Month: March 2021

The cost of printing currency notes in the denomination of ₹50 and ₹500 has come down, while it has gone up for ₹10, ₹20 and ₹100 notes.

According to the information given by the Currency Note Press (a unit of Security Printing and Minting Corporation of India Limited) to an RTI (Right to Information) filed by this correspondent, the standard cost of printing one currency note in the denomination of ₹50 was ₹1.24 in 2018-19, which came down to ₹1.22 in 2019-20. Similarly, the cost of printing one ₹50 note dropped to ₹2.65 from ₹2.71. The cost of printing of each unit of ₹200 in 2018-19 was ₹2.48. However, no cost price was given for FY20. No indent was placed for printing ₹2,000 note in FY20.

Input cost, supply

Though Security Printing Corp did not give any reason for the change in the printing costs, officials attribute it variously to lower input costs or reduced supply due to lower requirements.

According to the RBI’s Annual Report for FY20, indent placed for ₹500 notes was 1,463 crore pieces, while the actual supply from Security Printing Corp and Bharatiya Reserve Bank Note Mudran Private Limited) was 1,200 crore pieces. Similarly, the indent for ₹50 notes was 240 crore pieces, while the actual supply was 234 crore pieces. The supply of ₹100 notes also was less than the indent but not by much.

The Annual Report says: “The indent of bank notes for 2019-20 was lower by 13.1 per cent than that of a year ago. The supply of bank notes during 2019-20 was also lower by 23.3 per cent than in the previous year, mainly due to the disruptions caused by the outbreak of Covid-19 and the ensuing lockdown.”

Volume, value of bank notes

The volume and value of bank notes to be printed in a year depends on various factors such as the expected increase in ‘Notes in Circulation’ (NIC) to meet the growing public demand, and for replacing soiled/mutilated notes so as to ensure that only good quality notes are in circulation.

The expected increase in NIC is estimated using statistical models, which consider macro-economic factors such as expected growth in GDP, inflation, interest rates and growth in non-cash modes of payment. The replacement requirement depends on the volume of notes already in circulation and the average life of banknotes.

Besides these factors, the RBI estimates the volume and value of notes to be printed in a year also on the feedback received from its regional offices and banks on the expected demand for cash. It, then, arrives at the final number in consultation with the Government and the four printing presses – two under Security Printing Corp and two under Bharatiya Reserve Bank Note Mudran Private Limited.

The Finance Ministry on Monday informed the Lok Sabha that Scheduled Commercial Banks (SCBs) have written off loans worth ₹5.85-lakh crore. It also said that declarations received under Vivad Se Viswas Scheme accounted for around 28 per cent of pending tax disputes.

Minister of State in the Finance Ministry Anurag Singh Thakur in a written response said as per RBI data, SCBs have written-off loans of over ₹2.36-lakh crore in FY 2018-19, ₹2.34-lakh crore during FY 2019-20 and over ₹1.15-lakh crore during the April-December period of FY 2020-21.

As per rules, non-performing loans, including those in respect of which full provisioning has been made on completion of four years, are removed from the balance-sheet of the bank concerned by way of a write-off.

As borrowers of written-off loans continue to be liable for repayment and the process of recovery of dues from the borrower in written-off loan accounts continues, write-off does not benefit the borrower.

Thakur said that during the last two financial years and the first three quarters of the current financial years, SCBs recovered over ₹68,000 crore from the written off loan accounts.

Vivad Se Viswas Scheme

In another un-starred question, Thakur said that a total of 1,28,733 declarations have been filed till March 1 under the Vivad Se Viswas Scheme. These include 1,393 declarations by Central PSUs and 833 declarations by State PSUs/ boards. Declarations have been filed by taxpayers for resolution of tax disputes amounting to ₹98,328 crore till March 1. Taxpayers have made a payment of ₹53,346 crore under the scheme.

The total number of pending tax disputes as on the eligibility date was 5,10,491. The 1,28,733 declarations relate to 1,43,126 pending disputes (including cross appeals). “Thus, the declarations received under the scheme cover more than 28 per cent of pending tax disputes,” he said.

Senior citizens

In response to a question related to budget provisions for senior citizens, Thakur said that the Finance Bill, 2021 has proposed to insert a new section to provide exemption for persons over the age of 75 years from filing income-tax returns. This is subjects to the condition that the said person has only pension income and no other income.

However, in addition to such pension income he may have also have interest income from the same bank in which he is receiving his pension income.

Further, this bank is required to be a specified bank. The government will be notifying a few banks as specified banks. The pensioner will be required to furnish a declaration to the specified bank.

Once the declaration is furnished, the specified bank would be required to compute the income of such senior citizen after giving effect to the deduction and rebate allowable and deduct income tax on the basis of rates in force. Once this is done, there will not be any requirement of furnishing return of income by such senior citizen for this assessment year.

“This amendment will take effect from April 1, 2021,” Thakur said.

The microfinance industry is slowly inching towards pre Covid levels, both in terms of disbursements as well as the quality of portfolio. Disbursements in Q3 FY21 was around 96 per cent of the same period last year.

In the 36th issue of the Micrometer, MFIN (Microfinance Institutions Network) said that disbursements are expected to reach normal levels by the end of Q4 FY21 on the back of increased demand for loans.

The gross loan portfolio (GLP) of the microfinance industry stood at ₹2,32,648 as on December 31, 2020, an increase of around 10 per cent against ₹2,11,302 crores as on December 31, 2019.

Sequentially, loan disbursals during the October to December 2020 quarter jumped by over 90 per cent to ₹59,507 crore compared to ₹31,261 crore during Q2 FY21. The number of loans disbursed also doubled to 1.79 crore (0.88 crore), signifying steady progress towards normalcy.

The GLP of NBFC-MFIs grew by nearly 11 per cent at ₹74,712 crore as on December 31, 2020, compared to ₹67,255 crore in the same period last year. Sequentially, it increased by five per cent, compared to ₹71,147 crores as on September 30, 2020.

“It is heartening that the green shoots seen at the end of Q2 have proved to be true and sector disbursements are reaching almost at pre-Covid levels, backed by increased demand for loans to restart livelihoods. The disbursements during Q3 FY21 are around 96 per cent of Q3 FY20, indicating that it should reach normal levels by the end of Q4 FY21,” said Alok Misra, CEO and Director, MFIN, in a press statement.

Collection efficiency

There has also been an improvement in liquidity and the industry has been receiving funding support, both by way of debt and equity.

NBFC-MFIs received a total of ₹10,876 crores in debt funding, which is over 10 per cent higher compared to ₹9,854 crore in Q2 FY21.

Total equity of the NBFC-MFIs grew by nearly 17 per cent to ₹18,077 crores as on December 31, 2020, compared to ₹15,508 crore in the same period last year.

“The lenders and investors continue to show full confidence in the sector as evident by the debt funding going up 10.4 per cent compared to the previous quarter and equity moving up 16.6 per cent compared to the corresponding quarter last year,” Misra said.

Despite geographical variation, the portfolio quality is moving in the range of around 88-92 per cent.

The microfinance industry serves around 5.83 crore unique borrowers with 10.50 crore loan accounts.

The average loan disbursement per account for Q3 FY21 stood at ₹34,070, which is almost 19 per cent higher compared to ₹28,620 in the same period last year.

Banks hold the largest share of the portfolio in micro-credit, with a total loan outstanding of ₹97,956 crore, accounting for around 42 per cent of the total advances. NBFC-MFIs account for around 31 per cent at ₹72,128 crore, small finance banks hold around 17 per cent at ₹39,062 crore, NBFCs account for another nine per cent, and other MFIs account for around one per cent of the total loan portfolio.

In terms of regional distribution of GLP, east and north east account for 41 per cent of the total NBFC-MFI portfolio; south 27 per cent, west 14 per cent, north 11 per cent; and central eight per cent.