Bank-wise Details of the Shareholding of Government in PSU

5 PSU banks to reduce govt shareholding to meet MPS norms

Five public sector lenders, including Bank of Maharashtra, IOB and UCO Bank are planning to reduce government stake to less than 75 per cent to comply with Sebi's minimum public shareholding (MPS) norms, Financial Services Secretary Vivek Joshi has said. Out of 12 public sector banks (PSBs), four were complying with MPS norms as on March 31, 2023.

"As part of an ongoing effort, three more PSBs have complied with minimum 25 per cent public float during the current financial year. Remaining five PSBs have laid out action plans to meet MPS requirement," he told PTI in an interaction.

Currently, government holding in Delhi-based Punjab & Sind Bank is 98.25 per cent. It is followed by Chennai-based Indian Overseas Bank at 96.38 per cent, UCO Bank 95.39 per cent, Central Bank of India 93.08 per cent, Bank of Maharashtra at 86.46 per cent.

As per the Securities and Exchange Board of India (Sebi), all listed companies must maintain an MPS of 25 per cent.

However, the regulator had given special forbearance to state-owned banks. They have time till August 2024 to meet the requirement of 25 per cent MPS.

Joshi said banks have various options to bring down the stake, including follow on public offering or Qualified Institutional Placement.

Depending on market condition, each of these banks will take a call in the best interest of shareholders, he added. Without giving a timeline, he said, efforts were on to meet the requirement.

Joshi said the finance ministry has directed all state-owned banks to review their gold loan portfolio as instances of non-compliance with regulatory norms have been noticed by the government.

The Department of Financial Services (DFS) in a communication addressed to heads of PSBs has asked them to look at their system and processes related to gold loan.

A directive in this regard was issued last month advising them to fix anomalies relating to collection of fees and interest and closure of gold loan accounts.

The letter flagged various concerns, including disbursement of gold loans without requisite gold collateral, anomalies regarding collection of fees and repayment in cash.

The DFS urged banks to undertake a thorough review of the last two-year period from January 1, 2022 to January 31, 2024 so as to ensure that all gold loans were disbursed in compliance with regulatory requirements and internal policies of banks.

It is to be noted that the price of the yellow metal has surged to a record level. Price of 10 gm gold in the last one month jumped from Rs 63,365 to Rs 67,605.

According to the letter, the department has come across instances of non-compliance regarding the gold loan portfolio and hence issued the advisory.

The country's biggest lender, State Bank of India (SBI) alone has a gold loan portfolio of Rs 30,881 crore as of December 2023.

Punjab National Bank's gold loan exposure stood at Rs 5,315 crore while Bank of Baroda was at Rs 3,682 crore at the end of the third quarter.

Banks can not force Lawyers to pay Court Fees from their own pockets

The Privilege Committee of the Bar Council of Punjab & Haryana has called for a meeting with the Chairpersons of HDFC, ICICI, and Axis Banks. The reason behind this is an allegation that these banks have been instructing their panel lawyers to pay the court fees for filing cases in the Debt Recovery Tribunal in Chandigarh.

According to the complaint made by the Debt Recovery Tribunal (DRT) Bar Association in Chandigarh, the court fees can amount to lakhs of rupees. It is claimed that the banks only reimburse the lawyers months later. The DRT Bar Association believes that this practice is unethical and unfair. They argue that the high court fees are unaffordable for ordinary lawyers, and it is not appropriate for the banks or their officers to ask panel lawyers to pay from their own pockets.

The DRT Bar Association argues that this practice goes against the rights, duties, and privileges of advocates as outlined in the Advocates Act, 1961, and the BCI Rules. The Privilege Committee, headed by Chairman Lekh Raj Sharma and Members Raja Gautama and Karanjit Singh, agrees with this view. They believe that if this practice is widespread, it violates the provisions of the Advocate Act 1961, particularly Section 30. They also believe it is detrimental to the interests of common advocates, especially young ones. They argue that this unethical practice would give wealthy advocates a monopoly over legal work, which would undermine the talent and opportunities for other advocates.

The Privilege Committee comprising Chairman Lekh Raj Sharma and Members Raja Gautama and Karanjit Singh opined that “Prima facie it appears that this kind of the practice if it is prevalent is certainly in violation of the provision of the Advocate Act 1961, particularly Section 30, against Privileges Rights and Duties of the Advocate and also against the interest of the common Advocates particularly young Advocates.“

In response to these concerns, the Committee has summoned the Chairpersons of HDFC, ICICI, and Axis Bank to appear before them at the Bar Council of Punjab & Haryana. The Committee warns that failure to cooperate with the order would be seen as an admission of the unethical practice, and further action will be taken accordingly, in accordance with the law.

What is CPI and WPI?

What is CPI and WPI?

Consumer Price Index (CPI): The Consumer Price Index measures changes in the average price level of goods and services purchased by households over time. It is used to measure inflation and indicates the cost of living for consumers. The CPI is calculated by selecting a basket of goods and services that represent typical consumer purchases and tracking the changes in their prices over time. This index is often used to adjust wages, pensions, and government benefits to account for changes in purchasing power.

Wholesale Price Index (WPI): The Wholesale Price Index measures changes in the average price level of goods traded in bulk or at the wholesale level. It primarily serves as an indicator of inflation in the production and distribution stages of the economy. WPI tracks the price changes of goods before they reach the retail level and includes commodities such as raw materials, intermediate goods, and finished goods. Policymakers, businesses, and analysts use WPI to monitor inflationary pressures within the economy and make decisions based on price trends in the wholesale market.

Last 10 years Inflation Rate in India

Now, let’s have a look at the Last 10 years Inflation Rate in India.

Year	Average Inflation Rate
2024	5.09 (February)
2023	5.49
2022	6.7%
2021	5.13%
2020	6.62%
2019	3.73%
2018	3.94%
2017	3.33%
2016	4.95%
2015	4.91%
2014	6.67%
2013	10.02%

According to data released by the National Statistics Office (NSO), India’s retail inflation rate dropped to 5.09 percent in February 2024. This is the lowest it has been in the past four months. In January 2024, the inflation rate was slightly higher at 5.10 percent. It’s worth noting that the current inflation rate falls within the range set by the Reserve Bank of India (RBI), which is 2 to 6 percent. This means that the current inflation rate is considered acceptable by the RBI.

First let’s understand what is Inflation? Inflation is a term used to describe the general increase in prices of goods and services. It’s something that affects everyone, from the cost of groceries to the overall health of the economy. As India prepares for the upcoming general elections, it’s important to take a closer look at the country’s inflation rate to better understand its economic situation.

When we compare inflation in rural and urban areas, we find that the inflation rate in rural areas is slightly higher. In February, the rural inflation rate was 5.34 percent, which is 0.56 percent higher than the urban inflation rate of 4.78 percent. In December, the rural inflation rate was even lower at 4.34 percent

Bournvita to be removed from ‘Health drinks’ category. Govt says ‘there is no

Bournvita and other similar bevrages should be removed from the health drink category on e-commerce platforms as there is no ‘health drink’ category defined under Food Safety and Standards Act (FSS Act 2006), Ministry of Commerce and Industry said in a letter issued to the e-commerce companies.

In the letter, dated 10 April, the Ministry of Commerce advised the e-commerce companies to remove Bournvita and other beverages from ‘health drinks’ category.

"National Commission for Protection of Child Rights (NCPCR), a statutory body constituted under Section (3) of the Commission of Protection of Child Rights (CPCR) Act, 2005 after its inquiry under Section 14 of CRPC Act 2005 concluded that there is no 'health drink' defined under FSS Act 2006, rules and regulations submitted by FSSAI and Mondelez India Food Pvt Ltd," the ministry said in a notification, dated April 10," said the Department for Promotion of Industry and Internal Trade in its letter.

In the letter, dated 10 April, the Ministry of Commerce advised the e-commerce companies to remove Bournvita and other beverages from ‘health drinks’ category.

"National Commission for Protection of Child Rights (NCPCR), a statutory body constituted under Section (3) of the Commission of Protection of Child Rights (CPCR) Act, 2005 after its inquiry under Section 14 of CRPC Act 2005 concluded that there is no 'health drink' defined under FSS Act 2006, rules and regulations submitted by FSSAI and Mondelez India Food Pvt Ltd," the ministry said in a notification, dated April 10," said the Department for Promotion of Industry and Internal Trade in its letter.

In the letter, dated 10 April, the Ministry of Commerce advised the e-commerce companies to remove Bournvita and other beverages from ‘health drinks’ category.

"National Commission for Protection of Child Rights (NCPCR), a statutory body constituted under Section (3) of the Commission of Protection of Child Rights (CPCR) Act, 2005 after its inquiry under Section 14 of CRPC Act 2005 concluded that there is no 'health drink' defined under FSS Act 2006, rules and regulations submitted by FSSAI and Mondelez India Food Pvt Ltd," the ministry said in a notification, dated April 10," said the Department for Promotion of Industry and Internal Trade in its letter.

A year ago, Bournvita, had entered into a controversy because of its high content of sugar levels. A few days later, the National Commission for Protection of Child Rights (NCPCR) asked the Mondelez India-owned brand to remove all “misleading" commercials claiming of several health benefits with the consumption of the drink, reported Economic Times, referring to PTI. The action by the child rights body came after a video threw light upon the high sugar content in the beverage, which was earlier often labelled as “health drink" in several ads.

In a notice to Bournvita, the NCPCR also asked the confectionary major to send a detailed explaination or report in the matter. The action by NCPCR came after it received a complaint alleging that Bournvita promotes itself as a health drink and make claims like improving children's growth and development regardless of its high percentage of sugar and other ingredients that may impact children's health.

How to increase your eligibility for a personal loan? Here are 7 ways

Securing a personal loan is based on various factors that lenders evaluate to determine your capacity to repay the loan. There are various steps you can take to enhance your eligibility for a personal loan and potentially secure more favourable loan terms, such as lower interest rates or increased loan amounts. Here are some essential strategies

• Establish and sustain a strong credit score: This is paramount for lenders. A high credit score (preferably above 670) demonstrates responsible credit management, making you a more appealing borrower. Strive to pay all your bills punctually, maintain a low credit utilisation ratio (the amount of credit used divided by the total credit limit), and refrain from applying for excessive credit within a short timeframe.
• Lower your debt-to-income ratio (DTI): A reduced DTI ratio (calculated by dividing monthly debt payments by gross monthly income) indicates to lenders that you have sufficient income to handle additional debt. Pay off existing debts, such as credit cards or other loans, to decrease your DTI and enhance your loan eligibility.
• Boost your income: While it may sound straightforward, a higher income signifies a greater ability to repay the loan. If feasible, consider ways to enhance your income, such as securing a raise, taking on a side job, or monetising a hobby.
• Sustain consistent employment: A consistent employment record showcases financial reliability to lenders. Employment gaps or frequent job shifts may raise concerns.
• Think about a co-signer with a solid credit score: If your credit score is not ideal, having a co-signer with a strong credit history and steady income can greatly enhance your approval odds and potentially result in more favourable loan terms.
• Explore and compare lenders: Various lenders have different eligibility requirements and interest rates. Conduct research and compare lenders to identify one that provides favorable terms based on your credit profile and income.
• Limit loan application submissions: Numerous loan applications in a brief timeframe can adversely affect your credit score. Pre-qualify with lenders to determine if you meet their initial criteria before submitting a formal application.

By adhering to these steps and showcasing your financial responsibility, you can enhance your eligibility for a personal loan and potentially obtain a loan with more favourable terms tailored to your needs.

Frequently Asked Questions (FAQs)

Q. Why is it advisable not to submit multiple personal loan applications?

Submitting multiple loan applications in a brief timeframe can adversely affect your credit score. It’s advisable to pre-qualify with lenders to determine if you meet their initial criteria before submitting a formal application. 

This is because each official loan application results in a hard inquiry on your credit report. These inquiries can remain on your credit report for up to two years and may reduce your credit score, particularly if there are several inquiries within a brief period. A diminished credit score can make you a less appealing borrower and might result in loan denials or elevated interest rates. Additionally, lenders perceive multiple loan applications as an indication of financial desperation. This can raise concerns and decrease the likelihood of approval for any of your applications.

Furthermore, applying to multiple lenders can be overwhelming and make it challenging to keep track of loan terms and compare offers accurately. You might ultimately accept a loan with unfavourable terms due to fatigue from the application process.

Q. What makes personal loans a good choice?

Personal loans provide numerous benefits that make them suitable for various financial circumstances. Here's an overview of the primary advantages:

• Flexibility: Unlike certain loans designated for particular purposes (such as home equity loans for home renovations), personal loans provide greater flexibility in how you can utilise the funds. Common uses include debt consolidation, medical bills, unforeseen expenses, significant purchases, or even home improvements (depending on the lender).
• Quick approval and disbursement: Personal loans are usually unsecured, meaning they don't require collateral like your home. This simplified process enables faster approval times (sometimes even within the same day) and quicker access to funds compared to loans that require appraisals or more extensive paperwork.
• Reduced risk: With a personal loan, if you default on the loan, you won't be at risk of losing your home through foreclosure. This is a notable advantage, particularly if you're hesitant to put your homeownership on the line.
• Moderate loan amounts: Personal loans are ideal for borrowing smaller to moderate sums. They can be a suitable choice if you don't require a large amount of money, unlike home equity loans, which typically come with higher minimum loan amounts.
• Consistent payments: Personal loans feature fixed interest rates and set repayment terms (usually ranging from 12 to 60 months). This offers predictability for budgeting and makes managing your loan payments straightforward.

Q. How do you choose which bank or financial institution to borrow the loan from?

It's advisable to compare the offers from different banks before selecting a specific lender. Utilise online tools such as the loan eligibility calculator and personal loan EMI calculator to identify the loan option that best fits your needs. Some essential factors to consider when choosing a loan provider include interest rates, loan tenure, processing fees, and other associated costs.

Q. How can I compare the interest rates of personal loans?

Visit a financial aggregator's website and use the personal loan eligibility tool to receive a comprehensive list of available personal loan options, including important details like interest rates, processing fees, and additional charges such as pre-payment fees. With this information, you can easily compare the different personal loan options offered by various banks and NBFCs.

Q. Are personal loan interest rates fixed or variable?

For a fixed-rate personal loan, your EMI amount remains constant, meaning you will pay the same EMI each month throughout the loan tenure. Conversely, with a floating-rate personal loan, the EMI amount will decrease over time as it follows the reducing balance method for interest calculation. With a floating rate, the bank may adjust the applicable interest rate periodically according to the new MCLR rules. Floating interest rates may be revised either semi-annually or annually.