Economy News Notes:

The Reserve Bank of India has raised the overseas convertible bonds or FCCBs borrowimg limit to $750mn under the automatic route. Companies can now raise FCCBs upto $750mn without RBI approval.
The country's largest bank and Kingfisher Airline's lead lender, State bank of India, has finally admitted that its outstanding Rs 500 cr loan to the airline has been termed as non-performing asset.
Prime minister Manmohan Singh’s chief economic advisor has said that with inflation easing and weekly food inflation dropping into the negative zone, the focus needs to shift to growth.

Private Equity investments dipped from a high in the first half of the year to a low in December marked by the rough bumps of slowing GDP growth, sluggish capital markets, rising inflation, policy flip-flops, and the ever looming Euro crisis.
Further, with exits continuing to be the bane of the industry, fund raising has also been more challenging.
At a broad level, with macro-economic and policy concerns both globally and in India, 2012 is expected to stress test even the brave hearts.
And more so it will be a year that will decide whether the Indian risk capital industry can win back the confidence of and a bigger share of funds from Limited Partners (LPs).
A large number of India-focused funds were raised during 2004 to 2006, and many of these are due to raise their next fund.
- LPs are looking closely at the exit performance of these fund managers.
- Those who have not been able to earn returns will go out of business and leave the field open for long haul players.
- There is a growing trend of growth capital funds handpicking entrepreneurs to create new ventures in sectors such as financial services, cleantech and e-commerce space , a trend that gained pace in 2011.

Executive director of RBI said that corporate India should invariably hedge their actual risk exposures without exception as a base-case strategy.
He adds that the excruciating and wrenching volatility, experienced recently, unquestionably attests to the credentials of such a base-case strategy of being fully hedged.
He said, risk management is not about eliminating, or which is the same thing as completely hedging risk, but about first determining, like one’s pain threshold, risk tolerance threshold and then aligning an entity’s existing risk, be it currency, interest rate or commodity price risk, with its risk tolerance threshold.
He urged corporates not to be tempted and enticed by the nominally low interest rates in overseas borrowings and invariably rigorously evaluate such foreign currency borrowing options, benchmarking them against the comparable Rupee borrowings.