The Reserve Bank of India (RBI) is taking anti-inflation steps to curb inflation. Recently in credit policy RBI has hiked the benchmark short-term rate by 50 basis points and also hiked the cash reserve ratio (CRR) for banks by 25 bps. Following this the finance ministry might advice public sector banks to moderate credit disbursal for personal loans so that productive sectors can get more money supply.
The ministry wants that banks should be more careful when distributing loans although country’s growth do not get affected directly.
It seems a message to this effect will be conveyed personally by finance minister P. Chidambaram to bankers when he will meet bankers for the review of credit policy.
Finance ministry on Tuesday issued a statement indicating towards the things to come. It said banks should take “prudent” decisions while distributing credit so that credit is made available to the productive sectors.
Expressing his views on the statement issued by the finance ministry a banker said, “This means that we would have to put a check on personal and retail loans”.
Commenting on the anti-inflation steps taken by RBI in credit policy the finance ministry said that theses steps will help in bringing inflation to a reasonable level which is now on the edge of 12%.
Further the finance ministry stated, “Government expects that the measures taken by RBI, in continuation with measures already taken over the last two months, will help in moderating and containing inflation”.
Currently inflation is ruling at 11.89%, which is much above the RBI’s comfort level of 5%. RBI is expecting that the monetary measures taken in the credit policy will bring inflation down to 7% by March next year.
Wednesday, 30 July 2008
Thursday, 24 July 2008
Loan fair organized in North Dinajpur district for tribals in Islampur
A loan fair was organized for the tribals by the West Bengal SC; ST Corporation in North Dinajpur district with assistance of Islampur Municipality. In loan affair Rs 25,000 loans were allotted to 36 beneficiaries of the SC; ST categories. The loanee have received training on tailoring and handicraft from the West Bengal SC; ST Corporation.
In a speech the District Magistrate of North Dinajpur Mr Sukumar Bhattacharjee said: “It was an attempt to bring the SC, ST communities under income generating schemes. Soon a section of SC, ST population of Raiganj subdivision would be brought under the scheme.”
In a speech the District Magistrate of North Dinajpur Mr Sukumar Bhattacharjee said: “It was an attempt to bring the SC, ST communities under income generating schemes. Soon a section of SC, ST population of Raiganj subdivision would be brought under the scheme.”
Thursday, 19 June 2008
RBI bulletin show rise in small agri debts, fall in personal loans
In the latest monthly bulletin published by Reserve Bank of India the figures of agriculture credit sector clearly indicates that there has been increase in the number of small loan accounts held with nationalized and cooperative banks during last few years. According to the figures published there has been significant increase from 35.5% in 2004 out of the total small accounts to 41.8% in 2006, an increase of more than 17%.
However, during the same period, the share of small personal loan accounts has come down from 41.8% to 35.5%. But the share of small borrowers in the banking sector is still going down with their share of accounts dropping down from 96.4% in March 2001 to 90.3% in March 2006 and their share of the total loan volumes shrinking from 19.7% to 16.4% during the period.
Recently RBI conducted a survey of Small Borrower Accounts, which covered 33.8% of the 7.71 crore small borrower accounts with credit limits of Rs 2 lakh. As per survey details though the share of small borrowers continues to decline, the share of agriculture loans in the total small loans has increased substantially from 33.4% to 41.2% an increase of 8.8 percentage points just over in two years. Though the share of the amount outstanding against agriculture loans only went up from 29.1% to 31.1% during the period.
As per survey reports a considerable disparity has been found in the share of small borrowers across the states. The states with the highest share of small borrowers accounts were the poor and middle income states like Andhra Pradesh (94.2%), Bihar (95.9%), Jharkand (93.8%) and Tamil Nadu (94.5%) while that with the least share included rich states like Delhi (76.7%), Maharashtra (78.9%) Punjab (80.2%) and Haryana (82.7%). Likewise the share of small borrowers in total borrowings was found highest in least developed states like Bihar (56.9%), Assam (42.1%) and Orissa (41.9%) whereas it has been least in the developed states like Delhi (3.8%), Maharashtra (5.8%), and Gujarat (15%).
The RBI bulletin stated the worst impact has been seen on industry where the share of small borrower lending has declined marginally both in terms of number of accounts and amount outstanding to 3.7% and 4% respectively. According to figures of individual loans, the unfairness against women continues to increase.
There has been increase in the share of males both in total number of small borrower accounts and also in the amount outstanding, while the share of women has declined by 1.7 percentage points to 16.5% in the case of number of loans and by 1.1 percentage points to 13.9% in the case of loans outstanding....
However, during the same period, the share of small personal loan accounts has come down from 41.8% to 35.5%. But the share of small borrowers in the banking sector is still going down with their share of accounts dropping down from 96.4% in March 2001 to 90.3% in March 2006 and their share of the total loan volumes shrinking from 19.7% to 16.4% during the period.
Recently RBI conducted a survey of Small Borrower Accounts, which covered 33.8% of the 7.71 crore small borrower accounts with credit limits of Rs 2 lakh. As per survey details though the share of small borrowers continues to decline, the share of agriculture loans in the total small loans has increased substantially from 33.4% to 41.2% an increase of 8.8 percentage points just over in two years. Though the share of the amount outstanding against agriculture loans only went up from 29.1% to 31.1% during the period.
As per survey reports a considerable disparity has been found in the share of small borrowers across the states. The states with the highest share of small borrowers accounts were the poor and middle income states like Andhra Pradesh (94.2%), Bihar (95.9%), Jharkand (93.8%) and Tamil Nadu (94.5%) while that with the least share included rich states like Delhi (76.7%), Maharashtra (78.9%) Punjab (80.2%) and Haryana (82.7%). Likewise the share of small borrowers in total borrowings was found highest in least developed states like Bihar (56.9%), Assam (42.1%) and Orissa (41.9%) whereas it has been least in the developed states like Delhi (3.8%), Maharashtra (5.8%), and Gujarat (15%).
The RBI bulletin stated the worst impact has been seen on industry where the share of small borrower lending has declined marginally both in terms of number of accounts and amount outstanding to 3.7% and 4% respectively. According to figures of individual loans, the unfairness against women continues to increase.
There has been increase in the share of males both in total number of small borrower accounts and also in the amount outstanding, while the share of women has declined by 1.7 percentage points to 16.5% in the case of number of loans and by 1.1 percentage points to 13.9% in the case of loans outstanding....
Friday, 6 June 2008
BoM follow FM starts implementation of debt waiver scheme
On the direction of finance minister Bank of Maharashtra (BoM) has started implementation of the debt- waiver scheme for farmers.
Bank sources said instructions have been given to branches to identify the borrowers for waiver or debt relief and make them eligible for fresh finance.
To make the implementation of the scheme successful senior executives of the banks are visiting branches in districts across the country.
After collecting the data by 30th June bank will be displaying a list of all eligible accounts at the branches and work for making fresh finance available to all eligible farmers under the scheme will be started.
The scheme has been formulated with an aim to provide benefits to the small and marginal farmers by way of waiver of short-term production loans and overdue installments for the term loans taken by them.
Bank sources said instructions have been given to branches to identify the borrowers for waiver or debt relief and make them eligible for fresh finance.
To make the implementation of the scheme successful senior executives of the banks are visiting branches in districts across the country.
After collecting the data by 30th June bank will be displaying a list of all eligible accounts at the branches and work for making fresh finance available to all eligible farmers under the scheme will be started.
The scheme has been formulated with an aim to provide benefits to the small and marginal farmers by way of waiver of short-term production loans and overdue installments for the term loans taken by them.
Wednesday, 28 May 2008
Magma Shrachi Finance to launch personal loan by June
Financial Services Company Magma Shrachi Finance announced their entry into personal loan business, with main focus on rural and semi-urban market. Magma Shrachi Vice-Chairman and Managing Director Sanjay Chamria said preparations for the launch of the product in northern and southern India is complete and by June the product will be launched in all the locations.
He added "We are launching (the product) in 54 locations across India and already have set up our team to manage the business."
Company sources said at the time of filing to the Bombay Stock Exchange the company has a target of initial monthly turnover of Rs 30 crore and hopes to increase it up subsequently.
"The company will offer the product to salaried, self-employed professional and non-professionals," he said.
The company sources said that in the country several leading players have withdrawn from personal loan market but it will continue to focus on the rural and semi-urban market.
He added "We are launching (the product) in 54 locations across India and already have set up our team to manage the business."
Company sources said at the time of filing to the Bombay Stock Exchange the company has a target of initial monthly turnover of Rs 30 crore and hopes to increase it up subsequently.
"The company will offer the product to salaried, self-employed professional and non-professionals," he said.
The company sources said that in the country several leading players have withdrawn from personal loan market but it will continue to focus on the rural and semi-urban market.
Monday, 19 May 2008
Retailers’ latest offer loans for shoes and groceries
People who are obsessed to purchases, but find hard to afford, there is good news for them retailers are offering a helping hand — with loans that are small and interest-free. Now you can take loan for buying even a pair of shoes or for your monthly grocery purchases with loans.
In New Delhi at Reliance Retail Ltd’s footwear store, Reliance Footprint, which opened in January, consumers can help themselves to zero-interest loans for as low as Rs5,000 on buying shoes.
For instance you like a-pair Gecco shoes prices at Rs18,000, but can’t afford it, the firm will promptly finance it through the company’s tie-up with ICICI Bank Ltd — also at zero interest. The customer should have a banking relationship with ICICI Bank or HDFC Bank Ltd. Recovering the loan is the task of the bank.
The plan, in its initial stage, is having very few takers; hardly 10 people have already purchased shoes through financing at the New Delhi store in the last five months. It is believed that in the near future the number will increase with the awareness.
Mostly people take loans for home furniture to consumer electronic items which run in the mid to high thousands, retailers say the loan size could go so low that consumers could fund even their monthly grocery purchases with loans. “The ability to convert a one-time investment into an over-a-period-plan always improves the purchasing capability of people,” says Muralidhara Kadaba, president and chief executive for finance and travel, Reliance. “You make customers aspire for things they otherwise may have postponed or might settle for something that maybe compromising.”
Pankaj Rana, a catering service business owner, hasn’t bought his groceries on loans yet, but has liked the loan idea. On a grocery shopping visit to Big Bazaar in Wazirpur in north Delhi earlier this month, he ended up buying an LG television set through finance. “I was walking around the store and saw the TV on display… Store staff explained the finance option and I liked it,” says Rana. “You pay Rs700-800 per month as installment and it doesn’t affect your pocket much.”
Not everyone is as easy to convince as Rana, and Reliance is finding out that the mindset is hard to change.
“People don’t want to take EMI (equated monthly installments) on shoes,” admits R.K. Azad, manager for the Reliance Footprint store in Mayur Vihar in east Delhi. Referring to the consumer mindset that prefers to pay through credit and debit cards rather than taking small loans he said, “Rather, they would use plastic money.”
Although, credit card loans attract an interest payment, the concept has been widely in use in India for well over a decade now. Retailers believe that loans still need to score through the mindset in a country raised on a proverb of “saving for a raining day”.
“Somehow it hasn’t picked up in India,” admits Rakesh Kakkar, chief executive of Future Money, the consumer finance arm of Future Group. According to Kakkar major share of loan for consumer products is restricted to “high-ticket” products, including LCD television sets and expensive furniture. He added if we compare globally, 30-35% of consumer durable items are purchased through financing while it is just between 4-5% in India. On an average at Future Group’s Big Bazaar hypermarket in Wazirpur, the number of consumers opting for loans to purchase consumer durable items is still very small. According to officials of hypermarket finances, there are about five consumers to buy electronic items to furniture in a month.
Undeterred, Future Group, the parent of the country’s largest retailer Pantaloon Retail (India) Ltd, company official on condition of anonymity because they are not authorized to give out the details for the plan this early said the company is planning to introduce a card where consumers can make purchases of up to Rs3, 500 on grocery shopping, because they are not authorized to give out the details for the plan this early. No further details were available.
“We may look at grocery (financing) sometime later,” Kakkar says, but he declined to comment on the card with a Rs3, 500 credit limit.
However Kakkar, informed that company has plans to introduce loans for purchases of Rs5, 000 on apparel, jeweler and health and wellness products among others from the current minimum finance of Rs7, 000 on consumer electronics and furniture in the next two months.
Reliance Retail is also planning to launch cards which will allow consumers to shop on credit at Reliance Retail-owned stores. Similarly, Reliance also plans to widen the reach of its financial arm, selling everything from loans to insurance to a large number of its stores.
Besides this India’s largest discount retailer Subhiksha Trading Services Ltd has also tied up with financial firms to offer loans on mobile phones priced at Rs5, 000 and above. But it is sceptical whether consumers would want to buy their monthly grocery through financing.
“I am not very sure that customers are looking for financing for grocery at the moment,” says R. Subramanian, managing director of the Chennai-based Subhiksha. “It’s a month-on-month thing and why would anybody need financing?” he asked. Sharing his experiences in selling mobile phones through financing, he says, “Typically, nobody avails loans for buying mobile phones for Rs3, 000.”
Schoolteacher Ritu Sood is a case in point. She has a budget of about Rs10, 000 per month for her family of six, but it’s a clear “no” for her when it comes to taking loans on her grocery purchases.
“I don’t think so….We don’t need loans on that,” she says while pushing a trolley of grocery items in Big Bazaar in Wazirpur area.
However, Azad is trying to convince middle-class Indians that it’s okay to walk in borrowed shoes.
In New Delhi at Reliance Retail Ltd’s footwear store, Reliance Footprint, which opened in January, consumers can help themselves to zero-interest loans for as low as Rs5,000 on buying shoes.
For instance you like a-pair Gecco shoes prices at Rs18,000, but can’t afford it, the firm will promptly finance it through the company’s tie-up with ICICI Bank Ltd — also at zero interest. The customer should have a banking relationship with ICICI Bank or HDFC Bank Ltd. Recovering the loan is the task of the bank.
The plan, in its initial stage, is having very few takers; hardly 10 people have already purchased shoes through financing at the New Delhi store in the last five months. It is believed that in the near future the number will increase with the awareness.
Mostly people take loans for home furniture to consumer electronic items which run in the mid to high thousands, retailers say the loan size could go so low that consumers could fund even their monthly grocery purchases with loans. “The ability to convert a one-time investment into an over-a-period-plan always improves the purchasing capability of people,” says Muralidhara Kadaba, president and chief executive for finance and travel, Reliance. “You make customers aspire for things they otherwise may have postponed or might settle for something that maybe compromising.”
Pankaj Rana, a catering service business owner, hasn’t bought his groceries on loans yet, but has liked the loan idea. On a grocery shopping visit to Big Bazaar in Wazirpur in north Delhi earlier this month, he ended up buying an LG television set through finance. “I was walking around the store and saw the TV on display… Store staff explained the finance option and I liked it,” says Rana. “You pay Rs700-800 per month as installment and it doesn’t affect your pocket much.”
Not everyone is as easy to convince as Rana, and Reliance is finding out that the mindset is hard to change.
“People don’t want to take EMI (equated monthly installments) on shoes,” admits R.K. Azad, manager for the Reliance Footprint store in Mayur Vihar in east Delhi. Referring to the consumer mindset that prefers to pay through credit and debit cards rather than taking small loans he said, “Rather, they would use plastic money.”
Although, credit card loans attract an interest payment, the concept has been widely in use in India for well over a decade now. Retailers believe that loans still need to score through the mindset in a country raised on a proverb of “saving for a raining day”.
“Somehow it hasn’t picked up in India,” admits Rakesh Kakkar, chief executive of Future Money, the consumer finance arm of Future Group. According to Kakkar major share of loan for consumer products is restricted to “high-ticket” products, including LCD television sets and expensive furniture. He added if we compare globally, 30-35% of consumer durable items are purchased through financing while it is just between 4-5% in India. On an average at Future Group’s Big Bazaar hypermarket in Wazirpur, the number of consumers opting for loans to purchase consumer durable items is still very small. According to officials of hypermarket finances, there are about five consumers to buy electronic items to furniture in a month.
Undeterred, Future Group, the parent of the country’s largest retailer Pantaloon Retail (India) Ltd, company official on condition of anonymity because they are not authorized to give out the details for the plan this early said the company is planning to introduce a card where consumers can make purchases of up to Rs3, 500 on grocery shopping, because they are not authorized to give out the details for the plan this early. No further details were available.
“We may look at grocery (financing) sometime later,” Kakkar says, but he declined to comment on the card with a Rs3, 500 credit limit.
However Kakkar, informed that company has plans to introduce loans for purchases of Rs5, 000 on apparel, jeweler and health and wellness products among others from the current minimum finance of Rs7, 000 on consumer electronics and furniture in the next two months.
Reliance Retail is also planning to launch cards which will allow consumers to shop on credit at Reliance Retail-owned stores. Similarly, Reliance also plans to widen the reach of its financial arm, selling everything from loans to insurance to a large number of its stores.
Besides this India’s largest discount retailer Subhiksha Trading Services Ltd has also tied up with financial firms to offer loans on mobile phones priced at Rs5, 000 and above. But it is sceptical whether consumers would want to buy their monthly grocery through financing.
“I am not very sure that customers are looking for financing for grocery at the moment,” says R. Subramanian, managing director of the Chennai-based Subhiksha. “It’s a month-on-month thing and why would anybody need financing?” he asked. Sharing his experiences in selling mobile phones through financing, he says, “Typically, nobody avails loans for buying mobile phones for Rs3, 000.”
Schoolteacher Ritu Sood is a case in point. She has a budget of about Rs10, 000 per month for her family of six, but it’s a clear “no” for her when it comes to taking loans on her grocery purchases.
“I don’t think so….We don’t need loans on that,” she says while pushing a trolley of grocery items in Big Bazaar in Wazirpur area.
However, Azad is trying to convince middle-class Indians that it’s okay to walk in borrowed shoes.
Friday, 16 May 2008
SBI, GE Money to expand JV to personal loan and credit insurance segments
State Bank of India (SBI) and GE Money are trying to repair their joint venture after a brief period of strain over bad debt and losses at SBI Cards, the country's second largest card company. The SBI Card JV will continue to operate, under two separate JVs: SBI Cards & Payment Services Pvt. Ltd. (SBICPSL), which focuses on the marketing and distribution of SBI Cards, and GE Capital Business Processes Management Services Pvt. Ltd. (GEBPMSL), which handles the technology and processing needs of the JV.
SBI and GE Money have jointly announced to expand their 10 year old strategic partnership to a new level of growth and expansion in the future. A meeting was held between Mr. O. P. Bhatt, Chairman, State Bank of India and Mr. Yoshiaki Fujimori President & CEO, GE Money Asia in which it was decided SBI and GE would maintain the same percentage of ownership in both the ventures.
The JV partners also agreed to nominate Mr. Diwakar Gupta, one of the top executives of State Bank of India, as the CEO of SBI Cards & Payment Services Pvt. Ltd.
Under the new strategic initiative, SBICPSL will be better positioned to participate in the high-growth consumer financial services industry by offering other consumer financial products, such as personal loans and credit insurance, effectively expanding the scope of the JV. This move is a natural extension of the JV's leadership in the credit card space, and the success enjoyed by both partners. By cross-selling related financial services and products to its existing large pool of customers, the JV will also be offering an enriched portfolio of products to help customers realize their financial needs.
GEBPMSL will control the scale of its processing platforms to serve other providers in India, in addition to SBI Card's products and services.
After the bank's annual results Mr Bhat told the reporters that the bank has plans to turn around the cards business. He pointed out," India's rapidly expanding financial services sector offers several business opportunities and State Bank of India will be pleased to exploit these opportunities, in partnership with a global giant like GE, wherever possible."
He added SBI was also unhappy with GE's decision to partner LIC for its credit card venture. However, with GE Money reviewing its Indian operations, the senior management has not shown much interest in pursuing the venture. LIC's MoU with GE entered into last year was valid for 90 days and has since expired. The card business was to be launched on April 1, but there has been no movement on this business. LIC may review its business plan in consultation with Corporation Bank.
SBI and GE Money have jointly announced to expand their 10 year old strategic partnership to a new level of growth and expansion in the future. A meeting was held between Mr. O. P. Bhatt, Chairman, State Bank of India and Mr. Yoshiaki Fujimori President & CEO, GE Money Asia in which it was decided SBI and GE would maintain the same percentage of ownership in both the ventures.
The JV partners also agreed to nominate Mr. Diwakar Gupta, one of the top executives of State Bank of India, as the CEO of SBI Cards & Payment Services Pvt. Ltd.
Under the new strategic initiative, SBICPSL will be better positioned to participate in the high-growth consumer financial services industry by offering other consumer financial products, such as personal loans and credit insurance, effectively expanding the scope of the JV. This move is a natural extension of the JV's leadership in the credit card space, and the success enjoyed by both partners. By cross-selling related financial services and products to its existing large pool of customers, the JV will also be offering an enriched portfolio of products to help customers realize their financial needs.
GEBPMSL will control the scale of its processing platforms to serve other providers in India, in addition to SBI Card's products and services.
After the bank's annual results Mr Bhat told the reporters that the bank has plans to turn around the cards business. He pointed out," India's rapidly expanding financial services sector offers several business opportunities and State Bank of India will be pleased to exploit these opportunities, in partnership with a global giant like GE, wherever possible."
He added SBI was also unhappy with GE's decision to partner LIC for its credit card venture. However, with GE Money reviewing its Indian operations, the senior management has not shown much interest in pursuing the venture. LIC's MoU with GE entered into last year was valid for 90 days and has since expired. The card business was to be launched on April 1, but there has been no movement on this business. LIC may review its business plan in consultation with Corporation Bank.
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