Citizens' Issues
Rising household indebtedness a concern: report
With WPI inflation consistently undershooting projections, the real value of nominal debt or credit card outstanding has become higher than expected. This may contribute to the building up of financial risks and make it difficult for households to manage their balance sheets says a report from SBI 
 
The current increment in bank lending has mostly been to the personal loan segment. Moreover, within the personal loans, it is the credit card loan segment that is rising rapidly, indicating a rise in consumer indebtedness. However, household debt as measured by credit outstanding per credit card in India has been rising even in real terms (after being adjusted for wholesale price index (WPI) inflation, says a report from State Bank of India (SBI) Ecowrap. 
 
It said, "Personal loans share is currently rising in the total loan portfolio which leads one to wonder if this increase suggests a movement towards a similar glaring situation as had happened prior to 2008 global crisis when share of personal loans increased in total ASCB loans or does it portend a potentially brighter economic outlook ahead."
 
The divergence between the deposit and credit growth has increased recently. While all scheduled commercial banks (ASCB) deposit growth has hit 53-year low of 9.9% in FY16 as on 18 March 2016, the credit off take has shown some improvement (at 11.3% as on 18 March 16). Household debt as measured by credit outstanding per credit card in India has been rising both in nominal and real terms after being adjusted for WPI inflation. In nominal terms, the outstanding per credit card stood at Rs8,668 as of February 2016, a rise of 15.5% year-on-year, the Ecowrap report says.
 
Further, SBI says, when the historical series is looked at, one finds the share of personal loans to total loans by ASCB increased prior to the global financial crisis of 2008. It increased to 23% by 2006 from 12% in 2001 and it declined subsequently.
 
 
According to the report, personal loans share is once again rising in the total loan portfolio leading one to wonder if this increase suggests a movement towards a similar glaring situation or it portends a brighter economic outlook ahead. However, personal loans share at present does not seem worrisome with the level even below March 2009. 
 
"Though the rise in personal loans might suggest an improving economic momentum going forward, however increase in personal loans alone is not enough. This is corroborated by an in-house study about the relation between credit allocated to industry and personal loans over the past ten years which indicates that industry credit granger causes personal credit and not the other way round," it added. 
 
During March 2016, WPI inflation remained in the negative zone for the 17th month in a row at - 0.85% compared with -0.91% in February 2016 and -2.33% in March 2015. However the larger question is whether this continuous disinflation for the past 17-months reflects worsening consumer demand, the report says.
 
 
According to SBI, despite the negative inflation for the past 17 months, the real outstanding has increased. This indicates that with WPI inflation consistently undershooting projections, the real value of nominal debt or credit card outstanding has become higher than expected. The result does not change much even if we take consumer price inflation into account. This may, in turn, contribute to the building up of financial risks and make it difficult for households to manage their balance sheets, it added.

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COMMENTS

Mahesh S Bhatt

1 year ago

Death by Debt is unwritten untold Goevrnments Policy across the Globe.

Create bubbles of property/stocks/ commodities rip up free natural resources and sell at astronomical values to gullible stupid educated grads who take loans from education/house/health/festival.

These indebted youth let them die or struggle to repay while Political + Business enjoy the richness.

Mahesh Bhatt

B. Yerram Raju

1 year ago

All personal loans are bartering the future for the present and this has been accelerated with Credit Cards linkage to several Tourist Travels and Airlines. People without battering the eyelid today travel long distances and overseas by buying the airtickets and hospitality to repay in instalments. On top of this even the SBI Card offers Reward Points that are tagged only to purchases of items worth the cash value of reward points on the net.
Consumerism is living beyond one's own means and living on debt. The type of growth we are having today built on such consumerism is highly risky. It is time that the powers that be start thinking on austerity.
The FM thinks of this when his Fiscal Deficit is close on its heels. He asks his bureaucrats not to travel abroad or travel with permission or travel on economy class in airlines etc.,etc. Austerity has to start at several levels and several instrumentalities. This is imperative for sustainable growth.

Ramesh Poapt

1 year ago

big co;npa bubble, auto loan bubble, housing loan bubble, edu loan bubble, credit card/personal loan bubble...........burst previous 2008....next 201?...

MG Warrier

1 year ago

Those who have a regular income are also prone to borrow regularly. Personal loans and credit cards trap this category of borrowers in a 'vicious cycle'. I was a 'victim' of this behavioural pattern till retirement in 2003. Though interest rates were reasonably low as I was borrowing from staff cooperative credit society. I give below an excerpt from my forthcoming article in The Global ANALYST to illustrate the trap:
"What is negative interest rate for the consumer?
For starters, let me explain this concept with an example. Fish-vender Arundhati from a small town in Kerala has been selling fish by carrying headloads of fish from house to house for the last 25 years. Today, she buys fish costing about Rs3,500 from the wholesale market, transports it in an auto-rikshaw to her town and makes about Rs5,000 by evening by sale by carrying from door to door. Whole her life, she has been dependent on ‘Blade Bhasi’ a local money lender. Every Monday morning she borrows Rs5,000 and repays Rs5,500(including Rs500 towards interest) on Saturday evening. In this process, if the original Rs5000 belonged to Arundhati, the additional Rs500 paid is the negative interest she is paying to Blade Bhasi for safe custody of Rs 5,000 from Saturday to Monday. If the corpus of rs5,000 belonged to Blade Bhasi, the interest paid by Arundhati on the borrowed money @Rs500 per week on rs5,000 is at around 500 per cent per annum."
Your views are welcome.
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YouTube launches 360-degree live streaming
New York : Video sharing platform YouTube has introduced a 360-degree live streaming and spatial audio to its platform for both the viewers and event organisers.
 
"Now anyone, with just their phone, can have that front-row experience without having to be there," technology website The Verge quoted Neal Mohan, chief product officer, YouTube, as saying.
 
Just as watching a concert in 360 degrees can give you an unmatched immersive experience, spatial audio allows you to listen along as you do in real life, where depth, distance and intensity all play a role. 
 
Mohan's announcement arrives just after Facebook unveiled its plans for expanding live-streaming and its own design for a 360-degree camera, the report said.
 
"As a user, you don't need to do anything," Mohan said, adding, "There is no fancy technology to purchase or integrate."
 
Just open the YouTube app on your smartphone and you are ready to go. 
 
According to Mohan, along with 360-degree live streaming, they are also launching spatial audio for on-demand YouTube videos. 
 
"We are working with companies like VideoStitch and Two Big Ears to make their software compatible with 360-degree live streams or spatial audio on YouTube and more will be available soon," Mohan noted.
 
He said that the company would also make 360-degree live streaming and spatial audio technologies available at all YouTube Space locations around the globe.
 
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

Nanda Patel

1 year ago

https://http://www.youtube.com/watch?v=zDAYZU4A3w0

not a live steam but just a 360 video.

Banned drug seized from listed firm Avon Lifesciences may be the tip of the iceberg
Several financially distressed, small pharma companies can become easy prey to the underworld controlled drugs business. The recent seizure of drugs worth Rs2,000 crore from a loss-making Avon's plant may be just tip of an iceberg 
 
The recent case of seizing a whopping 18.5 tonnes of banned drug Ephedrine, worth over Rs2,000 crore from Avon Lifesciences a company listed in the Bombay Stock Exchange, should ring alarm bells for authorities. While Thane Police, which conducted the raids at Solapur, found no records of the drugs seized, Avon Lifesciences Ltd, which owns the facility, claims the materials may be stolen from its plant. After the announcement, Avon Lifesciences closed on Monday at its 52-week low or 19.97% down at Rs23.05 on the BSE.
 
According to market participants, the seizure of drugs from a pharma company premises may be just a tip of an iceberg, as there may be hundreds of small pharma companies either involved or thinking to get involved in similar practices due to financial distress.
The sale of ephedrine is banned in India. However, controlled manufacturing as a bulk drug for pharmaceutical use is legal in India. The abuse of the drug, popularly in the powder form, is known to cause euphoria, hallucinations, delusions, hypertension and nausea. It is synthesised to produce the narcotic methamphetamine. 
 
In a regulatory filing, the company said, “…we have all valid licenses and statutory registrations for manufacturing, stocking and sale of all products manufactured at our Solapur site. Also all the material has been accounted for and stocked with due notice to concerned statutory authorities. The concerned matter revolves around theft of some material and we are ascertaining the same in active cooperation with the investigating authorities.” 
 
According to reports, the drug was being diverted for unauthorised sale in Thane city. Thane Police Commissioner Parambir Singh is quoted in reports as saying, “The Ephedrine we found was completely off the books. It was not mentioned in the company’s quarterly and half-yearly audits.” 
 
Earlier, in Solapur, the police caught a 28-year-old man called Dhaneshwar Swami, who worked in Maharashtra Industrial Development Corporation (MIDC) campus. The police seized 5.5 kg of Ephedrine from him. Swami allegedly told the police that a large quantity of the drug was stored in the offices of Avon Lifesciences, also located in MIDC. Based on Swami’s information, the police searched the company godown and found 10,071.5kgs of Ephedrine and 8,541 kg of pseudoephedrine. 
Hyderabad-based Avon Lifesciences manufactures a range of pesticides, pharmaceuticals and dyes. Incorporated in 1993 as Avon Organics Ltd, it changed to its present name in 2011. For the quarter to end-December 2015, Avon Lifesciences, narrowed its net loss to Rs7.42 crore from Rs7.85 crore on higher expenses, despite recording total revenues of Rs5.56 crore as compared to Rs23.36 lakh in the same period previous year.
 
Another pharma company that is in financial distress is Dr Datson’s Labs Ltd. The company shares were suspended on 21 May 2015 due to procedural reasons. In Dr Datson’s case, one fine day, the lenders invoked all shared pledged by promoters. Other lenders had moved court and the official liquidator had taken possession of the company and its registered office on 30 April 2015. A month later, the stock exchanges suspended trading in the company, although its shares continued to be manipulated right until 23 April 2015, when they had shot up 183%, to Rs17 from Rs6. 
 
Dr Datson’s Labs started operations in 2006, incorporated as a private company called Aanjaneya Biotech which later became Aanjenaya Lifecare. It claimed to be making salts of quinine, a second-generation anti-malarial. Aanjaneya Lifecare’s promoters are Aasda Life Care Limited and Dr Kannan K Vishwanath. In 2009, Aanjaneya Lifecare became a wholly owned subsidiary of Aasda Life Care Ltd. 
 
Last month, the Jammu and Kashmir High Court, while dismissing a habeas corpus petition by a ‘drugs trafficker’, had said that due to India’s close proximity to the major opium-growing regions, the country is facing the menace of drug trafficking and drug abuse among the youth is increasing, which is a matter of concern. “The drug problem is a serious threat to the public health, safety and well-being of humanity. Besides, it is considered to be the originator of petty offences as well as heinous crimes like smuggling of arms and ammunition and money laundering,” the single bench of Justice Tashi Rabstan noted in its orders. 

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COMMENTS

Ramesh Poapt

1 year ago

'tip of the iceberg!'- well said! will the iceberg melt fully?!let us hope!

SuchindranathAiyerS

1 year ago

"Medicine" is like a drug on the Indian Market. From reservations and donation "Doctors", to commercial hospitals run by politicians and other criminals and so divorced from any semblance of "ethics" or "morality" to organ "harvesting" from the starving to guinea pigs for experimental medication. To drugs. Like corruption, the rest of crime in India, whether State sponsored and promoted, or not, should be made taxable and excisable. Then, there is some hope that the resultant bribe taking by enforcement authorities might reduce these practices, or the population on which these practices depend to some extent.

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