With an eye on elections, finance minister (FM), P Chidambaram, is trying to endear himself to families that have availed educational loans from banks. He announced a moratorium for all education loans taken up to 31 March 2009 and outstanding as of 31 March 2013. The government will take over the liability for outstanding interest as of 31 December 2013, but the borrower would have to pay interest for the period after 1 April 2014. Nearly 900,000 student-borrowers would benefit by around Rs2,600 crore which will be transferred to Canara Bank, the nodal bank managing the interest subsidy scheme on educational loans.
The education loan portfolio of nationalised banks, as on 31 December 2013, aggregated Rs57,700 crore in 2,570,254 accounts.
Emerging market economies are ‘most unloved ever’ and are now seen as the biggest risk to financial market stability, according to the latest Bank of America Merrill Lynch Fund Managers survey. The survey said that, currently, investors are the most underweight on BRIC countries—Brazil, Russia, India and China.
About 43% of respondents are of the opinion that global emerging market (GEM) equities are ‘undervalued’. This, in turn, could lead to a ‘contrarian rally’, according to the global financial services major. Almost 24% of global investors would like to remain underweight on GEM in the next 12 months, down from 28% in January 2013. Overall, 222 panellists with $591 billion of assets under management participated in the survey.
Securities and Exchange Board of India (SEBI) has pitched for a part of the money lying in employee pension funds to be invested in mutual fund schemes for investors below 40-45 years of age and earning over Rs6,500 per month. While looking to boost to the mutual fund industry with contribution from the Rs5.5-trillion corpus being managed by the Employees Provident Fund Organisation, SEBI feels that the age restrictions would safeguard investors from ‘unnecessary risks’ during the years closer to their retirement. Simultaneously, income-related restrictions will protect low-income employees from the risks associated with capital markets—a major roadblock in pension money being invested in high-risk assets.