Afternoon Despatch & Courier www.afternoondc.in
MUMBAI | FRIDAY, JULY 5, 2013
New Banks Could Become Game Changers NEWS FLASH
Cement makers to slow down capacity expansion: Care. Bajaj may launch passenger vehicle RE60 before fiscal-end. Indian pharma companies shifting R&D to SE Asian countries: Assocham. Around 75 MT shortfall in coal supply likely in FY'14. Crompton Greaves buyback offer begins on July 15.
Would increase financial inclusion, improve service efficiency, enlarge capital base and create new jobs says FICCI Survey By A Business Reporter
banked rural centres with a population of less than 9,999 will play a sighe RBI’s decision to allow new nificant role in expansion of banking players in the banking sector services to mid cities and rural India has received a big thumbs up and hence help in increasing finanfrom Indian industry. The move will cial inclusion in India. The setting up of new banks is induct new processes and technology, improve efficiency, enlarge the considered significant in view of the capital base to meet the credit needs fact that only 35% of Indian populaof the economy and generate huge tion have formal bank accounts as employment opportunities, says a compared to an average of 41% in FICCI’s Survey on New Bank Li- developing economies. Nearly 70% of India’s population censes. The survey which drew responses lives in villages. However, a vast mafrom existing banks, NBFCs, corpo- jority of approximately 6,50,000 vilrate and industrial houses and other lages in India do not have a single stakeholders reveals that a majority bank branch, thus leaving a huge (88%) of the respondents feel that chunk of the rural population in the RBI condition for an applicant ap- hands of money lenders. The total plying for a banking license to set up number of branches in rural India at least 25% of its branches in un- stood at 37,471 and the total banking
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All May Not Get Bank Licences Asserting that it will accelerate the process of issuing new bank licences, the Reserve Bank yesterday said it was possible that not all eligible applicants would be granted a licence. “We will try to accelerate the process ... We will look at the applications and then decide. It is still possible that not all eligible applicants might get licences,” RBI Governor D Subbarao told reporters.
RBI To Look Into Birla’s Licence Plea The RBI yesterday said it would look at whether there is any conflict of interest arising out of a bank licence application filed by Aditya Birla Nuvo, whose group Chairman Kumar Mangalam Birla happens to be on the board of the central bank. “We have to take a view on that. This is a very recent development,” Reserve Bank Governor D Subbarao told reporters.
outlets in villages after taking into account the Branches, Business Correspondents and other modes was just 1,81,753 (as on March, 2012). The Survey notes that apart from improving financial inclusion in India, new banks can potentially be the game changers in the following ways: one, they can bring in the new processes and technology and will play a significant role in driving competition. It will also encourage existing players to improve efficiency; two, new players with sound financial base will bring in the much needed capital that is required to support the credit needs of the economy and they will generate huge employment opportunities. On being asked to provide any other parameters that the respondents felt were significant and should be therefore considered by RBI before issuing the license, the top three parameters that emerged are Sound financial position and financial track record of promoters and all the group companies (53%); Deep understanding and experience in financial services including fiduciary financial services (29%); Binding all compulsions such as opening up of branches in unbanked areas, PSL targets, Basel norms and limited exposure to sensitive sectors (29%). 69% of the respondents felt that corporate/ industrial houses should be given licenses while the remaining 31% felt that they should not be allowed to operate as banks.
Monsoon Boost Business Indicators Forecast For FMCGs An Expanding Economy By A Business Reporter
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BUSINESS
he early arrival and prospects of a good monsoon are making FMCG firms such as Emami, Dabur, Marico and GSK Consumer Healthcare upbeat with expectations of growth in uptake in rural areas that account for up to 50 per cent of their sales. According to the FMCG companies, good monsoon adds to the ‘feel good factor’ in an economy and creates favourable emotional base for consumption. “Early and good monsoon specially means good news for the rural economy where dependence on agriculture is high and thus good monsoons benefits rural consumers very much,” Emami CEO (Sales, Supply Chain and Human Capital) N Krishna Mohan told PTI. According to him, Emami which gets about 40-45 per cent of total sales comes from rural India, expects increased consumption of FMCG products due to a good monsoon. Emami had posted a total turnover of Rs 1,627 crore in 2012-13. “A buoyant economy especially in rural India would mean more disposable income and would be favourable and there would be increased consumption of FMCG products,” Mohan said.
The recent volatility in the exchange rate is not expected to impede the economic recovery By A Business Reporter
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he Indian economy is growing at a faster rate than the previous year. These facts emerge from the BluFin Business Cycle Indicator (BCI) for the month of June 2013, providing “real time” information on the state of the business cycle in the Indian economy. At the current score of 167.1, a rise of 5.6% over the same month last year, the BCI continues to indicate an expansion. The year-on-year growth rate noted in the previous month was 5.8% and in June 2012 was 2.2%. Historically, the BCI has grown at 7% year-on-year, on an average. As much as 50% of the indicators in the composite BCI score have expanded compared to the same month last year. The intermediate sector continues to be a major contributor to BCI growth. Production data for aluminum, pig iron and copper indicate an expansion, as does a boost in infrastructural activities observed since late 2012. Also, falling international commodity prices such as those of copper, aluminum and
gold have boosted the economy’s growth, even though a large part of the benefit has been eroded by the depreciating rupee. Data on consumer demand are also indicating a mild recovery. The BCI has been forecasting an economic revival since July 2012, although the projected recovery appeared sluggish in the near term. Based on BCI trends, GDP is likely to grow at 5.3% in the first quarter of FY 2013-14, but to gather momentum by the third quarter with a forecasted growth of more than 6.2%. BluFin’s internal research suggests that the Indian economic recovery would be able to withstand current heightened currency risks. According to Debopam Chaudhuri, Vice President of Research and Development, BluFin, “We expect economic growth to be on track despite the weakening currency. A systematic rise in FDI since early 2013 coupled with cooling international commodity prices and a comfortable foreign reserve would help mitigate some of this shock-related risk, which has more to do with sentiment than fundamentals.”
BUSINESS BRIEFS DTC Bill In Monsoon Session
The government plans to introduce a bill for a direct taxes code (DTC) during the forthcoming monsoon session of Parliament, Finance Minister P Chidambaram has said. The code, which will replace the existing Income Tax Act 1961, aims to rationalise tax rates to bring more people and companies under the tax net.
Panel To Monitor Coal Blocks’ Progress
Concerned over tardy progress in development of captive coal blocks by private and public firms, the Centre has asked the states to form a committee headed by chief secretary to monitor and expedite the mining process. “To expedite the process of development of coal blocks, it is considered desirable to introduce a system of monitoring of the development of coal blocks by a monitoring committee, headed by the Chief Secretary of coal-bearing states,” Coal Secretary S K Srivastava said in a letter to the states.
Rajeev Dubey Becomes NHRDN President National HRD Network (NHRDN), the apex body of HRD professionals in the country, today announced the nomination of Rajeev Dubey as its new National President. Dubey is a President and Member of the Group Executive Board of Mahindra & Mahindra Ltd, and succeeds S Y Siddiqui, Chief Operating Officer, Administration (HR, IT, Finance & COSL) – Maruti Suzuki India Ltd. as the NHRDN National President.
Concerns Of Power, Fertilizers To Be Addressed
Days after the government nearly doubled natural gas price, Finance Minister P Chidambaram said concerns of power and fertiliser sector will be addressed before the increase is implemented in April 2014. On June 27, the Cabinet approved a new formula that uses weighted average of the price of LNG into India and average price at major gas hubs. According to the formula, the price of gas in 2014 will come to USD 8-8.2 per million British thermal unit as opposed to USD 4.2 currently. The hike in price will lead to increase in cost of generating electricity as well as urea cost. —Business Desk with inputs from PTI