RBI notifies separate NBFC category for MFIs

The RBI said NBFC-MFIs should have a minimum net worth of Rs5 crore, while for those operating in the north-eastern states the slab has been kept at Rs2 crore. It has given time till 1 April 2012, to the existing MFIs, whose asset size is less than Rs100 crore to comply with the capital adequacy requirement of 15%

Mumbai: The Reserve Bank of India (RBI) on Friday approved creation of a separate category of non-banking financial companies (NBFC) for the microfinance institution (MFI) sector and specified that such institutions need to have a minimum net owned fund of Rs5 crore, reports PTI.

An RBI-appointed panel headed by YH Malegam had earlier this year recommended setting up of a special category of NBFCs operating in the micro finance sector.

The panel had suggested a minimum net worth of Rs15 crore for an entity to qualify as an NBFC-MFI.

“It has been decided to create a separate category of NBFCs—NBFC-MFI,” RBI said in a notification.

The RBI in its second quarter policy review in October had approved setting up of this category of specialised financial companies which would cater to low-income groups.

The RBI said NBFC-MFIs should have a minimum net worth of Rs5 crore, while for those operating in the north-eastern states the slab has been kept at Rs2 crore.

“All new NBFC-MFIs shall maintain a capital adequacy ratio consisting of Tier I and Tier II capital which shall not be less than 15% of its aggregate qualifying assets,” RBI said.

The RBI has given time till 1 April 2012, to the existing MFIs, whose asset size is less than Rs100 crore to comply with the capital adequacy requirement of 15%.

Regarding loan disbursal and repayment by such institutions, RBI said that ‘qualifying asset’ shall mean loan disbursed to a borrower with a rural household annual income not exceeding Rs60,000 or urban and semi-urban household income not exceeding Rs1,20,000.

Also the tenure of the loan not to be less than 24 months for loan amount in excess of Rs15,000 with prepayment without penalty and the loan has to be extended without collateral.

The RBI has directed the NBFC-MFIs not to resort to any coercive methods and it would be repayable on weekly, fortnightly or monthly instalments.

Currently, out of the 300 MFIs in the country, about 70 are regulated by the central bank as NBFCs, accounting for the majority of the loans disbursed by the sector.

As per the norms, NBFC-MFIs can lend to individual borrowers who is not a member of more than one self help group. Also not more than two NBFC-MFIs should lend to the same borrower.

“All sanctioning and disbursement of loans should be done only at a central location and more than one individual should be involved in this function. In addition, there should be close supervision of the disbursement function,” RBI said.

Battling allegations of high interest rates and coercive tactics used to recover loans, the MFI sector has been facing hard times since October 2010.

Following a spate of farmer suicide, the Andhra Pradesh state government had in November 2010 promulgated an ordinance, putting curbs on MFIs.


Monday’s move to decide market direction: Friday Closing Report

Nifty may head to 5,170 if it holds above today’s high

Despite a flat opening, the market picked up momentum in the late morning session on across-the-board institutional buying and settled in the positive for the third day in a row. Today the Nifty rose 113 points on a volume of 55.06 crore shares on the National Stock Exchange (NSE), the lowest in the past four days. From here we may see the index moving to the level of 5,170 if sustains above today’s high. On the other hand, if the index is not able to maintain this rising trend, we may see it falling to around the level of 4,900.   

The market opened flat this morning as economic indicators pointed to a slowdown in the domestic economy amid global uncertainty. Also, pressure in the Asian markets in morning trade weighed on investor sentiments. The Nifty opened four points higher at 4,941 and the Sensex started the day at 16,494, up 11 points over its previous close. Profit booking following two days of gains soon led the benchmarks into the red and down to the day’s lows. At the lows, the Nifty touched 4,918 and the Sensex went back to 16,429.

However, a steady pace of buying lifted the benchmarks into positive terrain in late morning trade.  The upmove continued in subsequent trade supported by firm opening of the key European bourses and US stock futures trading in the positive.

The market hit its intraday high towards the end of the trading session with the Nifty crossing the 5,000 mark at 5,063 and the Sensex climbing to 16,888. The indices closed marginally off those levels, making it a third consecutive close in the positive. The Nifty gained 113 points to settle at 5,050 and the Sensex ended trade at 16,847, up 363 points.    

The advance-decline ratio on the NSE was in favour of the gainers at 1158:479.

Among the broader indices, the BSE Mid-cap index climbed 1.43% and the BSE Small-cap index rose 1.08%.

All sectoral gauges settled higher with the BSE Bankex emerging as the leader (up 3.26%). It was followed by BSE Poser (up 3.04%); BSE Metal (up 2.49%); BSE TECk (up 2.44%) and BSE IT (up 2.30%).

Hero MotoCorp (down 0.30%) was the lone loser on the Sensex today. The top gainers were Tata Power (up 6.30%); Tata Motors (up 4.57%); Tata Steel (up 4.04%); Sterlite Industries (up 3.79%) and State Bank of India (up 3.70%).

The major gainers on the Nifty were Ambuja Cements (up 8.10%); Tata Power (up 6.51%); BPCL (up 5.48%); IDFC (up 5.08%) and Tata Motors (up 4.81%). Hero MotoCorp (down 0.52%) and Ranbaxy Laboratories (down 0.26%) were the only losers on the index.

Markets in Asia closed mixed ahead of the US monthly payroll report and the European summit next week, where a detailed plan to resolve the debt crisis would be discussed.

This apart, China’s purchasing managers; index (PMI) tumbled to 49 from 50.4 in October, the lowest since February 2009.

The Hang Seng added 0.20%; the KLSE Composite rose 0.25%; the Nikkei 225 gained 0.54% and the Straits Times climbed 0.42%. On the other hand, the Shanghai Composite declined 1.10%; the Jakarta Composite lost 0.03%; the Seoul Composite shed 0.01% and the Taiwan Weighted fell by 0.53%.

Back home, foreign institutional investors were net buyers of equities totalling Rs687.26 crore on Thursday while domestic institutional investors were net sellers of stocks amounting to Rs713.08 crore.

Supreme Infrastructure has bagged two new road BOT projects—Jaipur Ring Road and Patiala Malerkotla Road—in addition to a project in the buildings vertical. The total value of the three projects is Rs1,248 crore. The stock gained 2% to close at Rs184 on the NSE.

Torrent Pharmaceuticals has received an approval of US Food and Drug Administration (USFDA) for its generic version of AstraZeneca’s hypertension drug Plendil. The approval is for 2.5 mg, 5 mg and 10 mg strengths of Felodipine extended release tablets to be sold on prescription basis. Felodipine is a calcium channel blocker (calcium antagonist), a drug used to control high blood pressure. Torrent Pharma rose 0.67% to close at Rs560 on the NSE.

Private sector lender Axis Bank on Thursday said it would raise Rs1,500 crore through bonds to fund its business growth. The board has passed a resolution approving allotment of unsecured redeemable non-convertible subordinated debentures on private placement basis as the bank’s Lower Tier II capital aggregating to Rs1,500 crore (including green shoe option of Rs500 crore). The stock rose 3.98% to settle at Rs1,011.30 on the NSE.


Activists snub taxi union’s threat to go on strike at the Mumbai airport

The black and yellow cabs are threatening to go on strike thinking that the space allocated to them free of charge by Mumbai Airport authorities would remain with them forever

Once again, an errant taxi union has threatened with a strike call, holding the city for ransom, if the private or long distance taxis are allowed to operate from the pre paid taxi booth at the Mumbai airport. Considering the huge number of black-and-yellow taxis and cool cabs, around 1,700 of them, operating with free parking space, transport activist have lambasted the demand of the union.
Ashok Datar, a transport expert told Moneylife that, “At whose cost do these taxis operate? They have free parking space through which they are occupying large area. Such a demand of theirs (the taxi union) is outrageous.”
Interestingly, these long distance taxis were given permission to operate from the space allocated to pre-paid cabbies. For instance, Mumbai Metropolitan Regional Transport Authority (MMRDA) had given them permission to operate the Mumbai-Pune taxi service from the domestic airport.
AL Quadros, leader, Mumbai Taximen's Union was quoted saying in national daily that “We are not against their services. Let them operate, but they shouldn't function from the prepaid taxi stand as it will hamper our business. The authorities should make a separate stand for them.”
However, experts say that the taxi union, in reality, is against any other cab service.
“This is pure dadagiri of the taxi unions. They just don’t want anyone else to come. If they want to, they can go on strike, but can’t stop anyone else to operate. This is not how free market works. Assuming that area is allotted by the Mumbai Airport authorities (MIAL) to taxi parking, it definitely cannot be only for yellow-and black or long distance. It would be for everyone,” says Jagdeep Desai, a Mumbai-based transport expert.
Activist point out that the number of taxis parked in the allocated space are way higher than actual requirement. “Statistics show that only 600 taxis are required on hourly basis during the peak hours. They just unnecessarily park their cabs and occupy the space. By making such threats, they are actually inviting government to start a public transport to the airport. Let them go on strike,” says Sudhir Badami, expert on transportation.
This is evident from the fact that taxi drivers claim they have been in queue for 10 to 11 hours. Activists wonder what is their business model, if it entails 10-12 hours in queue. Isn’t this possible only if they overcharge customers?
 According to Mr Datar, a study should be conducted to ascertain the requirement of taxies by destinations per hour at both the terminals and then the space should be allowed for different type of services such as to Pune, to Nasik , or within the city. So that pooling of taxies in orderliness would be good for the taxis, passengers and the airport authorities.




5 years ago

If yellow/black taxis get parking free then why not meru and others? they are charging Rs. 60 extra for every trip. this needs to be stopped.. We desparately need AC bus service from airport to thane, borivali , vashi and N point.


5 years ago

I guess this behaviour is quite often expected in railway stations too. In fact some traffic police on duty encourage. I notice this whenever i visit pune station. That rickshaw driver desert their rickshaws in the parking lots inside station and come inside the platforms solicitng business. The police on duty do nothing about it. The higher rank officials are aware but do nothing about it


5 years ago

From traffic jams all over the city to rude and often criminal behaviour, the taxi operator's bluff needs to be called, and discipline imposed once and for all. The threat to "strike" needs to be taken forward to a logical conclusion, including queries on how certain stretches of roads in Mumbai are taken over for idle parking of fleets of taxiis (D'Mello Road from Reay Road/Cotton Green to King's Circle, for example) when the permit conditions specify that each such vehicle must have its own secured parking place. Good luck.


5 years ago

It is high time that the 'goondagiri' of Taximen is nipped. Fellows like Quadros and Sharad Rao are menace to society. To bring these errant cabbies to book a concerted movement of the citizens is required, otherwise nothing much will happen.

For a few days police will make a show of taking action, CM will say he is calling a meeting and than it will be back to 'normal'.

We are listening!

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