Archive for January 18, 2015

admin | January 18, 2015
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RBI V/S NPA

This is a constant struggle that one is viewing almost ever since the lending started.”The major risk that the borrower takes the risk of losing his capital ” is something that we all understand. Similarly, the Lender also takes a risk of losing its principal and interest thereon, if and when the things go bad.That’s the way a balance is struck and the business of lending goes on and prospers.

The issue that RBI Governor Mr Rajan has raised is that there are many borrowers who either willfully default or do not try hard enough to honour their commitments to the lender. These are the borrowers who want the lenders to suffer and sacrifice first.This attitude is the point that irritates the lenders. To follow good etics is the bare minimum that should be expected and if found wanting, due and strict actions should not be delayed.

However, at the same time, the lenders too need to improve their quality of lending and monitoring. Timely identification of a likely default situation , continuing monitoring even when the going is good, extending a helping hand when needed re some of the things which are wellknown, well talked about but scarcely practiced.The situation of an NPA is so much scarry to the lenders that many a times they jump on a agreeing to debt restructuring proposal or putting excessive pressure of recovery leading to a stand off and precipitate NPA.

I feel there is a need to look at the issue of reducing NPAs at a holistic level and come out with some innovative plan of action Otherwise “Smart” promotors will keep on playing the game of ” Heads I win and Tails you Lose “.

Category: Finances |
admin | January 17, 2015
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Petrol Prices.. A relief , more to GOI Exchequer !!

The recent nose dive of the petroleum prices have surprised ( happily ) almost all of us . The experts have now come to a stable view that it is not just the lower demand due to slump in the world economy but there is also an over supply position from the producing nations leading to this steep and steady fall in petrol prices

Lower petrol prices would help in reducing the costs and inflationary pressure in the importing countries like India ..but the Indian government has preferred to smartly increase the excise duty on Petrol.. and has passed over only a marginal gain to the consumer. The full effect of the petrol price reduction thus is not passed over to the consumers and hence the pressure of inflation will not reduce to the full extent directly.Though the excise collection will enable the Government to check its deficit significantly and thereby control the inflation. In other words, the money supply will not rise due to lower deficits, thus controlling inflation.

These are the choices of the Macro Economists and they have played the game smartly.

But my concern is Simple like a common man. The Concern is… will the government reduce the excise when the petrol prices go up. Please keep in mind hat this is not a long term phenomena.. the prices will bounce back as soon as there are signs of recovery globally and the producers will than hit back with controlled production. A question like this need to be asked right now and a a soothing assurance from those in the Power need to be obtained. If this is not done, consumers will keep paying higher excise for a long long time.

Category: Finances, General, Political, Taxation |