Shri Venkaiah Naidu asserted that loan repayment by Self-Help Groups is 98% and hence, were most bankable and eligible for lending. He expressed concern over inadequate credit linkages to such groups in the States in the Northern and Eastern regions of the country with the Southern states accounting for 62% of total credit linkage of Rs.3,173 groups advanced during the last two years under DAY-NULM. He highlighted the importance of supporting Self-Help Groups that are in the forefront of addressing poverty by taking up various economically productive activities through internal lending among the members.
The Minister said that with several initiatives being taken to promote domestic and Foreign Direct Investment in various sectors, there is a vast scope for employment generation leading to increased demand for skilled manpower.
Shri Naidu said that the Government is committed to eliminating poverty by skilling the unskilled, funding the unfunded and reaching the unreached. The Minister stressed on the need for convergence in implementation of skill development programmes and scaling them up in a convergence mode. He said 25% of people still living Below Poverty Line is clearly unacceptable when the country is aspiring for a lead role in the comity of nations. Concerted efforts need to be mounted to eliminate poverty. Due emphasis needs to be given on training to catch the fish instead of giving fish all the time. While banks should scale up financing, loans need to be repaid.
Minister of Skill Development and Entrepreneurship Shri Rajiv Pratap Rudy said that an integrated eco-system is being put in place for skilling of 30 crore people while 24 ministries were involved in handling 70 skill development programmes. He expressed concern over skills not being given due recognition as a result of which in our country there are no Professors of Carpentry or Plumbing. Referring to what he called the paradox of people with 15 years of formal education and not finding jobs being promised jobs after a 15 week training, Shri Rudy said this needs to be resolved with proper course content and certification. He urged the banks to accept skill certification issued by approved agencies for advancing loans to skilled people.
Minister of State for Finance Shri Jayant Sinha suggested promotion of financial literacy among the beneficiaries as part of skill certification under skill development programmes to enable them with better management of money and enterprises for further growth in chosen area of career development. He favoured credit lending in the name of women stating that they proved to be more adept in managing finances. He also called for lending higher amounts under anti-poverty programmes. This suggestion assumes significance in the context of average loan amount sanctioned so far for setting up individual micro-enterprises under DAY-NULM being Rs.75,000/- against the permissible limit of Rs.2.00 lakh per beneficiary and Rs.3.11 lakh as against the ceiling of Rs.10 lakhs under group enterprises.
Shri Sinha said that under Prime Ministers MUDRA Yojana, Loan Origination System has been introduced under which credit history of beneficiaries would be tracked to help them develop further by extending all necessary support. He informed that lending target under MUDRA for the current financial year has been increased by Rs.50.000 cr from the Rs.1.30 lakh cr advanced to 3.40 cr beneficiaries during the last fiscal.
The National Conference on Deendayal Antyodaya Yojana-NULM is being organized by the Ministry of Housing and Urban Poverty Alleviation to discuss ways of scaling up skills training and credit flow to self-employment programmes and Self-Help Groups.
The beleaguered Micro, Small and Medium Enterprises (MSME) in Uttar Pradesh are slowly warming up to the idea of getting credit rating for their units.
Credit rating by an accredited institution helps a unit get easier credit terms from banks and financial institutions, while evoking confidence amongst its various stakeholders, including vendors, customers and peers.
The Union Budget 2016-17 has significantly increased support to the Performance Credit Rating Scheme (PCRS) by over 600 per cent to Rs 200 crore compared with merely Rs 28 crore during 2015-16. This indicates the priority accorded by the Centre to encourage MSMEs get the credit rating umbrella.
PCRS is administered by the National Small Industries Corporation (NSIC) under the aegis of the union MSME ministry.
In this regard, apex MSME body Indian Industries Association (IIA) has signed a Memorandum of Understanding (MoU) with CRISIL facilitate credit rating amongst the MSMEs.
IIA president Manish Goel said access to formal credit and lack of creditability had been the biggest obstacles for the MSMEs.
One way to overcoming these shortcomings is getting a credit rating. The MoU signed between IIA and CRISIL will facilitate credit rating easily and cost effectively, he added.
Crisil Director Salil Chaturvedi informed the Centre offered subsidy to the MSME units for getting rated under PCRS. The subsidy is 75 percent of the cost of credit rating of the individual MSME unit.
Goel appealed to the MSMEs in UP to get themselves credit rated. The benefits of this are multifoldyou get loans at lower interest rates, gain creditability in business, and ultimately get a chance to scale up. Credit rating is the first step in this direction, he said.
MSME sector is the backbone of the UP industrial base. It is estimated to contributing 60 percent to the state industrial output, employing 40 million and generating economic activity worth Rs 1,20,000 crore annually. It contributes 50 percent to the Gross State Domestic Product (GSDP).
UP is home to almost 4.4 million MSMEs, which includes 4.2 million unregistered units.
Public sector banks (PSBs), which are starved for equity capital, are refusing to tap the markets to raise funds, despite having all the necessary approvals in place. State Bank of India (SBI), Bank of India, United Bank, Oriental Bank of Commerce, Union Bank and IDBI Bank have had the permissions for more than a year or more but they have refrained from raising capital via the qualified institutional placement (QIP) route.
Arun Tiwari, chairman and managing director of Union Bank, points out that even though they have the approvals to raise Rs 1,386 crore via QIP, they havent done it as yet because they do not need the funds now. The credit growth in the system has been low and the areas that we are growing in dont require as much capital. Therefore, the need for capital-raising hasnt come yet, he said.
The credit growth in the banking system has been in the range of 8.5-11 per cent for almost two financial years now. And the PSBs, excluding SBI, seem to be the worst affected. According to Reserve Bank of India data, during the January-March quarter, bank credit of PSBs excluding SBI and its associates grew by a mere 1.4 per cent, compared with 7.8 per cent in the corresponding period in FY15.
Another reason, experts point out, which is stopping the lenders from approaching the market is the stress on the balance sheet, which may deter potential investors. In fact in the last one year, the quantum of bad loans on the book of PSBs has close to doubled, with the tally of bad loans for the listed PSBs (including SBI associates) at Rs 5.81 lakh crore at the end of March 2016, compared with about Rs 3 lakh crore at the end of March 2015.
Bankers also admit that all this combined with the volatility in the market has also deterred them from entering the capital markets.
Before Chandra Shekhar Ghosh, founder, MD and CEO, Bandhan Bank, became a household name in banking, his microfinance institution (MFI) needed little introduction. It had the distinction of being the leading MFI in the country and the largest player in its home state of West Bengal.
With little or no branding, Bandhan achieved this success using its personal connect with rural consumers, who in turn, recommended it to more people in the community. Bandhan#39;s rural consumer base today is estimated to be over six million.
But what worked for it as an MFI, may not necessarily cut ice as a universal bank. While its rural reach was instrumental in getting Bandhan its banking licence, that, say executives, could no longer give it incremental numbers as a universal bank.
Bandhan became a universal (in common parlance a regular) bank in August 2015.
There was debate within the company on whether Bandhan#39;s rural image should be preserved or not as we were transitioning to a universal bank. We decided that it would be prudent to retain the rural connect even as we expanded our horizons, targeting urban consumers, Ghosh said.
As an MFI, Bandhan#39;s tagline was #39;Hope for the Poor#39;. The launch campaign, conceptualised and executed by Ogilvy Mather, fused the past and the present using the tagline #39;Aapka Bhala, Sabki Bhalai#39;. The rationale, explains Ghosh, was that if you did good, you could help the poor. It was a message to urban customers to try out the bank#39;s services, and consequently, help the poor.
A series of six short television commercials were launched as part of the campaign. #39;Marksheet#39;, for instance, shows a young girl proudly showing off her exam results at her new school. She gathers all her friends to say thank you to a Bandhan account holder who made it possible for her to attend a good school. #39;Cricket#39; shows a young boy boasting about his skill in cricket and thanking a Bandhan customer for enabling him to attend a school that has a good cricket programme. The campaign was also taken to the digital medium.
Strategy pays off
Bandhan#39;s branding strategy, which aims to attract urban customers for deposits, while continuing focus on rural consumers for loans, has paid off, executives say. Bandhan, they say, has been aggressive in garnering deposits from urban areas, even as its rural base continues to grow.
To put things in perspective: In 2015-16, Bandhan collected about Rs 12,000 crore as deposits. Out of this, nearly a third came from corporate clients and more than 60 per cent from urban centres. At the same time, gross advances for the period under review stood at Rs 15,500 crore. Of this, close to 99 per cent of the credit was given to customers in rural and semi-urban centres as microfinance.
At a broader level, Bandhan#39;s brand campaign has positioned it as a banker for all rather than a banker for the poor, executives say.
Tata Motors announced that its total commercial and passenger vehicles sales rose 1% to 40,071 units in May 2016 over May 2015. The companys domestic sales of Tata commercial and passenger vehicles rose 2% to 35,643 units in May 2016 over May 2015. Exports declined 5% to 4,428 units in May 2016 over May 2015. The company announced the monthly sales volume data after market hours yesterday, 1 June 2016.
Hero MotoCorp reported 2.32% rise in total two-wheelers sales to 5.83 lakh units in May 2016 over May 2015. Market demand was expectedly subdued in May 2016, due to the heavy retail offlake that happened in April on account of the marriage season and regional festivals in different parts of the country during that month, the company said in a statement. However, a good monsoon after two consecutive years of sub-normal rains could lead to a change in sentiments in the rural markets, which may lead to a positive turn-around in the industry in the second half of this fiscal, it added. The announcement was made after trading hours yesterday, 1 June 2016.
In the month of May, Hero MotoCorp forayed into the world of motorcycle rally racing, through a strategic alliance with Speedbrain GmbH, the German off-road racing specialist. The newly formed Hero MotoSports Team Rally made its debut at the Merzouga Rally, a Dakar series race that recently concluded in Morocco.
Reliance Industries (RIL) announced at the fag end of the trading session yesterday, 1 June 2016, that its wholly-owned subsidiary, Reliance Industrial Investments and Holdings, is investing $16 million in compulsorily convertible preferred shares of a technology start-up viz. NetraDyne Inc., USA. The US-based entity is involved in high-end technology driven product development of deep learning solutions and vision based analytics targeted at industries such as fleet management, automotive, security and surveillance. The entity is currently in advanced stages of product development. It is yet to commence commercial operations, RIL said in a statement. NetraDyne Incs line of business has potential synergies with telecom and digital business initiatives of RIL apart from commercialization benefits in India, RIL added.
RIL further said that 50% of the investment in NetraDyne has been done on 31 May 2016. The balance 50% investment is likely to be completed by 31 March 2017. Upon conversion of the investment, Reliance Industrial Investments and Holdings will get about 15 million equity shares at $1.0613 per share. This translates to 40% equity stake.
Bharti Airtel said that Airtel Payments Bank announced the appointment of Shashi Arora as the CEO Managing Director of the company, subject to the approval of the Reserve Bank of India (RBI). He will replace Manish Khera, CEO, who has decided to pursue his entrepreneurial journey, Bharti Airtel said.
On 11 April 2016, Airtel Payments Bank received a payments bank license from RBI. The company plans to start rolling out its banking network in Q2 September 2016.
Coal India and its subsidiaries on provisional basis achieved 95% of targeted production at 42.58 million tonnes in May 2016. Coal India and its subsidiaries on provisional basis achieved 89% of targeted offtake at 45.53 million tonnes in May 2016. The announcement was made after market hours yesterday, 1 June 2016.
Axis Bank said it has signed tripartite share subscription agreement and shareholders agreement with A.Treds and Mjunction services. A.Treds is a subsidiary company of AXIS Bank. Mjunction services is a joint venture between Tata Steel and Steel Authority of India.
As per the agreement, Axis Bank purchased 1.65 crore shares of A.Treds for Rs 16.50 crore and Mjunction purchased 82.50 lakh shares of A.Treds for Rs 8.25 crore. Consequently, Axis Bank holds 67% stake and Mjunction holds 33% stake in A.Treds.
A.Treds is licensed by the Reserve Bank of India to engage in the business of trade receivables discounting systems (TReDS). The announcement was made after trading hours yesterday, 1 June 2016.
Separately, Axis Bank announced after market hours yesterday, 1 June 2016 that it has allotted senior fixed rate green bonds aggregating to $500 million under the MTN programme through its Dubai International Financial Centre (DIFC) branch. The notes will be listed at the Singapore Stock Exchange and London Stock Exchange. The notes have been priced at 160 basis points over the 5-year US Treasury Note, at a price of 99.479% to yield 2.988%. The notes will be denominated in US dollars, and will bear fixed interest of 2.875% per annum, with interest payable semi-annually in arrears.
Punjab National Bank (PNB) announced revision to its lending rates based on marginal cost of funds to be effective from 1 June 2016. PNBs Marginal Cost of Funds based Lending Rate (MCLR) for overnight loans will be 9.15%, for one month will be 9.20% and for three months will be 9.30%. The MCLR on 6-month loans will be 9.35% and for one-year loans the rate would be 9.40%, the bank said. MCLR for three-year loans would be at 9.55% and loans with five-year maturity would carry an MCLR of 9.70%, the bank said. The announcement was made after market hours yesterday, 1 June 2016.
All rupee loans sanctioned and credit limits renewed with effect from 1 April 2016 are priced with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which is the internal benchmark of the concerned bank. Actual lending rates are determined by adding the components of spread to the MCLR.
TVS Motor Companys total sales rose 11% to 2.43 lakh units in May 2016 over May 2015. The announcement was made after trading hours yesterday, 1 June 2016.
South Indian Bank said that its board of directors has decided to augment the capital by issue of Basel III compliant Tier I/II Bonds to be considered for capital fund purpose for a total face value not exceeding Rs 500 crore in one or more tranches, on such terms and conditions as it may deem fit, subject to the approval of Reserve Bank of India, shareholders and other regulatory authorities, if any. The mode, price and time of the issue will be intimated in due coursem the bank said. The announcement was made after trading hours yesterday, 1 June 2016.
Punj Lloyd announced after trading hours yesterday, 1 June 2016, that the High Court of Justice, Queens Bench Division, Commercial Court, UK has ordered the company and its subsidiary, Punj Lloyd Upstream (PLUL), to pay $26173659.16 (plus summary assessment costs amounting to 75000 pounds), to International Finance Corporation, towards their claims. The company said it is considering various legal options and shall take appropriate steps in respect of such order.
Kajaria Ceramics said that its board of directors will meet on 16 June 2016 to consider stock split. The company proposes to split face value of each share from Rs 2 to Re 1.
Gammon India announced after trading hours yesterday, 1 June 2016, that it has received a Notice of Conversion from DBS Bank (one of the joint lenders) for conversion of part of outstanding debt into equity shares under the Strategic Debt Restructuring Package of the company. Pursuant to this notice, DBS Bank has decided to convert part of its outstanding debt and interest aggregating to Rs 4.90 crore into 41.24 lakh equity shares of the company of face value of Rs 2 each at Rs 11.89 per equity share. Post this conversion the total shareholding of the CDR Lenders and DBS Bank will be 63.07% of the total equity capital of the company.
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