THE WEEKLY FINANCIAL NEWS
RBI now against 0% EMIs for consumer goods, banks withdraw finance schemes; festive sales likely to be hit
RBI feels consumers have been fooled by zero per cent or discounted interest rate schemes into Believing that bank funding comes for free, and wants them stopped. Consumer durable manufacturers offer the zero per cent facility mostly on high-value products such as smartphones, LED TVs and premium home appliances.
International rating agency Fitch on Friday said bad loans in India's banking system are likely to peak in FY2015-16, but stopped short of putting a number to the same.The agency had earlier said the bad loans in the system will peak by the middle of the current fiscal (FY14) but on Friday it said the change in forecast is due to recent macroeconomic developments. Earlier this week, Fitch had downgraded the viability ratings of three state-run lenders, including Punja National Bank and Bank of Baroda, by one notch to 'bb+' from 'bbb-', citing concerns about a protracted economic slowdown, high "stressed assets" and their low capital but retained their long-term issuer default ratings at 'bbb-'.
Most chairmen carry on the older tradition and leave an equally dirty balance sheet for the successor to clean up. But not Chaudhuri. For quarter ending June 2013, State Bank of India's net profit was Rs 4,298.56 crore when he made provisions of Rs 600 crore for pension liabilities and said similar provisions need to be made in the next few quarters.
While the government has taken measures to control the deficit, these have been met with contrasting reactions; though the public is upset about some of the steps affecting their monthly budgets, the stock market seems to be cheering them. How can something that hurts us as consumers be encouraged by investors? The fact is that the recent measures taken in the name of reforms seem to have pitted the consumers against investors. The reforms that generate the highest returns for investors are often at odds with the interests of consumers.
US stocks were little changed in choppy trading on Tuesday after data failed to ease investor concerns about the impact on the economy of stalled budget negotiations in Washington.
The S&P 500 faced a possible fourth straight day of decline, but a gain of nearly 5 per cent in Facebook shares led the Nasdaq composite index higher. Tea Party-backed US senators threatening to stall a bill to fund the US government ran into a wall of resistance late Monday from top Senate Republicans, including Minority Leader Mitch McConnell.
India loses $68 billion, or about Rs 4,14,800 crore of its Gross Domestic Product due to electricity shortage, says a report."There is strong correlation between power consumption and the GDP of the country. Power shortages currently cost India a GDP loss of $68 billion (0.4 per cent of total GDP)," said a Ficci report on Power Transmission. Transmission bottlenecks are an important reason for these shortages. Since demand and generation capacity are both expected to increase in the future, transmission constraints need to be addressed urgently, said the report released on Friday.
Not one to mince words, former Reserve Bank of India (RBI) Governor Bimal Jalan spoke out succinctly on the differences between the central bank and the Finance Ministry.He also made it clear that private companies which had applied for banking licences should be prepared to wait awhile. Jalan heads the external committee that will screen the 26 applications. Some of the biggest Indian groups and entrepreneurs such as the Tatas, Anil Ambani and Kumar Mangalam Birla are among the applicants.
By Sutanuka Ghosal.
Government of India makes gold more expensive by hiking duties four times in 20 months, hoping this will deter citizens of India from holding more gold.
To know where the market is heading now click on the slide show below
TERM OF THE WEEK
Cap and TradeA regulatory system that is meant to reduce certain kinds of emissions and pollution and to provide companies with a profit incentive to reduce their pollution levels faster than their peers. Under a cap-and-trade program, a limit (or "cap") on certain types of emissions or pollutions is set, and companies are permitted to sell (or "trade") the unused portion of their limits to other companies that are struggling to comply.