Crisil says, loan portfolios of microfinance companies to grow at a compounded annual rate of 35%, to touch Rs450 billion by March 2016
The Indian microfinance industry is all set to put the Andhra Pradesh crisis behind and rebound showing more resilience, said the rating agency CRISIL at a press conference today.
According to CRISIL, the sector will grow at a compounded annual rate of 35% , to reach Rs450 billion by end-March 2016 “supported by stronger building blocks”.
In order to to sustain the current pace of growth, micro finance instituitons (MFIs) will have to raise equity; but that will require them to “address challenges associated with low promoter shareholdings and a near-term decline in profitability”, said CRISIL.
CRISIL attributes the change in fortunes of MFIs to “greater clarity from the Reserve Bank of India’s guidelines, deeper penetration of credit bureaus, and increasing use of technology to improve collections, which are distinctive features of the current phase of growth in India’s MFI sector”.
According to a CRISIL release, “Improved geographical spread of assets has also raised stakeholder confidence and improved funding availability. No state now accounts for more than 20% of loans from the MFIs, down from 35% at the time of the crisis. Over the past three years, MFIs have raised Rs20 billion as equity, and Rs240 billion as additional funds from banks. Notably, bank funding to MFIs is eligible for priority sector lending status. However, the MFIs’ dependence on bank loans, specifically from the top five banks, is expected to remain high over the medium term”.
It further says, “MFIs are adequately capitalised for their current scale of operations. However, three years of rapid growth have skewed the sector’s gearing to 5.4 times, from around 3 times in the past. A CRISIL analysis indicates that the MFIs need to raise equity of at least Rs18 billion over the next two years to maintain growth momentum and gearing at current levels.”
Sustaining growth would depend on two factors. First, promoter shareholding, which has declined significantly following repeated infusions of capital, which has to be shored up. Promoter stakes are as low as 20% for the ten leading MFIs, says CRISIL. This could constrain fund raising. Secondly, CRISIL says, MFIs have to deal with a potential reduction in investor appetite because profitability of the large players is set to decline by around 30 basis points annually over the next two years. With interest margin capped at 10% from April 2014, interest spreads could fall by up to 120 basis points.
The rating agency expects MFIs to offset this partially by increasing their fee incomes, especially from banking correspondent activities, and by cranking up scale of operations and operating efficiencies.
This was in connection with a compalint filed by Dr. Subramanian Swamy accusing Sonia and Rahul of illegally acquiring the assets of the National Herald newspaper.
A Magistrate in Delhi issued summons to Sonia Gandhi and Rahul Gandhi, requiring them to appear before the court on August 7.
BJP leader, Dr. Subramanian Swamy had filed a petition in the court accusing Sonia and Rahul of illegally acquiring the assets of the National Herald newspaper. The National Herald, which was originally started by Jawaharlal Nehru in 1938, was shut down in 2008.
Dr. Swamy had accused in his petition, that Young Indian, a company floated by Sonia and Rahul, acquired the assets of Associated Journals Limited, the public limited company which owned the pre-independence newspaper. Also under consideration was a Rs90 crore loan sanctioned by the Congress Party for the purposes of acquiring the paper. If true, the loan is illegal since a political party is not allowed to give loans for commercial purposes under the Income Tax Act.
Dr. Swamy details some of his allegations on his website. He says on his website that, “The first dubious fact of the Associated Journals' RoC details is that Jawahar Lal Nehru, Indira Gandhi, Feroze Gandhi, GD Birla and other deceased persons, are shown as current shareholders. In fact 80% of the original shareholders are no more. So too many of the defunct firms, including several companies having dubious addresses in Kolkata, are shown as shareholders of the Associated Journals Ltd.”
He further says, “On February 26, 2011, the Board of Associated Journals Pvt. Ltd. passed a Resolution approving that All India Congress Committee (AICC) had loaned to the Company unsecured and for zero interest rate, to extinguish the liability of the company, more than Rs.90 crores. It is illegal for a political party to give loans to any company. The Resolution also resolved that in lieu of this deal with AICC, the Board decided to allot all AJ’s nine crore shares, of Rs.10 each to Young Indian, the private company of Sonia Gandhi and Rahul Gandhi, where both together more than three fourths of the total shares and fully control the said Young Indian Company.”
Dr. Swamy also goes on to question the fact that a shareholders meeting for Young Indian was held at 10, Janpath. If true, this would be illegal, considering that 10, Janpath is a New Delhi Government Accomodation. Such alloted accomodation cannot in any way be used for commercial or business purposes.
Finally, Dr. Swamy states on his site, “In his election affidavit on assets and liabilities, Mr. Rahul Gandhi had failed to inform that he owned 38% share of a company he had formed named Young Indian with his mother, Ms. Sonia Gandhi, who also owned 38% of the shares.”
Dr. Swamy had made the allegations public in a press conference he had held in November 2012. After which, he filed a petition in the Delhi Court which has issued the summons.
After the summons were issued, Dr. Swamy said to ANI News, that “They will have to face trial and will appear as accused.” Others who have been summoned include Motilal Vora, Oscar Fernandez and Sam Pitroda. Metropolitan Magistrate Gomati Manocha wile issuing the summons said, “I have found a prima facie case against all the accused. The court has directed them to appear before it on August 7.”
You can easily get refund of a train ticket bought through the Railways passenger reservation system or PRS, either online or through a ticket window. There may be some delay in refund for tickets bought from private re-sellers
If there is one technology based product in India, which showcases domestic Indian skillsets as well as has a history of being able to very deftly and adroitly avoid falling into the trap of lop-sided foreign solutions, then it has to be the Indian Railway's Passenger Reservation System, or PRS for short. Handling between 1.5 to 2.25 million separate transactions per day, each transaction being for anything from one to six passengers, covering over 2,500 trains with over 50 different classes of travel and no count on quotas, concessions and more - the PRS has set a benchmark all over the world, which some of us who have worked on databases as well as other technologies can only begin to understand.
But surely do we appreciate and feel proud of as Indians. Just imagine the complexities? I wish Unique Identification Authority of India (UIDAI) and Aadhaar had been handed over to Indian Railways, it would not have been the mess it is now, and the information would have stayed on in India.
That it gets stick from a variety of segments, from passengers to competitors to simply jealous entities, is par for the course when something is Indian and successful. Especially from Indians, and very especially from ex-pat Indian origin types, sadly, but true. Very bluntly, I do wish the Indian Railways would take time out to propagate this one aspect of technology, if for not only blowing their own bugle, but then also to be able to build some self-confidence in millions of other Indians who are daily subjected to all sorts of perception management tricks on forcing Indians to believe that they can not compete with the world.
Having said that, there are multiple problems faced by people using the PRS, not all of which are the fault of the service provider Indian Railways. Fact remains, things have only become better, and given the pace of lack of change mostly elsewhere, this is like being able to send a manned space mission to Mars from India.
Which does not in any way reduce the reality that yes, many people appear to and do have problems when seeking refunds, though here again, Indian railways score better than most other cash-handling utilities and services in India. Try getting a refund from an airline, for example? Also, for the 700-1000 million transactions per annum, refunds are a very small number.
Still, you bought a ticket, and now want a refund?
Obviously, when the numbers are so vast, this is not going to happen without checks and balances. We are assuming here that you want a refund in most cases for cancellations done well before departure time, at least four-six hours. What happens, then, when you need a refund for a railway ticket bought using the PRS?
1) Ticket bought for cash over the counter - refund is as fast as the queue will permit, subject to the complex rules regarding cancellation of refunds. It is good to learn about the rules before heading for a refund. They can be found written on the wall, in time-tables, and online.
2) Ticket bought online from IRCTC - My experience has been that for dozens of bookings a year, and about half of them resulting in cancellations, I have not had a single bad experience. Few times that there was some confusion, due to missing a train or other issues, there was nothing that a couple of emails did not resolve. Every paisa paid online is refunded, subjected to the rules prevailing - including service tax refunds.
3) Tickets bought through other private websites - These are the complicated and troublesome episodes, because here we have additional rules and fine print from the private website. I will be very frank, but the fine print with these private websites appears to keep changing all the time, and there is not much that an external agency can do to help since these terms and conditions are seldom available in printed hard copy form anywhere.
Which, in a way, is the solution we would expect from Indian Railways too - that they incorporate terms and conditions from private re-sellers on Indian Railways pages, both online and hard-copy. And that these terms and conditions, especially for refunds, be changed only after due information to the Indian Railways.
At the end of the day, I, as a railway passenger, am a customer of the primary vendor, Indian Railways. Any problems created and not resolved by their intermediaries with us as customers will only reflect badly on them.
And that is why many of us appear to blame Indian Railways when the real issue often lies with other vendors or providers. From crowds outside railway stations to sanitation to food to ticket refunds.
Clarity and accountability set by Indian Railways for all issues pertaining to PRS would be of great help not just for customers but also for the name and fame of Indian Railways too.
PS: What about refunds for tickets unused because of missed trains and connections?
Fear not, Indian Railways have pre-empted pretty much every contingency here, and from "Ticket Deposit Receipt" system both online and across the counter, to writing a letter, there is a rule and there is a refund. Look for it, send an email, ask around - and it will happen. Some extreme cases that I have resolved in my own experience include -
# child chewing up tickets before boarding the train.
# child floating the ticket away as "boat" in water gutter near platform.
# fell asleep on platform bench and train departed without me.
# whole group of school-children penalised for misspelling names.
There are good human beings at Indian Railways, it is just that they expect you to take some time out to read and understand their rules and regulations, too. Fair enough?
(Veeresh Malik started and sold a couple of companies, is now back to his first love—writing. He is also involved in helping small and midsize family-run businesses re-invent themselves.)