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.
Fitch says bad loans of Indian banks
likely to peak by FY16
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-'.
Forex reserves jump $2 billion to
$277 billion
India's
foreign exchange reserves rose by a robust $2.03 billion to $277.38 billion in
the week ended September 20 on a healthy increase in the core currency assets. The
reserves had increased
by $544.7 million to
$275.35 billion in the previous reporting week.
Raghuram Rajan brings Wall Street
flavour to Mint Street
The
composition of two new panels by the Reserve Bank of India signals governor
Raghuram Rajan's determination to consign the old school of thought to the
dustbin, and a bigger role for intellectuals from financial markets in central banking than bureaucrats. The panel on
Comprehensive Financial Services for Small Businesses and Low-Income Households, headed
by Nachiket Mor, and the Urjit Patel Committee to revise and strengthen
monetary policy framework do not have a single bureaucrat who are renowned to
throw rule books stalling decision making than letting new ideas flourish. Rajan,
who became the third youngest governor of the central bank this month, is
pushing for a vibrant financial market with many instruments to trade in bonds and currency
which are looked at with reservations by old timers. He has begun to dismantle
rules on bank branches and hedging which are seen as a break from bureaucracy.
Oil subsidy, rupee may push fiscal
deficit above 5 percent
Widening
oil subsidy and weakness
in rupee are likely to
push India's fiscal deficit above 5 per cent in the current financial year as
against the budgetary target of 4.8 per cent, a ratings and research agency
said.India Ratings & Research, a unit of Fitch Group, said the recent
depreciation in the value of rupee is likely to increase oil subsidy to 0.4 per
cent of the country's gross domestic product (GDP), 0.1 per cent more than the
budgetary target.
Govt clears 15 FDI proposals worth
over Rs 2,000 crore
The finance
ministry has approved 15 foreign direct investment (FDI) proposals totalling Rs
2,000.5 crore and recommended two applications, including that of US drug major
Mylan, for final Cabinet clearance. The 15 proposals were cleared following
recommendations by Foreign
Investment Promotion Board (FIPB) on August 27.
Outgoing SBI chairman Pratip
Chaudhuri leaves poor investors, rich legacy
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.
Fuel price hike, curb on gold imports
& other reforms: How consumers & investors are impacted
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.
Wall Street flat as Washington fiscal
battles weigh
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.
Power shortages cost India $68 bn in
GDP: Ficci
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.
Banking licence applicants will have
to wait: Bimal Jalan
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.
EXPERT VIEW
Why Indians love it when government
makes gold expensive
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 Trade
A 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.
