APMC delisting: Vegetables price crash as farmers sell directly to consumers

Vegetables price have plunged in Mumbai over the past two weeks, on a sudden increase in direct supply from farmers to retailers and bulk consumers, following the state government’s removal of the legal compulsion for farmers to sell only at regulated wholesale markets (mandis). Prices of green vegetables have fallen up to 53 per cent since July 15. The delisting of fruit and vegetables from mandis was announced in early July.

Normally, during the monsoon, vegetable supply gets interrupted due to slow harvesting in muddy fields, non-availability or delay in transport and fear of high spoilage. Since the normal seasonal vegetables are harvested in August, the pre-season sown crop with mechanised irrigation facility is hitting the mandis, especially in Maharashtra.

“Farmers turned entrepreneurs for the first time to sell their vegetables directly to consumers. They bring truckloads directly to consumer centres and sell directly, ignoring the middlemen,” said Shri Ram Gadhave, president, Vegetable Growers Association of India.

Middlemen say they aren’t perturbed, pointing to the slump in prices as evidence. “Arhatiyas (middle agents) are an integral part of the trade system, as they release the quantity as required; they hold farm output for another day. Farmers would not have such a carryover system. Hence, farmers would not be able to execute direct sales for long. And, unlike arhatiyas, no one would extend farmers the monetary support for their needs. Hence, they’d have to come back to us,” said Sanjay Bhujbal, a vegetables trader in at the Agricultural Produce Market Committee (APMC)-run mandi at Vashi, Navi Mumbai.

In January this year, the central government had proposed that state governments delist fruits and vegetables from the ambit of the APMC law. Madhya Pradesh, Andhra Pradesh and Karnataka accepted earlier; Maharashtra followed suit in July.

APMC delisting: Vegetables price crash as farmers sell directly to consumers Vegetable prices in Delhi and Kolkata have remained elevated, on the whole; July is a lean season for new arrivals. In Delhi, daily arrival of for example, arrivals of okra (bhindi) declined to 76 tonnes on August 2 from 166 tonnes on July 15. That of bitter gourd was 34 tonnes on August 2, from 83 tonnes two weeks earlier.

APMC delisting: Vegetables price crash as farmers sell directly to consumers

Bridge on Mumbai-Goa highway collapses; 2 bodies recovered, 22 missing

At least two buses and several other vehicles went missing near Mahad city after a bridge on the Savitri River collapsed early on Wednesday due to torrential rains in the Konkan region. Two bodies have been recovered, even as the search operations are underway, Raigad Collector Sheetal Ugale said, news agency ANI reported.

The bridge on Mumbai-Goa, more than seven decades old and a critical link to the Mumbai-Goa national highway, crashed around 1 a.m. due to the flood waters rushing into the river.

Two state transport buses with 11 passengers each were missing and there was no contact with either their drivers or the passengers, Ugale added.

Since the Maharashtra State Road Transport Corporation buses — which started from Mumbai — did not arrive at their scheduled Mahad depot, Ugale appealed people to get in touch with the concerned authorities about their missing relatives.

Bridge on Mumbai-Goa highway collapses; 2 bodies recovered, 22 missing

NGT order chokes diesel car sales

The diesel car business in the capital has taken a beating after the National Green Tribunal last month directed the transport authorities to de-register 10-year-old diesel vehicles to control pollution.

The decision came as Delhi’s car dealers were beginning to take in their stride the Supreme Court ban on 2,000 cc diesel vehicles. The ban, imposed last December, had also affected sales of diesel cars below 2,000 cc in the National Capital Region.

“All of a sudden, buyers are unsure whether their cars can be used after 10 years. This brings down the resale value and affects sales of new diesel cars,” said Jnaneswar Sen, senior vice-president, marketing and sales, Honda Cars. He added there was no rise in enquiries for diesel cars in Delhi last month.

The NGT order was delivered on July 18. The Supreme Court ban is still in place and the court’s order based on a final hearing have been reserved since July 4.

A dealer in luxury cars in the NCR said demand for diesel cars below 2,000 cc had declined by 15-20 per cent after the Supreme Court ban. “There was a further drop of 30-40 per cent after the NGT action last month. A chunk of luxury car buyers has put purchases on hold,” he said.

The dealer said the registration cost for a diesel car priced Rs 60-70 was about Rs 6 lakh and in the past, one could drive the car in Delhi for 15 years.

If the NGT order is implemented, a buyer of such cars will still pay Rs 6 lakh but use it for 10 years.

“There is a hit buyers will have to take,” the dealer said. After the NGT order, the Haryana government said it would ban 10-year-old diesel vehicles in Gurgaon and Faridabad.

The NGT decision, if executed, effectively will continue to drive people away from diesel cars in the national capital region. “There is lack of clarity and buyers are confused,” said an industry executive.

The narrowing price gap between petrol and diesel is also reducing the incentive to own diesel cars. The price differential between petrol and diesel is down to Rs 9 a litre from Rs 30 four years ago. According to the Society of Indian Automobile Manufacturers, the share of diesel variants in new cars nationwide fell to a low of 26 per cent in May from 52 per cent four years ago.

“It may take some time for the NGT action to be implemented. But buyers are worried. In Delhi, hardly one-fifth of our Etios sales came from petrol variants till last year. Now over half are petrol,” said N Raja, senior vice-president and director, sales, Toyota.

Delhi is the country’s sixth largest market for passenger vehicles. The number of cars registered in Delhi in March 2015 was 2.6 million. An estimated one in three passenger vehicles sold in Delhi runs on diesel.

NGT order chokes diesel car sales

Top 10 corporate groups owe Rs 5.73 lakh cr to lenders

Top 10 corporate groups in the country owed Rs 5.73 crore to state-owned banks and financial institutions at the end of March this year, government said today.

The Reserve Bank of India collects credit information from banks under the CRILC reporting system for borrowers with the credit exposure greater than Rs 5 crore.

“RBI had informed that gross outstanding credit for top ten corporate groups is Rs 5,73,682 crore as on March 2016,” Minister of State for Finance Santosh Kumar Gangwar said in a written reply to the Rajya Sabha.

RBI is prohibited from disclosing credit information except under certain conditions, he added.

The minister was asked whether it was a fact that top 10 corporate houses owe a huge amount of money to the public sector banks and financial institutions.

Gangwar further said that government has taken specific measures to address various issues facing sectors such as infrastructure, steel and textiles where incidence of non-performing assets (NPAs) or bad loans is high.

The government has also approved establishment of six new Debt Recovery Tribunals to speed up the recovery of bad loans to the banking sector.

“The government has recently issued advisory to banks to take action against guarantors in event of default by borrower …Since in the event of default, the liability of the guarantor is co-extensive with the borrower,” Gangwar said.

In reply to another question, he said public sector banks wrote off (including compromise) Rs 59,547 crore during 2015- 16 while their private sector counterparts wrote off Rs 12,017 crore. Foreign banks too wrote off Rs 1,057 crore.

“RBI has informed that write-off details for leading account holders are not available with them,” the minister added.

Top 10 corporate groups owe Rs 5.73 lakh cr to lenders

Novopay banks on rural customers

Novopay, a Bengaluru-based payments company, says it is slowly disrupting the mobile wallet space by focusing on unbanked and rural customers.

Many of these customers use their nearby store with the Novopay Solutions board as their local banking channel. Money transferred from kin working in Delhi or Mumbai to their bank account is reflected into their Novopay wallet, bank-backed, with the store keeper assisting them in doing transactions on a smartphone. The local store validates the user who receives the money with the Aadhaar-based unique identification numbers database, using biometric scanners and smartphones.

Novopay is a bank-backed account wallet, with the money stored in the wallet linked to the bank account.

“Everybody is targeting the 200 million middle class with a smartphone — they think, eventually, the guy will buy e-commerce goods on my wallet. We actually are targeting the 900 mn people in the interiors,” says Srikanth Nadhamuni, co-founder and chairman of Novopay Solutions. “The people who are not being served by the banking sector are our target audience. Even from a business perspective, this is a huge market”.

As the chief technology officer of the Aadhaar project, Nadhamuni helped Nandan Nilekani build the underlying technology for the world’s largest citizen identification project. With Novopay, he and co-founders Gautam Bandyopadhyay and Sridhar Rao are putting to use the Aadhaar authentication system to provide access to banking and financial services to reach out to the unbanked, where transactions can be as low as Rs 10.

Novopay has tied up with RBL, Axis Bank, IDFC and Bank of India to deliver its services to customers through the bank- backed wallet. The company has a consumer wallet and is building its user base by partnering with companies, than by splurging cash to get more users. IDFC Bank, a strategic investor in Novopay, utilises the underlying software built by the company to run its banking operations.

A study by Google and The Boston Consultancy Group (BCG) says Indians will use digital instruments to make payments worth $500 billion by 2020, contributing to 15 per cent of Gross Domestic Product. By 2023, it estimates non-cash transactions will overtake those in cash, as more people adopt digital channels for transacting money. Several measures such as the rise of digital wallets, payment banks and introduction of a Unified Payment Interface, which uses standards to allow seamless mobile-first payments across platforms, will contribute to this shift.
Novopay delivered a little over five million transactions last year, with users remitting an average of Rs 3,000 to their family members, access being at through about 44,000 outlets — the local stores which operate the assisted wallet to users. By mid-2017, Novopay aims to increase the reach five-fold, to around 300,000 outlets across India.

“In a place like Ghatkopar (a Mumbai suburb), for instance, the opening of a new Novopay outlet sees hundreds of people coming forward to utilise its services to send money to their friends and family back home. The banks are also happy that walk-in customers are being handled conveniently by Novopay,” says Sridhar Rao, chief executive. “Our model is low-cost and, therefore ,easy to deploy in neighbourhood locations, giving both consumers and banks a huge relief.”

The low-cost model of using local shops is supplemented by the underlying technology architecture built by Nadhamuni, which he says is the world’s lightest Core Banking Solution (CBS) — with the platform allowing the company to scale the user and transaction base multiple-fold, with little incremental cost.

“Traditionally, banks and financial institutions have outsourced technology. You might have a pretty front-end but if you have a heavy CBS, whose cost structure doesn’t allow you to open accounts and maintain the accounts of poor people, it doesn’t make sense,” says Nadhamuni. ” Even telecom companies didn’t build their own technology.”

Novopay has built a network operations centre which Nadhamuni call the company’s Googleplex. “We have built the entire CBS system ground-up. We have built the asset management system, liability system and payment system and the entire CBS Lite can handle shifts such as bitcoins. What we have built is a Googleplex than an enterprise CBS,” says Nadhamuni. “The marginal cost of creating a new account on our platform is nothing. We built it ground-up. So even if it’s a Rs 10 transaction, we are okay.”

Novopay banks on rural customers

On-tap banking may not see long queue for licence

The Reserve Bank of India (RBI) has opened the doors for new players to enter the banking system. However, experts believe at least in the short to medium term, there isn’t going to a big queue of players at the regulator’s door seeking universal banking licence.

Banking analysts believe the pool of players that were likely to apply has been streamlined by excluding corporate entities. Moreover, stringent regulatory framework applicable to a bank such as meeting priority-sector lending norms, focus on financial inclusion and statutory requirements are also going to serve as deterrent.

“Priority sector requirement is a big challenge and we need more preparations to convince our investors before we take up the responsibility of meeting priority sector commitment. There would be a concession period but we need to figure out how we would be performing in that period, so that we can give adequate return to our investors,” said V P Nandakumar, managing director and chief executive officer (CEO) of Manappuram Finance. The non-anking financial company (NBFC) is looking at applying in the next three or four years.

Even though some large NBFCs will be interested, not all of them will rush to apply. “We don’t see many NBFCs converting into banks, given the stringent guidelines and statutory norms. Thus, though on-tap, licensing will be limited,” said a research report by Religare.

Some other large NBFCs such as Bajaj Finserv and Mahindra & Mahindra Financial Services are going to get excluded because they are part of larger corporates and, as a result, do not fit the bill.

Abizer Diwanji, national leader (financial services) at EY India, explained that considering that the gestation period of the business is long, players will take their time out and chalk out the plan and apply only after that.

Resident individuals having 10 years of experience in banking and finance at a senior level can apply for licence
Corporate entities to be excluded but they can hold 10% stake in a bank
NBFCs converting into banks should do so through a holding company structure
Minimum capital requirement is Rs 500 crore
Experts say there would be no rush to apply for licence
Gives scope to companies for long-term planning before applying for licence
Meeting priority-sector lending to be a daunting task for new banks
Big cooperative banks best suited to become universal banks

“It takes at least two-three years to have the start of a stable deposit base. But, as soon as an entity becomes a bank, the priority-sector obligation starts getting counted and that itself can make the bank a loss-making proposition. If you don’t have a particular scale, meeting priority-sector challenges can be quite daunting and NBFCs need to do serious research,” he added.

The central bank has clearly stated that financial inclusion has to be one of the key objectives. Experts say considering there are 10 small finance banks (SFBs) and at least eight payments banks players that will also be focused on this space, competition is going to be significant. Profitability challenges for any of these new players will increase further.

Banking experts believe the latest guidelines are also mainly directed towards individual professionals, who have relevant experience to start banking operations in India. Says Ashvin Parekh of Ashvin Parekh Advisory Services: “I believe the guidelines are favourable towards professionals, who will bring in good global practices and new ideas into the sector.”

While the guidelines say the key executives or promoters have to be ‘Indian residents’, experts say it will not be much of a hindrance because people like ex-Citibank chief Vikram Pandit or Anshu Jain (former co-CEO of Deutsche Bank) would most likely be in non-executive roles as chairperson. In fact, sources suggest some Indian bankers with foreign experience are already in talks with top legal brains in the banking sector to structure such deals.

On-tap banking may not see long queue for licence

Four million tax arrear cases may get waiver

For the first time ever, the income tax department is thinking of writing off tax arrears in each case where the dues are up to Rs 5,000.

The idea is to cut litigation, lower the cost of collection and prioritising of bigger defaulters. Though writing off will mean the government could lose up to to Rs 600 crore, many of these accounts are anyway not recoverable. There are four million tax arrear cases of under Rs 5,000, older than three years.

Initially, what is being considered is writing off 1.8 mill ion arrear cases with dues under Rs 100 each. “(This could) then be expanded to cover arrears under Rs 5,000. This will ease a lot of hassle that tax payers go through, beside de-cluttering our database of arrears, which might not even be recoverable,” said an official. About 2.2 million cases are between Rs 100 and Rs 5,000.

I-T Department mulls writing off small tax arrears
1.8 million cases with tax arrears of under Rs 100 will be tackled first

2.2 million cases, older than three years with tax arrears between Rs 100 and Rs 5,000, might be considered later

The government is considering to give up claims on the reduce litigation, lower cost of collection and prioritise big defaulters cases

“Since these are old cases, they are not even being followed up by the department. In some cases, the defaulter cannot be tracked. The cost of recovery is higher than the pending tax amount in many cases,” another official added.

Meanwhile, the government has decided to expedite refunds of up to Rs 5,000 and also for cases where the arrear amount is up to Rs 5,000.

In a circular issued recently, the department has said “The refund pendency data has revealed that there are a large number of pending claims of refunds up to Rs 5,000 …for assessment years 2013-14, 2014-15 and 2015-16…the assessing officers be directed to issue refunds expeditiously, without making any adjustment of arrear demands…”

In 2014-15, the Central Board of Direct Taxes issued 13 mn refunds worth a combined Rs 26,663 crore.

Four million tax arrear cases may get waiver