During the last quarter of FY13, public sector banks wrote off Rs14,549 crore as loans and recovered Rs16,464 core from assets that turned bad
Public sector banks (PSB) or state-run lenders wrote off Rs14,549 crore as loans, while recovering Rs16,464 crore from assets that turned bad during the March quarter.
In a written reply in Lok Sabha, minister of state for finance Namo Narain Meena said, “Banks resort to write off only after exhausting all other possible avenues for recovery or when the asset coverage is not enough”.
He further said that banks are required to adhere to Reserve Bank of India (RBI) guidelines on write offs as well its board approved policy.
“The banks should either make full provision as per the guidelines or write-off such advances and claim such tax benefits as are applicable,” the minister said.
In reply to a separate question on long term capital need of the banks, the Minister said that the government is considering setting up a holding company to meet these requirements.
“To meet the long-term needs of capital of PSBs, the government in consultation with Reserve Bank of India, is considering formation of holding company.
The matter is under consultation with Department of Legal Affairs and Legislative Department,” Meena said.
The public sector banks need capitalisation to meet their enhanced lending, which is increasing every year. This fiscal, the government has made provisions of Rs14,000 crore for bank recapitalisation.
The June quarter GDP stood at 4.4% compared with 4.8% recorded in the last quarter, a 17-quarter low
The Indian economy grew a lower-than-expected to 4.4% per cent during the first quarter as against 5.4% growth in gross domestic product (GDP) same period last year.
This crucial economic data point came on a day the Prime Minister Manmohan Singh expressed confidence that growth will improve in the second half of current fiscal. He told the Rajya Sabha, that GDP estimate at 5.5% this fiscal was possible and that fears of numbers going down to 3% were 'totally unfounded'.
During the June quarter, agriculture growth was recorded at 2.8% versus 2.9% while services sector grew by 6.6% versus 7.7% on year while the industrial sector only recorded 0.2% growth.
During rthe fourth quarter of 2012-13, the GDP had grown at 4.8% while in April-June period last year, GDP growth stood at 5.4%.
Manufacturing growth was recorded at -1.2% compared with -1% year-on-year in the numbers released today.
Investing in mid-cap schemes would mean taking on high risk. While most such schemes invest in a basket of 50 mid-cap stocks, the scheme from Motilal Oswal Mutual Fund would invest in just 30 stocks
Motilal Oswal Mutual Fund plans to launch an open ended equity scheme—Motilal Oswal MOSt Midcap Focused 30 Fund (MOSt Focused 30). This scheme, as the name suggests, will invest in 30 mid-cap companies. The scheme would invest 80%-100% of its assets in companies with market capitalisation that falls within that of the largest market capitalisation stock in the CNX Mid Cap Index and the smallest market capitalisation stock of the same index. These will not include companies which are in either the benchmark CNX Nifty Index or the CNX Small Cap Index. The remaining part of the assets would be invested in debt.
Mid-cap stocks are generally volatile. Mid-cap schemes on an average have invested in around 50 stocks. Out of 21 mid-cap schemes, just five invest in less than 40 stocks. A couple of schemes have invested in over 60 stocks. Yet the returns from all these schemes can be highly volatile compared to other large-cap schemes or multi-cap schemes. A scheme investing in 30 mid-cap stocks could face greater volatility.
If mid-cap schemes fund managers do their job properly, you would benefit from higher returns. Mid–cap stocks fall as quickly as they rise and, therefore, wrong timing can decimate your returns. Wrong timing can happen because you have chosen to buy mid-cap schemes before a crash. There are many examples of mid-cap schemes that invest in large-cap stocks to curb volatility. (Read: Small- and Mid-cap schemes: Cushioning the fall)
As the scheme from Motilal Oswal MF would avoid large-cap stocks, therefore, though the volatility may be more, in a rally, returns would not be dragged down by large-cap stocks. But for that, the fund management would need to be efficient in picking good stocks. Motilal Oswal is a relatively new entrant in the mutual fund business. Apart from four exchange traded funds, its first mutual fund scheme—Motilal Oswal MOSt Focused 25 Fund was launched in May 2013 and has a corpus of Rs84.62 crore. Taher Badhsah is the fund manager of the new scheme while Abhiroop Mukherjee would be the fund manager of the debt portion.
Below is the performance of other mid-cap schemes as on 29 August 2013. The schemes have been shortlisted on the basis of a minimum track record of three years and a minimum corpus of Rs100 crore. The difference between a good scheme and a poor performing scheme can be huge.
Details of the scheme
Benchmark: CNX Midcap Index
Entry Load: Nil
Exit Load: Nil
Minimum Application Amount (During NFO):
Rs. 10,000/- and in multiples of Re. 1/- thereafter.
Additional Application Amount:
Rs. 1,000/- and in multiples of Re. 1/- thereafter.
Maximum total expense ratio (TER) permissible under Regulation 52 (6) (c) (i) and (6) (a) Upto 2.50%
Additional expenses under regulation 52 (6A) (c) Upto 0.20%
Additional expenses for gross new inflows from specified cities Upto 0.30%