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The overall size of the budget has remained almost unchanged from the interim one presented in February, indicating the government's strong commitment to move along the <keyword id="20099794" type="General" weightage="20" keywordseo="fiscal-prudence" source="keywords">fiscal prudence</keyword> path, said experts on Tuesday. According to the <keyword id="19908389" type="General" weightage="100" keywordseo="Union-Budget" source="keywords">Union Budget</keyword> 2024-25 presented by Finance Minister Nirmala Sitharaman, the total expenditure in Budget Estimates (BE) 2024-25 is estimated at Rs 48,20,512 crore of which total <keyword id="20018917" type="General" weightage="20" keywordseo="capital-expenditure" source="keywords">capital expenditure</keyword> is Rs 11,11,111 crore. The total expenditure in the Interim Budget presented in February was estimated at Rs 47,65,768 crore of which total capital expenditure was Rs 11.11 lakh crore. Debadatta Chand, Managing Director &amp; CEO, <keyword id="19920717" type="General" weightage="20" keywordseo="Bank-of-Baroda" source="keywords" meta.keywordsubtype="org" meta.entityname="Bank of Baroda" meta.hostid="261" meta.entityid="Bank of Baroda">Bank of Baroda</keyword>, said the Union Budget complements the main takeaways from the Economic Survey and focusses clearly on medium term development of the economy. "The overall size of the budget has remained almost unchanged from the interim one. The budget has shown strong intent on moving along the fiscal prudence path and targeted the <keyword id="19942084" type="General" weightage="20" keywordseo="fiscal-deficit" source="keywords">fiscal deficit</keyword> at 4.9 per cent for the year," he said. The said action will keep the growth steady as well as robust not only for economy but also banking. Aditi Nayar, Chief Economist, ICRA Limited, said the budget has kept the capital expenditure unchanged and pared the fiscal deficit to 4.9 per cent of GDP. "The anticipated reiteration of the reduction in the fiscal deficit to below 4.5 per cent of GDP in FY2026 is welcome. Interestingly, the new medium term fiscal consolidation path has been linked to a reduction in the debt/GDP ratio instead of continued compression of the fiscal deficit/GDP ratio," she said. Buoyed by improvement in revenue collection, the government has lowered fiscal deficit target to 4.9 per cent for the current <keyword id="19910979" type="General" weightage="20" keywordseo="financial-year" source="keywords">financial year</keyword> as against 5.1 per cent estimated in February's interim budget. Ranen Banerjee, Partner and Leader Economic Advisory, PwC India, said that fiscal prudence is the highlight of the full Union Budget 2024-25. The government has gone with realistic projections on its revenue and expenditure estimates and refrained from announcing overly populist measures. "The majority of the allocations, including the capex allocation, are as outlined in the interim budget, thus providing continuity. The capex being kept at INR 11.11 trillion was expected, given that the ability to consume this allocation is limited due to disruption from the elections in the first quarter and the second quarter being typically slowed down by the monsoons," Banerjee said. Institute of Chartered Accountants of India (ICAI) President Ranjeet Kumar Agarwal said the government has announced five schemes to facilitate employment and skilling for 4.1 crore youth over the next five years with a central outlay of Rs 2 lakh crore. "This is a welcome step that will create a skilled workforce to address the existing deficit and generate <keyword id="19972727" type="General" weightage="20" keywordseo="employment-opportunities" source="keywords">employment opportunities</keyword>. Additionally, financial support for loans up to Rs 10 lakh for higher education will help students pursue higher education and acquire skills," he added. Indian Institute of Insolvency Professionals of ICAI (IIIPI) Chairman Ashok Haldia said the budget proposals for an integrated technology platform and sprucing up NCLT infrastructure will provide a fillip to the Insolvency and Bankruptcy Code (IBC) regime. IIIPI is promoted by ICAI. Meanwhile, Kumarmangalam Vijay, Partner, JSA Advocates and Solicitors, opined that in its new avatar, it seems that the Modi government is keen to deliver on its promise of 'ease of doing business'. "Its focus on making it simpler is evident from the abolition of the angel tax, the increase in new income tax regime thresholds, new Vivad se Vishwas Scheme 2024 for the resolution of pending cases and the increase in the threshold for appeal by tax departments at various levels, decriminalising the non-reporting of shares received from non-resident employers and reducing the period for re-opening of the cases," Vijay said. The Institute of Company Secretaries of India (ICSI) said there has been a focus on the manufacturing sector in the budget. Measures have been taken for simplifying the FDI/ODI rules and regulations, and the <keyword id="21847964" type="General" weightage="20" keywordseo="tax-regimes" source="keywords">tax regimes</keyword>. The enhanced Mudra loan limit and the abolition of angel tax are all set to incentivize the startup and MSME ecosystem of the country. "The nine priorities identified in this progressive and inclusive budget 2024 are aimed at generating ample opportunities for all. Besides agricultural reforms, the budget focuses on skilling, educating and employing the youth, a priority that the ICSI has been concentrating on," said ICSI President B Narasimhan. Rajesh Magow, Co-Founder and Group CEO, MakeMyTrip, said the government's continued emphasis on infrastructure development is commendable. Enhanced road infrastructure will bolster the travel and tourism sector. "We also welcome the initiatives to develop iconic spiritual and cultural sites into world-class tourist hotspots," Magow said. Furthermore, he said the provision of credit for TCS against income tax under 'Income from Salaries' is logical and will provide much-desired relief to taxpayers who travel internationally.

Budget size almost unchanged from interim, shows govt's commitment to fiscal prudence: Experts

<ul><li>Many of the working capital loans made to India's small entrepreneurs may be turning bad.</li><li>RBI Deputy Governor MK Jain raised an alarm in a speech yesterday but former governor Raghuram Rajan had already warned of 'credit risk' in September 2018.</li><li>Indian banks have given over ₹7 lakh crore worth loans under the Pradhan Mantri Mudra Yojana. </li><li>This will be added burden for Indian banks that are already saddled with bad loans worth over ₹9 lakh crore.</li></ul>Many of the working capital loans made to India's small entrepreneurs may be turning bad. MK Jain, the deputy governor of the Reserve Bank of India (RBI) raised an alarm in a speech yesterday but former governor Raghuram Rajan had already warned of the potential 'credit risk' in September 2018. In his report to the Lok Sabha (the lower house of Indian Parliament) Committee on Estimates in September 2018, Rajan highlighted that the "government should focus on sources of the next crisis, not just the last one. In particular, government should refrain from setting ambitious credit targets or waiving loans." At the end of March 2019, the total defaults since inception of the scheme was ₹17,650 crore (over $2.5 billion), roughly 2% of all the money lent under the programme. Rajan told you so... Rajan, who famously predicted the global financial crisis of 2008, specifically highlighted the rising quantum of contingent liability on account of Pradhan Mantri Mudra Yojana, which gives collateral-free loans to small entrepreneurs to meet their day-to-day business needs. A contingent liability is a possible future burden that cannot be quantified right now. In this case, banks giving these easy loans should have kept aside some money in case the borrowers become unable to repay the money. As it seems, the chickens have come home to roost. “The Mudra is a case in point-…while such a massive push would have lifted many beneficiaries out of poverty, there has been some concern at the growing level of non-performing assets among these borrowers,” the current RBI deputy governor Jain said on Tuesday (November 26). Over ₹7 lakh crore worth loans have been given under the Mudra scheme since its inception in 2015. Just as Rajan had warned, the amount of loans defaulted more than doubled in just one year, according to a <a href="https://www.business-standard.com/article/economy-policy/npas-under-modi-s-mudra-scheme-doubled-to-rs-9-204-cr-in-just-1-year-rti-119062400108_1.html" data-type="tilCustomLink" target="_blank">report</a> earlier this year. What's worse, another report showed that <a href="https://www.businesstoday.in/current/economy-politics/only-20-percent-mudra-loans-utilised-start-new-businesses/story/377353.html" data-type="tilCustomLink" target="_blank">only 20% of the money borrowed</a> went into starting a new business. Earlier this year, RBI had announced one-time restructuring of loan for small business owners who have borrowed less than ₹25 crore or if the loan default happened after January 1 of 2019. This has helped the MSMEs whose cash flows were adversely impacted due to transition under Goods and Services Tax (GST) and demonetisation. "Inefficiencies in lending practices, poor credit appraisal, willful default by borrowers and impaired cash flows due to slowdown also contribute to higher default rate," a Citi report this week said. Though the number of defaulters, and the amount of unpaid loans, is <a href="https://www.livemint.com/politics/policy/why-bad-loans-are-low-under-mudra-scheme-1563730565534.html" data-type="tilCustomLink" target="_blank">significantly lesser among smaller borrowers</a>, this is an added burden for Indian banks, particularly the state-owned ones, who are already saddled with unpaid loans to the tune of over ₹9 lakh crore at the end of March 2019. SEE ALSO: <a href="https://www.businessinsider.in/policy/economy/news/raghuram-rajan-gave-ideas-on-how-to-revive-economic-growth-in-india/articleshow/71573594.cms" data-type="tilCustomLink" target="_blank">Raghuram Rajan’s recipe to revive India's economic growth</a>

Raghuram Rajan's warning about Mudra loans last year may be coming true— and now a Citi report confirms it

<ul><li>Due to lack of <keyword id="944278" type="PERSON" weightage="20" keywordseo="insurance-coverage">insurance coverage</keyword>, LGBTQIA+ community needs to have a higher rate of savings to prepare for medical emergencies or even for planning to adopt a pet. </li><li>DDB Mudra Group has taken a step in the right direction to empower its queer employees who otherwise lack basic financial rights in our country. </li></ul>With the abolition of article 377 that decriminalised homosexuality, our country has come a long way. However, LGBTQIA+ community still has to fight for basic social rights and financial planning needs. From hunting for a perfect apartment where they don’t get an eviction notice in the first month of moving in with their partner to dealing with social prejudices, the queer community also has to navigate through a financial ecosystem that doesn’t back them up at all. They need to have a higher rate of savings to prepare for medical emergencies or even for planning to adopt a pet. While several companies now offer insurance coverage for gender-reassignment surgery, DDB Mudra Group is the first agency network in India to cover same-sex couples and unmarried partners who live together under its <keyword id="35492" type="PERSON" weightage="20" keywordseo="insurance-policy">insurance policy</keyword>. Married hetreosexual couples in India live stress-free because they are covered with their spouses’ family-floater health policy. So with its latest move, DDB Mudra Group aims to modify the definition of ‘family.’ It is also an honest attempt at building an inclusive workplace for its employees. “Everyone should be able to care for those they love,” read its caption. <div type="javascript" title="Custom" contenttype="Image"><cdata><![CDATA[]]></cdata></div> To bring about this change, the HR team at DDB Mudra Group had to stay patient and push themselves as the process took an entire year. Rita Verma, Executive Vice President &amp; Head HR, DDB Mudra Group said that it was worth the wait. She said, “Today, I’m very proud to say that our medical insurance covers our people’s partners - same-sex, hetro, live-in or married. This entitlement of medical benefits from only the spouse to anyone you love is monumental. To drive this change internally and with our insurance partners required unwavering commitment. The entire process took almost a year, but it was so worth it. Change doesn't happen overnight, and as a Group, we will continue to push ourselves to shed any unconscious bias in the work environment, every single day.” Talking about DDB’s work culture in India, Verma added, “At DDB, the “Freedom to Be” is a deeply held value. When our employees feel they have to hide or mask a key part of themselves at work because they feel unsure, unsafe, or invisible; it can take a toll on motivation, engagement, and (ultimately) employee retention and turnover rates. Over the years, we have worked towards helping each person feel free, valued and respected no matter who they are, how they choose to live and who they choose to love. And a way to create an immediate impact, is through the company benefits that employees receive for them and their loved ones.” Lack of basic financial rights for same-sex partners in India There are over a gazillion financial, social and legal benefits a marriage license offers to a hetreosexual couple in India, like the ability to inherit spouse's assets, nominate one's spouse as a partner-in-life in insurance schemes, share a lease legally, get medical insurance together or open a joint bank account, but gay couples can't rely on their marital status for financial protection. It is time we give them the 'right to companionship' instead -- to help them be financially secure. Talking about how workplaces can drive socio-economic change in our country by pushing themselves a little, Amit Kekre, National Strategy Head, DDB Mudra Group, said, “Because of same-sex relationships not being legal in most parts of India, they struggle on the issue of basic financial rights, such as partner insurance, property co-ownership, joint loan applications for instance. But that’s not just where the buck stops. They even face issues on small little things, like being able to rent or buy houses for instance. Although, the issue is not just a legal one. As a matter of fact, some states in India have begun to legalise same sex relationships. But the problem is larger -- its a socio-cultural issue, one which corporates can make a huge impact on by institutionalising policies that normalise same sex relationships.” Here is hoping that more agencies and brands follow DDB Mudra Group’s lead.

This Indian agency is the first to update its insurance policy that includes same-sex couples and live-in partners

New Delhi, Dec 3 () The government on Tuesday said close to 3 per cent of Rs 6.04 lakh crore worth of loans sanctioned under the Pradhan Mantri Mudra Yojana (PMMY) has turned into bad loans.
 Prime Minister Narendra Modi launched the PMMY on April 8, 2015, for providing collateral free loans of up to Rs 10 lakh to non-corporate, non-farm small/micro enterprises with a view to generating employment, and providing access to easy finance to small enterprises.
 In a written reply to a question on the PMMY in the Rajya Sabha, Minister of State for Finance Anurag Thakur also said any complaint received in respect of implementation of the PMMY, including turning down of loan applications, delay in turn-around-time (TAT) and lenders' insisting on collateral/guarantor on certain occasions, are redressed in coordination with the respective banks.
"Scheduled Commercial Banks (SCBs) and Regional Rural Banks (RRBs) have reported that as of March 2019, against a total amount of Rs 6.04 lakh crore disbursed by them under PMMY since inception of the scheme, an amount of Rs 17,251.52 crore had turned into Non-Performing Assets (NPAs), which is 2.86 per cent of the total disbursed amount," the minister said.
 Loans are classified as MUDRA under the PMMY. The loans are given under three categories of Shishu, Kishore and Tarun to signify the stage of growth and funding needs of the beneficiary.
 Replying to another question, the minister said during the last five financial years, the total number of branches of public sector banks (PSBs) increased to 87,580 at end-March 2019 from 78,939 as of March 2014 .
 The minister also informed the House that PSBs wrote off Rs 47,658 crore, Rs 56,847 crore, Rs 79,048 crore, Rs 1,24,275 crore and Rs 1,86,632 crore during financial years 2014-15, 2015-16, 2016-17, 2017-18 and 2018-19, respectively, according to the RBI data. 
Of these, write-offs in loans pertaining to 'agriculture and allied activities' were Rs 2,833 crore, Rs 6,361 crore, Rs 7,091 crore, Rs 10,345 crore and Rs 12,556 crore in those financial years respectively. NKD MR
MR

Nearly 3 pc of Mudra loans turn into bad loans: Govt

To ensure that the unemployed rural population of India also fulfils its <a href="http://www.businessinsider.in/searchresult.cms?query=entrepreneur&amp;sortorder=effectivedate">entrepreneurial dreams</a>, a new programme is going to be launched soon on the lines of ‘<a href="http://www.businessinsider.in/searchresult.cms?query=startup+india&amp;sortorder=effectivedate">Startup India, Standup India’</a>. 
 
The Deen Dayal Upadhyay Swaniyojan Yojana will be launched soon in which rural poor will be able to explore self-employment opportunities. 
 
The programme, which will be funded by the National Rural Livelihood Mission of the rural development ministry, will have skill sets such as driving, plumbing, <a href="http://www.businessinsider.in/searchresult.cms?query=agriculture&amp;sortorder=effectivedate">agriculture</a>, horticulture, etc. 
 
In case of funding, the Micro Units Development and Refinance Agency, or the <a href="http://www.businessinsider.in/searchresult.cms?query=mudra+bank&amp;sortorder=effectivedate">MUDRA Bank</a> will oversee it. 
 
As per the Socio Economic and Caste Census (SECC) data, one third of India's rural households are landless and depend on manual labour for an income, highlighting the need for <a href="http://www.businessinsider.in/searchresult.cms?query=skill+development&amp;sortorder=effectivedate">skill development</a> in these areas. 
 
(Image: Indiatimes)

Unemployed rural-poor to get desi version of ‘Startup India, Standup India’, fulfil entrepreneurial dreams

While presenting the <keyword id="6360189" type="COMPANY" weightage="20" keywordseo="Union-Budget">Union Budget</keyword> for the financial year 2015-16, the Narendra Modi-led BJP government had proffered to build a refinance agency in order to provide much-needed credit facilities to <keyword id="6359222" type="UNKNOWN" weightage="20" keywordseo="small-business">small business</keyword> units called the <keyword id="2746719" type="UNKNOWN" weightage="20" keywordseo="Micro-Units-Development-Refinance-Agency">Micro Units Development Refinance Agency</keyword> or <keyword id="2746495" type="UNKNOWN" weightage="20" keywordseo="mudra-bank">MUDRA Bank</keyword>. And April 8 is the day, when <keyword id="71" type="POSITION" weightage="20" keywordseo="Prime-Minister">Prime Minister</keyword> <keyword id="6354477" type="PERSON" weightage="20" keywordseo="Narendra-Modi">Narendra Modi</keyword> will launch the Rs 20,000 crore MUDRA Bank to refinance the institutions falling under microfinance sector. This agency will also play a role of regulator for this sector. This was revealed in an Economic Times report. The <keyword id="156153" type="ORGANIZATION" weightage="20" keywordseo="Ministry-of-Finance">Ministry of Finance</keyword> today held a stakeholders' consultation in order to work out the method of functioning of MUDRA Bank, which is expected to benefit about 5.77 crore small business units, the ET report added. The meeting, chaired by Financial Services secretary Hasmukh Adhia, was attended by representatives of <keyword id="134585" type="COMPANY" weightage="20" keywordseo="Micro-Finance">micro finance</keyword> institutions, NBFCs, Banks, NABARD, SIDBI and RBI, ET quoted a statement issued by the <keyword id="47209" type="ORGANIZATION" weightage="20" keywordseo="Finance-Ministry">Finance Ministry</keyword>. 

	As per the statement issued by the ministry, "Based on the consultation which took place today as well as the consultation which will happen in the days to come, the exact modalities of functioning of MUDRA Bank and its activities would be framed before the formal launch of MUDRA Bank on April, 8 2015 by the Prime Minister, and the same would be unveiled on the day of launch." 
 The ET report also added that the MUDRA bank would join hands with state-level/regional-level coordinators to provide <keyword id="25455" type="ORGANIZATION" weightage="20" keywordseo="finance">finance</keyword> to last mile financier of small/micro business enterprises. It would also chart out policy guidelines for micro/small enterprise financing business, registration of MFI entities, regulation of MFI entities and accreditation /rating of MFI entities. Besides, the bank will also frame guidelines for financing practices to ward-off indebtedness and ensure proper client protection principles and methods of recovery. Earlier, when the Budget session was on, Finance Minsiter <keyword id="42575" type="PERSON" weightage="20" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> has announced that "MUDRA Bank will refinance Micro-Finance Institutions through a <keyword id="2746650" type="UNKNOWN" weightage="20" keywordseo="Pradhan-Mantri-Mudra-Yojana">Pradhan Mantri Mudra Yojana</keyword>." (Image: cdn.e27.co)

Indian startups and small businesses have a reason to cheer, Rs 20,000cr funding to be made available April 8 onwards!

After complaints about <keyword id="3230097" type="UNKNOWN" weightage="100" keywordseo="Ghost-loans">ghost loans</keyword> in the housing sector, <keyword id="6354335" type="CITY" weightage="100" keywordseo="reserve-bank-of-india">Reserve Bank of India</keyword>, which is India's central banking institution, is looking into the matter. 
 "This is always under our scrutiny but if we do get any complaints of that sort we do look into them and investigate them properly," <keyword id="3230430" type="UNKNOWN" weightage="100" keywordseo="ss-mudra">SS Mudra</keyword>, deputy governor of <keyword id="30067" type="ORGANIZATION" weightage="100" keywordseo="RBI">RBI</keyword>, told ET. 
 Ghost loans either refer to the <keyword id="3230428" type="UNKNOWN" weightage="100" keywordseo="fictitious-loans">fictitious loans</keyword> recorded in the books, or the ones that arise when the borrower on whose name they have been taken took them at the request of the real borrower.

RBI sets eyes on ghost loans in housing sector

<keyword id="71" type="POSITION" weightage="80" keywordseo="Prime-Minister">Prime Minister</keyword> <keyword id="6354477" type="PERSON" weightage="80" keywordseo="Narendra-Modi">Narendra Modi</keyword> on Wednesday launched Mudra (<keyword id="2748082" type="UNKNOWN" weightage="80" keywordseo="Micro-Units-Development-and-Refinance-Agency">Micro Units Development and Refinance Agency</keyword>) bank under the Pradhan Mantri Jan Dhan Yojana. 
 
A Times of India report said, speaking at the occasion, the PM said, "We need to increase employment opportunities in the nation." 
 
"Big industrial houses provide jobs to only 1.25 crore people, while small entrepreneurs employ 12 crore people, PM Modi said. 
 <keyword id="6355261" type="POSITION" weightage="80" keywordseo="Finance-minister">Finance minister</keyword> <keyword id="42575" type="PERSON" weightage="80" keywordseo="Arun-Jaitley">Arun Jaitley</keyword> said that "Mudra bank will benefit around 5.77 crore <keyword id="6359222" type="UNKNOWN" weightage="80" keywordseo="small-business">small business</keyword> enterprises". 
 "Mudra bank is a step in the direction of <keyword id="6357455" type="EVENT" weightage="80" keywordseo="Funding">funding</keyword> the unfunded," Arun Jaitley said, reported TOI. 
 
The Prime Minister also distributed Mudra loans to some beneficiaries.
<blockquote class="twitter-tweet" lang="en">
	
		What is <a href="https://twitter.com/hashtag/MUDRAbank?src=hash">#MUDRAbank</a>? PM Modi launches the <keyword id="2799793" type="UNKNOWN" weightage="80" keywordseo="Micro-Units-Development-Refinance-Agency">Micro Units Development &amp; Refinance Agency</keyword> (via MIB) <a href="http://t.co/HMWnMJJb94">pic.twitter.com/HMWnMJJb94</a>
	- TIMES NOW (@TimesNow) <a href="https://twitter.com/TimesNow/status/585666546237833216">April 8, 2015</a></blockquote>
<blockquote class="twitter-tweet" data-partner="tweetdeck">
	 PM distributes 'MUDRA' loan on the launch of MUDRA (Micro Units Development and <keyword id="2799791" type="UNKNOWN" weightage="80" keywordseo="Refinance-Agency-Ltd-">Refinance Agency Ltd.</keyword>) Bank <a href="http://t.co/AWWjy1ZM7G">pic.twitter.com/AWWjy1ZM7G</a>
	- ANI (@ANI_news) <a href="https://twitter.com/ANI_news/status/585668076424822784">April 8, 2015 
	 
	</a></blockquote>
(Source: PMO/Twitter)

PM Modi launches Mudra bank, to benefit 5.8 cr small businesses

<ul><li>The government’s Credit Guarantee Scheme for MSMEs is “a growing contingent liability” that needs an urgent evaluation, he said. </li><li>Both MUDRA loans as well as the Kisan Credit Card need to be examined closely for potential risk </li><li>Over-optimism of 2006-2008 marked by risky bets combined with slow government decision making led to bad loan problem </li></ul>In his reply to the <keyword id="3658" type="LOCATION" weightage="20" keywordseo="India">India</keyword>n <keyword id="6354721" type="ORGANIZATION" weightage="20" keywordseo="parliament">Parliament</keyword>, Former Reserve Bank of India governor <keyword id="6358908" type="PERSON" weightage="20" keywordseo="raghuram-rajan">Raghuram Rajan</keyword> has warned India should take a <a href="https://www.thehindu.com/business/Economy/raghuram-rajan-blames-over-optimistic-bankers-growth-slowdown-for-bad-loans/article24925803.ece">closer look</a> at the risks of small loans, saying the next <keyword id="142154" type="PERSON" weightage="20" keywordseo="bad-loans">bad loans</keyword> crisis could potentially come from setting unrealistic credit targets or granting loan waivers. “Both MUDRA loans as well as the Kisan Credit Card, while popular, have to be examined more closely for potential credit risk,” Rajan said in his 17-page official response to India’s Parliamentary committee which had sought his views on the country’s rising bad loans menace. He highlighted the government’s Credit Guarantee Scheme for MSMEs is “a growing contingent liability” that needs an urgent evaluation. This scheme, also called Udaan, was launched in 2000 has <a href="https://economictimes.indiatimes.com/industry/banking/finance/banking/raghuram-rajan-has-a-word-of-caution-on-msme-lending/articleshow/65765097.cms">posted </a>more than 2.5 million in cumulative guarantee approvals with loan amounts of over ₹1.2 trillion ($17 billion) in FY 2016-17. Under the Mudra scheme, a total of ₹6.4 trillion ($85 billion) of loans is <a href="https://www.thehindu.com/business/Economy/raghuram-rajan-blames-over-optimistic-bankers-growth-slowdown-for-bad-loans/article24925803.ece">estimated</a> to have been disbursed to date. Over-optimism of boom years Rajan <a href="https://indianexpress.com/article/explained/raghuram-rajan-bad-loans-npa-indian-banking-system-economy-5351347/">noted </a>that in the boom years of 2006-2008, a number of banks extended loans based on over-optimistic estimates that eventually soured due to a slowdown in the government’s decision making and slowing economic growth. “Clearly, bankers were overconfident and probably did too little due-diligence for some of these loans. Many did no independent analysis, and placed excessive reliance on <keyword id="13222" type="DOMAIN" weightage="20" keywordseo="SBI">SBI</keyword> Caps and IDBI to do the necessary due-diligence. Such outsourcing of analysis multiplied the possibilities for undue influence,” he reportedly said. In a moment of “irrational exuberance” similar to mistakes made in many economies in the phase of high economic growth, Indian banks took risky bets of high leverage with lower levels of promoters equity with little due diligence. Hit by economic slowdown and project cost overruns, infrastructure companies were unable to service their debt obligations. Governance issues were also to blame. “A variety of governance problems such as the suspect allocation of coal mines coupled with the fear of investigation slowed down government decision making in Delhi, both in the UPA and the subsequent NDA governments,” he said. RBI did not create NPAs Taking on recent criticism from the Indian government that Rajan <a href="https://timesofindia.indiatimes.com/business/india-business/economy-slowed-down-due-to-raghuram-rajans-policies-not-demonetisation-niti-aayog-vc/articleshow/65655402.cms">created </a>the bad loans crisis resulting in an economic slowdown, he reminded the committee that bankers, promoters, or their backers in government sometimes turn around and accuse regulators of creating the bad loan problem when the regulator only acts as a “referee” and isn’t a player in the lending process. “The truth is bankers, promoters, and circumstances create the bad loan problem. The regulator cannot substitute for the banker’s commercial decisions or micromanage them or even investigate them when they are being made,” he said.

Raghuram Rajan reminds India what caused bad loans, warns Mudra loans could be the next wave Of NPAs

Mumbai, Jan 30 () After a prolonged period of troubles with big-ticket exposures, it will be the loans to agriculture, small businesses and unsecured retail debt which will become a concern for banks in 2020-21, a rating agency said on Thursday.
 The size of the corporate stressed asset book, arrived at after an analysis of over 30,000 companies, is lower than the year-ago period and the incremental corporate slippages will slow down in the new fiscal, India Ratings said.
 The commentary comes after over six years of stress due to corporate exposures, which have had a heavy impact on banks' profitability and forced the government to inject more capital into banks it runs. 
 The RBI has also estimated a dip in stress at its bi-yearly stability report in December.
 Loans to agriculture, micro, small and medium enterprises and the retail advances are a matter of "concern", its associate director Karan Gupta told reporters here.
 He said the last two years have seen banks focusing more on the unsecured loans by growing credit cards and personal loans at a faster clip.
 Retail product asset quality is deteriorating, he said, pointing out that all major segments like auto, education, and personal loans and credit cards have seen a faster accretion in NPAs.
 Meanwhile, the agency also flagged potential concerns awaiting lenders on this front, pointing out that job and wage growth in the economy has lagged retail loan growth.
 NPAs continue to increase in the MSME segment as well, he said, adding that the NPAs in the government-mandated MUDRA loans are 14 per cent.
 It, however, said that due to covers like the credit guarantee trust for MSEs, the MUDRA loans are not as much as a problem as these appear to be.
 On the corporate side, it said 17.9 per cent of the total bank credit or Rs 18.5 lakh crore in advances to large value segment as of September 2019 can be classified as stressed, which is down from 19.3 per cent in the year-ago period.
 The agency said 3.9 per cent of the advances, which are now classified as standard stressed assets, are at the highest risk of slipping into NPAs, and these come majorly from the power, real estate and construction sectors.
 The lower stress will lead to a moderation in the credit costs, or the amount of money that has to be set aside to cover for sour bets, it said.
 Meanwhile, the agency also said that the trend of an "indirect privatisation" of the banking sector, seen in higher accretion of deposits and loan writing over the past five years, will continue even in FY2020-21 as well.
 There will be a heavy competition for deposits, it said, adding that the private sector banks have an upper edge in this fight as they are offering higher interest rates and also developed an ability to make borrowers pay higher rates to protect their margins.
 It has given the private sector banks a stable outlook, while the state-run ones have been placed under the 'rating watch evolving' category.
 On the non-bank lenders or NBFCs front, the agency said there will be a divergent trend where a few select NBFCs will grow on the back of better liability management, access to capital and distribution network, while others will be laggards.
 There has been an improvement in the asset liability management issues, which led the NBFC sector to a crisis, it said, adding that entities will rely more on bank and off balance sheet financing rather than the market-based ones.
 The agency said it has a negative outlook on the wholesale NBFCs and also those focused on commercial vehicles.
 The loans against property segment has also been given a negative outlook due to weakened pricing and asset quality challenges, tractors as a segment also carries a similar outlook on uneven and unseasonal rainfall, while a broader economic slowdown has led to the same outlook on construction equipment as well.
 The microfinance segment outlook is also "negative" on asset quality trends, while gold loans is the only segment which has bagged a "stable" outlook from the rating agency, it said. AA MR
MR

Agri, small biz, retail loans to be a concern for banks in FY21

New Delhi, Jun 15 () Finance Minister Nirmala Sitharaman on Monday held a meeting with the heads of major private sector banks, and asked them to ensure effective rollout of Rs 3-lakh crore ECLGS for the MSME sector, hit hard by coronavirus-induced lockdown. The meeting -- also attended by CEOs of major non-banking financial companies (NBFCs) -- on Emergency Credit Line Guarantee Scheme (ECLGS) was held through a video conference. The Finance Minister chaired a meeting through video conference with major private banks and NBFCs to ensure effective roll out of ECLGS and uninterrupted/ smooth liquidity to Indian MSMEs in this difficult time. Debasish Panda, Secretary, Department of Financial Services, was also present in the meeting, the finance ministry said in a tweet. As of June 11, public sector banks have sanctioned loans worth Rs 29,490.81 crore under the 100 per cent Emergency Credit Line Guarantee Scheme. Out of this Rs 14,690.84 crore has already been disbursed. The scheme is the biggest fiscal component of the Rs 20-lakh crore Self-Reliant India Mission package announced by Sitharaman last month. On May 21, the Cabinet had approved additional funding of up to Rs 3 lakh crore at a concessional rate of 9.25 per cent through ECLGS for the MSME sector. Under the scheme, 100 per cent guarantee coverage are being provided by National Credit Guarantee Trustee Company (NCGTC) for additional funding of up to Rs 3 lakh crore to eligible MSMEs and interested Micro Units Development and Refinance Agency (MUDRA) borrowers in the form of a guaranteed emergency credit line (GECL) facility. For this purpose, a corpus of Rs 41,600 crore was provided by the government, spread over the current and next three financial years. The scheme is applicable to all loans sanctioned under GECL facility during the period from the date of announcement of the scheme to October 31 or till an amount of Rs 3 lakh crore is sanctioned under GECL, whichever is earlier. The main objective of the scheme is to provide an incentive to member lending institutions to increase access and enable availability of additional funding facility to MSME borrowers, in view of the economic distress caused by the COVID-19 crisis, by giving them 100 per cent guarantee for any losses suffered by them due to non-repayment of the GECL funding by borrowers. All MSME borrower accounts with an outstanding credit of up to Rs 25 crore as on February 29, which were less than or equal to 60 days past due as on that date, i.e., regular, SMA-0 and SMA-1 accounts, and with an annual turnover of up to Rs 100 crore, are eligible for GECL funding under the scheme. DP BAL

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