According to Dun & Bradstreet (D&B), total bank lending in FY11 grew a robust 24.2% to reach Rs42.60 trillion, which exceeded the RBI’s growth projections of 20% for non-food credit
Speaking at a recent awards ceremony in Mumbai, Mohan Ramaswamy, Chief Operating Officer, Dun & Bradstreet (D&B)—a provider of business information, knowledge and insight—said, "Over the last few years, the banking sector has seen numerous changes due to economic and regulatory reforms aimed at improving the transparency and efficiency of the banking system. Continued efforts at improving the stability of the Indian banking sector have helped the sector grow in strength over the years."
He added, "Our study revealed that FY11 saw the strongest credit growth in the last three years. Total bank lending in FY11 grew a robust 24.2% to reach Rs42.60 trillion, which exceeded the RBI's growth projections of 20% for non-food credit. The incremental credit growth was driven mainly by credit demand in major sectors such as commercial real estate, infrastructure and personal loans. The growth in the personal loan segment was attributable to consumer durables, housing and vehicle loans. Additionally, bank lending to NBFCs (non-banking financial companies) also witnessed a sharp rise in FY11."
Speaking on the same occasion, Arun Jain, chairman & CEO, Polaris Software, said,"For banks to leap from local to a global business landscape, what is going to be extremely crucial is the focus on creating the highways for growth, a financial technology Infrastructure. The future of banking will need to be agile; it will have to have the capability of non-disruptive integration with existing and legacy systems, ease of usage, ease of change and ease of implementation of regulatory and risk frameworks. As technology requirements are moving rapidly from mere functionality to architecture, agility and addictive technologies, banks with their technology partners have a huge opportunity to make a powerful impact and move towards profitable growth."
New Delhi District Consumer Disputes Redressal Forum decrees that Cholamandalam had acted in a ‘rash and negligent manner’ in dealing with a claim for a stolen car
A private insurance firm has been ordered by a city district consumer forum to pay Rs5 lakh as damages to its client for refusing to settle his claim worth Rs3.10 lakh for his stolen car and subjecting him to "metal agony".
Terming Cholamandalam MS General Insurance Company Ltd's decision to reject Vasant Kunj (New Delhi) resident Satya Deo Prasad's claim for his stolen car as "arbitrary", the New Delhi District Consumer Disputes Redressal Forum also asked the insurance firm to settle Prasad's claim worth Rs3.10 lakh.
"We are of the view that opposite party (insurance firm) has simply acted in a rash and negligent manner in dealing with the claim and has arbitrarily repudiated it for no good reason and in the process caused harassment, mental agony and expenses to the complainant (Prasad) and thus is liable for imperfection and deficiency in providing insurance services," said the forum's bench, headed by President CK Chaturvedi.
Mr Prasad, in his complaint, said his car, which was stolen in June 2008, was insured with the firm for the period between July 2007 and July 2008.
The car was stolen on 2 June 2008, from Saket, after which he lodged a First Information Report (FIR) with the police and immediately informed the bank which had financed its purchase, he said.
Mr Prasad then informed the insurance firm about the incident on 13 June 2008, as the particulars of the company were not easily traceable as the original documents were in the stolen car, he said.
Returns from NPS have varied between 12.52% and 1.82% even for bond schemes, since they are market-determined. This is sure to put off savers. Even a massive dose of financial literacy will not help
An analysis of the performance of pension fund managers in the New Pension System (NPS) shows huge volatility in the returns of various schemes and this could put off many savers.
Over the past three years, returns of the schemes for the unorganised sector have varied from 23.51% to -3.15%. This surprising volatility in the returns of NPS, when the investments are supposed to be straitjacketed, will scare away Indian savers, who simply will not associate volatility with a pension plan. This factor alone will ensure that NPS for the voluntary sector will remain a non-starter.
While it is true that NPS returns are market-determined and therefore bound to be volatile, Indian savers, who largely shun equities and mutual funds, would not want to be part of something like this, for a very long time. This would be a big blow to the scheme at a time when the government is set to adopt a new and improved PFRDA Bill into an Act.
The NPS was launched for all citizens of the country, including workers in the unorganised sector, on a voluntary basis, with effect from 1 May 2009. However, returns for the unorganised sector have been abysmal and extremely volatile. In certain cases the schemes investing in government securities and corporate bonds have delivered negative returns. If this is the case, it would be difficult to enlist voluntary subscription for the pension scheme.
For the period 2009-10 and 2010-11, the returns for unorganised sector workers from six fund managers ranged between 12.52% and 1.82% for government securities, 12.66% and 4.02% for corporate bonds, and 25.94% and 7.95% for equity. For the period January 2011 to June 2011, returns on the schemes of corporate bonds and government securities in Tier I & II have ranged from 1.99% to -0.88%.
Six fund managers (UTI Retirement Solutions Limited, SBI Pension Funds Pvt Ltd, IDFC Pension Fund Management Co Ltd, ICICI Prudential Pension Funds Management Co Ltd, Kotak Mahindra Pension Fund Ltd and Reliance Capital Pension Fund Ltd) managed funds for subscribers since May 2009. Each of the fund managers manage three schemes - Scheme E (Equity), Scheme C (fixed income instruments other than government securities), and Scheme G (government securities).
SBI performed poorly in equity schemes, but did well in fixed income schemes, and some like UTI and IDFC did really well only in equity schemes. The spread between the returns of the fund managers for a particular period and scheme was enormous, going to as much as 8% in certain cases. Since this is the nascent stage, we cannot accurately judge the performance of the fund managers. If returns between different funds remain hugely uneven, savers will be scared off.
In equity schemes, from May 2009 to March 2010, in Tier I of the NPS where no withdrawal is allowed, UTI was the best performer with a return of 26%, whereas SBI was the lowest of the six with an 8% return, a huge difference of 18%. In 2010-11, Kotak and ICICI took the lead with a return of 12% and SBI and UTI provided returns of 8% each. In the first quarter of the current financial year, all the schemes have seen negative returns. The performance was more or less similar for Tier II as well.
In Scheme C, for the period May 2009 to March 2010, SBI, ICICI, IDFC and Kotak, delivered a return of 10%, whereas Reliance and UTI delivered returns of 5% and 4%. In FY2010-11, SBI was the best with 13%, whereas IDFC was the lowest at 6.26%.
SBI's continued its good show in government securities as well, with returns of 10% and 12% for the two periods. Returns in 2009-10 were as low as 2% as was the case for UTI and IDFC. In 2010-11, UTI provided a return of 13% and IDFC was at 7%.
According to NPS guidelines, savers can put money in any of the following schemes.
Asset class E (equity market instruments) - The investment in this asset class would be subject to a cap of 50%. This asset class will be invested in index funds that replicate the portfolio of either the BSE Sensitive index or the NSE Nifty 50 index. These schemes invest in securities in the same weightage comprising an index.
Asset class G (government securities) - This asset class will be invested in central government bonds and state government bonds.
Asset class C (credit risk bearing fixed income instruments) - This asset class will be invested in the following instruments:
(i) Liquid funds of AMCs regulated by SEBI.
(ii) Fixed deposits of scheduled commercial banks.
(iii) Debt securities with maturity of not less than three years tenure issued by bodies corporate, including scheduled commercial banks and public financial institutions.
(iv) Credit-rated public financial institutions/PSU bonds.
(v) Credit-rated municipal bonds/infrastructure bonds.