Page 14 - Banking Finance June 2019

ROUNDUP

Growth likely in Microfinance sector by 20-22% in FY20,
India notifies pact with
says ICRA
US on MNC tax evasion
The micro finance industry is likely to see a growth of 20-22 per cent in 2019-20
The inter-governmental agreement
despite last year's liquidity squeeze, according to
with the
rating agency ICRA. "The domestic microfinance
US for
sector registered a robust 28 per cent growth dur-
e x -
ing the 12 months ended December 2018 against
c h a n g e
26 per cent in 2017-18, and has emerged unscathed
of coun-
even as the liquidity squeeze after September 2018
t r y - b y -
severely curtailed growth of NBFCs in India," ICRA said in its report on the per-
country (CbC) reports on multina-
formance review and outlook for the MFI sector. "As of December 31, 2018,
tional companies concerning income
the overall micro loan market size (including SHG Bank linkage programme) was
allocation and taxes paid has been Rs. 2.37-lakh crore," it further said.
notified by India in order to help
However, small finance banks as well as micro finance institutions would together
check cross-border tax evasion.
require external capital of nearly Rs 3,500 to Rs 4,700 crore in the next three
Signed by Central Board of Direct years, in compliance with their growth targets of 25 per cent to 30 per cent
Taxes Chairman P C Mody and US annually, it said. "Investors continued to support the industry with equity infu-
ambassador to India Kenneth Juster sion of around Rs. 4,350 crore in 2018-19, against Rs. 4,100 crore in 2017-18,"
in March, the agreement was noti- the ICRA report said.
fied by the revenue department on It further said that over 90 per cent of the capital raised in 2018-19 was by
April 25. This agreement for ex- MFIs, with assets under management of more than Rs 1,000 crore, adding that
change of CbC reports, along with this implies that larger entities have been able to attract capital while the smaller
the Bilateral Competent Authority less-diversified entities continue to struggle on this front.
Arrangement, will enable both the
Accordingly, smaller MFIs could focus on originating more loans under the busi-
countries to automatically exchange
ness correspondent/co-lending framework as partners to large lenders to con-
CbC reports filed by the ultimate
serve capital, ICRA said, adding that alternatively there could be some further
parent entities of multinational en- consolidation in the industry, with the smaller MFIs being acquired by larger
terprises (MNEs) in the respective NBFCs and banks.
jurisdictions, pertaining to the years
commencing on or after January 1, IEPF recovers Rs 1,514 cr of investors' money from
2016.
Peerless
It will also shed light on the need for
IEPF has recovered deposits worth Rs. 1,514 crore which were owed by Peer-
Indian subsidiary companies of US
less General Finance and Investment Company to its investors for over 15 years.
multinationals to do local filing of the
Under the Companies Act, 2013, the Investor Education and Protection Fund
CbC reports, while reducing the com-
(IEPF) was set up to focus on protecting the interest of investors.
pliance burden.
"This amount was taken by the company by issuing about 1.49 crore Deposit
Relating to the global allocation of
Certificates to more than 1 crore individual investors. The data submitted by
income, taxes paid, and certain
the company reveals that 50.77 per cent of the total amount was taken in the
other indicators of an MNC, a CbC
form of deposit certificates worth Rs. 2,000 or less. Number wise, such certifi-
report aggregates country-by-coun-
cates make up 85.32 per cent of the total number of certificates issued," a fi-
try information. It also consists of a nance ministry statement said.
list of all the group companies oper-
"Most of these investors are common citizens belonging to the lower - and
ating in a specific jurisdiction and the
middle-income group, including daily wage earners, among others. Geographi-
nature of the main business activity
cally, the investors belong to 30 states and Union Territories. Most of the inves-
of each such constituent entity.
tors belong to Bengal," it added.
14 | 2019 | JUNE | BANKING FINANCE