The entrepreneurship streak appears to be stronger in the small retail business space, going by the pattern of loans disbursed by the Micro Units Development and Refinance (MUDRA) Bank.
Small retailers, shopkeepers and those running micro units have utilised almost half of the loans disbursed under the MUDRA scheme launched by the Centre in April 2015.
As of May 20, the total loan disbursement was about Rs. 1.43 lakh crore and new entrepreneurs accounted for much of it.
MUDRA offers three categories of loans, Shishu (covering loans up to Rs. 50,000), Kishor (loans above Rs. 50,000 and up to Rs. 5 lakh) and Tarun (above Rs. 5 lakh and up to Rs. 10 lakh).
The objective of the scheme is to encourage new small businesses and ensure that at least 60 per cent of the credit flows to Shishu category units and the balance to the Kishor and Tarun categories. This has been realised as loans sanctioned/disbursed under the first category have so far have been higher than those under the other two categories.
According to a senior official at the State Bank of India, the demand for loans has been more from those taking up , among others, transport and community/personal service businesses.
In terms of States’ performance, Karnataka topped last year with Rs. 16,469 crore disbursements, followed by Tamil Nadu ( Rs. 15,496 crore) and Maharashtra ( Rs. 13,372 crore).
In disbursals, State Bank of India and its associate banks accounted for the biggest share of Rs. 16,999 crore. The disbursals by the 39 NBFC-Microfinance Institutions were also significant at Rs. 44,026 crore.
MUDRA loans are cheaper than those offered by other agencies, such as banks and MFIs. The cost of MUDRA funds, on an average, is 150-200 basis points lower than the benchmark repo rate.
The finance ministry has eased certain rules in reporting by financial institutions to comply with an agreement between India and the US for implementing the Foreign Account Tax Compliance Act (FATCA).
Financial institutions had told the government it was difficult to take physical self-certification from the subscribers. Heeding to the complaint, the ministry allowed obtaining of self-certification through internet banking platform.
The ministry also did away with the requirement of TIN number if a person is in a country where that number is not provided.
There were also queries from financial institutions about valuation of custodial accounts maintained with depositories. The ministry clarified that valuation of securities might be done at the values regularly communicated by depositories to the depository participants and brokers.
“Hopefully, this should help reporting of unlisted securities,” said Bahroze Kamdin, partner, Deloitte Haskins & Sells.
FATCA requires foreign financial institutions (FFI) to report information about financial accounts held by US taxpayers. If the FFI does not comply, the IRS can impose a 30 per cent withholding penalty on US payments made to the FFI.
Expectations on structural reforms however remain low and “could be a positive catalyst if GST gets passed”, it said.
Investor sentiment towards the Indian economy is improving but markets are now looking at the passage of key reform bills like the Goods and Services Tax ( GST ) to act as “new catalysts”, says a Citigroup report.
Expectations on structural reforms however remain low and “could be a positive catalyst if GST gets passed”, it said.
According to the global financial services major, both equity and fixed income (FI) investors are portraying a constructive outlook for India, but are waiting for the next ‘catalyst’ for fresh inflows.
“Positioning on India still remains heavy and relative valuations do not appear to be cheap. This is possibly leading to a lack of substantial fresh inflows as the markets await new catalysts,” Citigroup said in a research note.
The BJP-led NDA government assumed office on May 26, 2014 with a thumping majority in Lok Sabha , but some key bills, including the one on GST, have been stuck in Rajya Sabha due to opposition from some other parties, mainly Congress.
As per the report, foreign equity as well as fixed income investors believe that the Indian economy is relatively attractive than other emerging market economies as it provides better macro stability. Some investors were also enthusiastic about the prospects of a cyclical recovery.
Though investors are on a cautious mode but with better monsoon forecasts, rural consumption is likely to revive. Moreover, urban consumption is expected to get a boost post the 7th Pay Commission implementation.
“We will facilitate your efforts to make your investments in India profitable. We must take advantage of the opportunities that abound in the growth of both our economies,” said President Pranab Mukherjee.
India today promised a conducive environment for Chinese investors and urged them to participate in ‘Make in India’ and other flagship programmes of the government to boost bilateral trade.
“We will facilitate your efforts to make your investments in India profitable. We must take advantage of the opportunities that abound in the growth of both our economies,” said President Pranab Mukherjee addressing a meeting of the India-China Business Forum here on the second day of his four-day visit to China.
The forum, attended by industrialists and businessmen of both sides, was told by the President that India would like to see greater market for Indian products in China in a bid to balance bilateral trade which is now in China’s favour.
This, he said, would particularly be needed in sectors where the two countries have natural complementarities as in drugs and pharmaceuticals and IT and IT-related services and agro products.
“It is a matter of satisfaction that there is emerging focus on two-way investment flows,” he said.
The President noted that the bilateral trade between India and China has grown steadily since the turn of this century from USD 2.91 billion in 2000 to USD 71 billion last year.
Guangdon province boasts of a USD one trillion economy with high manufacturing and other industries along with being a powerful export house of China. It has sister province relationship with Gujarat and Maharashtra.
A pilot smart city cooperation project has been announced between Shenzhen and the Gujarat last year.
Referring to the links of 2nd century before the Christian era between Guangdong and Kanchipuram through a direct sea route, Mukherjee said this is an exciting time for India and China to reinforce the old linkages and join hands for new.
Noting that India has recorded a growth rate of 7.6 per cent each year for over a decade now, he said India believes that it cannot grow in isolation.
“In an increasingly interconnected world, India would like to benefit from technology advances and best practices of different countries.
“The comprehensive reforms introduced in key areas of our economy have enhanced the ease of doing business in India. Our foreign investment regime has been liberalised through simplified procedures. And removal of restrictions on foreign investments,” he said.
The President said these reforms have renewed the interest of global investors in India. In 2014, there was a 32 per cent growth in investments and in 2015, India emerged as one of the biggest global investment destinations, he said.
Mukherjee said India would like more of China’s overseas direct investment which has now crossed USD 100 billion mark.
He said the Indian government was setting up industrial corridors, national investment and manufacturing zones and dedicated freight corridors to stimulate investment in this sector.
Its ‘100 Smart Cities” initiative will transform India into a digitally empowered society and knowledge economy, he said.
“India welcomes your participation in these programmes. Chinese companies with inherent strengths in infrastructure and manufacturing can look towards India as an important destination in their ‘Going Global’ strategy.
“On their part, Indian companies can partner with Chinese enterprises in the new domain of ‘Internet of Things’ which underlines the ‘Made in China 2025’ strategy,” he said.
The President said he was happy to note that a good start has been made by Chinese businesses who are investing in infrastructure projects and industrial parks in India.
Bilateral cooperation in India’s railway sector is also progressing well, he said.
A good number of premier Indian IT firms and other manufacturers are present in China, he said and noted that Indian entrepreneurs were also considering the prospects of jointly exploring opportunities in third countries.
Summing up, the President said India believed there was great potential for economic and commercial cooperation among the two countries, which faced similar opportunities on coming together.
“To realise the full potential of our economic partnership, it is important to bridge the information gap between our business communities.
“We are committed to providing a conducive environment for more investments from China. We stand ready to facilitate many more collaborations between the industry and businesses of our two countries across different sectors. India invites investors from China to be partners in India’s growth story,” he said.
After releasing a consultation paper on peer-to-peer (P2P) lending last week, Reserve Bank of India (RBI) has started meeting some leading players in the sector. The founder of a leading P2P lending platform, who met officials of RBI’s Department of Non-Banking Regulation on Wednesday, told FE on the condition of anonymity that the central bank is gearing up to come out with final guidelines for P2P lending platforms by the end of the current calendar year.
He also said that money laundering and interest rate are two of the main areas that the RBI is focusing on while framing the final guidelines for the sector. “It seems RBI is keen on capping the rate interest that a P2P lender can charge at the same level as that for non- banking finance company micro finance institutions (NBFC MFIs),” he said.
As per current RBI regulations, the maximum rate of interest that an NBFC MFI can charge is the lower of 10% more than its cost of funds and 2.75 times of the base rate of the top five commercial banks.
“While money laundering shouldn’t have been a big concern, given that draft guidelines have mandated that all transfer of funds happen directly from the lender’s bank account to that of the borrower, the unearthing of a few ponzi schemes in the P2P sector in China seem to have made the RBI more cautious,” the P2P lending platform’s founder added.
Post May 31, which is the deadline set by RBI for suggestions and comments on the regulations, it will work on the final guidelines and seems keen on releasing them by the end of the year, he added.
According to P2P Finance Association, the global P2P market almost doubled last year and has crossed the £5 billion mark.
“Although nascent in India and not significant in value yet, the potential benefits that P2P lending promises to various stakeholders and its associated risks to the financial system are too important to be ignored. The Reserve Bank has therefore found it necessary to put out this discussion paper to elicit public opinion and views of the various stakeholders on the future course of action having regard to the current legal and regulatory framework in place to regulate the business of financial intermediation,” RBI noted in the consultation paper.
It has also proposed a minimum capital requirement of R2 crore for P2P NBFCs and is intent on restricting such entities to just companies, thereby barring proprietorships, partnerships and LLPs.
The Income Tax department has launched a special electronic grievance redressal system called ‘e-nivaran’ in order to fast track taxpayer grievances and ensure early resolution of their complaints.
A separate and dedicated window for grievance redressal has been launched recently in the Income Tax Business Application (ITBA), the new smart electronic platform for the regular operations of the department.
The facility is called ‘e-nivaran’ (electronic solution) and acts to integrate all online and physical complaints gathered by the department at this platform which will be monitored by the Assessing Officer of the case upto the supervisory officers in a paperless environment.
The facility is called ‘e-nivaran’ (electronic solution) and acts to integrate all online and physical complaints gathered by the department at this platform which will be monitored by the Assessing Officer of the case up to the supervisory officers in a paperless environment.
“The new system is called unified grievance management system and is acronymed ‘e-nivaran’. The system not only records the origin of the grievance on the electronic platform it works on, but it also keeps tracking it till it reaches its logical conclusion for final resolution,” a senior IT official said.
The e-portal will also ensure that grievances related to any section or domain of the tax department are transferred quickly to the department concerned like that of refunds issue or any other IT matter concerning an assessee.
The decision to launch ‘e-nivaran’, the official said, was taken in view of Prime Minister Narendra Modi few months back asking the IT department to pull up its socks and ensure that taxpayers grievances are resolved in the shortest possible time.
Modi had also asked all such departments which have a public interface to reduce this time to one month from the existing two months time.
The Central Board of Direct Taxes (CBDT), the policy-making body of the department, has recently also created a new structure in the department to deal with these issues called the Taxpayer Services unit.
Allotting high priority to this issue, the CBDT had also brought a new mechanism where top officers of the department have been allotted a specific quota of complaints to monitor and track, from their origin to successful resolution.
India is working on a mechanism to boost cooperation amongst small and medium enterprises in the five-nation BRICS to promote joint ventures and share expertise on strengthening the sector.
New Delhi, which holds the Presidency of the BRICS this year, is drafting a framework for a joint growth strategy for micro, small and medium enterprises (MSMEs) in the region. “The framework for cooperation amongst MSMEs, which will identify the relative strengths of each country and also possible areas of joint ventures, will be discussed at the next meeting of officials in June and hopefully finalised at the BRICS ministerial meet in October,” a government official told BusinessLine . MSMEs in Brazil, for instance, are highly successful in participating in government procurements, he said, adding that they “capture almost 90 per cent of the business. Other countries could draw from Brazil’s legislative frameworks and other policy initiatives to help their small industry also get a chunk of government business.”
The BRICS grouping of five emerging economies — Brazil, Russia, India, China and South Africa — together account for a GDP of over $16 trillion, which is about half that of the seven major advanced economies. More than 40 per cent of the BRICS economies are driven by the MSME sector, according to government estimates.
The Commerce and Industry Ministry is also holding discussions with the industry to give a final shape to its proposal of putting in place a BRICS portal for addressing non-tariff measures (NTMs) that hamper trade between the BRICS.
Exporters’ body FIEO is one of the industry bodies giving inputs for the proposed portal.
“One of the biggest problems faced by exporters in the five countries is the lack of knowledge on various non-tariff measures (NTMs), such as new standards or specifications. Most of the times they get to know about the NTMs only when their goods are rejected. If this issue is addressed, it will serve as a big incentive for industry in the five nations to trade with each other,” said Ajay Sahai of FIEO.
The entrepreneurship streak appears to be stronger in the small retail business space, going by the pattern of loans disbursed by the Micro Units Development and Refinance (MUDRA) Bank.
