Citizens' Issues
Reliance Foundation to spread financial literacy among slum women
The Reliance Foundation on Monday announced a unique initiative it has taken up -- a project to spread financial literacy and awareness among half a million slum women of Mumbai.
 
The programme was launched on the 83rd birth anniversary of the late industrialist Dhirubhai Ambani and aims to "empower women towards making informed financial decisions and get them to inculcate the savings habit".
 
Backed by CRISIL's technical knowhow, the Reliance Foundation has carried out a study of Mumbai slums which revealed how women were usually kept out of the financial decision making process by the men.
 
"Even the employed ones among them hand over their salary to their husbands or fathers who manage the money. Psychologically, these women do not feel adept at handling finance. In reality, however, they are much better at managing finances though a majority of them know nothing about the basics of banking," a foundation official said.
 
Accordingly, a module has been created to educate such women in the basics of banking, help them avail of government initiatives like Jan Dhan Yojana, Rashtriya Swasthya Bima Yojana and Pradhan Mantri Suraksha Bima Yojana.
 
The Reliance Foundation will help every woman open a bank account under Jan Dhan Yojana and connect older women to the Atal Pension Yojana, said foundation COO Jitendra Kalra.
 
In the first phase, a pool of 50 master trainers will be trained from the marginalized women using technical help of CRISIL Foundation, who in turn would train another 2,400 trainers by March 2016 to carry the programme forward.
 
Kalra added the workshop is designed as an extension of Prime Minister Narendra Modi;s 'Beti Bachao, Beti Padhao' programme.
 
"By educating women from marginalised sections of the society on financial matters, we will be empowering them to make informed decisions for the financial well-being of their families. After all, a woman cares the most for her family," he noted.
 
Headed by founder-chairperson Nita Ambani, Reliance Foundation is engaged in helping marginalized sections of people and impacts over 5,500 villages and four million people by its activities.
 
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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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

11 months 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

11 months 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.
 

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COMMENTS

Mr Jitendra

11 months 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

11 months 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

11 months 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 11 months ago

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

Simple Indian

11 months 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.

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