Financial innovation for stressed companies

As the saying goes, necessity is the mother of invention. That is exactly what's happening between banks and companies in financial distress. Recently, a commodity company which wasn't able to service the interest on a bank loan issued commercial paper of a similar amount. The bank subscribed to the commercial paper and the money was used to make the interest payment.

When a company is unable to service a loan, banks give the company another loan with new terms and conditions, popularly referred to as evergreening of loans. Many industry players are not amused with this kind of innovation because the banking sector is already reeling under the pressure of non-performing assets. "This kind of innovative banking will only add to the stress of the banking system," says an industry veteran.

Are equity fund inflows slowing?

After keeping faith in mutual funds during a turbulent 2015, are retail investors finally beginning to get nervous? If one goes by the December numbers, when net inflows hit a 19-month low, it would really seem so. Industry sources say the investment pace could have slowed further in January, amid a sharp correction in the stock market.

The third week of January was particularly bad in terms of net inflows, as gross inflows were offset by redemptions, say industry officials. Slowing of equity fund flows could be a double whammy for the market, as foreign investors have been continuously pulling out money from the market.

Too many cooks...

Investment advisors have a tough job of providing their views on one stock or the other. But retail investors are never satisfied with one view, especially after the advent of social media.

An investor recently tweeted to Samir Arora of Helios Capital, Motilal Oswal and Raamdeo Agarwal of Motiwal Oswal Securities, value investors Sanjay Bakshi and Ayush Mittal and others, seeking their opinion on Kitex after its disappointing third quarter numbers. Here is what Samir Arora had to say: "If so many people give you their views, you will be totally confused."