Economy
Asset quality of retail loans by NBFCs to improve: Moody's
The underlying performance and asset quality of retail loans backing Indian asset-backed securities (ABS) will improve over the next two years despite an expected increase in non-performing loans (NPL) due to tightened recognition norms, global credit rating agency, Moody's Investors Service said on Thursday.
 
"Although retail loans originated by non-bank financial companies (NBFCs) -- subject to the tighter criteria since March 1 -- account for the bulk of assets backing Indian ABS, we expect improving macroeconomic conditions and more rigorous collection processes by originators will boost their underlying performance," said Vincent Tordo, a Moody's analyst.
 
"In particular, we expect the performance of loans backing commercial vehicles and construction equipment -- the main assets used in Indian ABS -- to improve owing to favourable operating conditions and increased efforts by originators to prevent delinquent loans from progressing into NPLs," adds Tordo.
 
Moody's conclusions are contained in its just-released report 'India -- ABS: Indian ABS Performance Is Largely Immune from Bank NPL Woes'.
 
According to Moody's the new NPL criteria require NBFCs to recognise loans that are 150 days or more in arrears, as compared to 180 days previously.
 
The standard will further tighten to 120 days from March 2017 and 90 days from March 2018.
 
While Moody's expect NPL ratios of NBFCs to rise over the next two years owing to the new criteria; it expects the improving underlying performance to be reflected in lower delinquencies.
 
According to data from ICRA -- Moody's Indian affiliate -- the performance of loans on new commercial vehicles have improved markedly over the past six months, reflecting overall improving operating conditions in the country.
 
The performance of loans on used commercial vehicles, commercial equipment and tractors was mostly stable.
 
Moody's said that the Indian ABS are largely immune from the run-up in NPLs in the Indian banking sector.
 
This was due to the fact that Indian ABS are exclusively backed by loans originated by NBFCs and not by banks.
 
In addition, the vast majority of assets backing ABS are retail or small loans, while the increase in bank NPLs has been largely the result of poor performing corporate loans to borrowers in heavy industries, Moody's said.
 
Banks' retail loans have, in fact, seen their performance improve over the past five years.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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Indian consumers prefer government gold coins over regular ones: Study
Indians are well known for their obsession for gold jewellery, but now gold coins issued by the government have also caught their fancy over regular, unbranded coins, a joint study commissioned by MMTC and the World Gold Council said on Thursday.
 
The report titled 'India's gold investment evolution, Indian Gold Coin: An introduction to branded gold coins' highlighted consumer preferences mapped against a wide range of parameters like awareness, relevance, uniqueness, size and accessibility.
 
The report is based on a survey conducted by Nielsen India amongst 1,180 respondents from eight top-tier Indian cities -- Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad, Ahmedabad and Kochi.
 
The Indian Gold Coin is among the key initiatives of the gold monetisation programme launched by Prime Minister Narendra Modi on November 5, last year, and is the country's first sovereign gold coin.
 
The research found that there is a clear preference for an Indian Gold Coin over regular, unbranded coins. "The most appealing characteristics of the Indian Gold Coin are its guaranteed purity, its standard features, government backing and the Make in India imprimatur," the study said.
 
"Banks and branded jewellers are the preferred channels to purchase the coin. The most popular denominations are two, five and ten grams. Consumers are most likely to buy the coin during Diwali or as gifts for birthdays, marriages and other special occasions," it added.
 
"As distribution expands, the Indian Gold Coin will emerge as the preferred form of gold investment in India as well as for purchases during festivals and for gifting on special occasions. The Indian Gold Coin also fills a gap in the international basket of national gold coins," said Somasundaram PR, Managing Director, India, World Gold Council.
 
The Indian Gold Coin is currently available in denominations of five and 10 grams coins -- a 20-gram gold bar is also available. The coins have Ashoka Chakra engraved on one side and the face of Mahatma Gandhi on the other.
 
"We have successfully sold Indian Gold Coins to the tune of 185 kg since launch. The research echoes consumers' preference for the Indian Gold Coin as it is backed by the government and is a quality product," said Ved Prakash, CMD, MMTC.
 
"Apart from MMTC outlets, the Indian Gold Coin is currently available at four banks -- Indian Overseas Bank, Federal Bank, Vijaya Bank and Yes Bank. The total number of outlets is close to 200 and, in the near future, our focus is to strengthen distribution by signing up more banks and India Post to ensure it is available to consumers across the length and breadth of the nation," he added.
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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COMMENTS

Shrikant Dattatraya Sahasrabuddhe

7 months ago

It is none of govt. business to promote sale of gold coins.Previous govt. started the scheme so as to squander the foreign exchange on non essential gold import so as to weaken the rupee as well as the economy.(anti national elements in the govt.)

21 AAP MLAs get time till Oct 17 to respond to EC notice
The Election Commission of India (ECI) has given Delhi's 21 Aam Aadmi Party (AAP) legislators time till October 17 to explain why they should not be disqualified from the assembly after their appointment as Parliamentary Secretaries.
 
The 21 lawmakers have faced disqualification from the Delhi assembly for allegedly holding 'office of profit' as Parliamentary Secretaries.
 
In the notice issued on Monday, the ECI also told petitioner Prashant Patel to submit his rejoinder to the 21 AAP lawmakers' reply by October 21.
 
The AAP legislators had earlier written to the Election Commission requesting for more time to file their replies, following which the extension till October 17 has been given.
 
"It may be noted that if no reply is received by the aforesaid date, it will be presumed that you have nothing to say in this matter and the Commission will take appropriate action without any further reference to you," the notice said.
 
After coming to power in February 2015, Chief Minister Arvind Kejriwal's government appointed 21 party lawmakers as the Parliamentary Secretaries, saying this would facilitate smooth functioning of the government but would not cause any burden on the exchequer.
 
The Delhi High Court in September quashed the appointment of 21 Parliamentary Secretaries.
 
In June 2015, a major row was sparked off on the issue of 'Office of Profit' after President Pranab Mukherjee rejected the Delhi government's bill to exclude the post of Parliamentary Secretary from the 'Office of Profit' definition. 
 
The Delhi government sought through the bill an amendment to the Delhi Members of Legislative Assembly (Removal of Disqualification) Act, 1997, so as to exclude the post of Parliamentary Secretary from the definition of 'Office of Profit'.
 
The AAP has maintained that none of the Parliamentary Secretaries was given "pecuniary benefits" and the appointment of the party legislators as Parliamentary Secretaries did not amount to creation of a "public office".
 
Disclaimer: Information, facts or opinions expressed in this news article are presented as sourced from IANS and do not reflect views of Moneylife and hence Moneylife is not responsible or liable for the same. As a source and news provider, IANS is responsible for accuracy, completeness, suitability and validity of any information in this article.

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