Money & Banking
Banking sector more responsive to people's needs
New Delhi : A major change taking place in India's financial system is the greater responsiveness of the formal banking sector to the articulated needs of the population, the government said on Tuesday.
 
"The culture is changing in India and th ere is a greater responsiveness to the articulated needs of the people," Financial Services Secretary Anjuly Chib Duggal said while addressing the opening of South Asia conclave on Financial Inclusion here organised by the Microfinance Institutions Network (MFIN).
 
Noting the recent banking licenses granted by Reserve Bank of India to Bandhan Bank and other small financial institutions, Duggal outlined the scenario for the future in the sphere of reaching finance to the "last mile" and the needy towards supporting their growth.
 
"We're looking, in a time-span of three to five years, at a hybridisation of delivery points, at high-touch banking institutions, with microfinance institutions being among them," she said.
 
The secretary said that "borrowers" of microfinance, 99 percent women, are now being referred to as such, and no longer as "beneficiaries", because they come with concrete business plans.
 
"We're looking at realignments in the banking sector, we're looking at chemists as banking points," she said, pointing out that a recent banking license had been granted to a pharmaceutical company.
 
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

manoharlalsharma

1 year ago

till the day BANKS r not to serve a common people till no intervention of POLITICAL influence.

B. Yerram Raju

1 year ago

Yes; increasing supply of credit and other services to hitherto unreached areas is the best solution. But the secretary should also be aware that only 0.63% of the Jan Dhan accounts got the credit of Rs.5000 each.

MFIs cannot certainly compromise on costs and the credit from them would be at around 20-23% interest rates and all other accompanying costs.

If the government is serious in increased credit flow to the needy viable enterprises in rural areas, they should restore the mutual trust between the borrowers and the banks by restricting the loan write-off to extreme weather impacts and inimitable social calamities through a Parliament resolve.

Corporate loan origination when defective shall be punished at the identified source notwithstanding the retirement of those top executives during the last five years. They brought shame in the name of collective thinking and systemic approvals.

EPF tax proposal withdrawn, finally
After an uproar and backlash from taxpayers, especially EPF subscribers, Finance Minister Arun Jaitley decided to roll back his proposed EPF tax
 
After facing opposition from taxpayers, the Indian government on Tuesday announced withdrawal of its controversial proposal to levy tax on employee’s provident fund (EPF). "In view of representations received, the government would like to do a comprehensive review of this proposal and therefore I withdraw the proposal," Finance Minister Arun Jaitley said in a suo motu statement in the Lok Sabha. He however clarified that 40% exemption given to National Pension Scheme (NPS) subscriber at the time of withdrawal remains.
 
On 29th February, Finance Minister Jaitley, while presenting the Budget announced that in order to bring parity in the pension system 40% of the corpus withdrawn at retirement will be tax exempt for both the NPS and Employee Provident Fund EPF. This meant that 60% of the EPF corpus, which is now tax exempt, will be taxed. 
 
This led to an uproar from the middle class demanding a roll back. An online petition demanding the withdrawal of the taxation of the EPF corpus soon went viral on social media. The petition now has over 2.5 lakh supporters.
 
The budget announced that 40% of the corpus withdrawn at retirement will be tax exempt for both the NPS and EPF. The balance corpus withdrawn will be subject to tax. However, if the corpus is transferred to an annuity, it will be tax exempt. (Earlier, the entire 60% of the corpus withdrawn from NPS was taxable and the entire interest earned under EPF was tax-free). This has led to a backlash from EPF subscribers. Attempts to clarify the new norms have led to more confusion.
 
Revenue Secretary Hasmukh Adhia clarified that only the interest accrued on EPF contributions made after 1 April 2016 will come under the new proposal. Therefore, 40% of the interest accrued on contributions made after 1st April will be tax exempt and its remaining 60% will be taxed. This 60% will also be tax exempt if it is invested in pension annuity schemes, he added. This contradicted both the Finance Minister (FM)’s speech and the Finance Bill, which was quite clear about what the government intended to do.
 
A clarification issued by the Ministry of Finance stated that, “It is expected that the employees of private companies will place the remaining 60% of the corpus in annuity, out of which they can get regular pension. When this 60% of the remaining corpus is invested in annuity, no tax is chargeable. So what it means is that the entire corpus will be tax free, if invested in annuity.” This contradicted with what Adhia had said that only interest will be subject to tax. 
 
Finally, the issue was discussed at a high-level meeting between officials of the Prime Minister's Office (PMO) and the Finance Ministry on 3rd March.
 
The proposal would not have impacted 3.26 crore subscribers of Employees Provident Fund Organisation (EPFO) drawing statutory wage of up to Rs15,000 per month. EPFO has a total subscriber base of 3.7 crore.

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Five key lessons about women and work in India
While marginally more women work in India than in Pakistan (27 percent and 25 percent, respectively), Pakistan’s female labour-force participation rate is growing and India’s is declining. The percentage of women working in Bangladesh is three times higher than in India, which ranks last among BRICS countries in terms of women’s labour-force participation -- among G-20 countries, it is second to last, behind only Saudi Arabia.
 
Why might this be? In the South Asian context, on International Women’s Day, our analysis of the state of women and work in India does not offer clear explanation. Countries often experience a dip in women’s labour-force participation as incomes rises and women drop out of low-paying menial work, usually in agriculture. But typically as the economy develops further and education levels rise, more and more women enter the labour force.
 
India’s economy is well beyond the point when large numbers of women would be expected to enter the labour force, based on evidence from other developing nations. And this is no academic concern -- recent estimates project that closing India’s gender gap in labour-force participation would generate a 27 percent net increase in the Gross Domestic Product (GDP).
 
But despite the increasing number of women pursuing secondary and post-secondary education, India’s women keep dropping out. Since 2005, more than 25 million Indian women have left the labour force.
 
Working outside the home is associated with a number of positive empowerment outcomes for women. At the household level, women who participate in the labour force marry and have children later, and their children stay in school longer. Even the sisters of women who work marry later.
 
Critically, women who work have greater decision-making power within the household, and make more decisions jointly with their partners. In work we have conducted in northern Madhya Pradesh, we document a correlation between participation in Mahatma Gandhi National Rural Employment Guarantee Scheme (MGNREGS) and higher self-reported levels of empowerment: Women who participate in MGNREGS report higher levels of decision-making power within their households and higher levels of mobility than women who do not participate.
 
On a macro-level, evidence that gender equality (and more specifically, women’s increased labour-force participation) contributes to economic growth is strong. Yet women face discrimination and disadvantage across all aspects of work. They earn less, they participate less, their employment status is more tentative, and the quality of the jobs they perform is lower than men. The International Labor Organization estimates that at the global level, 48% of women’s productive potential is unutilized.
 
The evidence on why so few women in India work - and why even more women are dropping out of workforce - is limited. At Evidence for Policy Design, research has taught us five key lessons about women and work in India:
 
- Women want to work. National Sample Survey (NSS) data show that 31 percent of women who spend the majority of their time performing domestic duties would like some kind of job. The proportion of educated rural women who want to work is even higher: Upwards of 50 percent would like a job apart from their domestic work. If all women who expressed a desire to work did so, Female Labour Force Participation Rate (FLFPR) in India would rise 21 percentage points (78 percent).
 
- Jobs near home attract women. We conducted a pilot survey of rural, below-poverty-line youth in areas around Bhopal. In our study, 93 percent of unemployed female youth said they would take a job if they could work from home or in the village. In contrast to the national labour market, the MGNREGS has seen increased participation from women over the last five years, and now employs slightly more women (52 percent) than men (48 percent).
 
- Social norms are mutable, and broader economic trends and government policies matter. The Operation Blackboard initiative was launched in the 1980s, alongside a 50 percent quota for women teachers. Since then, the education sector has grown to employ the most women outside of agriculture.
 
- Current initiatives such as Skill India, Make in India, and new gender-based quotas - from corporate boards to the police force - can spur positive change. But we need to invest in skill training and job support. More than half of women who would like a job, particularly those in rural areas, say they do not have the skills required for the work they want to do-for example, leatherwork or textile manufacturing.
 
Further, the opportunities that exist need to be equitable. From 2010 to 2012, women’s share in the manufacturing labour-force rose from 15-25 percent, but the gender wage gap across sectors in manufacturing was high-much higher than in services. To increase women’s labour-force participation and wellbeing, current policies must take women into consideration.
 
- Migration for employment remains an under-explored, less supported means to employ women. In one EPoD survey, 62 percent of unemployed female youth-similar to 68 percent of unemployed young men-said they would consider migrating for a job. Migration is difficult, however, and women have particular concerns that must be addressed. Despite reporting they would be willing to consider migrating for work, 69 percent of female youth report it is unsafe to live away from home (this time, in the context of skills training), compared to only 32 percent of male youth. And female respondents were more likely to report they would migrate within their district than males.
 
Effective strategies to increase women’s labour-force participation are poorly understood. Further research is needed to explore these questions. An event called Shrinking Shakti, co-hosted by EPoD’s Rohini Pande and journalist Barkha Dutt on March 7 in Delhi, convened scholars, politicians, executives, journalists, and more to discuss the question. We will be exploring the five points outlined here in greater detail through future columns. With India poised to become the largest economy in the world by 2030, it cannot afford to leave half of its workforce behind.
 
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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