Growth in credit to priority sector slows to 10% in October

The slowdown is on account of lower offtake by agriculture and MSME segments as well as decline in micro credit

Mumbai: Bank lending to the priority sector grew at a mere 10% in October this year, on an annual basis, on account of lower offtake by agriculture and MSME (micro, small and medium enterprise) segments as well as decline in micro credit, reports PTI.

Credit offtake by the priority sector had grown by 19.9% during the same month of 2010.

Credit disbursement to the priority sector stood at Rs12.48 lakh crore in October compared to Rs11.35 lakh crore in the same month last year, according to the Reserve Bank of India (RBI).

In October, bank disbursements to agriculture and allied activities went up by a mere 7.1% to Rs4.35 lakh crore. In October 2010 credit disbursement to the segment had gone up by 20.4% on an annual basis.

Similarly, growth in offtake by the MSME sector slowed to 17.4% at Rs4.73 lakh crore in October. Bank credit disbursement to the sector had increased by 20% in October last year.

As far as micro credit is concerned, the sector, in fact, witnessed a decline of 13.3% during the month under review to Rs24,601 crore. Micro credit had grown by over 50% in the same month last year.

Credit to the housing sector in October this year stood at Rs2.36 lakh crore, up a meagre 3.5% on an annual basis. The growth in credit to housing had stood at 9.3% in October 2010.

Bank credit disbursement to weaker sections grew by 13.3% to Rs2.20 lakh crore during the month under review.

Credit offtake by weaker sections from banks had risen at an annual rate of 27.7% in October last year.

While some priority sectors like agriculture and loans for weaker sections is disbursed at an interest rate lower than their prime lending rates, other segments do not fall under the subsidised lending regime.

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    Finance ministry wants FDI in airlines within SEBI framework

     

    While approving the draft Cabinet note on FDI in airlines, the finance ministry has suggested the DIPP consult SEBI on the issue as several airlines, including Kingfisher and Jet Airways are listed companies

    New Delhi: The finance ministry is understood to have given the green signal to the proposal to allow 26% foreign direct investment (FDI) by foreign airlines in the private carriers, many of them facing a cash crunch, with a rider that such investments should not violate Securities and Exchange Board of India’s (SEBI) takeover code, reports PTI.

    The Department of Industrial Policy and Promotion (DIPP) had proposed 26% FDI by foreign airlines into the domestic industry in the backdrop of Kingfisher Airlines slipping into a severe debt crisis and several others facing resource crunch.

    While approving the draft Cabinet note on FDI in airlines, the finance ministry has suggested the DIPP consult SEBI on the issue as several airlines, including Kingfisher and Jet Airways are listed companies, sources said.

    “We have asked DIPP to consult SEBI so that their regulations do not come in conflict with the Takeover Code,” a senior finance ministry official told PTI.

    Under the SEBI’s Takeover Code, an open offer is triggered once an investor acquires 26% stake in a listed company.

    The size of the open offer required is 25%, which would mean that the investor will have to buy additional equity from the public.

    Several ministries, including the home ministry and the Planning Commission have already backed the proposal.

    However, the aviation ministry is for fixing a cap of 24% on the FDI.

    At present foreign investment up to 49% is permitted in the domestic airlines, but the foreign carriers are disallowed to make such strategic investments.

     

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    No plan to decontrol diesel pricing, says government

    “There is no immediate plan to decontrol diesel or LPG as they have cascading effect (on general prices),” minister of state for petroleum and natural gas RPN Singh said

    New Delhi: The government has no plans to decontrol diesel pricing but wants consumer to “get used” to changes in petrol rates being effected every fortnight, reports PTI.

    “There is no immediate plan to decontrol diesel or LPG as they have cascading effect (on general prices),” minister of state for petroleum and natural gas RPN Singh told reporters here.

    While the government had in June last year freed petrol pricing from its control, it continues to dictates retail rates of diesel, cooking gas (LPG) sold to households and kerosene sold through public distribution system (PDS).

    State-owned oil firms are currently selling diesel at a record loss of Rs13.53 per litre, kerosene at Rs29.99 per litre and domestic LPG at Rs287 per 14.2-kg cylinder.

    “There is no meeting scheduled (of the Empowered Group of Ministers) to decide on (raising) diesel or LPG prices,” Mr Singh said.

    EGoM headed by finance minister Pranab Mukherjee is empowered to decide on rates of the three sensitive products.

    Mr Singh said consumers should get used to changes in prices of petrol every fortnight—moving up if international rates rise or reducing if prices come down.

    State oil firms had last month effected three price revisions in petrol—first hike rates by Rs1.80 per litre on 3rd November, then reducing it by Rs2.22 per litre on 15th November and a further cut of Rs0.78 a litre on 30th November.

    On the three sensitive products, Indian Oil Corporation, Bharat Petroleum Corporation and Hindustan Petroleum Corporation are projected to lose Rs1,37,605 crore in revenues this fiscal.

    The three firms are losing Rs425 crore per day on sale of diesel, domestic LPG and kerosene at government controlled rates, which are way below cost.

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    COMMENTS

    Jaideep Sidhu

    8 years ago

    I have reading about the oil companies making huge losses each day due to selling these items at low prices.
    How is it then that they still survive?
    Does it mean that they haven't made a profit in ages?

    We are listening!

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