Ajit Mishra, vice president, Research, Religare Broking, answers your queries.
The origin of the challenge is the so-called "fresh start" process. Many in the MFI industry apprehend that such a law in India will encourage small unsecured borrowers to default and destroy the credit culture. So, while'Fresh start' is a welcome step as it will free up the debtors from the archaic laws of the colonial era, debtors need handholding and counselling to prevent any misuse, says Tamal Bandyopadhyay.
PSB chiefs tried to argue that liquidity is in surplus in the system and the problem was related to lack of demand in the economy, instead of banks' reluctance to lend, but 'the FM said it is a perception issue that loan is not available, which we need to dispel,', reports Somesh Jha.
The new regulations by the Reserve Bank of India (RBI) on microfinance have prompted MFIs to go for a makeover, in order to cope with the new limitations imposed on them.
The Reserve Bank, in Annual Monetary Policy Statement, has also asked banks to set up internal exposure limits for those non-banking financial companies who have gold loans portfolio of more than 50 per cent of the total financial assets.
2018 recorded a strong uptick in start-up investments on the back of some mega deals and was the best year for the sector, surpassing the previous high of $4.8 billion in 2015.
Higher levels could not be sustained as participants offloaded their long positions in view of September series expiry.
In containment areas, movements of people is totally banned and essential services are delivered at the doorsteps.
The current slowdown has lasted for over 18 months and is the longest incident of sluggishness since 2006.
Gold, forex assets, IT sector, pharma. Devangshu Datta explains why each of these is a good hedge against market shocks at this time.
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A discount on the product may make a credit card loan seem cheaper than a consumer durable loan. But missing a payment in case of the former will mean exorbitant charges.
Banks, through the Indian Banks' Association, have urged RBI and credit information companies to maintain a database of wilful defaulters.
'The solution is to enable a graceful transfer of the deposit and funding 'franchise' from capital-deficient firms to capital-surplus firms.' 'This will expand credit intermediation, bring down its costs, and put the financial sector on a definite path of recovery,' argues former RBI deputy governor Viral Acharya.
"RBI will given additional licences" for setting up banks in the country, he said presenting the budget for 2010-11 in the Lok Sabha.
Sectorally, telecom, realty, auto and banks were among the top losers, shedding as much as 2.22 per cent.
Financing against gold being a secured form of lending and higher margins are key reasons.
As share of cash volumes in trading mix sees decline, it will result in moderation of profitability from core broking operations.
Even if Mudra steps in to play its main role of refinancing at some stage, the responsibility for the bad loans remains with the banks.
The Reserve Bank on Monday cautioned people against money schemes offering assured high returns and asked them not to have deposits with unauthorised non-banking finance companies (NBFCs), which falsely claim to have approval from the central bank to conduct business.
How will the RBI announcement on loan moratorium work for those with home loans, auto loans, personal loans, consumer durables loan? Here's what experts have to say.
The finance ministry's plan to offer basic banking licences may find few takers because of doubts over the commercial viability of the proposed business model.
An analysis of past 20 years' demand cycles done by Edelweiss Securities indicates that the auto sector is currently in the middle of a down cycle. Volume recovery, they say, is unlikely to be as sharp as in the past, unless there is strong fiscal support.
Unlike in the past, when old private banks compromised upon underwriting standards to take on the bulk, they've now realised that scaling up at the cost of quality isn't worth the while. These banks have also readjusted growth targets when required, and rebalanced books to preserve capital and asset quality.
There was no relief for existing home buyers who are stuck in stalled projects and are paying both rent and EMI on their home loans.
From auto, refrigerator, and mobile handset makers to real estate firms, companies are tying up with banks to dole out attractive finance schemes and discounts to make buying more affordable.
'No commercial bank will be allowed to fail. There is nothing to worry about.'
As FY20 Budget fiscal measures need to be better understood, a reversal of the stance back to neutral will allow MPC flexibility to respond to incoming data.
PM's economic advisory council chairman C Rangarajan has asked microfinance institutions (MFIs) to overhaul their "flawed" business model for sustainability.
'There is a misconception that gold is a dead asset in India.' 'Around 30 per cent of agriculture loans are collateralised by gold, Soumya Kanti Ghosh and Saket Hishikar, economists at the SBI, point out.
Let all the stakeholders, especially the government, remember that if the Make in India lion needs to roar and rise again, it won't happen unless India Inc rises too, points out Shekaar Subramanian.
'We don't expect any immediate impact on salaried jobs.'
Most adult Indians should have access to bank deposits, credit and remittance facilities as well as insurance and mutual fund products in the next decade, and technology will play a big role in this transformation, says Tamal Bandyopadhyay.
It's not widely advertised, but a few banks and non-banking finance companies (NBFCs) provide loans against used cars.
"Bank loans to all MFIs, including NBFCs working as MFIs on or after April 1, 2011, will be eligible for classification as priority sector loans if, and only if, they conform to the regulations formulated by the Reserve Bank," RBI Governor D Subbarao said in the 'Monetary Policy Statement for 2011-12'.
He said unwarranted rumour-mongering, speculation, and bear hammering of all Reliance Group companies shares over the last few weeks had caused grave damage to all our stakeholders.
Historically, overall credit has grown at 1.6 times GDP growth
"Banks were not in favour of the proposal due to the unsavoury past experience in India and abroad and that large capital buffer that would be available to the banks sponsored by industrial/business houses would create an uneven playing field with the existing banks," the Reserve Bank said in a statement.
The Bill's 2007 version covered only MFIs not regulated by the Reserve Bank of India.
The reform priorities are clear: enhance savings, improve productivity. Just 25 basis points of moving interest rate up or down would not boost investment: Former RBI Governor Y V Reddy.
The liquidity crisis at Dewan Housing Finance Corporation Limited (DHFL) has dented the fortunes of ace investor Rakesh Jhunjhunwala, who increased his stake in the troubled company in the March 2019 quarter (Q4FY19).
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