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Showing posts from August 21, 2018

EPFO revises down payroll numbers by 12% for September-May period

The payroll data has been revised downwards for each of the nine months between September 2017 and May this year The net enrolment numbers released by the Employees’ Provident Fund Organisation (EPFO) has been revised down by 12.4 per cent for the September-May period, from an earlier estimate of 4.5 million to 3.9 million. The payroll count in June rose by 24 per cent to 793,308. The net enrolment numbers for June were the highest since September 2017. In May, the payroll numbers had grown by 10 per cent to 638,653. The payroll count is essentially the difference between the number of workers who joined and exited from the EPFO’s fold. All employees who work in establishment hiring at least 20 workers contribute towards provident fund and pension, managed by the EPFO. The Union government has been citing this data since past few months as an indication for job growth in the economy. During a debate on the no-confidence motion, Prime Minister Narendra Modi had claimed that over 10 milli…

India’s GDP rose fourfold in 1993-2012, while wages only doubled: ILO

India’s gross domestic product (GDP) rose more than fourfold between 1993-94 and 2011-12 but workers salaries only doubled, the International Labour Organization (ILO) said on Monday in the latest indication of low pay and growing wage inequality in the country. Over the last two decades, GDP has risen at an annual average of about 7%. “Overall, this means that GDP rose more than four-fold since 1993”, but low pay and wage inequality India Wage Report. “The India Wage Report shows that low pay and wage inequality remain a serious challenge to India’s path to achieving decent working conditions and inclusive growth,” said the report, adding that the average real wage in India has doubled between 1993-94 and 2011-12. It said though rural wage increased faster than urban wage, the cumulative wage in urban India is more than double that of rural India, indicating the wage inequality in the country and how decent work remains a constant challenge. India’s strong economic growth is not trans…

INTER-CREDITOR AGREEMENT: SOME PRIVATE SECTOR AND FOREIGN BANKS SEE RED

The inter-creditor agreement (ICA) between banks, which is part of the government’s Sashakt plan, is meeting with some stiff resistance from some private sector banks and almost all foreign banks. The agreement was mooted by the Sunil Mehta committee as the first step to resolve bad or non-performing loans (NPAs). Any bank that signs the ICA, agrees to the following conditions: 1. When a borrower defaults or shows signs of default, the lead bank shall alone negotiate with the promoter or with rival bidders for a resolution. 2. If any bank dissents, it has the option to buy the loan from other bankers at a premium or sell its loan to them at a 15% discount to the liquidation value of the loan. 3. If two-thirds of the lenders involved in a loan have signed the ICA, then the provisions of this agreement will apply. Almost all public sector banks have signed the agreement. Among private banks ICICI, Axis, Federal and some smaller banks have signed, but banks like HDFC, Kotak and RBL are holdi…

Enact new law to enable public credit registry, says RBI’s Acharya

Reserve Bank of India (RBI) deputy governor Viral Acharya on Monday said there is a need to enact a new law to bring the public credit registry (PCR) under its purview. A new PCR Act will ensure transparency in data acquisition and dissemination through access rights by various users, Acharya said at a session at the Ficci-IBA conference. “It is desirable to have a special comprehensive legislation overriding the prohibitions contained in all other legislations on sharing of information required for PCR. Otherwise, all such legislation will have to be amended separately, providing an exemption for sharing of information with PCR,” said Acharya. The idea of a PCR was first mooted by Acharya himself last year at the Annual Statistics Day conference. He said the PCR aims to be an extensive database of credit information that is accessible to all stakeholders. From the point of origination of credit to its termination, the PCR will capture all lender-borrower accounts at one place. A high-…

RBI Staff Threaten 2-day Strike

Reserve Bank of India (RBI) employees are threatening to skip work across the country on September 5 and 6 to press with their long-pending demands for updating pension plans and grant of new options on the retirement corpus. They want one more option for pensions to Contributory Provident Fund (CPF) retainers. Furthermore, they say that CPF or Additional Provident Fund should apply to staff recruited since 2012. Staff members have come together under the banner of the United Forum of Reserve Bank Officers and Employees to press for industrial action that could hurt traditional banking operations in the first week of September. They claimed the finance ministry had always turned down their demand, although it updated pensions for about 5.5 million central government employees. “RBI governors, past and present, have time and again taken up the issue with the government and assured the employees and retirees of a positive outcome. However, it has not happened. The ministry has every time…

RBI Changes its Stance on Rupee Swings

The central bank has conspicuously taken a ‘hands-off’ approach on days the rupee fell The Reserve Bank of India (RBI) appears to have changed its approach toward dealing with volatility in the currency markets. While the central bank’s stated position has been that it would step in to curb volatility, the RBI was conspicuous by its ‘handsoff’ approach on days the rupee fell precipitously. On the day the rupee plunged to a new record low in five years, the RBI only sold dollars modestly, unwilling to support the local unit when emergingmarket currencies faced a collective rout. “In the wake of the latest rupee depreciation, the RBI appears to be not as worried as it was in 2013,” said Anindya Banerjee, currency analyst at Kotak Securities. “If the rupee is falling against the dollar in line with other emerging market currencies, it does not bother the central bank much as long as the decline is not exclusive to rupee.” Back in August 2013, the level of forex reserves were at about $275.…

Ind AS for NBFCs – Not Just an Accounting Challenge

Indian Accounting Standards (Ind AS) have become mandatory for certain non-banking finance companies (NBFCs) effective April 1, 2018, with the first quarter reporting out for some. This puts to rest the speculation that the transition to Ind AS for NBFCs may get postponed. Transition to Ind AS, while primarily being an accounting change, is expected to have a profound impact on the business of NBFCs. Ind AS should be as much part of the CEO agenda as it is of the CFO/ Controller’s agenda as it is expected to significantly alter the KPIs and business ratios (cost-to-income ratio, NII, NIM, NPA ratios and provision coverage ratios) based on the choices made. NBFCs are advised to proactively reach out to internal and external stakeholders to highlight impacts of these changes. Some of the significant potential changes in practices that are expected due to Ind AS are as follows: • Upfront fees and loan origination costs such as commission and incentives are incurred by NBFCs. Ind AS require…

‘Sebi’s Rejig of MF Schemes Triggered Small Cap Rout’

NEW CATEGORIES of schemes and new benchmarks led to fund houses buying more of mid- and large-cap stocks, says a report The Sebi circular on categorisation and rationalisation of mutual fund schemes led to cash inflows into several small-cap funds drying up in an unprecedented portfolio overhaul, says a research note by brokerage Prabhudas Lilladher. The circular had sought to create uniformity in the mutual fund industry by setting clear definitions of large-cap, mid-cap and small-cap stocks. That would create specific categories of mutual fund schemes, where only one scheme is allowed per category. Small-cap stocks witnessed net selling of about ?22 crore (January-June). About ? 280 crore was sold in April 2018, while ?140 crore was sold even in June 2018. In the same period, ?21,900 crore worth of large-cap stocks were bought, while mid-cap stocks as per the changed definition reported net buying of ?14,500 crore. The tightening of norms meant that two categories — a new one called l…

Logistics, Warehousing Leases Up 45% in H1 of ’18

GST, INFRASTRUCTURE STATUS PUSH DEMAND FOR LEASING ACTIVITY Leasing was driven by consolidation and expansion moves of e-comm, third-party logistics, retail and engineering & manufacturing cos Policy initiatives including implementation of the goods and services tax (GST) and grant of infrastructure status led to a 45% increase in leasing activity in logistics and warehousing segment in India’s top seven cities in the first half of 2018 from a year ago to 10 million square feet, showed data from CBRE South Asia. Leasing activity was primarily driven by consolidation and expansion moves of e-commerce, third-party logistics, retail, and engineering and manufacturing companies, which together accounted for more than 75% of the leasing reported during the period. The rise is attributed to policy reforms that the sector has witnessed over the past two years, particularly the implementation of the GST, as more and more companies in the sector consolidate their operations and locate closer…