LIC may be asked to pick up government stake in PSUs

The move is part of the government’s efforts to raise Rs40,000 crore through disinvestment in state-owned companies, as envisaged in the Budget

New Delhi: The finance ministry is likely to ask country’s largest insurer LIC (Life Insurance Corporation of India) to buy 5%-10% of government stake in public sector undertakings (PSUs) as part of the exercise to raise Rs40,000 crore through disinvestment, reports PTI.

“LIC would be asked to pick only small portion (5%-10%) in some PSUs,” finance ministry sources told PTI.

The cash-rich LIC had earlier said that it has earmarked over Rs40,000 crore for investment in equities in public and private sector companies in the current fiscal.

LIC is the largest domestic institutional investor in the Indian market.

The government has fixed a mammoth Rs40,000 crore disinvestment target for the current fiscal. However, with eight months over, it has only been able to mop up Rs1,145 crore.

In order to meet the target, the government is mulling innovative measures, like buyback and cross-holding. Under the buyback mode, the government can raise money by selling its equity in the company to the concerned PSU itself.

The Department of Disinvestment (DoD) has already floated a Cabinet note which seeks to ask cash rich companies to buy back shares in PSU peers.

The government has been thinking of raising funds through the buyback route as it has not been able to raise money through sale of equity in public sector units on account of uncertainty in the stock markets.

Such companies may be asked to buy back about 5% equity from the shareholders. Under the current regulations, market regulator Securities and Exchange Board of India (SEBI) allows companies to buy back their own equity from shareholders.

User

Growth in non-food credit offtake slows to 18.4% in October

While the farm sector, services and industry reported lower credit growth offtake in October as compared to the same month in 2010, it was higher in case of personal loans, as per the latest data released by the RBI

Mumbai: Non-food credit offtake from banks by major sectors recorded a growth of 18.4% in October this year, suggesting the impact of the high interest rate regime in the economy, reports PTI.

The annual growth in non-food interest was 20.8% in the same month last year.

While the farm sector, services and industry reported lower credit growth offtake in October as compared to the same month in 2010, it was higher in case of personal loans, as per the latest data released by the Reserve Bank of India (RBI).

“On a year-on-year basis, non-food bank credit increased by 18.2% in October 2011 as compared with 20.8% in the previous year,” the RBI said.

According to experts, the prevailing high interest rate regime has affected credit growth by making borrowings expensive.

The total non-food credit disbursement stood at Rs38.38 lakh crore in October, up from Rs32.46 lakh crore in the same month of the previous fiscal.

As per the data, the total credit disbursement to agriculture and allied areas grew by only 7.1% at Rs4.35 lakh crore in October.

“Credit to industry increased by 23.1% year-on-year in October 2011 as compared with 24.8% in the previous year...” the RBI said.

The total credit disbursement to industry—which includes infrastructure, metals, food processing, rubber, plastic and their products and engineering—was Rs17.56 lakh crore in October.

“Credit to the services sector increased by 18.2% year-on-year in October 2011, lower than 21.5% in the previous year,” the RBI said.

The sector saw bank credit offtake rise to Rs9.27 lakh crore in October this year.

Within services, while segments like transport, computer software, tourism and wholesale trade witnessed slower growth in the offtake of credit during the month, disbursements to non-banking financial companies saw a big jump.

“Credit growth to non-banking finance companies (NBFCs) on a year-on-year basis in October 2011 at 41.5% was significantly higher than 26.1% in the previous year,” the apex bank said.

Bank credit disbursement to the NBFC segment stood at Rs1.85 lakh crore in October this year.

On the other hand, the silver lining was credit extended to the personal loan sector which registered a growth of 14.5% during October 2011 compared to a growth of 12% during the same month a year ago.

During the month under review, total credit offtake by the sector stood at Rs7.16 lakh crore.

The RBI had in June revised its non-food credit growth projection for this fiscal downward to 18% from the earlier estimate of 19%.

The decline in growth projections is on account of the RBI’s monetary tightening policy. The apex bank has raised its key policy rates 13 times since March 2010 in a bid to tame inflation, which is currently above 9%.

Last fiscal, non-food credit offtake increased by 21.5%, much above the RBI’s projection of 20%.

Gross commercial bank credit, which also includes food credit, grew by 18.7% in October on an annual basis, as against a growth of 20.9% in the same month of 2010.

This is on account of a massive 48.5% jump in food credit offtake during the month under review, as against only a 31.5% growth in October last year.

Food credit offtake stood at Rs68,190 crore in October this year, compared to Rs45,906 in October last year.

User

Oil marketing companies cut petrol price by Rs 0.78 per litre

The reduction, which will be effective from midnight Wednesday, was lower than the anticipated cut of Re1 per litre because of drop in rupee and firming of international prices during the past 48 hours

New Delhi: With global crude rates coming down, petrol price in India has been cut by Rs0.78 per litre, the second reduction in two weeks, reports PTI.

The reduction, which will be effective from midnight Wednesday, was lower than the anticipated cut of Re1 per litre because of drop in rupee and firming of international prices during the past 48 hours.

Petrol in Delhi will now cost Rs65.64 per litre as against Rs66.42 a litre earlier.

The reduction comes on back of a 3.2% or Rs2.22 per litre cut in rates effected from 16th November. This was the first cut in retail prices in nearly three years and the first since prices were decontrolled in June 2010.

Before that, oil companies on 4th November raised petrol price by Rs1.80 a litre as fall in the rupee’s value against the dollar increased the cost of oil imports.

Indian Oil Corporation (IOC), the market leader which announced latest cut in price on behalf of the industry, said the reduction was made possible as the decline in international rates of the fuel outweighed the drop in the rupee.

“The combined impact of the two factors is an over-recovery of Rs0.65 per litre (excluding taxes),” it said in a statement.

The price of petrol averaged about $109 in the second fortnight of November, over 5% less than the $114.14 a barrel in the previous 15 days.

The rupee averaged 51.50 per dollar this fortnight, 4.4% weaker than the 49.32 in the preceding two weeks. A lower rupee increases the cost of oil imports for Indian refiners.

Petrol in Mumbai will cost Rs70.65 a litre, down by Rs0.82 per litre.

IOC, Bharat Petroleum Corporation and Hindustan Petroleum Corporation review petrol prices every two weeks based on the average of global benchmarks in the previous fortnight.

While petrol price was freed from government control in June last year, the government caps prices of other fuels—diesel, cooking gas and kerosene to rein in inflation.

IOC said under-recovery or revenue loss on diesel has gone up from Rs10.17 per litre to Rs12.03 a litre as international benchmark of the fuel has firmed up. Similarly, loss on kerosene has increased from Rs25.66 per lire to Rs28.56 a litre and that on domestic LPG from Rs260.50 per cylinder to Rs286.50 per cylinder.

“The increase in under-recovery on sensitive productions would increase the per day under-recovery of oil marketing companies from Rs348 crore per day during second fortnight of November to Rs452 crore per day with effect from 1st December,” it said adding for the full fiscal the revenue loss is now estimated at Rs135,000 crore.

User

We are listening!

Solve the equation and enter in the Captcha field.
  Loading...
Close

To continue


Please
Sign Up or Sign In
with

Email
Close

To continue


Please
Sign Up or Sign In
with

Email

BUY NOW

The Scam
24 Year Of The Scam: The Perennial Bestseller, reads like a Thriller!
Moneylife Magazine
Fiercely independent and pro-consumer information on personal finance
Stockletters in 3 Flavours
Outstanding research that beats mutual funds year after year
MAS: Complete Online Financial Advisory
(Includes Moneylife Magazine and Lion Stockletter)