Total gross loan of microfinance industry grows 6 pc to Rs 65,090 cr in Q3

Source: The Economic Times, Feb 21, 2019

NEW DELHI: Total gross loan portfolio of the microfinance industry stands at Rs 65,090 crore at the end of the third quarter, showing an increase of 6 per cent from the previous quarter and an annual growth of 37 per cent, according to a report by Sa-Dhan.

The report is based on data provided by 124 microfinance institutions.

Combined microcredit portfolio of all lenders as on December 31, 2018, was Rs 1,57,497 crore of which NBFC-MFIs are leading with Rs 60,117 crore and 38.17 per cent market share, followed by banks with Rs 52,556 crore and 33.37 per cent market share.

It also said the combined microcredit disbursement of all players during the quarter was Rs 50,942 crore. Of this, banks are leading with Rs 19,618 crore and 38.51 per cent share, followed by NBFC-MFIs with Rs 19,426 crore and 38.13 per cent share.


RBI to pay Rs 28,000 crore as interim dividend to government

Source: The Economic Times, Feb 19, 2019

NEW DELHI: The Reserve Bank of India (RBI) will pay Rs 28,000 crore as interim dividend to the government, which will help the Centre meet its revised budget estimates that include an allocation for the first-ever income transfer to farmers and burnish its fiscal credentials ahead of the general elections.

The central bank follows a July-June financial year and usually distributes the dividend in August after annual accounts are finalised. With this interim transfer, the government will get a total Rs 68,000 crore from the central bank in the current fiscal. The RBI had transferred Rs 40,000 crore to the government in August 2018.

This will be the highest receipt from RBI in a single financial year for the government, exceeding the Rs 65,896 crore it received in FY16 and Rs 40,659 crore in FY18. Read the rest of this entry »

Govt’s disinvestment proceeds touch Rs 53,558 crore in current fiscal year

Source: Business Standard, Feb 17, 2019

New Delhi: The government’s disinvestment proceeds have touched Rs 53,558 crore so far in the current fiscal, as against the full year budget target of Rs 80,000 crore.

Last week, as much as Rs 10,000 crore came in from Bharat-22 ETF and, another Rs 5,379 crore from the sale of Specified Undertaking of Unit Trust of India (SUUTI) stake in Axis Bank.

The government has sold as much as 3 per cent stake in Axis Bank held via SUUTI through an offer for sale (OFS) and raised about Rs 5,300 crore. Read the rest of this entry »

Govt targets Rs 4,000 crore through additional Bharat-22 ETF sale

Source: Business Standard, Feb 13, 2019

New Delhi: The government will on Thursday launch yet another offering of its flagship exchange-traded fund (ETF) — Bharat-22 — to meet the divestment target of Rs 80,000 crore. The additional sale is expected to raise around Rs 4,000 crore, sources said.

This comes alongside a sale of the Centre’s stake in Axis Bank, and buybacks from a number of state-owned companies.

There could also be offers-for-sale (OFSs) for a number of big state-owned companies, including Oil and Natural Gas Corporation (ONGC) and Oil India, and initial public offerings of companies like Mazagon Dock and MSTC.

The additional sale of Bharat-22 units would be for a single day and will be open for institutional and retail investors. This will be the second issuance of Bharat-22 ETF this fiscal year, and third overall.

The government has so far raised Rs 22,900 crore through the ETF. While Rs 14,500 crore was raised in November 2017, another Rs 8,400 crore was raised in June 2018.

Business Standard had reported in November that the Department of Investment and Public Asset Management (DIPAM) will go for another offering of Bharat-22 this year.

As of January-end, the government has mopped up Rs 35,533 crore in disinvestment for 2018-19. It has yet to factor in around Rs 15,000 crore that it will get from Power Finance Corp’s acquisition of the Centre’s stake in REC.

Additionally, Axis Bank posted on the exchanges on Monday that the Specified Undertaking of Unit Trust of India (SUUTI) will sell a 3 per cent stake in the bank, which could garner the exchequer around Rs 5,000 crore.

SUUTI currently holds a 9.56 per cent stake in Axis, 7.9 per cent stake in ITC and 1.79 per cent stake in Larsen & Toubro. The combined value of these stakes is around Rs 46,000 crore.

Almost all big state-owned companies have also announced or are expected to announce plans to buy back shares, including Oil India, ONGC, Coal India and others. Whatever shares they buy back from the Centre will count towards its disinvestment targets.

Additionally, DIPAM is still planning a number of OFSs, including that of the oil exploration companies. According to a report in Mint newspaper, Oil India’s Chairman Utpal Bora said a 10 per cent sale of the company’s stake will happen soon.

ONGC and Indian Oil are also supposed to have OFSs. DIPAM plans to do at least two more IPOs, and aims to complete the strategic sale of Central Electronics and Pawan Hans, before March 31. Officials are confident that these plans will help it meet the divestment target.

The Bharat-22 ETF comprises shares of ONGC, IOC, SBI, BPCL, Coal India, Nalco, Bharat Electronics, Engineers India, NBCC, NTPC, NHPC, SJVNL, GAIL, PGCIL, NLC India, Axis Bank, ITC, L&T, Indian Bank and Bank of Baroda.

Govt brings single regulator Bill for intl financial services centres in RS

Source: Business Standard, Feb 12, 2019

New Delhi: The government on Tuesday introduced a Bill to set up a unified authority for regulating all financial services in international financial services centres (IFSCs) in the country. 

The International Financial Services Center Authority Bill, 2019, mandates that transaction of financial services in the IFCS shall be governed by an authority headed by a chairman.

Currently, banking, capital markets and insurance sectors in IFSCs are regulated by multiple regulators — the RBI, Sebi and Irdai — and this would provide inter-regulatory coordination.

The Bill has a provision for establishment and incorporation of the authority. Regulatory bodies including RBI, Sebi, IRDA, PFRDI would have one nominee as its member, while the Finance Ministry will have rights to nominate two officials in the Authority.

It will be “regulating the financial products, financial services and financial institutions in an IFSC,” the Bill said.

Two members could also be appointed by the central government on the recommendation of the selection committee.

“The Chairperson and a member shall hold offices for a term of three year from the date on which he enters upon his office and shall be eligible for reappointment,” the Bill said.

An IFSC enables to bring back to India the financial services and transactions that are currently carried out in offshore financial centres by Indian corporate entities and overseas branches or subsidiaries of financial institutions (FIs). 
 It provides business and regulatory environment that is comparable to other leading international financial centres in the world like London and Singapore.

IFSC provides Indian companies with easier access to global financial markets.

Cash in circulation now more than pre-demonetisation level

MUMBAI: Currency in circulation touched a new high of Rs 20.65 lakh crore on January 18, 2019, way above the pre-demonetisation high of Rs 17.97 lakh crore. The increase in currency usage points to a recovery in ‘informality’ in the economy as the government goes easy on goods and services tax compliance and businesses continue using cash, according to Pranjul Bhandari, chief economist, India, HSBC.

The acceleration of CIC since late-2017 has resulted in leakage of liquidity from the banking system, said Bhandari, who has previously served at the IMF, finance ministry and Planning Commission. The introduction of GST was expected to improve tax compliance but is taking time, she said in a research report.

She said the informal sector, which had weakened significantly following demonetisation has, with the progress of remonetisation, inched up.

However, Soumya Kanti Ghosh, chief economist, SBI group, told TOI, “It is a matter of debate whether currency in circulation implies more cash usage.

This is because there has been a decline in velocity of money implying that fewer cash transactions are being made.” In the past, economists have noted how CIC goes up ahead of major elections. Former governor Raghuram Rajan, too, had attributed the surge in currency in April 2016 to state elections. “Around election time, cash with the public does normally increase…. You can guess as to reasons why, we can also guess,” he had said.

Bhandari says this is not the case now. “We tested for some other drivers of cash as well, for instance, poll-related increase in cash use, and found it to be insignificant.” Bankers say money not coming back into the banking system is one of the reasons why they are unable to meet deposit growth targets Deposit growth during FY19 (up to January 18, 2019) at 4.9% has not been keeping pace with credit surge, which has grown 8.2% during the same period, making it difficult for banks to cut interest rates.

“Traditionally, currency in circulation has been positively correlated with rural demand. However, that relationship may have broken down in FY19. Nearly 70% of rural India, whose main source of income is wages, was not doing too well. And yet, CIC accelerated. We attribute this to the recovery in the informal sector,” said Bhandari. When currency in circulation surpassed predemonetisation levels, government officials said the increase was below trend growth and as a ratio of GDP, it was still lower. The CIC-to-GDP ratio was 11.9% on the eve of demonetisation.

After touching a low of 8.8% in March 2017, it jumped to 10.9% in March 2018, and a likely 11.4% by March 2019. “We expect the CIC-to-GDP ratio to inch up further to 11.6% by March 2020, implying some increase but not an acceleration in currency leakage,” said Bhandari.

Incidentally, high CIC-to-GDP ratio was one of the reasons cited by the government for demonetisation. Bhandari attributes the rise of ‘informal’ economy to teething issues with the GST regime. She says this is expected to get addressed next year, arresting the increase in informality and blunting the acceleration in the CIC-to-GDP ratio. “However, if rural demand rises over the year, that could lead to a rise in CIC,” she adds. Source: The Economic Times, Feb 12, 2019

Finance ministry seeks Rs 27,380 cr from RBI’s risks, reserves fund

Source: Business Standard, Feb 11, 2019

New Delhi: The finance ministry has sought from the Reserve Bank of India (RBI) Rs 27,380 crore that was withheld by the central bank towards risks and reserves in the previous years, said sources.

The RBI had retained Rs 13,190 crore towards risks and reserves during 2016-17. It increased to Rs 14,190 crore in 2017-18. Together, retained amount is Rs 27,380 crore.

The ministry has requested the RBI to provide an interim surplus for the current fiscal on the analogy of the previous financial year and transfer the amount withheld from the surplus of 2016-17 and 2017-18, sources said.

Earlier this month, Economic Affairs Secretary Subhash Chandra Garg had said the government expects Rs 28,000 crore from the RBI as interim dividend during the current fiscal. Read the rest of this entry »