Money & Banking
RBI's concerns on banking and economic stability
The RTP explicitly states that the performance of the Indian banking system remained subdued during the year due to a slowdown in the sector's balance-sheet growth
 
The RBI recently released two reports on the condition of banking and allied sectors in the India. The first is on trends and progress of banking sector in India 2014-15 (RTP) and the second is the financial stability report (FSR). Both offer interesting insights on the Indian economy.
 
The RTP explicitly states that the performance of the Indian banking system remained subdued during the year due to a slowdown in the sector's balance-sheet growth. The performance of public sector banks (PSBs) was sub-optimal compared to private sector banks (PVBs) as profitability and credit growth both declined. Along with this, in both the groups, the asset quality declined. The report also mentions policy environment changes like falling commodity prices and the strengthening US dollar. Amidst the policy environment challenges, the regulatory and policy responses during the year included initiatives for the de-stressing the banking sector, reforming and recapitalization of the PSB's, making banking more inclusive and the like. 
 
The FSR states that the corporate sector at present seems to be vulnerable and needs closer monitoring. This is in line with the view of the mid-year review of the finance ministry which states that of the four engines of growth - private consumption, public investment, private investment and exports - the first two are doing relatively better as compared to the last two. That private investment is not picking up can be explained by the fact that the corporate sector is under stress, and this is due to the leverage/ debt on their balance-sheets. The FSR mentions an analysis of a large sample of non-government, non-finance companies (NGNFs), roughly some 20,000 public limited companies and approximately some 255,000 private limited companies. In both these, leverage (debt to equity ratio) has gone up from 2011-12 to 2013-14. The interest coverage ratio (reflecting the debt servicing ability) has gone down for both the groups from 2011-12 to 2013-14. The profitability of the public sector companies has decreased while the profitability of private sector companies has marginally increased. An analysis of a smaller sample of 2711 NGNF's also yields another crucial insight about the sectoral composition and vulnerability. Sectorally, companies in the iron and steel and construction sector have both high leverage as well as interest burden. 
 
The FSR seems to be reflecting on the soundness and resilience of the financial system. The year raised several concerns. The March-September period saw a reduction in growth of both deposits and credit as well as deterioration of asset quality with an increase in the gross non-performing advances (GNPAs). Profitability of the scheduled commercial banks (SCBs) declined. The asset quality of both scheduled urban cooperative banks (SUCBs), as well as the non-banking finance companies (NBFCs), also deteriorated. The stress tests in these conditions on the banking front reveal that there is resilience, but it may become vulnerable amid deteriorating macroeconomic conditions. 
 
Fourth, a significant point in the FSR is on the perception of risk by experts that is captured in the systemic risk survey. At present, this framework has five broad groups - global risks, macro-economic risks, market risks, institutional risks and general risks. Compared to April 2015, the survey shows an increase in October 2015 in areas like the global slow down, sovereign risk/contagion and foreign exchange rate risk. These are now marked "high risk" in the report. The perception of some risk items have reduced over this time frame, and these include domestic inflation, current account deficit, household savings, regulatory risk and natural disaster risks. 
 
All this in the two reports point to the fact that a recovery is underway albeit sluggishly. The private sector and the banking sector, especially the public sector banks, seem to be inching towards stress. Over the next year, de-stressing the financial system and reducing the debt burden so that private investment happens will remain crucial challenges for Indian bankers and corporate honchos. How they fare only time will tell.
 
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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COMMENTS

B. Yerram Raju

1 year ago

The RBI should have gone into the roots of the decline in the quality of lending. Banks in their embrace with technology ignored the human factor. Due diligence of clients has become a routine pastime and not an essentiality. Supervision over the agricultural and MSME advances is also a serious casualty in several Public sector banks. Development Banking has been consigned to the machines and orchestrated balance sheets. For every instruction machine is the answer. The staff at different hierarchical levels sing the song of technology. A day would come when answering a customer grievance has to be also paid for. Perhaps such payment would bring more accountability. At least the remedy for improper or irresponsible reply can be sought in Courts!!

MG Warrier

1 year ago

That the problems of Indian financial sector are much deeper and may need policy initiatives from GOI additional to usually debated regulatory reforms, implementing new bankruptcy code and further dilution of Centre’s stakes in public sector banks(PSBs) is being flagged in various reports published by the Reserve Bank of India. In this respect at least, India’s central bank is transparent and it is the media and other stakeholders including GOI who are ignoring strong signals given by RBI including in the latest Annual Report (Refer Governor’s Overview: RBI Annual Report 2014-15).
The revelation that ‘while the PSBs accounted for 72 per cent of total banking sector assets, they accounted for only 42 per cent in total profits during 2014-15, with the private sector banks(PVBs) surpassing the PSBs in the share of total banking sector profits’ may not surprise anyone who has been following the pressures on PSBs to do ‘directed’ business with management and HR-related constraints emanating from their government ownership. The same RBI report gives the reason for PSBs to remain in public ownership. That is the retarded growth prospects (remaining happy with less than 30 per cent share in India’s banking business) and unwillingness to penetrate to rural and semi-urban areas evinced by private sector banks. Reluctance to take risk and an eye on creamy layer of business distinguish private sector banks from PSBs in India.

The continuing deterioration in the asset quality of banks in general, and PSBs in particular, can be traced to inadequate attention paid to infusing professionalism at the top and consequent inefficiency from top to bottom.

As other institutions like cooperative banks and NBFCs are also not in better health, needful has to be done and done quickly to restore the health of scheduled commercial banks across private and public sectors. Government should own the responsibility to ensure necessary linkages for credit provided under ‘directed lending’ so that the asset created generate enough incremental income for repayment. Banks should be guided to improve pre-disbursement appraisal and monitoring of large-sized advances. For the purpose, banks will have to acquire sufficient in-house skills and the present trend of ‘outsourcing skills’ can be harmful in the long run.

M G Warrier, Mumbai

Forget LPG subsidy if your taxable income exceeds Rs10 lakh
Benefit of LPG subsidy will not be available if the consumer or his/ her spouse had taxable income of more than Rs10 lakh in previous financial year
 
If your or your spouse's taxable income last year was more than Rs10 lakh, then you will have to forget your subsidy for the liquefied petroleum gas (LPG) refill. According to a central government release, benefit of LPG subsidy will not be available if the consumer or his/her spouse had taxable income of more than Rs10 lakh in previous financial year.
 
"While many consumers have given up subsidy voluntarily, it is felt that consumers in the higher income bracket should get LPG cylinders at the market price. Therefore, the Government has decided that the benefit of the LPG subsidy will not be available for LPG consumers if the consumer or his/her spouse had taxable income of more than Rs10 lakh during the previous financial year computed as per the Income Tax Act, 1961," the government said in the release.
 
According to the statement, at present, there are 16.35 crore consumers of LPG in the country and the government is transferring refill subsidy through direct benefit transfer (DBTL) to about 14.78 crore of them. 
 
Following a call from Prime Minister Narendra Modi, about 57.20 lakh consumers have given up their LPG subsidy, the release says.
 
According to media reports, only 3% of the population pay income tax in India. Out of this almost 90% is accounted by 288.44 lakh taxpayers that earn income below Rs5 lakh. As per reply given by the Finance Ministry in the Parliament, there are 13.78 lakh taxpayers, with an income of Rs10 lakh to Rs20 lakh. About 4.06 lakh people earn an income of over Rs20 lakh per year, the data shows.
 

User

COMMENTS

Mr Jitendra

1 year ago

Tying subsidy amount to Rs 10 Lakhs income from previous financial year is not correct.

First, with one stroke they should remove LPG subsidy for all 16 crore LPG consumers. Period. Next, thing is there will be chaos and that will allow them to decide on giving subsidy to only those consumers who approach them "case by case" and by judging the approaching consumer's social and economic strata.
A person needing subsidy will do everything required to get that subsidy. Person capable of buying cylinder at market rates would not do the required thing. As such, people do the required paperwork and steps for "Non Creamy Layer" certificate to avail OBC benefits. They also do all paperwork of three generations to prove themselves in OBC caste. Similarly the real needy people will do the necessary paperwork for availing subsidy.

This Rs 10 lakhs thing is something so fishy to hear: First the Prime Minister appealed to rich and affluent class to give up subsidy. Some 30 Lakhs opted out. Next, a large campaign was driven on TV and Radio and papers to request people to opt out. That made number reach 58 Lakhs and that was still not enough. Finally, they decided to "snatch" it. Kids do similar thing: first they request a thing, then they demand it loudly and if still not received then they snatch it from you.

Subramani P K

1 year ago

Subsidy for LPG is not the only benefit which is to be withdrawn but many other like the free distribution of many articles by the states like TV, Lap top, cycle, cattle, gas stove and so on. Subsidies for MPs, MLAs, free travel, tax free income, fertilizer, free electricity etc to farmers, tax free agricultural income and many more are also be stopped forthwith. All these benefits are enjoyed by affluent & the poor are denied even the minimum financial support. A comprehensive study has to be made of the system and totally revamped to benefit only the poor & needy that to direct through their bank & nothing in kind. This will control the misuse of subsidies & benefit the deserving. NDA should take up the revamping as a first step in 2016.

Chandragupta Acharya

1 year ago

Withdrawal of subsidy is welcome, but by stating “…taxable income of more than Rs.10 lakh during the previous financial year computed as per the Income Tax Act, 1961…", government has kept rich farmers out of the ambit. This is completely unfair, unjust and discriminatory. There is no justification for linking subsidy to a person’s profession and withdrawal of subsidy should be applied to all.

REPLY

Anurag

In Reply to Chandragupta Acharya 1 year ago

It also excludes our esteemed "MPs" as their salary is not taxable.

Simple Indian

1 year ago

The first line "your OR your spouse's income" is misleading. I presumed it would be "family income" of Rs. 10 lakhs or more. Let's wait for the Govt to clarify.
However, this is a welcome move, long overdue. In fact, the ceiling should be brought down to Rs. 5/6 lakhs. Subsidies are meant for people who can't afford a certain product / service at its market price. So, it's high time the Govt curbs such welfare schemes to only those who deserve it.
Napoleon is believed to have once said that England is a country of shopkeepers. Similarly, India has become a country of free-loaders. All Govts since 1947 have made people dependent on govt welfare schemes, instead of providing people greater means of earning their livelihoods.

Navi Mumbai Consumer Forum settles only eight complaints a year
Consumer Forums in Mumbai, Thane and Navi Mumbai are the worst in India, while the District Consumer Court in Chandigarh is the best, finds a consumer activist
 
The basic aim of consumer court is to “help the poor and needy with economical and speedy justice”. But in reality the opposite is true. The consumer courts are out there to find faults with the submissions and reject the complaints at small instances so as to reduce the workload. This is very cleverly done as teamwork of all the staff. This means if you try to complain to higher level in the same office, nothing will happen, as the higher staff hearing you is also the member of their team! A reply received under Right to Information (RTI) revealed that the Thane Additional Consumer Disputed Redressal Forum at Belapur in Navi Mumbai rejects 33.42% complaints at the admission stage. 
 
With my experience of 25 years with the various consumer courts in India, I have come to the conclusion that Mumbai, Thane and Navi Mumbai consumer courts are the worst in India while the District Consumer Court in Chandigarh is the best. Mumbai, Thane and Navi Mumbai consumer courts make different rules that suites themselves, violating the very purpose for which the consumer courts have been established, and also violating all the defined laws set up for accepting the complaints.
 
Few years ago the district consumer forums in Mumbai, Thane and Navi Mumbai wanted the case papers to be written in Marathi with translation in English, just to harass the consumers so that the consumer do not file complaints due to difficulty and expenses and shy away from the court. When this was opposed by the consumer activists new rules were made, which were more foolish….like keep a defined margin, defined spacing, defined format, and making pages in a certain sequence. If any little deviation, the consumer court had a good reason to dismiss the complaint or reject the case papers. Later the activists also opposed this and the consumer courts had to sheepishly withdraw this nuisance. 
 
The Mumbai, Thane and Navi Mumbai consumer courts are run by bunch of corrupt jokers who do not know that there is no prescribed format for filing a consumer complaint in the district consumer disputes redressal forum and a simple application is accepted by all the courts all over India. But these courts in Mumbai, Thane and Navi Mumbai do their best to harass and make things difficult for the consumers.
 
Now do you want to know how efficient the consumer courts of Mumbai, Thane and Navi Mumbai are? Let me give you just one example of the Thane Additional Consumer Disputed Redressal Form at Belapur, Navi Mumbai.  In the last 6 years, from the year 2010 till November 2015 the Navi Mumbai Consumer Court received 1,290 complaints out of which it allowed only 859 complaints and decided only 48 complaints. That means the consumer forum is deciding only 8 cases per year.
 
District Consumer Disputes Redressal Forum, Belapur, Navi Mumbai facts:
 
  1. Received 1,290 complaints from 2010 till November 2015 (six years).
  2. It allowed only 859 complaints out of 1,290 complaints. That means only 66.58 % of complaints were allowed and 33.42% were not even accepted.
  3. Out of 859 allowed complaints, it dismissed 240 complaints, that is, 27.93 % complaints were rejected. 
  4. Out of 859 complaints, it settled 48 complaints, which is only, 5.58% complaints in six years. It shows that only 3.7% complaints are settled per year of the total received.
  5. Out of eight settled cases, how many were in favour of consumer, the court never discloses.
 
(The data was collected by RTI query)
 
Looking at the operation cost of the consumer forums with the infrastructure and salaries of the staff you can imagine what will be the cost for settling one complaint. It will run to many lakhs. Is it worth settling one complaint for so many lakh of rupees? 
 
The cost incurred by the court to settle the complaint is many hundred times more than the relief amount claimed by the consumer.
 
We need to question the President of the Consumer Disputes Redressal Commission who is responsible for running the consumer forum and is directly liable for causing losses to the government and causing harassment to the consumers. Such people should be arrested and tried in court so that others in the line also learn a good lesson.
 
It means that Consumer Court is also a scam where the staff is enjoying all government benefits and giving just an output of 8 settlements every year. Now out of these eight settlements how many are in the favour of the consumer and how many against the consumer, the consumer forum has to disclose.
  
 
(Arun Saxena is President of International Consumer Rights Protection Council. www.consumergrievance.com)

User

COMMENTS

manoharlalsharma

1 year ago

all government agencies whether it is State/Central including HC doing the job as their wish not to serve CITIZENS who pays from his hard arming we only elect the governments sheltering these under valued employees.

Simple Indian

1 year ago

In this day n age, where technology helps speed up things with 'smart working', it's a pity we have to follow age-old procedures like this. I hope under PM Modi's Digital India push, even Consumer Forums are digitized and enable consumers file complaints online. Rules and procedures are meant to facilitate the consumers' lodging complaints, not to shoo them away. While there's rampant corruption in lower judiciary, it's only natural that quasi-judicial bodies like the Consumer Forums are following in the same direction. Mera Bharat Mahaan !

REPLY

Meenal Mamdani

In Reply to Simple Indian 1 year ago

I heartily second your suggestion to file complaints online.

If igaveabribe.org accepts complaints online and now CM Phadnavis is making filing a FIR more digital friendly, the Consumer Courts should be the first to follow this trend of empowering the common man.

If they do not take it up promptly, then the consumers should start an online petition on Awaaz.org and present the signatures to the higher judiciary which is supposed to maintain an oversight on the Consumer Courts.

Simple Indian

1 year ago

Apart from the administrative hassles mentioned in the article, I am told the Forums in Mumbai-Thane-Navi Mumbai also ask consumers to engage lawyers to represent their case, something not mandated in the Consumer Protection Act. Wish our High Court of Bombay would take suo motu action against such 'rogue' Forums, as their actions defeat the very purpose of the laws framed for protecting consumers' rights. Maybe a PIL in the HC could help improve things.

Yogesh

1 year ago

Additionally asked me to go the lawyer to represent the case.

REPLY

Shirish Sadanand Shanbhag

In Reply to Yogesh 1 year ago

I have already commented on it. Consumer Court is controlled by so called "Consumer Court Advocates' Association".
As in other Courts, here Consumer Court Bar Association is not possible, since Consumer Court law encourages the consumer to represent their complaints themselves, in plain language with bills and payment details.

Yogesh

1 year ago

The study about Navi mumbai consumer court is true. I am the witness to that. I was 4-5 times denied by the officers to register a case against deficient service. The officer wanted to write in a particular manner, no word less of more, in prescribed format which has to be typed on legal paper which only one typing institute can write/know. After registering case after 4-5 attempt , finaly I came to know that , that time court is not there , i mean all jury members were not present. after 6 months all the jury memebers were present, then case started. Then jury told me to rewrite the complaint again. By this time I lost interest. left it.

REPLY

Vaibhav Dhoka

In Reply to Yogesh 1 year ago

shameful proposition to consumer.

Shirish Sadanand Shanbhag

1 year ago

There is Consumer Court Advocates' Assoclation in Mumbai, Thane & Navi Mumbai. This association from time to time suggests and prevail upon Consumer Courts in this area, to accept the consumer complaints in a particular formet. It is openly displayed at all the Consumer Courts, to give the consumer complaint in a particular manner, which is more or less, the format of normal court.
Even though Consumer Courts were barred from appearance of an advocates, when they were initially formed, at later dates advocates were allowed. In Mumbai, Thane & Navi Mumbai Consumer Courts, due to interference of so called Consumer Court Advocates' Association, consumer complaints are rejected, so that aggrieved consumers fall pray to this Consumer Court Advocates' lobby.

REPLY

Vaibhav Dhoka

In Reply to Shirish Sadanand Shanbhag 1 year ago

How can superior court allow quasi judicial bodies to engage in corrupt practice.

MOHAN SIROYA

1 year ago

At the outset, let us congrats the veteran activist Arun Saxena for collecting an information for this article which is indeed an eye e. However, the following statements need bak up statistics as given in case of Belapur Navi Mumbai Consumer Forum.
1. How one can know that Consumer Forums in Mumbai and Thane are also sililar?
2. How Forum at Chandigarh can be called BEST in disposal rate as no statistics are revealed ?
3 What is the Bench mark to take a Forum decision in "Favor" or "Against" the Consumer ? In normal parlance as no complainant gets the full demanded reliefs, it can be construed that even upholding a complaint in part is in "Favor".
If this is so, analysis the author serves as an answer when it is mentioned that 240 complaints were rejected or dismissed amounting to 27.93% ofhe totalcomplaints disposed.
4. Lastly Can some one also enlighten as to on what ground the PIO can deny giving information on decisions of favorable or non-favourable orders of the Forum, if such a query under RTI was made ?

Deepak

1 year ago

Consumer Forums are useless. I had lodged complain in Maharashtra State Consumer Forum against builder for late possession of my Flat(6 years!) & levying escalation charges on me & i had to pay rent from my pocket during this period. My case went on for more that one & half year & out of frustration i had to settle out of court with the builder as per his terms in order to get possession & paid as per his demand. This was the only court case in my life & i realised judiciary is of no use for common man like me.

Meenal Mamdani

1 year ago

Mr. Saxena has done a great service to all consumers by this article.

Proving the consumer court decisions malafide would be very hard. It may be better to shame the staff of the consumer court by giving wide publicity to the judgments, with names of the staff involved in the case, including the judge. Citizens could organize protests at the court to draw attention to this sorry state of affairs.

Finally a complaint to the Bombay High Court highlighting these statistics could put the consumer court staff on notice that they are under scrutiny and may shape up their behavior.

Prakash Sheth

1 year ago

Mr Saxena, there is quite a degree of truth in your anguished article. But I would suggest you to please use respectful language while referring to the President/member of a CDRF as they are constitutionally created posts, and can land you in more trouble. I would like to add to your comments by saying that the judges/members at a CDRF are, most probably by their mind-sets or by the atmosphere they have worked in, more often than none, pro-OPs, and miserably fail to realise the pain/injustice suffered by the consumer who spends his time/money/energy to approach a CDRF. The costs they grant to a successful consumer at the end of a long drawn and tiring trial, are chicken feed and are much far away from practical reality, although supreme court has in Salem Bar Advocates Association case laid down very clearly that costs must be granted and that too, realistic costs and not just symbolical or superficial costs.

REPLY

Babubhai Vaghela

In Reply to Prakash Sheth 1 year ago

http://daily.bhaskar.com/news/pil-agains...
PIL - 8 of 16 CJIs Corrupt - Kept Pending by the Next 6 Chief Justices of India. Upper Castes Males Dominated Higher Judiciary - Sovereign Authority of India - is Bloody Corrupt.

Babubhai Vaghela

In Reply to Prakash Sheth 1 year ago

Online babu-bashing no crime, SC says

Amit Choudhary | TNN | Jan 22, 2015, 04.40 AM IST

http://timesofindia.indiatimes.com/tech/...

Arman Oza

1 year ago

This is not just about reducing the workload, as you have suggested. A much effective way of reducing workload would have been awarding of punitive or exemplary damages in cases where blatant deficiency in service is found. This would have served as a credible deterrent for unscrupulous service providers and resulted in less number of complaints arising. But as you know the consumer courts have chosen to be kind enough on service providers by not pronouncing such awards. So it is not about workload but it is who do you want to oblige.

REPLY

Prakash Sheth

In Reply to Arman Oza 1 year ago

I agree Mr Oza. I know of a case before South Mumbai CDRF, where the DF over-enthusiastically awarded incredible amounts to the complainant by way of costs, compensation and harrassment, because the complainant was the Additional Municipal Commissioner of Mumbai, and still is. There is also one more glaring irregularity going on in DFs and SCs. A currently sitting member in Mah.State Commission filed complaint before South Mumbai Forum against an airline, which was bound to be allowed with heavy costs. The complainant's advocate and the firm to where he belonged, regularly appear before the same sitting member in the Mah.State Commission. Will the said member not oblige the South Mumbai Forum, when an appeal against SMF order is placed before him? Will the said member not oblige the said advocate and his firm, when they appear before him?

Vaibhav Dhoka

1 year ago

One is surprised how high court or Supreme court overlook such on goings in consumer forums mentioned.In fact most quasi judicial forums enjoy at cost of taxpayers money post retirement.They must be made answerable or government should constitute inquiry and impound perks for failure to do duty.

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