In just 5 months, MUDRA lends over Rs. 42,000 crore & invests Rs 203 crore in securitisation deals

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Micro Units Development & Refinance Agency (MUDRA) has recently closed its fourth deal with a total book of over Rs 203 crore, five months after it stepped into the securitisation market.

It has invested Rs 100 crore in two securitisation deals with Janalakshmi Financial Services and another Rs 50 crore in Satin Credit Care. It has also invested Rs 53 crore in SK Financial Services, a Jaipur-headquartered NBFC through a securitisation deal.

“We are directly investing in pass through certificates either as junior or senior investor,” Jiji Mammen, CEO, MUDRA, said.”All our investments are in healthy loan portfolios that will fetch us good yields.”

The coupon rates for all the securitisation deals are between 9.5 per cent and 10 per cent and the average yield for all assets was around 22 per cent, according to Mammen. Securitisation allows companies to provide part of their loan books and its receivables as guarantee to financial institutions. MUDRA was established as a subsidiary of Small Industries Development Bank of India (Sidbi) by PM Narendra Modi in April this year. The agency was set up with an initial corpus of Rs 5,000 crore to provide capital to all banks seeking refinancing of small business loans under Pradhan Mantri Mudra Yojna.

MUDRA’s latest attempt is to provide support to NBFCs and MFIs so that they in turn finance micro enterprises by participating in securitisation of their loan assets. It provides second loss default guarantee for credit enhancement and participates in investment of Pass through Certificate as senior or junior investor.

In the past five months, MUDRA has disbursed Rs 42,000 crore, one fourth of its total annual target of Rs 1,80,000 crore. The lending agency’s disbursals nearly doubled in the past two months to about Rs 27,000 crore from the Rs 15,000 crore it disbursed in the first quarter of the current fiscal year.

MUDRA has given loans of over Rs 1.3 lakh crore to 35 million borrowers. About 35 per cent of the total loans sanctioned last year were disbursed by MFIs. Among 45 per cent of the total loans disbursed by PSUs, 20 per cent was disbursed by SBI alone while 23 per cent was disbursed by private banks.

Of the planned disbursement of Rs 1.8 lakh crore this fiscal year, public sector banks would disburse Rs 77,700 crore, followed by Rs 21,000 crore by private and foreign banks, Rs 15,000 crore by regional rural banks, and Rs 64,240 crore by MFIs.

Source: http://economictimes.indiatimes.com/articleshow/54286037.cms

EPF Act to be amended to include firms with 10 workers

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New EPF Act may oblige small firms with 10 or more staff to deduct PF from workers’ salary

Government plans to amend the Employees Provident Fund Act to bring more workers under the ambit of retirement fund body EPFO by reducing the threshold for coverage of firms to 10 workers, Lok Sabha was informed today.

Labour and Employment Minister Bandaru Dattatreya said the plan is to amend the law so that firms with ten employees can also be brought under the ambit of EPFO to ensure more workers come under the umbrella of social security.

At present, it is mandatory under the Employees’ Provident Fund and Miscellaneous Provisions Act for firms having 20 or more workers to subscribe to social security schemes run by the Employees’ Provident Fund Organisation.

In his written reply, he said no proposal is under the consideration of the government to allow EPFO subscribers to contribute voluntarily towards pension scheme in addition to their employers’ mandatory contribution.

He said effort is on to bring more unorganised workers under the ambit of various social security schemes for which more projects are being unveiled. “There is more focus on these workers,” he said.

Responding to the ‘plight’ of beedi workers following the introduction of 85 per cent pictorial norm on tobacco products, Dattatreya said the Labour Ministry is working to impart vocational skills to beedi workers.

He said several representations were received regarding “adverse consequences” of the Health Ministry’s notification prescribing 85 per cent pictorial warning on tobacco products.

He said at a meeting chaired by him in April, concerns were raised by stakeholders. The report of the meeting was conveyed to the Health Ministry.

He said beedi workers are covered under group insurance scheme and provided assistance of Rs 10,000 in case of natural death and Rs 25,000 in case of accidental death. Rs 1500 is also provided for the funeral of deceased workers.

Financial assistance of Rs 5000 is given to widows or widowers of beedi workers under social security schemes for wedding of their first two daughters.

Source: http://economictimes.indiatimes.com/articleshow/53489861.cms

Government disburses Rs 1,433 crore as interest subsidy to exporters

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Government has disbursed Rs 1,433 crore up to March under the interest subsidy scheme to exporters, the Commerce Ministry today said.

The Centre’s interest equalisation scheme, announced last December, reduces cost of capital by allowing 3 per cent interest subsidy on pre and post-shipment rupee export credit to eligible exporters.

“Indian exporters pay high rate of interest on the capital borrowed… all products manufactured and exported by SMEs (are) eligible. Up to March 2016, benefit to the tune of Rs 1,432.90 crore has been passed on to eligible borrowers,” the ministry said in a statement.

Enlisting steps to improve ease of doing business and boost exports, it said the ministry has taken several steps.

Number of mandatory documents required for exports and imports have been reduced to three for each segment. Earlier 7 documents were required for exports and 10 for imports.

“Exporter can now file online applications for IEC (import export code), Advance License, MEIS (merchandise exports from India scheme), SEIS (services exports from India scheme), pay application fee online and check status of their applications,” it said.

To spread awareness about benefits of free trade agreements, it said an ambitious outreach programme has been launched to reach out to exporters located in the 34 major export clusters/cities.

“The programmes focus on training exporters to utilise the FTAs, taking inputs from exporters on FTAs under negotiations for example Regional comprehensive economic policy (RCEP),” it added.

It said the efficacy of these initiatives is reflected in the fact the annual trade data  indicates the share of manufacturing sector in India’s total exports has increased from 64 per cent in 2014-15 to more than 69 per cent in 2015-16.

In terms of trading across borders, India is ranked at 133rd out of 189 economies, according to the World Bank’s report on ease of doing business.

Source:http://economictimes.indiatimes.com/articleshow/53178132.cms

 

Presumptive taxation: No audit for turnover up to Rs 2-cr

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Small businesses with a total turnover of up to Rs 2 crore will not be required to get their accounts audited if they opt for presumptive taxation scheme, the finance ministry said on Monday.

“The higher threshold (up to Rs 2 crore) for non-audit of accounts has been given only to assessees opting for presumptive taxation scheme under section 44AD,” the ministry stated.

Section 44AB of the Income Tax Act makes it obligatory for every person carrying on business to get his accounts of any previous year audited if his total sales, turnover or gross receipts exceed Rs 1 crore.

“However, if an eligible person opts for presumptive taxation scheme as per section 44AD(1) of the Act, he shall not be required to get his accounts audited if the total turnover or gross receipts of the relevant previous year does not exceed Rs 2 crore,” the statement said.

Finance Minister Arun Jaitley in the 2016-17 Budget had proposed to increase the turnover limit under the presumptive taxation scheme under section 44AD of the Income Tax Act to Rs 2 crore “which will bring big relief to a large number of assesses in the MSME category”.

Jaitley had said if the taxpayer opts for the presumptive taxation scheme, he has to remain in that scheme for 5 years.

Source: http://www.business-standard.com/article/economy-policy/presumptive-taxation-no-audit-for-turnover-up-to-rs-2-cr-116062001050_1.html

MUDRA disburses Rs. 1.43 lakh cr to small, micro entrepreneurs

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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.

Source: http://www.thehindubusinessline.com/todays-paper/tp-money-banking/mudra-disburses-rs-143-lakh-cr-to-small-micro-entrepreneurs/article8651795.ece

AskMe Fin plans payment services for SMEs

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E-commerce marketplace Askme Bazaar plans to help small and medium vendors who are transacting on its site by arranging credit and insurance products for them. These services will be provided via Askme Fin, the groups’ financial services platform. In the last 2-3 months, Askme Fin has helped about 75 SMEs to raise loans from banks and SMEs, Pawan Lohia CEO, Askme Fin, told FE.

AskMe Fin has tied up financial institutions such as Mahindra Finance, Bajaj Finserv, Religare, Capital Float, ICICI Bank, Sme.com and Mandi.com to help SMEs access loans and is in talks with other banks and NBFCs who can lend to vendors.

Anand Sonbhadra, group – CFO of AskMe Fin, said his firm had facilitated disbursements of Rs 30 lakh across 150 merchants till date. The firm hopes to assist 10,000 online and offline merchants raise loans worth around Rs 1,000 crore by the end of March 2017. The average loan size varies from Rs 8-10 lakh, he added.

Askme Pay intends to add 2-3 million merchants. AskMe Pay, the payment platform of AskMe Group will be launched by June and will enable integration of other wallets on its platform. AskMe Pay will largely earn revenue via merchant discount rates and loan referral commissions from lenders, which is the range of 20-30% of the processing fee. Also services related to customer relationship management, marketing and promotional activities will fetch revenue from the merchant, Sonbhadra explained.

According to a TechSci Research Report – India Mobile Wallet Market Opportunities and Forecast, 2020, the mobile wallet market in India is projected to grow to $ 6.6 billion by 2020. A Nielsen report in February adjudged Paytm the most popular mobile wallet followed by Freecharge and MobiKwik, respectively.

Source: http://www.financialexpress.com/article/industry/companies/askme-fin-plans-payment-services-for-smes/265051/

India moots framework for SME sector cooperation in BRICS

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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.

Source: http://www.thehindubusinessline.com/todays-paper/india-moots-framework-for-sme-sector-cooperation-in-brics/article8617609.ece