Money & Banking
Micro-finance funding skewed towards urban areas
Despite the intended focus on low-income population, the bulk of which resides in rural areas, the loan portfolio of non-banking microfinance companies that touched an all-time high last year, is heavily skewed in favour of India's urban quarters, fresh data shows.
 
According to Sa-Dhan, an association of microfinance institutions, within the loan portfolio of Rs60,328 crore in 2015-16, only 28% or Rs16,892 crore, went to the rural economy, with urban and semi-urban areas accounting for 72% or Rs43,436 crore.
 
In the previous year, rural exposure was 30%.
 
"Demand for the rural loaning is of very low volumes," P. Satish, Executive Director of Sa-Dhan, told IANS, adding credit in the hinterland was is failing to pick up due to limited geographic reach of these finance companies.
 
"If the institutions have to give more credit in rural areas, they need a wider network. Even rural area-focused institutions have their office in semi-urban or urban areas. In urban areas, especially, they have a wider geographical reach,” Satish said.
 
“Moreover, the demand for rural credit is mainly for agricultural loans, which under Centre's various 'krishi' schemes are better catered by banks at a lower interest rate."
 
Microfinance institutions give small loans to entrepreneurs with an income limit of Rs100,000 and Rs160,000 respectively in rural and urban areas with a cap on the indebtedness at Rs100,000.
 
Microfinance Institutions Network, a self-regulatory organisation for the sector established in October 2009, that has a target of providing financial services to 100 million low income households by 2020 feels there are some regulatory issues as well that need to be addressed.
 
“There has been a continuous policy dialogue with the Reserve Bank of India on several policy issues, mainly on microfinance institutions and broader financial inclusion,” said Ratna Vishwanathan, Chief Executive of the network.
 
“The amount of loan portfolio in rural areas is very less compared to the urban areas, which may be a concern -- it, in fact, fell in 2015-16,” Oscar Martins, Director of Financial Services with Protiviti, told IANS.
 
“Migration to urban areas is increasing fast and many of these migrants are also microfinance clients,” added Satish, giving another reason why the loan portfolio is skewed in favour of urban areas.
 
“Despite the talk of universal financial inclusion, as long as there is a demand for small, unsecured loans at the lower end of the economic levels, there will be an expansion of the portfolio of micro-finance institutions in urban and semi-urban areas."
 
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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Madras HC orders CBI probe into pre-poll seizure of Rs 570 cr
The Madras High Court on Monday directed the Central Bureau of Investigation (CBI) to probe the transport of Rs570 crore in three containers and its seizure near Tiruppur in Tamil Nadu in May 2016.
 
The court ordered the CBI to take action as per law if it finds sufficient material in support of the petition filed by a DMK leader.
 
The court heard the petition filed by DMK spokesperson T.K.S. Elangovan alleging serious doubt about the genuineness of the belated claims of the State Bank of India (SBI) over the Rs570 crore seized during the run-up to state assembly elections held on May 16.
 
On May 13, 2016, the Election Commission's surveillance team at Tiruppur chased and seized three container lorries transporting cash to the tune of Rs570 crore.
 
The seized lorries were brought and parked in the office of District Collector of Tiruppur from May 14-17, 2016.
 
The SBI has said that the cash belonged to it and it was being transported to its cash chest in Andhra Pradesh when it was seized by the Election Commission officials.
 
According to Elangovan, huge cash should be transported by rail and escorted by local police which was not done in this case.
 
He also alleged that the cash transfer was not supported by proper documentation.
 
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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Few takers of office space in first half of 2016: Study
There were few takers of office space in leading eight cities of India in the first half of 2016 owing to slow take-up of space by the IT and BFSI industry, though the second half of the year looks promising, a study said.
 
"The first half of the year has been a mixed bag for the key markets with large volume locations like Bangalore and Mumbai seeing a drop in net absorption owing to slower take-up of space by IT (Information Technology) and BFSI (Banking, Financial services and Insurance) sectors," said a report by real estate consultancy Cushman and Wakefield.
 
The net absorption of office space declined 18 per cent year-on-year across the top eight cities, including Chennai, Pune, Mumbai and Be ngaluru, in the first six months of 2016, it said.
 
"The first half of the year was marked by unavailability of quality space in many cities, while other cities saw prevalence of small-sized deals, which together led to a decline in overall net absorption," the report said.
 
"This, however, is going to be only temporary as the second half looks promising," it said.
 
"A large number of companies has committed space, foreseeing limited availability of upcoming quality stock in select markets which will push up absorption in the second half of the year. These pre-commitments are bound to steer net absorption, going forward," Anshul Jain, Managing Director (India) of Cushman and Wakefield, said. 
 
"India's economic growth story remains strong with additional fillip coming in from the government in the form of relaxation of FDI in a number of sectors. All this will help the office space market to remain positive with absorption levels remaining positive for the rest of the year," Jain added.
 
In the same period Hyderabad, Delhi-NCR, Ahmedabad and Kolkata recorded a rise in net absorption of office space, the report stated.
 
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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