Corporation (DVC) through a Joint Venture Company (JVC) proposed to be formed with the DVC with an equity shareholding of 74:26 by NLC and DVC. 

RTPP consists of two Units of 600 MW each and both the Units have been commissioned during March 2016. As per the proposal, the Project Cost as determined by CERC/APTEL for the purposes of arriving at the final tariff for power or such cost as mutually agreed between NLC and DVC would be the consideration value for the transfer of RTPS Project assets to the JVC.

NLC being a Government Company, the proposal for investment in the JVC is required to be sanctioned by the Government of India. The Ministry of Coal, the Administrative Ministry, in consultation with the other Ministries, is in the process of submitting the proposal to the Cabinet Committee on Economic Affairs for sanction of investment decision.

On obtaining the sanction from the Government of India, further course of actions with regard to entering into Joint Venture Agreement and formation of JVC with the DVC will be undertaken subject to obtaining necessary statutory and other administrative approvals.

Motherson Sumi arm launches proposed tap issue of senior secured notes

The Additional Notes are rated BB+ by S&P and are jointly and severally guaranteed on a senior secured basis by certain of the Company's subsidiaries.

Motherson Sumi Systems Ltd has announced that One of Company's subsidiaries, Samvardhana Motherson Automotive Systems Group B.V. (the Company) has announced the launch of its proposed tap issue of US$ 100,000,000 US$ 150,000,000 (Capped) senior secured notes offering (the Additional Notes) to form a single series with the U.S.$300,000,000 4.875% Senior Secured Notes due 2021. 

The Additional Notes are rated BB+ by S&P and are jointly and severally guaranteed on a senior secured basis by certain of the Company's subsidiaries.

HCL Technologies surges 5% on Q1 results

The company posted a net profit after tax, minority interest and share of profit of associates of Rs. 20552.00 million for the quarter ended June 30, 2016.

HCL Technologies Ltd stock was higher by 5% at Rs.841.The company posted a net profit after tax, minority interest and share of profit of associates of Rs. 20552.00 million for the quarter ended June 30, 2016. Total Income is Rs. 115595.90 mn for the quarter ended June 30, 2016.

The scrip opened at Rs. 0 and touched a high and low of Rs. 0 and Rs. 0 respectively. A total of 4700089(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 112951.88 crore.

The BSE group 'A' stock of face value Rs. 2 touched a 52 week high of Rs. 997 on 19-Aug-2015 and a 52 week low of Rs. 706.5 on 11-May-2016. Last one week high and low of the scrip stood at Rs. 805 and Rs. 742.8 respectively.

The promoters holding in the company stood at 60.36 % while Institutions and Non-Institutions held 32.25 % and 7.39 % respectively.

The stock traded above its 200 DMA.

Tata Motors records sales growth of 7% in July 2016

Tata Motors passenger vehicles in the domestic market, recorded a sale of 13,547 nos., a year-on-year growth of 31%, compared to 10,335 nos. sold in July 2015.

Tata Motors passenger and commercial vehicle sales (including exports) in July 2016 were at 43,160 vehicles, a growth of 7%, over 40,154 vehicles sold in July 2015. The company’s domestic sales of Tata commercial and passenger vehicles for July 2016 was at 37,789 nos., a growth of8%, over July 2015. The Company continued to witness year-on-year growth in certain key segments in July 2016, with the company’s LCV sales growing by 5% and its passenger cars growing by 43%. Cumulative sales (including exports) of the company for the fiscal was at 166,889 nos., higher by 7% over 156,658 vehicles, sold last year.

Passenger Vehicles
In July 2016, Tata Motors passenger vehicles in the domestic market, recorded a sale of 13,547 nos., a year-on-year growth of 31%, compared to 10,335 nos. sold in July 2015. Sales of passenger cars in July 2016 was higher by 43% at 12,209 nos., compared to 8,520 nos., in July 2015, due to strong demand for the recently launched Tiago. Cumulative sales growth of all passenger vehicles in the domestic market, were 45,062 nos., a growth of 8%, compared to 41,823 nos., in July 2015.

Commercial Vehicles
The overall commercial vehicles sales in July 2016, in the domestic market were at 24,242 nos., lower by 2%, over July 2015. The sales of Tata Motors Light Commercial Vehicles, continued to grow in the domestic market at 13,544 nos., an increase of 5% over July 2015. M&HCV sales were at 10,698 nos., lower by 9%, over July 2015. The segment saw subdued demand due to lower freight rates, heavier than usual monsoon in some of the states and some slowdown in the replacement market.

Cumulative sales of commercial vehicles in the domestic market for the fiscal were at 102,640 nos., higher by 7% over last year. Cumulative LCV sales were at 56,841 nos., an increase of 9% over last year, while M&HCV sales of 45,799 nos., were higher by 4%, over last year.

Exports
The company’s sales from exports was at 5,371 nos., in July 2016, a growth of 6% compared to 5,078 vehicles sold in July 2015. The cumulative sales from exports for the fiscal was at 19,187 nos., higher by 3%, over 18,588 nos., sold last year.

BPCL clocks 1% gains on the bourses

The company has signed a pact for acquiring a 21% stake (on a fully diluted basis) in the share capital of FINO Pay Tech for a consideration of Rs.251 crore in an all cash deal.

BPCL gained 1% to Rs.596 on BSE. The company has signed a pact for acquiring a 21% stake (on a fully diluted basis) in the share capital of FINO Pay Tech for a consideration of Rs.251 crore in an all cash deal. The definitive agreements to this effect were signed on July 29, 2016 and the transaction is expected to be completed by December 31, 2016.

The scrip opened at Rs. 604 and has touched a high and low of Rs. 604 and Rs. 593.55 respectively. So far 539020(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 85692.71 crore.

The BSE group 'A' stock of face value Rs. 10 has touched a 52 week high of Rs. 602 on 25-Jul-2016 and a 52 week low of Rs. 366.1 on 23-Feb-2016. Last one week high and low of the scrip stood at Rs. 602 and Rs. 575.5 respectively.

The promoters holding in the company stood at 54.93 % while Institutions and Non-Institutions held 30.55 % and 14.52 % respectively.

Mahindra Holidays & Resorts slips 1%

The company is planning to invest around Rs.550 crore.

Mahindra Holidays & Resorts India slipped 1% to Rs.435 on BSE. The company is planning to invest around Rs 550 crore. The proposed investment is to add around 500-550 units.

The scrip opened at Rs. 448.9 and has touched a high and low of Rs. 448.9 and Rs. 432.5 respectively. So far 13767(NSE+BSE) shares were traded on the counter. The current market cap of the company is Rs. 3899.66 crore.

The BSE group 'B' stock of face value Rs. 10 has touched a 52 week high of Rs. 474.95 on 23-Dec-2015 and a 52 week low of Rs. 262 on 25-Aug-2015. Last one week high and low of the scrip stood at Rs. 452.55 and Rs. 420.65 respectively.

The promoters holding in the company stood at 75 % while Institutions and Non-Institutions held 14.89 % and 10.11 % respectively.

The stock is currently trading above its 50 DMA.

Bank of Japan keeps deposit rate at -0.1%

The Bank will purchase ETFs so that their amount outstanding will increase at an annual pace of about 6 trillion yen (almost double the previous pace of about 3.3 trillion yen).

Against the backdrop of the United Kingdom's vote to leave the European Union and the slowdown in emerging economies, uncertainties surrounding overseas economies have increased and volatile developments have continued in the global financial markets. In order to prevent these uncertainties from leading to a deterioration in business confidence and consumer sentiment as well as to ensure smooth funding in foreign currencies by Japanese firms and financial institutions, thereby supporting their proactive economic activities, at the Monetary Policy Meeting (MPM) held today, the Policy Board of the Bank of Japan decided upon the following.

An increase in purchases of exchange-traded funds (ETFs) by a 7-2 majority vote

The Bank will purchase ETFs so that their amount outstanding will increase at an annual pace of about 6 trillion yen (almost double the previous pace of about 3.3 trillion yen).

(2) Measures to ensure smooth funding in foreign currencies by Japanese firms and financial institutions by a unanimous vote.

a) Increasing the size of the Bank's lending program to support growth in U.S. dollars

The Bank will increase the size of its lending program to support growth in U.S. dollars (the Special Rules for the U.S. Dollar Lending Arrangement to Enhance the Fund-Provisioning Measure to Support Strengthening the Foundations for Economic Growth Conducted through the Loan Support Program) to 24 billion USD (about 2.5 trillion yen; double the previous size of 12 billion USD). Under this lending program, the Bank provides its U.S. dollar funds for a period of up to 4 years to support Japanese firms' overseas activities through financial institutions.

b) Establishing  a new facility for lending securities to be pledged  as collateral for   the
U.S. Dollar Funds-Supplying Operations

The Bank will establish a new facility m which it lends Japanese government securities (JGSs) to financial institutions against their current account balances with the Bank so that these JGSs can be pledged as collateral for the U.S. Dollar Funds-Supplying Operations.
2. With regard to the guideline for money market operations, the guidelines for asset purchases except for ETF purchases, and the policy rate, the Bank decided to leave these unchanged.
(1) Quantity Dimension: The guideline for money market operations

The Bank decided, by an 8-1 majority vote, to set the following guideline for money market operations for the intermeeting period:[Note 21

The Bank of Japan will conduct money market operations so that the monetary base will increase at an annual pace of about 80 trillion yen.
(2) Quality Dimension: The guidelines for asset purchases

With regard to the asset purchases, the Bank decided, by an 8-1 majority vote, to set the following guidelines:[Note 21

a) The Bank will purchase Japanese g9vemment bonds (JGBs) so that their amount outstanding will increase at an annual pace of about 80 trillion yen. With a view to encouraging a decline in interest rates across the entire yield curve, the Bank will conduct purchases in a flexible manner in accordance with financial market conditions. The average remaining maturity of the Bank's JGB purchases will be about 7-12 years.
b) The Bank will purchase Japan real estate investment trusts (J-REITs) so that their amount outstanding will increase at an annual pace of about 90 billion yen.
c) As for CP and corporate bonds, the Bank will maintain their amounts outstanding at about 2.2 trillion yen and about 3.2 trillion yen, respectively.

(3) Interest-Rate Dimension: The policy rate

The Bank decided, by a 7-2 majority vote, to continue applying a negative interest rate of minus 0.1 percent to the Policy-Rate Balances in current accounts held by financial institutions at the Bank.

3. The Government is undertaking fiscal and structural policy initiatives, including a large-scale "stimulus package," which is currently being compiled. The Bank will pursue "Quantitative and Qualitative Monetary Easing (QQE) with a Negative Interest Rate" including measures decided today and provide highly accommodative financial conditions. The Bank believes that these monetary policy measures and the Government's initiatives will produce synergy effects on the economy.

4. The Bank will continue with "QQE with a Negative Interest Rate," aiming to achieve the price stability target of 2 percent, as long as it is necessary for maintaining that target in a stable manner. It will examine risks to economic activity and prices, and take additional easing measures in terms of three dimensions -- quantity, quality, and the interest rate -- if it isjudged necessary for achieving the price stability target.

As shown in the July 2016 Outlook for Economic Activity and Prices (Outlook Report) released today, there is considerable uncertainty over the outlook for prices against the background of uncertainties surrounding overseas economies and global financial markets. Against this backdrop, with a view to achieving the price stability target of 2 percent at the earliest possible time, the Bank will conduct a comprehensive assessment of ·the developments in economic activity and prices under "QQE" and "QQE with a Negative Interest Rate" as well as these policy effects at the next MPM. The Chairman instructed the staff to prepare for deliberations at the next meeting.

Chinese authorities will continue to allow credit to drive growth, expects Fitch

Chinese banks' viability ratings (VRs), which range from 'bb' to 'b', reflect substantial but varying risks to capital and asset quality. Fitch's base-case assessment of banks' intrinsic profiles considers relative loss-absorption capacity rather than subjectively adjusting reported NPL data.

The rapid pace of growth in Chinese leverage since 2008, which has contributed to economic imbalances and decreasing credit efficiency, poses significant asset-quality risks for Chinese banks, says Fitch Ratings in a Special Report published.
 
Credit to GDP, as measured by Fitch-adjusted total social financing, has roughly doubled over the past eight years, while credit/GDP productivity rates since 2008 indicate substantial mal-investment and further increases in problem credit. Fitch believes the Chinese authorities will continue to allow credit to drive growth and prefer to restructure debt rather than allow mass defaults, regardless of the size of problem credit in the economy. Bad debt may be socialised and other tools employed over time - including offsetting risks through capital market issuance - to help the resolution process. The migration of debt to the sovereign balance sheet is more probable than a wholesale upfront carve-out of assets.
 
Chinese banks' viability ratings (VRs), which range from 'bb' to 'b', reflect substantial but varying risks to capital and asset quality. Fitch's base-case assessment of banks' intrinsic profiles considers relative loss-absorption capacity rather than subjectively adjusting reported NPL data. This is due to uncertainties relating to on-and-off balance sheet asset quality. That said, Fitch's report addresses questions about the potential size of asset quality problems facing the financial system and the process by which they will likely be addressed, with reference to implications for bank ratings.
 
The report also outlines two alternative scenarios beyond the base case to help frame the potential scale of risk and policy solutions. The scenarios - based around core assumptions pertaining to inefficient credit, impairment rates and loss rates - assume a one-off resolution of the debt problem over the more probable multi-year process.
 
Our alternative scenario assumptions yielded NPL rates of 15%-21% for the financial system, resulting in a one-off capital shortfall of CNY7.4trn-13.6trn (USD1.1trn-2.2trn) - equivalent to around 11%-20% of GDP. The aggregate capital gap for Fitch-rated commercial banks is CNY4.9trn-8.7trn, but individual gaps relative to risk-weighted assets vary across the portfolio.
 
Fitch has long highlighted how Chinese banks' strengths and in particular weaknesses are factored into their ratings. The pace of credit growth, the rise of shadow banking and limited transparency around certain risks have especially weighed on VRs. The size of the problem will ultimately grow, which is why we conducted the alternative scenario analysis. The scenarios are not factored into banks' ratings, and Fitch does not expect the exercise to lead directly to rating actions. Nevertheless, how the debt resolution plays out will determine bank ratings. Bank VRs may be subject to change in the event of an unexpected significant one-off fall in credit exposure, depending on its size and purpose, how the fall was achieved, and a bank's sustainable financial profile after the event.
 
All Issuer Default Ratings for Fitch-rated Chinese banks are support-driven, and any rating changes are tied to perceived changes in the propensity or ability of the sovereign to support the banks. Support already appears to be playing out in less explicit ways, but larger issues affecting the banks - such as idiosyncratic risks and resolution - are less inclined to face public disclosure, even though systemic issues tend to require greater disclosure to address market concerns. If support for the financial system crystallises on the sovereign's balance sheet and sufficiently alters its financial profile to warrant rating action on the sovereign, it could result in similar rating action for bank IDRs.