New Delhi, February 24
More than a dozen corporates, including big names such as Aditya Birla Group, M&M, L&T, as well as state-owned PFC, LIC and India Post, will apply to the Reserve Bank for licence to open banks.

While announcing comprehensive guidelines for new bank licences two days ago, the RBI said interested entities can file their applications by July 1.

Other entities keen to enter the banking space are IFCI, Shriram Group, Religare, ADA Group, Srei Infra, India Infoline Ltd and IndiaBulls Ltd. Reliance Industries Ltd and Tata Group, which are speculated to be mulling entry into the banking space, have remained tight-lipped about their plans.

Power Finance Corporation (PFC) Chairman and Managing Director Satnam Singh has said the company would seek approval for entering into banking space in the next board meeting.

"We qualify in both the categories...either we can set up a bank or convert ourselves into a bank," he said.

Larsen & Toubro spokesperson said the group would be interested in applying for new bank licence.

Commenting on the norms, non-banking financial entity Shriram Capital Chairman Arun Duggal said RBI has come up with comprehensive guidelines.

"We remain interested in foraying into the banking space and promoting financial inclusion," Duggal said, adding that the Group has required capital to enter in the banking sector.

An official in the Finance Ministry, which controls majority stake in term lender IFCI, said the entity would also like to be considered for new bank licence.

Aditya Birla Group CEO Ajay Srinivasan Chief Executive of Aditya Birla Group's Financial Services said: "Our group remains committed to meeting financial needs of its target customers. We intend to apply for a banking licence." CEO of Reliance Capital Sam Ghosh said: "We will be interested in applying for a banking licence."

When asked whether IndiaBulls will apply for a banking licence, its Group Director Ajit Mittal said: "We have an open mind. We will take a view. The Board will decide in due course of time."

India InfoLine Group Chairman Nirmal Jain said: "This is continuance of reform process, and will go a long way to drive the agenda of inclusive growth".

He had said recently that he can successfully convert all the 4,000 branches of his Non-Banking Financial Companies (NBFC) business into that of a bank and that his focus will not be the large urban markets.

SREI Infra Finance too said it will definitely apply for a banking licence.— PTI

Whirlpool of India Ltd, a subsidiary of Whirlpool Corporation, with three state-of-the-art manufacturing facilities, has become a major player in the Indian home appliance market. Shantanu Dasgupta, Vice-President, Corporate Affairs & Strategy, Whirlpool India, talks to Girja Shankar Kaura about the future strategy of the company.

Q. How has Whirlpool’s Indian business grown in the past few years? Which product categories have significantly contributed to this growth and why?

A. In the financial year ending March 2012, we registered a turnover of Rs 3,135 crore and a net profit of Rs 124 crore. In the past five years, we have doubled our turnover and quadrupled profit, becoming debt-free along the way. These achievements are significant when seen in the context of intense competition, entry of new global brands, and -last but not least - a tough business environment through most of this period.

Q. What is Whirlpool India’s current standing in the market vis-a-vis the competition from international and domestic players?

A. We are in the top three in refrigerators and washing machines and in the top five in microwave and air-conditioners. We enjoy leadership position in some states in some categories. We have entered the water purifier and cooking businesses recently and see these as future growth and profit engines for the company.

Q. Whirlpool has enjoyed a great run in India, of course. But, tell us about a few challenges that the company could have handled better, as a learning for other multinationals that want to entrench themselves in the Indian market?

A. The biggest learning that we have acquired through our journey in India is to be adaptable to changing business scenarios. From a promising start when we entered the country, we became unprofitable and had to rebuild our business. This has taught us to adapt and change our strategies when required.

Q. How does Whirlpool’s India business operate as compared to its international operations? How significant is the Indian business for the global entity now?

A. Whirlpool’s business is skewed to the ‘Americas’- the North America and Latin America businesses account for 80 per cent of the Corporation’s turnover. That said, India features among the top 5 in terms of profits and is a country from which much is expected in the future.

Q. You also widened the product offerings by entering into new categories in the recent past like invertors, water purifiers and kitchen appliances, among others. What is the strategy behind this approach?

A. As mentioned, we see these as future growth and profit engines for the company. Quality of water has always been a concern in India and people either boil or use rudimentary forms of filtration. With health consciousness on the rise, we expect the market to get more sophisticated in terms of products that consumers use.

Q. What's the plan on developing and enlarging distribution network? What kind of investment is planned for this? Where do you see, in percentage terms, your network increasing to in 1-2 years from where it is currently?

A. This is a continuous exercise. Currently, we are present in 25,000 outlets in the country and the aim is to grow that, with particular focus on smaller towns. Over the next two years, we aim to increase our reach by at least 5,000-6,000 outlets.

Q. How do you view the rural markets?

A. Rural, as defined in the Census, is not a big market for us, unlike FMCG businesses. In fact, two-thirds of the consumption of appliances takes place in the top 40 cities of India. 

Chandigarh, February 24
The National Bank for Agriculture and Rural Development (NABARD) has asked Haryana to initiate steps and improve rural institutional finance in the state, so that farmers are weaned away from private moneylenders and rural indebtedness is slowly ebbed out.

NABARD has asked the state government to improve the recovery performance of cooperative banks in the state, enhance the scope of short-term cooperative credit structure, remove the stipulation on individual borrowing limit in kisan credit cards and ensure that the debt swap scheme was fully explored across Haryana, wherein farmers’ debts from private moneylenders are swapped with bank loans.

These suggestions have been given to the state government, as part of the State Focus Paper for the 12th Five Year Plan (2012-17). Highlighting the critical issues relating to rural financial institutions, NABARD has pointed out that the recovery level of the cooperative banks in the state was affecting the fresh advances by these banks. It has been pointed out that urgent steps are needed on the part of the state government to help these cooperative banks improve their recovery performance, which, in turn, will improve the fiscal health of these banks and allow them to finance further.

“The operations of short-term cooperative credit structure in the state are confined to disbursement of production credit. There is an urgent need for diversification of business, with emphasis on agriculture term lending by state cooperative banks and district cooperative banks to improve their financial health, increase their share in total banking business in the state and cater to the needs of farmers,” suggests the paper. The apex agriculture bank has also said banks operating in Haryana have shown “unsatisfactory” progress in bringing farmers into the fold of institutional finance, by failing to give fresh loans to farmers who had been provided debt relief or debt waiver under the Agriculture Debt Wiaver and Debt Relief Scheme of 2008. It is pointed out that of the 5,79,339 farmers provided with debt waiver/relief, fresh lending has been given to just 38.5 per cent (2,23,220) of these farmers. The banks have been asked to provide fresh finance to remaining beneficiaries.

NABARD has also asked the agriculture cooperative societies and cooperative banks to do away with the stipulation of having a maximum limit for individual borrowing by farmers at Rs 1.50 lakh, so that farmers can fulfil the entire production requirement by short-term cooperative credit structure. 

Karnal, February 24
The two-day "National Vendor Development Programme-cum-Industrial Exhibition" that concluded here today proved a boon for Micro, Small and Medium Enterprises (MSMEs) who got to know about the purchase policy of the Union government for Central Public Undertakings and facilities available for "Skill development and quality testing".

The MSMEs were informed that the Government of India had made it mandatory for Central public sector undertakings to purchase 20 per cent of requirements from MSMEs and stress was laid on "standard and quality" of the products to meet the prescribed standards.

Inaugurating the programme, which was organised by "Micro Small and Medium Enterprises Development Institute (MSME-DI), Karnal, Tarun Bajaj, managing director, HSIIDC, urged the MSMEs to take up the challenge and stand in competition by producing “cost-effective manufactured goods with highest quality".

Director, MSME Development Institute, Vivek Kumar said micro, small and medium entrepreneurs facing twin problems of quality testing and manpower training can now breathe easy as MSME plans to open 10 common facility centres at a cost of Rs 150 crore.

Life Freedom Index, a survey conducted by HDFC Life in association with ValueNotes, reveals that only 13% of urban women are extremely confident about the adequacy of their financial plan to meet all their lifetime needs. There is always an overconfidence bias in these surveys. This brings us to the larger question: Are women planning for their retirement and why do they need to plan for their retirement?

Challenges faced by women

Evidence suggests women have fewer working years and lesser time to save compared to their male counterparts. This is because of the traditional roles that women play in our society that leads to disruptions at certain stages in their careers. This leads to less time in workforce and sometimes, unfortunately, lower incomes.

Apart from the lower lifetime earning potential, women outlive men in India. According to a UN study, life expectancy for women is expected to reach 72 years by 2026 and 78 years by 2051 as compared to life expectancy of men at 67 years and 70 years in the similar years. These years have their costs; the resources must last longer to cover them. Also, women’s genetic and biological makeup makes them vulnerable to medical and health situation that are unique.

These are compelling reasons for women to focus on retirement planning in a structured manner as early as possible.

Steps to consider for retirement planning

A. Assess your current situation: The first step to meet your retirement goal is to take stock of your current financial position, and ask yourself the questions below.

* When you want to retire? For example, if you are married, do you want to retire before your spouse? If your spouse is planning for retirement, do you want to add your retirement plan?

* How much you will need to live through retirement?

* How much you can afford to save?

B. Look out for investment avenues: To invest wisely, you need to balance your desire for growth with your risk-taking ability. Most women are risk averse and are more comfortable in safer investment avenues. There are diverse investments options, but you must decide which balance of risk/return is right for you. A visit to a professional financial consultant would be useful. Reviewing the performance of your selected investment is important. You may need to adjust your investment strategy to be slightly more conservative as you age and approach retirement target age.

C. Educate yourself on investments & financial planning: Our Life Freedom Index survey also reveals that there is wide gap in awareness about life events and products among Indian urban women. It is very critical to educate yourself about the different investment vehicles along with the different life stage events for right approach to financial planning. You should cultivate a habit of reading different personal finance columns, and related publications to brush up your knowledge on finance.

D. Save systematically and be disciplined: Our research shows that most women follow some level of discipline in adhering to their financial plan and management, which is a big positive towards their retirement goals. A planned small saving each month can add up to a lot over the years. For example, Mrs Shah & Mrs Bakshi both start investing in a savings plan. Mrs Shah invests Rs 50,000 per month while Mrs Bakshi invests Rs 2,000 more than Mrs. Shah every month. After 15 years, assuming an average return of 6%, Mrs Bakshi will have Rs 5.82 lakhs more than Mrs. Shah. Thus the trick is to save as much as possible and systematically.

E. Realigning your savings as per life stage: It is important to review your retirement plan in view of the life stage changes — marriage, kids, purchase of asset or taking a sabbatical. If your income has increased, you can allocate more towards your retirement plan. If your liabilities have increased then realign the investment course, but do not stop investing in your retirement plan.   Preparing for retirement isn’t just about saving. It is about knowing what you will need in retirement and then creating a plan that will help you get there. There is a natural tendency to delay our retirement planning thinking that our retirement is at a distance and we have ample time left to start one. We may, however, do not realise that waiting even just one more year to start saving could create a shortfall in our desired corpus. For women, who face unique situations concerning finances, a delay has significant consequences. When it comes to retirement security, women typically find themselves at a disadvantageous position when compared to their male counterpart. Hence the importance of good financial planning and adequate coverage becomes apparent.

The author is Executive Vice-President and Head, Marketing & Direct Channels, HDFC Life. The views expressed are his own

Finance Minister will be busy in finalising the Union Budget 2013 to be presented on February 28. There are really many challenges before him to address and present a Budget, which will boost economic growth of the country. The GDP growth for the year-end 2013 is likely to be around 5.5% and all eyes are on the Budget. Not only we Indians but also the world is also looking very closely to the developments in India, as this Budget will decide the future course investment in the economy of the country. Fiscal deficit and current account deficit are the major concerns at present and overcoming people’s expectations is a big challenge for the Finance Minister. Corporate world is also looking positively that this Budget will be pro- growth and not a populist Budget considering general election in one year’s time.

Recently, the government has also taken many steps to contain the deficit, including hike in diesel price and CNG prices. Now the diesel price is partly decontrolled and diesel price is likely to be increased by 45 to 50 paise every month. The government also collected a sum of Rs 12,000 crore by the disinvestment of NTPC shares recently. But these measures do not suffice and we want more doses from the government to speed up the economic growth. Rupee has appreciated recently against dollar but the crude oil price on the other hand is near to $95 per barrel. In this scenario, containing deficit will be a major challenge for the government. RBI has also taken cautious approach and has reduced repo rate by 0.25% only.

Increasing service tax and excise duty will lead to dissatisfaction across the class and may back fire the government. In my view, the Finance Minister should look into the following areas which can really help in increasing revenue and as well as reducing the deficit.

Focus on wealth tax

The wealth tax act is totally ignored in India and we have hardly seen any action based on wealth tax evasion. There is news in the media that the Finance Minister is considering the inheritance tax as an option to increase the revenue but I think if wealth tax is reviewed totally and actions are taken seriously then this can help a lot in increasing the revenue. The basic limit of wealth tax exemption is 30 lakh at present for individuals and needless to say lakhs of people will be having bank fixed deposit or postal deposit more than 30 lakh in India. Less than 3 crore people file their income tax return and I don’t think even 1% of these people will file their wealth tax returns. Revenue collection has to come from rich and ultra rich people and not from the poor and middle class family. I request the Finance Minister to make a new wealth tax law like done in income tax by making Direct Tax Code.

Promote Gold Deposit Scheme

We are the largest importer of gold in the world and this disturbs our balance of payment situation. The government is keen to reduce the import of gold to overcome balance of payment crisis. The government has recently increased import duty on gold from 4% to 6%. RBI also recently allowed mutual fund Gold ETFs to invest part of the fund in gold deposit scheme. Gold deposit scheme is one of the best avenues to invest in gold for HNIs and is the only gold investment, which pays interest to depositor. I think the government has to aggressively promote gold deposit scheme and banks are to be given targets to achieve the same. No bank talks about the scheme and is not taking any step to promote gold deposit scheme. We all know religious charitable trusts are having huge quantity of physical gold, which is not used for years. If the scheme is promoted and advertised aggressively then things may change in coming years.

Reduce expenses

It is difficult for the government to reduce the subsidy burden overnight as it has many political implications and no party can take a risk when you have general election within one year’s time. It is high time the Finance Minister must reduce the unwanted expenditure of the Government to reduce the deficit. The government should also make aggressive disinvestments plan next year to reduce the interest burden.

Increasing tax every time will not solve the problem. You have to search for other areas either to increase the revenue or to reduce the expenditure. I hope the Finance Minister will take this into account while presenting the Budget and not load more taxes on poor and middle class family.

The author is Head, Financial Planning at Apna Paisa. The views expressed are his own