The Reserve Bank of India (RBI) has put four public sector banks, including IDBI Bank and Indian Overseas Bank under watch and advised them to stay off risky assets so that their financial health is not stressed further. Though UCO Bank is said to also be in the list, the fourth bank could not be ascertained as of yet.

The RBI had carried out asset quality review (AQR) which will come to an end on March 31. The financial health of these lenders is not said to be improving and may remain so even after the AQR. These banks are suffering losses and have been advised to improve their financials by looking for capital infusion and creating a self-sustaining model by selling assets.

The gross NPA of Indian Overseas Bank (IOB) increased by 52% to Rs. 34, 502.13 crore at the end of December 2016, while the loss stood at Rs. 554 crore.

The gross NPA of IDBI Bank grew to 80% to Rs. 35, 245 crore and it booked a loss Rs. 2, 255 crore. The government shifted IDBI Bank's MD and CEO Kishor Kharat to Indian Bank. M K Jain, MD and CEO of Indian Bank, was in turn moved to IDBI Bank. UCO Bank is also expected to remain under stress during the fourth quarter ending March 31. Its gross NPA during the third quarter surged by 49% to Rs. 2, 181.26 crore and the loss was Rs. 437 crore.

Posted on: March 26, 2017, 9:30 am

Finance minister Arun Jaitley today ruled out farm loan waivers by the Centre. He further stated that states can utilise their own resources in this regard. The rationale given for this decision is that the Centre cannot adopt a selective approach by helping one state and not the others.


Jaitley said in the Rajya Sabha - "This issue (loan waiver) has cropped up in several states. The Centre has its policies for agriculture sector under which we provide interest subvention and other support. We will continue to give all that. If a state has its own resources and want to go ahead in that direction (waiving farm loans), it will have to find its resources. The situation where the Centre will help one state and not the others will not arise.”

Agriculture Minister, Radha Mohan Singh has stated that the BJP government in Uttar Pradesh will waive off loans of small and marginal farmers as has been promised in party's state election manifesto in the recent assembly polls.

The Oppositions party led by Congress had demanded that the BJP led government should announce a loan waiver for farmers across the country as was done by the UPA in 2006 and not just for Uttar Pradesh where the BJP has returned to power with a major mandate.

Posted on: March 26, 2017, 9:21 am

With Bangladesh’s Prime Minister, Sheikh Hasina visiting New Delhi next month, it is being expected that India will announce a large credit line amounting to $4 billion to Bangladesh.

There will be some agreements that will be signed between the two countries. One would be to get India on board as an adviser in implementing the Rosatom-Bangladesh nuclear power plant in Rooppur.

India had extended a similar credit line in September 2016 to Vietnam. It was a $500 million credit line for Hanoi to build its defense.

There will some defense agreements (seven MoUs) that will be executed between the two nations. One is for training crews of the Bangladesh Navy. China has played a key role in Bangladesh Navy's modernization and the deal to train Bangladeshi crew is seen as an attempt to leverage capacity-building cooperation with countries in the region to block Chinese demands for access.

There will be another deal that will be signed between the nations. This is for the implementation of Bangladesh's first nuclear power project at Rooppur. In November 2016, India had proposed it be made part of the agreement between Bangladesh and Rosatom for advisory support. Almost US$ 1 billion is likely to be allocated for infrastructure development of the project. The Rooppur project is being established by Russia's Rosatom, with Russia and Bangladesh approving the draft inter-governmental agreement last week.


Posted on: March 26, 2017, 9:16 am

Edelweiss India Special Situation Fund has bailed out Unitech Machines (which is an auto component maker) with a loan of Rs. 380 crores. This loan will be converted into equity which will be encashed by Edelweiss at a premium when the company floats its shares. The funds received will be used to repay the loan of Yes Bank, ICICI Bank and other banks and financial institutions. The loan comes at a time which will prevent a default on part of Unitech Machines. The loan is in form of a seven year bond with an option to convert these bonds into equity after three years. 

Unitech Machines is India's third largest two-wheeler lighting solutions provider and a primary vendor to Hero MotoCorp. Edelweiss India Special Situation Fund is focused on turnaround of stressed assets. It has a corpus of 11, 000 crore.

As part of the loan deal, Rs. 330 crores will be used to repay loans of banks and other creditors and the balance amount of Rs. 50 crores will be used as working capital.

If it would not have been bailed out by Edelweiss, Unitech Machine would have defaulted in the quarter to March and would have added to the stress on Indian banks which are already facing a crunch due to defaulting loans. It plans to repay all its loan to its six lenders and Edelweiss would be the sole lender to the company.

Posted on: March 23, 2017, 1:17 am

Finance Minister Arun Jaitley stated last week that here was no proposal before the government to withdraw the new Rs 2, 000 currency notes in a written reply to the Lok Sabha.

It was also informed that the old Rs. 500 and Rs. 1, 000 notes that have been returned to the currency chests of Reserve Bank of India (RBI) amounted to Rs 12.44 lakh crore as on December 10. This data would have to be reconciled with the physical cash balances to eliminate counterfeit notes, accounting errors and possible double counts etc., after which only the final figures will be arrived at.

As of March 3, the currency in circulation stood at Rs. 12 lakh crore.

On November 8, last year, the BJP government led by Prime Minister, Narendra Modi, had announced the demonetisation of Rs. 500 and Rs. 1000 currency notes in order to curb black money, corruption and terror financing.

In a statement, the Finance Minister stated - "Demonetisation seeks to create a new 'normal' wherein the GDP would be bigger, cleaner and real. This exercise has resulted in an increase in deposits with banks. This will facilitate reduction of interest rates and provide more headroom to banks to expand their credit base.”

The limits of withdrawal from savings bank accounts were also completely removed from March 13. This has brought about a sense of normalcy in the banking operations and liquidity in the country.

Posted on: March 22, 2017, 10:35 pm

An Inter-Disciplinary Standing Committee on Cyber Security has been set up by the Reserve Bank of India (RBI). The set up of this committee was proposed in the last monetary policy review outing.

The committee has been formed on the recommendations of the expert panel on Cyber Security and Information Technology Examination headed by Ms. Meena Hemchandra. As per RBI reports, the 'Statement on Developmental and Regulatory Policies' which was presented along with the sixth bi-monthly monetary policy on February 8, 2017 had proposed the constitution of the inter-disciplinary standing committee.

This committee will comprise of 11 members. They will review and revise the cyber threats inherent in the existing/ emerging technology, study adoption of various security standards/ protocols, interface with stakeholders and suggest appropriate policy interventions to strengthen cyber security and resilience.

The members of this committee are various learned and distinguished personnel who belong to different banks and organizations. The team is not limited to these 11 members and the RBI may include within this committee, more experts in the field of cyber security. The committee may also operate through a framework of sub-committees to examine and assess specific issues, as and when the need arises.

Posted on: March 3, 2017, 2:05 pm

Asian Development Bank (ADB) and India have entered into a $500 million loan pact to expand inter-regional power connectivity and to strengthen the existing transmission system to accommodate renewable energy-generation capacity in India. The inter-regional connectivity will boost transfer of power to southern regions which have been affected by power shortages.

As per the statement issued, $500 million loan will come from the capital resources of ADB and will make up around 19 per cent of the $2.581 billion total project cost. Power Grid Corporation of India (Powergrid) will be providing counterpart financing of USD 2.081 billion for the entire project. The duration of the loan is 20 years, including a five-year grace period with an annual interest rate determined in accordance with ADB's LIBOR-based lending facility.

The project which is being set up with this loan facility is expected to be completed by December 2020 and is stipulated to build 800 kilovolt (kV) and 320 kV High Voltage Direct Current (HVDC) converter stations and 765 kV power transmission systems in India. It will also help Powergrid to add 6, 000 MVA transmission capacity between Raigarh in Chhattisgarh and Pugalur in Tamil Nadu; 2, 000 MVA transmission capacity between Pugalur in Tamil Nadu and North Trichur in Kerala and 3, 000 MVA transmission capacity to accommodate renewable energy flows via Bikaner in Rajasthan.

Posted on: February 27, 2017, 2:10 pm

United Bank of India (UBI) has entered into a tie-up with Indian Railway Catering and Tourism Corporation (IRCTC) to offer the bank customers with the facility to purchase railway tickets using the bank's debit card from the IRCTC website.

UBI is a Kolkata based bank which is now the 14th bank and 10th among government banks to provide the ticket booking facility to its customers by having a direct tie- up with IRCTC.

As per recent orders, the Government has waived service charges on train ticket booking done through the IRCTC website in order to promote digital transactions and make way for a cashless economy. IRCTC is also keen to enter into tie ups with various banks to facilitate their customers to book their tickets directly from the IRCTC website.

UBI’s executive director, Mr. Ashok Kumar Pradhan, stated that the bank is continuously working to provide convenience to its customers by introducing technology based products and services.

As per recent reports, UBI has a net profit in their quarter Rs. 64 crore which was due to an increase in its non-core income. Its net profit was Rs. 17 crore in the year ago period.

Posted on: February 27, 2017, 2:09 pm

Working Capital is defined as the capital of a business which is used by the company to carry out day to day trading operations and is calculated by the current assets minus the current liabilities. Working Capital Financing is mostly used by small companies. It assists them in taking care of the creditors and continue the cash flow on a daily basis.

Every business, be it big or small requires a smooth cash flow to trade and run the operations smoothly. A company carries the risk of ruining its reputation if it doesn’t pay the bills on time. For a complete financing solutions, companies rely on banks for working capital to manage their operations. Working capital financing has broadly been categorized in Trade Credit, Cash Credit/Bank Overdraft, Working Capital loans, Purchase/Discount of Bills, Bank Guarantee, Letter of Credit and Factoring among others. Let’s have a quick look on them.


Working Capital Financing - the types

Trade Credit

Trade credit is the credit given by bank to business on the basis of the firm’s reputations and credit worthiness. This system of working capital allows the business to buy or purchase products without making immediate payment and the credit is given on short term basis. There is a free period for the companies to capitalize on, once the free period is over, a fee is charged and the calculation is based on the period of the credit used.


Cash Credit/ Bank Overdraft

This is the most widely used of all the working capital financing by the companies. The facility is given by banks which sanctions a specific amount to business to make payments. The cash credit works mainly because the business is charged interest on the amount used by the company, not on the total sanctioned amount. The companies wisely utilise the facility by depositing a part or the full amount to avoid interest and at the same time gets the benefit of carrying the business without any hassle.


Working Capital Loans

A working capital loans is quite like term loans and is given by financial institutions to companies for investing it on permanent financial needs, not on the temporary or daily financial operations. In this kind of working capital financing, the company has the flexibility to make the payment on installments or the full amount at the closure of the loans.


Purchase/Discount of Bills

This type of finance is also widely used by small companies as it comes out to be more lucrative than others. Regardless of the company’s size and magnitude, a company is bound to generate some bills including recurring charges. These bills work as a document for the sellers who approach the bank with the bills and are given an amount after applying the discount on the bills and the interest. The amount is collected by the bank from the debtor on the maturity date of the bills.


Bank Guarantee

This is popularly known as non-fund based working capital financing where the companies avail bank’s guarantee to minimise the risk or failure of delivering the task undertaken by the company or the services promised by the companies. The guarantee can be revoked by the holder in case of non-performances and the bank makes money by charging commission and may ask for some security before issuing the guarantee.


Letter of Credit

Like Bank Guarantee, this too is known as non-fund based working capital financing. The difference between the two is very marginal. In the former the bank guarantee is revoked and the payment is made to the holder in case of non-performance of the opposite party while in Letter of credit, the payment is made to the opposite party, if the party performs as per the agreement and terms of the Letter.



This is more of a conventional source of funding on a short term basis. The concept works on an arrangement where a company sells its accounts to a third party at a price which is lower than its actual value. This is where third party becomes a ‘Factor’ and renders factory services to the company. The third party (Factor) takes care of the financing as well as hold the right to collect the money from the debtors. Factoring Working capital is again divided into two categories- one is with recourse and the other without recourse. The former comes into the picture when the debtor fails to make the payment which is then taken care by the company and in the latter it is borne by the third party in case of non-payment.

The above working capital financing are the most popular ones and are widely used not only by small business enterprises but also big companies. The nature of finance is solely dependent on the size and the value of the company, along with its credibility in the market. The companies with good number of plants would require some of the above working capital financing to make sure the financial transactions are smooth. Having said that, these are not the only working capital financing modules, but there are others like public deposits, corporate deposits and commercial paper. So, if you are operating a business then you need to do a thorough research and consult with the bank representative to understand what kind of working capital would suit the demand and requirement of your business. In addition, one must also make sure the documents required by the banks before you apply for any such options. Once you understand the process and the complexities of the working capital financing and choose the right option then it could be extremely beneficial for you to operate your business.

Posted on: April 3, 2016, 6:11 am

Life is too precious to be careless about. Everyone wants a life free of any sort of bad incidents or accidents. Since we you are not born with a far sight and cannot control things beyond your power, you should ensure some preventive measures so that a catastrophic event like a health problem, a car accident, or a death in your family must not wipe out everything you have worked so hard to earn.Insurance is a way of protecting you against these financial losses. For a payment (premium), an insurance company will take the responsibility of compensating your financial losses.

What type of insurances should I have? There are various types of insurance policies available to suit your growing needs and lifestyle, but you need to be careful while choosing them. To help you out, we have compiled a list of some major and popular insurance policies available now-a-days.

Life Insurance - Life is a big “question mark”, you have no idea the challenges you have to face unless you reach that point. But the one stagnant fact that remains is “death”. You are a mortal and thus every heartbeat is precious and takes you one step closer to your death. You cannot control the time of your death, but what you can try to control is the events that follow after it. Events that might hamper the ones you love and want to see happily secured. This is where Life Insurance comes into play. When you buy life insurance, you're paying for the peace of mind that your family will be taken care of in the event of your sudden demise. Life Insurance is a must for adults who have people depending on them financially, such as minor children or a spouse who does not work or even have aged parents. Though it is a morbid thought, but if something happens to you it is their future that will be jeopardized. So if you die during your earning years, your family members will be left with the huge burden to pay the regular bills, pending debts (if you have any), household utility expenses etc. Unless you're very wealthy, these payments may be impossible for your family to make with the loss of your steady income. This cash, that the life insurance will provide, also known as the “death benefit”, replaces your income and can help your family meet many important financial needs like funeral costs, daily living expenses and college funding. Life insurance can pay your dependents money as a lump sum or as regular payments if you die. It gives you the assurance that your dependents will be looked after if you are no longer there to provide for them. The amount of money paid by the insurance company depends on the money scheme.

Health Insurance - Living a healthy illness free life is what everyone dreams of. But that is when reality strikes and you realize that health is something that you cannot negotiate with. Everybody faces some or the other health issue in their entire lifespan. These days, with prices touching the sky so has the cost of treatment. Even a simple visit to a doctor has become expensive. And god forbids, if you are diagnosed by some illness then starting from the hospital admission till the process of your recovery, the bills that your treatment will generate will make you sweat. This is where Health Insurance helps you. It is designed to take care of a portion of your medical and surgical expenses. Depending on the type of health insurance coverage you either need to pay the required cost of your treatment out of your pocket and then the insurance company will reimburse you, or they make payments directly to whoever is treating you. Health insurance can be directly purchased by an individual, or it may be provided through an employer. Medicare and Medicaid are programs which provide health insurance.

Car Insurance - When you buy a car there are high chances that you might be in an accident that can harm your vehicle. The accident might be caused by you or by a third party but the loss incurred can bring tears to your eyes.Worst case scenario, your car might get stolen! Then what? This is when Car insurance (also known as auto or motor insurance), is applicable. The premium of the insurance is dependent on certain parameters like value of the car, type of coverage, vehicle classification etc. Car insurance will give you the peace of mind of driving miles and miles. It will also save you from shelling out huge chunks of money all of a sudden.

Home Insurance - The safety of a house is the most important thing today. With the escalating rate of real estate, having a house is almost equivalent to having liquid cash. Thus this insurance is a must for all those people owning a house. A homeowner’s insurance should cover everything from the structure of your house to your belongings in case of an unforeseen accident. But if you live in an area of the country which is prone to any natural calamity like flooding, earthquakes etc., you may need to buy additional coverage that is not included in your primary policy. Some homeowners insurance is designed for renters, typically. It is referred to as the "renters insurance", and only covers the belongings inside the house. Nobody likes to think about what would happen in the event someone gets injured on his or her property, but accidents happen. And unfortunately, so do lawsuits, even among friends. A typical homeowner’s insurance policy provides liability coverage when someone not living with you is injured while on your property.

Disability Insurance - When people start working often they like to stay in denial that someday something bad might happen that can make them unfit to work for quite a long period of time and thus get stripped off their income source. As a major strata of the society relies on their job for their livelihood, it is a good thing to have a backup. Disability insurance pays some or all of a worker's salary if that worker becomes disabled and is unable to work at his or her job. This disability can come from accidents or injuries on the job, as well as from other illnesses such as cancer or a heart attack. Disability insurance can reimburse disabled workers for some of the income they lose while recovering from illnesses and injuries. Disability insurance is of two types

1. Short-term disability insurance: This usually covers disabling illnesses for up to six months, while long-term disability insurance can cover much of a worker's salary for an entire lifetime, if necessary.

2. Long-term disability insurance: This can cover most of the worker's salary for an entire lifetime, if necessary.

Depending on the type of job one has, the premium can be expensive or moderate. Jobs having higher life risks tend to demand more premium. But is better to pay more money to have a secure future in case of an emergency rather than losing your home or worse.

Long term care insurance - This insurance is exactly as the name suggests. It covers the expenses for people who are aging and need help with daily activities. It covers nursing home expenses or to provide for an attendant. This is the sort of insurance you do not think about until you tend to become older.It is apt for those who do not have anybody to look after them. It is advisable to do it as early as possible because the older you get, the more expensive you get to be insured.

Travel Insurance - This insurance covers any sort of hazards you might go through while travelling. It minimizes the cost of considerable financial risks of traveling like accidents, illness, missed flights, canceled tours, lost baggage, theft, terrorism, travel-company bankruptcies, emergency evacuation, and getting your body home if you die. The various types of travel insurances are as follows:

1. Medical Emergencies and Evacuation

2. Trip cancellation

3. Baggage & personal belongings

4. Personal liability

5. Coming home early & resuming your trip

So if you are travelling alone or going to an unknown place you should definitely have some sort of travel insurance done.

According to your needs, you need to carefully plan which insurances are best suited for you from the above provided list. Insurance cannot be bought hastily and needs a lot of planning beforehand. But if you do manage to buy the right kind of insurances, then surely it will benefit you in the long run financially. So start planning for a better future.

Posted on: July 9, 2015, 7:57 am


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