WEEKLY FINANCIAL SNIPPETS- 15/09/2018

1. BANK CREDIT ROSE BY 13.49% AND DEPOSITS BY 8.9%: Bank credit grew by 13.49% in the fortnight ended August 31, 2018. The total bank credit as on 31 St August 2018 stood at Rs. 87,89,259 crore. The credit during the same period a year ago stood at Rs. 77,44,237 crore. In the fortnight ended 31 St August 2018, deposits grew by a mere 8.8% to Rs 116,45,870 crore from Rs. 106,96,099 crore in the same period last year. Loans to Agriculture and allied activities rose by 6.6% during the same period.
2. RAHURAM RAJAN CAUTIONS ON MSME LENDING: Mr. Raghuram Rajan, former governor of RBI has warned that the next build-up of Non-Performing Assets (NPAs) could be in the loans to Medium Small and Marginal Enterprises (MSMEs) under the credit guarantee schemes. Mr. Rajan said that the government should now concentrate on sources of the next crises and should refrain from setting ambitious targets. He said that credit targets were sometimes achieved by abandoning appropriate due-diligence, thereby creating the environment for future NPAs. Both Mudra and Kisan Credit cards have to be examined more closely for potential credit risk. He also pointed out that the Credit Guarantee Scheme for MSME (CGTMSE) run by SIDBI is a growing contingent liability and needs to be examined with urgency.
3. MUTUAL FUND ASSETS SURPASS Rs. 25 TRILLION: The assets managed by domestic Mutual Funds Industry have crossed the Rs 25 trillion mark at the end of August 2018, marking a year-on-year growth rate of 25%. Out of this, Rs. 4.6 trillion was added in the last one year. This feat has been achieved by the industry in 25 years after it was opened for private investors. The Industry now has aimed to achieve the next 25 trillion in five years.
4. GOVERNMENT MAY END EPFO REGULATORY: The government is considering relieving the Employees’ Provident Fund Organisation (EFPO) of its regulatory duties and plans to create a separate entity to handle such regulatory functions. The idea and rationale behind the proposal is to avoid conflict of interest as now the EFPO is India’s largest provident fund provider and as well a regulatory.
5. NOW PAY TAX ON PROVIDENT FUND WITHDRAWAL: Provident Fund withdrawal consists of principal portion and interest earned on it portion. The taxability of the two differs based on the time of withdrawal. If the withdrawal is made before 5 years of continuous service then the entire contribution made by the employer is taxable and the tax would be deducted if the amount exceeds Rs. 50,000/-. And if the deduction has been claimed under section 80C while making such investment over the tenure of the service, then the entire contribution will be taxed.
6. INDIANS ARE MORE ADHERED TO PERSONAL LOANS: According to RBI data, in May 2010, the total outstanding personal loan amount with banks was Rs. 5.89 lakh crore. This amount as on June 2018 was Rs. 19.33 lakh crore. Consumer durable loans as on May 2010 were Rs. 8,010 crore, and on June 2018 it was Rs. 20,300 crore. Outstanding credit cards amount as on May 2010 was Rs. 19,579 crore, and on June 2018 it was Rs 74,400 crore. Sine 2010 banks have changed their strategies and have started focussing on these un-secured loans. A large proportion of customers taking personal and consumer durable loans are working class in
the age group of 25-45 years.

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